United States v. Kolon Indus., Inc.

• Decision Date: 22 February 2013
• Docket Number: Criminal No. 3:12cr137–01.
• Citation: 926 F.Supp.2d 794
• Parties: UNITED STATES of America, v. KOLON INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — Eastern District of Virginia

926 F.Supp.2d 794

UNITED STATES of America,

v.KOLON INDUSTRIES, INC., Defendant.

Criminal No. 3:12cr137–01.

United States District Court,

E.D. Virginia,

Richmond Division.

Feb. 22, 2013.

Michael S. Dry, Assistant U.S. Attorney, U.S. Attorney's Office, Richmond, VA, Kosta S. Stojilkovic, Assistant U.S. Attorney, U.S. Attorney's Office, Alexandria, VA, John W. Borchert, Trial Attorney, Fraud Section Criminal Division, Dept. of Justice, Washington, DC, for United States of America.

Stephen C. Neal, Cooley LLP, Palo Alto, CA, Jeff G. Randall, Paul Hastings LLP, Washington, DC, Rhodes B. Ritenour, LeClairRyan, Richmond, VA, for Kolon Industries, Inc.

MEMORANDUM OPINION

ROBERT E. PAYNE, Senior District Judge.

This matter is before the Court on defendant Kolon Industries, Inc.'s (“Kolon”) MOTION TO QUASH SERVICE AND TO DISMISS INDICTMENT (Docket No. 21). For the reasons set forth herein, the motion is granted in part and denied in part.

BACKGROUND

On August 21, 2012, a federal grand jury returned a six count Indictment (Docket No. 3) against Kolon, as well as five individuals, Kolon's officers and employees, alleging that they and others had participated in a conspiracy to convert trade secrets, in violation of 18 U.S.C. § 1832(a)(5), the theft of trade secrets, in violation of 18 U.S.C. §§ 1832(a)(2) & 2, and obstruction of justice, in violation of 18 U.S.C. §§ 1512(c) & 2. The Indictment was unsealed on October 18, 2012 pursuant to an Order entered on October 10, 2012 (Docket No. 11) and a Notice filed by the United States on October 18, 2012 (Docket No. 12). On October 2, 2013, a Summons (Docket No. 9) was issued by the Clerk of the Court ordering Kolon to appear before the Court on December 11, 2012 at 1:30 p.m.¹

On December 10, 2012, Kolon filed its MOTION FOR LEAVE TO ENTER LIMITED AND SPECIAL APPEARANCES (Docket No. 15), seeking leave for its counsel to enter special appearances for the sole purpose of challenging sufficiency of service upon the defendant and seeking to quash the summons and dismiss the Indictment. In its supporting Memorandum (Docket No. 16), Kolon declared that it would not appear at the scheduled arraignment “due to absence of effective service.” Id. at 2.

On December 11, 2012, the case was called timely at 1:30 p.m. EST and neither Kolon nor the counsel who had signed the motion for leave to enter limited and special appearances appeared. The United States appeared through representatives of the Office of the United States Attorney for the Eastern District of Virginia and of the Criminal Division of the United States Department of Justice. At that hearing, the Court continued the arraignment until March 6, 2013 at 10:00 a.m. EST.

Immediately following the hearing, the United States filed its POSITION ON SERVICE (Docket No. 18),² in which the United States detailed the various ways in which it had effectuated service of the summons on Kolon and asked the Court to order Kolon's appearance at the March 6 arraignment date upon penalty of contempt of court.

On December 13, 2012, the Court entered an Order (Docket No. 20) granting the motions for leave to enter a special appearance, instructing Kolon to file its motion to quash, and setting a briefing schedule and argument date on that motion. Extensive briefing followed, including an opposition (Docket No. 25), a reply (Docket No. 28), a sur-reply (Docket No. 33) and a response to the sur-reply (Docket No. 37). On February 4, 2013, the Court entered an Order (Docket No. 36) requiring supplemental briefing on several specific issues. Responses were filed by the United States (Docket No. 38) and by Kolon (Docket No. 39). Argument was held on February 8, 2013. The motion is ripe and ready for review.

DISCUSSION

“Service of process, under longstanding tradition in our system of justice, is fundamental to any procedural imposition on a named defendant.” Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350, 119 S.Ct. 1322, 143 L.Ed.2d 448 (1999). Indeed, “[b]efore a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied.” Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987). Proper service of the summons constitutes a requirement beyond “notice to the defendant and a constitutionally sufficient relationship between the defendant and the forum.” Id. Absent a voluntary appearance by the defendant, the Court simply cannot exercise jurisdiction over a defendant, particularly a defendant that is not a resident of this District, if the service of process was not completed. See Knowles v. Logansport Gaslight & Coke Co., 86 U.S. 58, 62, 19 Wall. 58, 22 L.Ed. 70 (1873) (“[I]n the case of non-residents, like that under consideration, personal service cannot be dispensed with unless the defendant voluntarily appears.”).

