Rockefeller Tech. Invs. (Asia) VII v. Changzhou Sinotype Tech. Co.

• Decision Date: 02 April 2020
• Docket Number: S249923
• Citation: 260 Cal.Rptr.3d 442,9 Cal.5th 125,460 P.3d 764
• Court: California Supreme Court
• Parties: ROCKEFELLER TECHNOLOGY INVESTMENTS (ASIA) VII, Plaintiff and Respondent, v. CHANGZHOU SINOTYPE TECHNOLOGY CO., LTD., Defendant and Appellant.

9 Cal.5th 125

460 P.3d 764

260 Cal.Rptr.3d 442

ROCKEFELLER TECHNOLOGY INVESTMENTS (ASIA) VII, Plaintiff and Respondent,

v.CHANGZHOU SINOTYPE TECHNOLOGY CO., LTD., Defendant and Appellant.

S249923

Supreme Court of California.

April 2, 2020

Law Offices of Steve Qi and Associates, Steve Qi, May T. To; Law Offices of Steven L. Sugars and Steven L. Sugars for Defendant and Appellant.

Paul Hastings, Thomas P. O'Brien, South Lake Tahoe, Katherine F. Murray, Nicole D. Lueddeke, Los Angeles; Blum Collins, Steve A. Blum and Chia Heng Ho for Plaintiff and Respondent.

Gibson, Dunn & Crutcher and Daniel M. Kolkey, San Francisco, for California International Arbitration Council as Amicus Curiae on behalf of Plaintiff and Respondent.

Benson K. Lau and Adam M. Satnick, Los Angeles, for Pacific Rim Cultural Foundation as Amicus Curiae on behalf of Plaintiff and Respondent.

Covington & Burling, David B. Goodwin, San Francisco, and Peter Trooboff for Professors of International Litigation as Amici Curiae.

Opinion of the Court by Corrigan, J.

The parties here, sophisticated business entities, entered into a contract wherein they agreed to submit to the jurisdiction of California courts and to resolve disputes between them through California arbitration. They also agreed to provide notice and "service of process" to each other through Federal Express or similar courier. The narrow question we address is whether the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638 (Hague Service Convention or "the Convention") preempts such notice provision if the Convention provides for a different method of service. Consistent with United States Supreme Court authority, we conclude that the Convention applies only when the law of the forum state requires formal service of process to be sent abroad. We further conclude that, because the parties' agreement constituted a waiver of formal service of process under California law in favor of an alternative form of notification, the Convention does not apply. We reverse the Court of Appeal's contrary decision.

I. BACKGROUND

Changzhou SinoType Technology Co., Ltd. (SinoType) is based in China and specializes in developing Chinese graphical fonts. During 2007 and 2008, its chairman, Kejian "Curt" Huang, discussed forming a new company with Faye Huang, president of Rockefeller Technology Investments (Asia) VII (Rockefeller).¹ In February 2008, they signed a Memorandum of Understanding (MOU). The MOU reflected an intent to form the new company, allocate interests and responsibilities between the two existing companies and transfer assets to the new entity. The MOU provided that the parties would, "with all deliberate speed, within 90 days if possible," attempt to draft "long form agreements carrying forth the agreements made" in the MOU. The MOU also stated, "this Agreement shall be in full force and effect and shall constitute the full understanding of the Parties that shall not be modified by any other agreements, oral or written." The MOU provided:

"6. The Parties shall provide notice in the English language to each other at the addresses set forth in the Agreement via Federal Express or similar courier, with copies via facsimile or email, and shall be deemed received 3 business days after deposit with the courier.

"7. The Parties hereby submit to the jurisdiction of the Federal and State Courts in California and consent to service of process in accord with the notice provisions above.

"8. In the event of any disputes arising between the Parties to this Agreement, either Party may submit the dispute to the Judicial Arbitration & Mediation Service in Los Angeles for exclusive and final resolution pursuant to according to [sic] its streamlined procedures before a single arbitrator who shall have ten years judicial service at the appellate level, pursuant to California law, and who shall issue a written, reasoned award. The Parties shall share equally the cost of the arbitration. Disputes shall include failure of the Parties to come to Agreement as required by this Agreement in a timely fashion."

Eventually, negotiations broke down and the "long form agreements" were never finalized. In February 2012, Rockefeller sought arbitration. The arbitrator² found that SinoType received notice on numerous occasions and "all materials were sent both by email and Federal Express" to the Chinese address listed for it in the MOU.³ SinoType neither responded nor appeared.

In November 2013, the arbitrator concluded Rockefeller was entitled to an award of $414,601,200. His written decision was sent to SinoType by Federal Express and e-mail.

