Pangang Grp. Co. v. U.S. Dist. Court for the N. Dist. of Cal. (In re Pangang Grp. Co.)

• Decision Date: 22 August 2018
• Docket Number: No. 17-72370,17-72370
• Citation: 901 F.3d 1046
• Parties: IN RE PANGANG GROUP COMPANY, LTD.; Pangang Group Steel Vanadium & Titanium Company, LTD. ; Pangang Group Titanium IndustryCompany, LTD. ; Pangang Group International Economic & Trading Company, Pangang Group Company, LTD.; Pangang Group Steel Vanadium & Titanium Company, LTD. ; Pangang Group Titanium IndustryCompany, LTD. ; Pangang Group International Economic & Trading Company, Petitioners, v. United States District Court for the Northern District of California, Oakland, Respondent, United States of America, Real Party in Interest.
• Court: U.S. Court of Appeals — Ninth Circuit

901 F.3d 1046

IN RE PANGANG GROUP COMPANY, LTD.; Pangang Group Steel Vanadium & Titanium Company, LTD. ; Pangang Group Titanium IndustryCompany, LTD. ; Pangang Group International Economic & Trading Company,Pangang Group Company, LTD.; Pangang Group Steel Vanadium & Titanium Company, LTD. ; Pangang Group Titanium IndustryCompany, LTD. ; Pangang Group International Economic & Trading Company, Petitioners,

v. United States District Court for the Northern District of California, Oakland, Respondent,United States of America, Real Party in Interest.

No. 17-72370

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 13, 2018—San Francisco, California

Filed August 22, 2018

Kathleen M. Sullivan (argued) and William B. Adams, Quinn Emanuel Urquhart & Sullivan LLP, New York, New York; Robert P. Feldman and Andrew P. March, Quinn Emanuel Urquhart & Sullivan LLP, Redwood Shores, California; for Petitioners.

Merry Jean Chan (argued), Assistant United States Attorney; J. Douglas Wilson, Chief, Appellate Division; United States Attorney’s Office, San Francisco, California; for Real Party in Interest.

Petition For Writ Of Mandamus D.C. No. 4:11-cr-00573-JSW

Before: Michael R. Murphy,^* Richard A. Paez, and Sandra S. Ikuta, Circuit Judges.

IKUTA, Circuit Judge

After the government delivered criminal summonses to attorneys for the Pangang Group Company, Ltd. and its subsidiaries Pangang Group Titanium Industry Company, Pangang Group Steel Vanadium & Titanium Company, Ltd., and Pangang Group International Economic & Trading Company (collectively, the "Pangang Companies"), the attorneys made a special appearance on behalf of their clients to quash service of the summonses. The district court denied their motion. The Pangang Companies petition for a writ of mandamus directing the district court to vacate its order, arguing that the delivery of the summonses did not effect service on the Pangang Companies under Rule 4(c)(3)(D) of the Federal Rules of Criminal Procedure (which we refer to as the Criminal Rules). We conclude that where such delivery provides actual notice to a foreign organization, it satisfies Criminal Rule 4. Because the evidence established that the Pangang Companies had actual notice of the summonses, the district court did not err, let alone clearly err, in denying the Pangang Companies’ motion to quash. Therefore, we deny the petition.

I

This petition requires us to review the intertwined history of the 2016 amendments to Criminal Rule 4 and the government’s repeated attempts at service on the Pangang Companies.

A

On February 7, 2012, the government indicted the Pangang Companies on charges of conspiracy to commit economic espionage, in violation of 18 U.S.C. § 1831(a)(5), and attempted economic espionage, in violation of 18 U.S.C. § 1831(a)(3) and (4). The Pangang Companies are enterprises owned and controlled by the Chinese government. According to the indictment, the Pangang Companies conspired with individuals to illegally obtain trade secrets from E.I. du Pont de Nemours & Company related to chloride-route titanium dioxide production technology.¹

A federal magistrate judge issued summonses to each of the Pangang Companies. The government served the summonses at the New Jersey office of a U.S. subsidiary of one of the Pangang Companies, Pan America, Inc., and mailed copies to the same location. At the time, the government attempted service pursuant to the 2011 version of Criminal Rule 4, which provides the process for issuing and executing an arrest warrant or summons to a defendant if a criminal complaint establishes probable cause to believe that an offense has been committed and that the defendant committed it. Fed. R. Crim. P. 4(a). A summons "require[s] the defendant to appear before a magistrate judge at a stated time and place." Fed. R. Crim. P. 4(b)(2). The 2011 version of Criminal Rule 4 provided that a summons is served on an organization "by delivering a copy to an officer, to a managing or general agent, or to another agent appointed or legally authorized to receive service of process." Fed. R. Crim. P. 4(c)(3)(C) (2011). A copy must also "be mailed to the organization’s last known address within the district or to its principal place of business elsewhere in the United States." Id.²

On March 29, 2012, the Pangang Companies made a special appearance in district court through two attorneys from Quinn Emanuel Urquhart & Sullivan, LLP (the "Quinn Emanuel attorneys"), and filed a motion to quash service of the summonses on the grounds that service on Pan America was defective under Criminal Rule 4. On July 23, 2012, the district court granted the motion, reasoning that service had not complied with the delivery requirement of Criminal Rule 4 for three of the Pangang Companies, and had not satisfied the mailing requirement as to all four Pangang Companies, see Fed. R. Crim. P. 4(c)(3)(C) (2011).