A. The Federal Rules of Criminal Procedure

Fed.R.Crim.P. 9 instructs that, where the government elects to proceed by indictment, “[t]he court must issue a warrant—or at the government's request, a summons—for each defendant named in an indictment.” Fed.R.Crim.P. 9(a). Rule 9 goes on to explain that a summons “must be in the same form as a warrant except that it must require the defendant to appear before the court at a stated time and place.” Fed.R.Crim.P. 9(b)(2). The reader is then directed to Fed.R.Crim.P. 4(b)(1) for the form of the warrant and is further informed that “[t]he warrant must be executed or the summons served as provided in Rule 4(c)(1), (2), and (3).” Fed.R.Crim.P. 9(b)(1) & 9(c)(1)(A).

Rule 4, in turn, provides that the summons must contain, in addition to the “stated time and place,” (1) the defendant's name, (2) the offense charged, and (3) the signature of a judge. Fed.R.Crim.P. 4(b)(1)(A)-(D). The summons

[I]s 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. 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.

Fed.R.Crim.P. 4(c)(3)(C). Following service, “[t]he person to whom a summons was delivered for service must return it on or before the return day.” Fed.R.Crim.P. 4(c)(4)(B).

Kolon argues that Rule 4 imposes two separate and distinct requirements on the government in order to effectuate service of a summons: (1) that a copy be delivered “to an officer, to a managing or general agent, or to another agent appointed or legally authorized to receive service of process” and (2) that a “copy ... be mailed to the organization's last known address within the district or to its principal place of business elsewhere in the United States.” Kolon Mot. to Quash (“Kolon Mot.”) (Docket No. 21) at 6 (quoting Fed.R.Crim.P. 4(c)(3)(C)). In Kolon's view, failure to comply with the second sentence of the rule (the so-called “mailing provision”), even where it would be impossible to do so, defeats any attempt at service and strips the Court of personal jurisdiction. Kolon Mot. at 15.

There is no question, and the parties agree, that delivery is a jurisdictional requirement. See Govt. Resp. in Opp. to Def. Mot. to Quash (“Govt. Opp.”) (Docket No. 25) at 7; Kolon Mot. at 6. There is substantial disagreement over whether or not the mailing provision constitutes a requirement of service or an additional notice requirement. If the former, then the Court cannot exercise jurisdiction over a defendant; if the latter, then failure to comply might result in the government being admonished for not accomplishing the impossible, but would not be a bar to prosecution of the case. If Kolon's position is correct, then almost none of the government's attempts to effectuate service could have been successful because they would not have satisfied the mailing provision. Given that argument, it is appropriate first to resolve whether the fact that a corporation does not have a former address in the District or a principal place of business within the United States serves as an absolute bar to service of a criminal summons under Rule 4.³

B. The Mailing Provision

The first sentence of Rule 4(c)(3)(C) contains what is often termed the “delivery provision.” The second sentence contains what is called the “mailing provision” which provides that “[a] copy [of the summons] 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.” Fed.R.Crim.P. 4(c)(3)(C). The parties agree that Kolon has no last known address within the Eastern District of Virginia and has no principal place of business within the United States. See Govt. Pos. at 7; Kolon Mot. at 14.

The United States makes several arguments to support its claim that it adequately complied with the “mailing requirement.” For one, the United States indicates that it mailed a copy of the summons to the “last known place of business within the United States.” Govt. Pos. at 5. It mailed the summons to Kolon USA. Govt. Pos. at 6. The United States also emailed the summons to an email address of a H.S. Yoon who was listed on the Kolon website as the “contact point” for the Aramid product. Govt. Pos. at 5.

Kolon responds that none of these efforts are sufficient to comply with the “mailing provision” because, says Kolon, the mailing provision is perfectly clear: the summons must be (1) mailed to (2) the organization at (3) an address in the United States. See Kolon Mot. at 14. Under this interpretation, neither mailing the summons to Kolon USA (a different organization) nor sending the email to Mr. Yoon (not mail) nor mailing the summons to Kolon Industries in Korea (not in the United States) would be sufficient to comply with the terms of the Rule.

It is clear that the United States did not strictly comply with the mailing provision and,...