Rockefeller petitioned to confirm the award ( Code Civ. Proc., § 1285 ), and transmitted the petition and summons to SinoType through Federal Express and e-mail. SinoType did not appear and the award was confirmed in October 2014. In November 2015, Rockefeller sought assignment of various future royalty payments that several companies owed to SinoType. (See Code Civ. Proc., § 708.510.) SinoType specially appeared and moved "to quash and to set aside default judgment for insufficiency of service of process." (See Code Civ. Proc., § 473, subd. (b).) SinoType asserted that it did not receive actual notice of any proceedings until March 2015 and argued that Rockefeller's failure to comply with the Hague Service Convention rendered the judgment confirming the arbitration award void. In a declaration supporting the motion, chairman Curt acknowledged that, in January 2012, he had received a letter from Faye that "mentioned arbitration." He further declared that "[s]ince Faye Huang and others had harassed me previously, and because I did not believe there was any binding agreement between SinoType and [Rockefeller], I decided to ignore the letter and subsequent FedEx packages and emails. I did not open them." Curt claimed that he only opened the Federal Express packages in March 2015 after a client told him Rockefeller claimed SinoType owed it money. The motion to set aside the judgment was denied,⁴ but the Court of Appeal reversed. (See Rockefeller Technology Investments (Asia) VII v. Changzhou Sinotype Technology Co., Ltd. (2018) 24 Cal.App.5th 115, 233 Cal.Rptr.3d 814, review granted Sept. 26, 2018, S249923 ( Rockefeller Technology Investments ).)

II. DISCUSSION

A. The Hague Service Convention

As to the superior court proceeding to confirm the arbitration award, SinoType argues the Hague Service Convention applies because notice of the proceeding was sent abroad to China, where defendant is based. Mirroring the Court of Appeal's reasoning below, SinoType contends that China's objection to Article 10 of the Convention precludes service in China through Federal Express. SinoType was never properly served, and the judgment confirming the arbitration award is void for lack of personal jurisdiction. (See Rockefeller Technology Investments , supra , 24 Cal.App.5th at pp. 133-135, 233 Cal.Rptr.3d 814.) To address this contention, we examine the language of the Hague Service Convention and pertinent United States Supreme Court authority.

The Convention is "a multilateral treaty that was formulated in 1964 by the Tenth Session of the Hague Conference of Private International Law ... [and] was intended to provide a simpler way to serve process abroad, to assure that defendants sued in foreign jurisdictions would receive actual and timely notice of suit, and to facilitate proof of service abroad." ( Volkswagenwerk Aktiengesellschaft v. Schlunk (1988) 486 U.S. 694, 698, 108 S.Ct. 2104, 100 L.Ed.2d 722 ( Volkswagenwerk ).) The United States was an original signatory, and China adopted it in 1992. ( Kott v. Superior Court (1996) 45 Cal.App.4th 1126, 1134-1135, 53 Cal.Rptr.2d 215 ( Kott ); Hyundai Merchant Marine v. Grand China Shipping (S.D.Ala. 2012) 878 F.Supp.2d 1252, 1262, fn. 5 ; see also Volkswagenwerk , at p. 698, 108 S.Ct. 2104.)

Article 1 of the Convention states it "shall apply in all cases, in civil and commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad." ( Hague Service Convention, supra , 20 U.S.T. at p. 362.) The Convention requires each member state to "designate a Central Authority which will undertake to receive requests for service coming from other contracting States and to proceed in conformity with the provisions of articles 3 to 6." (Ibid .) "The Central Authority of the State addressed shall itself serve the document or shall arrange to have it served by an appropriate agency, either— [¶] (a) by a method prescribed by its internal law for the service of documents in domestic actions upon persons who are within its territory, or [¶] (b) by a particular method requested by the applicant, unless such a method is incompatible with the law of the State addressed." (Ibid .) "The primary innovation of the Convention is that it requires each state to establish a central authority to receive requests for service of documents from other countries. [Citation.] Once a central authority receives a request in the proper form, it must serve the documents by a method prescribed by the internal law of the receiving state or by a method designated by the requester and compatible with that law. [Citation.] The central authority must then provide a certificate of service that conforms to a specified model."⁵ ( Volkswagenwerk , supra , 486 U.S. at pp. 698-699, 108 S.Ct. 2104.)

As relevant here, article 10 of the Convention states: "Provided the State of destination does not object, the present Convention shall not interfere with— [¶] (a) the freedom to send judicial documents, by postal channels, directly to persons abroad , [¶] (b) the freedom of judicial officers, officials or other competent persons of the State of origin to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the...