Between August 2012 and November 2012, the government attempted to serve the Pangang Companies by mailing and delivering the summonses to various individuals and addresses within the United States that were associated with the Pangang Companies. In addition, the Department of Justice (DOJ) formally requested that an agency of the Chinese government serve the Pangang Companies. The Chinese government refused.

On February 7, 2013, the Pangang Companies made a second special appearance in district court through the Quinn Emanuel attorneys, and filed another motion to quash. The district court granted the motion, holding that none of the agents and addresses bore the requisite connection to the Pangang Companies required under Criminal Rule 4(c)(3)(C). The government asked the district court to reconsider its rulings, arguing that the service of the summonses had substantially complied with Criminal Rule 4. The court denied the government’s motion.

B

While the government was struggling to serve the Pangang Companies, the DOJ asked the Advisory Committee on the Criminal Rules to make changes to Criminal Rule 4. For those unfamiliar with the rulemaking process, we provide a brief overview. The Rules Enabling Act of 1934, 28 U.S.C. §§ 2071 – 2077, authorized the Supreme Court to promulgate rules of procedure which have the force and effect of law. The work of formulating and revising such rules has been delegated to the Judicial Conference of the United States (the principal policy-making body of the U.S. Courts). Id. § 2073. The Judicial Conference formed a Committee on Rules of Practice and Procedure (referred to as the Standing Committee) and five advisory rules committees, the Advisory Committees on Appellate, Bankruptcy, Civil, Criminal, and Evidence Rules. See id. § 2073(a)(2), (b). By statute, the meetings of each Advisory Committee are generally open to the public, and minutes of each meeting are maintained by the committee and made available to the public. Id. § 2073(c)(1).

The rulemaking process proceeds as follows. After evaluating proposals for new rules or amendments to existing rules, an Advisory Committee may recommend a proposed change to the Standing Committee. See id. § 2073(b). If the Standing Committee approves the proposal, the Advisory Committee notifies the public regarding the proposed rule or amendment and solicits public comment. See Procedures for the Judicial Conference’s Committee on Rules of Practice and Procedure and Its Advisory Rules Committees, § 440.20.40 (2011).³ After evaluating and responding to such comments, the Advisory Committee may recommend a final rule or amendment to the Standing Committee. See id. § 440.20.50. The Standing Committee then makes an independent recommendation to the Judicial Conference, see id. §§ 440.30.10(d), 440.30.20(d), which in turn recommends the proposed changes to the Supreme Court. If the Supreme Court approves the proposal, it will promulgate the revised rules to take effect on December 1 of the same year unless Congress enacts legislation to the contrary. See 28 U.S.C. § 2074.

The DOJ asked the Advisory Committee to amend Criminal Rule 4 to allow service on an organization outside of the United States either by serving the organization under the laws of the foreign jurisdiction or through a non-exhaustive list of other means of service. Letter from Lanny A. Breuer, Assistant Attorney General, Dep't of Justice, to Judge Reena Raggi, Chair of Advisory Comm. on Criminal Rules (Oct. 25, 2012).⁴ The Advisory Committee developed a revised version of the proposal. Advisory Comm. on Criminal Rules, May 2014 Report to Standing Committee, at 2, 6 (May 5, 2014), [hereinafter Initial Advisory Committee Report ].⁵ In its report to the Standing Committee, the Advisory Committee proposed three amendments to Criminal Rule 4. Id. at 2. First, it proposed adding the following sentence to the end of Criminal Rule 4(a) : "If an organizational defendant fails to appear in response to a summons, a judge may take any action authorized by law." Id. at 3. Second, it proposed eliminating the requirement that a summons be separately mailed to an organizational defendant within the United States, except in cases where service is "made on a statutorily appointed agent when the statute itself requires a mailing as well as personal service." Id. Finally, it proposed adding a new subdivision (D) to Criminal Rule 4(c)(3), which would authorize serving a summons on an organization not within a judicial district of the United States by (1) delivery on an appropriate individual in compliance with the foreign jurisdiction’s law; or (2) "any other means that gives notice," including by a method stipulated by the parties, undertaken by a foreign authority in response to a formal request, or "permitted by applicable international agreement." Id. at 4–5.

The Standing Committee approved the Advisory Committee’s recommendation to publish the proposed amendments for public comment. Comm. on Rules of Practice and Procedure, September 2014 Report to the Judicial Conference, at 18–19 (...