Service of Pleadings in the Electronic Age03/28/2023
Recent court proceedings demonstrate the extent courts may go to authorize alternative means of service. When service methods by process server or mail, whether certified or express, are unsuccessful, you should consider the other alternative means courts have allowed.
In In re Three Arrows Cap., Ltd., No. 22-10920 (MG), 2022 WL 17985969 (Bankr. S.D.N.Y. Dec. 29, 2022), after an insolvency proceeding in the British Virgin Islands, a Chapter 15 proceeding was filed in the U.S. to enforce and defend claims against directors and officers who may be U.S. citizens and not living in the U.S. This proceeding sought to require founders of Three Arrows Capital to disclose information to access company cryptocurrency. However, the founders failed to provide books and records, were unavailable for meaningful discussions and refused to provide current locations. Without their current locations, the liquidators were unable to formally serve subpoenas to compel production of the missing information.
Rule 45 of the Federal Rules of Civil Procedure allows a party to serve a subpoena by delivering a copy to the recipient anywhere in the U.S. Additionally, 28 U.S.C. Section 1783 provides that a subpoena can be directed to a U.S. national or resident abroad if it is “necessary in the interest of justice, and … that it is not possible to obtain his testimony in admissible form without his personal appearance or to obtain the production of the document or other thing in any other manner.” Section 1783 further provides that the relevant inquiry is whether the discovery sought is 1) necessary in the interest of justice and whether it is 2) not possible to obtain the discovery in any other manner. The Bankruptcy Court here found that discovery was proper under Bankruptcy Rule 2004. And, the recipient had not been cooperative. Thus, discovery under Section 1783 was proper.
The final inquiry was the method of service. Under Rule 45, a subpoena may only be completed by personal delivery. However, courts routinely authorize alternative means of service provided the method is “reasonably calculated” to provide actual and timely notice to a recipient. The court determined that personal service would be futile since the recipient was concealing his location. Further, although the most recognized alternative service method is certified mail, which requires an actual receipt, that method was impossible given the recipient’s unknown whereabouts. Finally, the court considered whether service by email and social media was permissible. The court found it was permissible where it is demonstrated that the recipient is presently using such medium. Thus, the court authorized service by Twitter and email.
In contrast, in Midwest Commercially Funding, LLC v. Kelly, 2023 IL 128260 (Mar. 23, 2023), in a judgment collection proceeding, the plaintiff emailed a citation to discover assets, akin to a post-judgment subpoena. The court noted that under Illinois Supreme Court Rules 277 (c) and 105 that service is authorized by any method provided by law for service of summons or by prepaid certified or registered mail. The plain language of the statutes does not authorize service by email.
Therefore, parties should be attentive to circumstances where electronic means can be used as an alternative method of service and not assume that because their usage is commonplace, such service is authorized.
Should you have any questions about alternative service methods, please contact Rick Rein.