Cheetah Mobile, Inc. et al v. Apus Group

Northern District of California, cand-4:2015-cv-02363

ORDER by Hon. Haywood S. Gilliam, Jr. GRANTING {{63}} Motion to Serve by Alternative Means and to Extend Service Deadline; and DENYING {{66}} Motion to Dismiss for Lack of Prosecution. Issued by Hon. Haywood S. Gilliam, Jr. on 7/28/2016. (hsglc2S, COURT STAFF)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 CHEETAH MOBILE, INC., et al., 7 Case No. 15-cv-02363-HSG Plaintiffs, 8 ORDER GRANTING PLAINTIFFS' v. MOTION TO SERVE BY 9 ALTERNATIVE MEANS AND APUS GROUP, DENYING DEFENDANT'S MOTION TO 10 DISMISS FOR LACK OF SERVICE Defendant. 11 Re: Dkt. Nos. 63, 66 12 Northern District of California United States District Court 13 Pending before the Court are two motions: (1) Plaintiffs Cheetah Mobile, Inc., Cheetah 14 Mobile America, Inc., and Cheetah Technology Corporation's motion to serve Defendant APUS 15 Group by alternative means and to extend the service deadline ("Motion for Alternative Service") 16 and (2) Defendant APUS Group's cross-motion to dismiss for lack of service ("Motion to 17 Dismiss"). Dkt. Nos. 63, 66. For the reasons articulated below, Plaintiffs' Motion for Alternative 18 Service is GRANTED and Defendant's Motion to Dismiss is DENIED. 19 I. BACKGROUND 20 On May 27, 2015, Plaintiffs filed a complaint alleging eleven causes of action under 21 California and federal law: (1) defamation; (2) trade libel/product disparagement; (3) copyright 22 infringement; (4) false advertising; (5) trademark dilution by tarnishment; (6) trademark dilution; 23 (7) unfair competition and business practices; (8) false and misleading advertising; (9) unfair 24 competition; (10) intentional interference with prospective economic advantage; and (11) 25 intentional interference with contract. Dkt. No. 1. Plaintiffs seek injunctive relief, monetary 26 damages, restitution, and attorney's fees and costs. Id. 27 Plaintiffs have been attempting to serve Defendant unsuccessfully since May 27, 2015. 28 Mot. for Alternative Service at 1; Dkt. No. 63-1 ("Slenkovich Decl.") ¶ 3. On the same day that 1 they filed their complaint, Plaintiffs attempted to personally serve a copy of the complaint and 2 summons upon Defendant's CEO, Mr. Tao Li, in Mountain View, California, where he was 3 attending a public event. Mot. for Alternative Service at 2; Slenkovich Decl. ¶ 3. However, the 4 summons served upon Mr. Li was not signed by the clerk of the court and did not bear the court's 5 seal. Dkt. No. 25-8; see also Slenkovich Decl. ¶ 6. Accordingly, on October 21, 2015, this Court 6 issued an order quashing service and extending Plaintiffs' deadline to properly effectuate service 7 to February 15, 2016. Dkt. No. 57. 8 On June 11, 2015, shortly after receiving notice that Defendant would challenge Mr. Li's 9 service as ineffective, Plaintiffs initiated service via the Hague Convention on the Service Abroad 10 of Judicial and Extrajudicial Documents in Civil or Commercial Matters, 20 U.S.T. 361, T.I.A.S. 11 No. 6638 (1969) (the "Hague Convention"). Slenkovich Decl. ¶ 4. The parties dispute the events 12 surrounding the Chinese authorities' attempt to serve Defendant at the sole physical address listed Northern District of California United States District Court 13 on Defendant's website — No. 10 Wangjing Street, 42/F Area B, Tower 3, Wangjing SOHO, 14 Chaoyang District, Beijing, China 100015. However, it is undisputed that an individual located at 15 the aforementioned address informed Chinese authorities that they were at the incorrect location to 16 serve "APUS GROUP." See Dkt. 63-6 ("Liu Decl.") ¶ 7; Dkt. 66-4 ("Pan Decl.") ¶¶ 6-8. 17 Thereafter, Chinese authorities attempted to serve Defendant at a second business address, but 18 service was again unsuccessful. See Mot. for Alternative Service at 4; Pan Decl. ¶ 11. 19 Plaintiffs' February 15, 2016, deadline to effectuate service has passed, and service has not 20 been completed to date. On February 8, 2016, Plaintiffs filed the currently pending Motion for 21 Alternative Service. On February 25, 2016, Defendant filed its opposition to Plaintiffs' Motion 22 for Alternative Service and Defendant's cross-Motion to Dismiss. 23 II. DISCUSSION 24 The Court will first analyze Plaintiffs' Motion for Alternative Service before addressing 25 Defendant's Motion to Dismiss. 26 A. Plaintiffs' Motion for Alternative Service 27 Plaintiffs' Motion for Alternative Service requests that the Court (1) permit Plaintiffs to 28 serve the complaint, summons, and associated papers on Defendant via email and by serving 2 1 Defendant's U.S. counsel and (2) extend Plaintiffs' deadline to properly effectuate service. Mot. 2 for Alternative Service at 2. 3 i. Legal Standard 4 "Before a federal court may exercise personal jurisdiction over a defendant, the procedural 5 requirement of service of summons must be satisfied." Omni Capital Int'l v. Rudolf Wolff & Co., 6 484 U.S. 97, 104 (1987). Under Federal Rule of Civil Procedure 4(h), a defendant corporation can 7 be served "at a place not within any judicial district of the United States, in any manner prescribed 8 by Rule 4(f) for serving an individual, except personal delivery under (f)(2)(C)(i)." Fed. R. Civ. 9 P. 4 (h)(2). The relevant subsection of Federal Rule of Civil Procedure 4(f) provides that a foreign 10 defendant may be served outside of the United States "by other means not prohibited by 11 international agreement, as the court orders." Fed. R. Civ. P. 4(f)(3). 12 "[S]ervice under Rule 4(f)(3) must be (1) directed by the court; and (2) not prohibited by Northern District of California United States District Court 13 international agreement." Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1014 (9th Cir. 14 2002). To comport with traditional notions of due process, notice must be "reasonably calculated, 15 under all the circumstances, to apprise interested parties of the pendency of the action and afford 16 them an opportunity to present their objections." Mullane v. Cent. Hanover Bank & Trust Co., 17 339 U.S. 306, 314 (1950); Rio Props., Inc., 284 F.3d at 1016. "[S]ervice under Rule 4(f)(3) is as 18 favored as service available under Rule 4(f)(1) or Rule 4(f)(2)" and is "neither a 'last resort' or 19 'extraordinary relief.'" Rio Props., Inc., 284 F.3d at 1015. It is within the district court's "sound 20 discretion" to determine whether alternative means of service are warranted. Id. at 1016. 21 ii. Analysis 22 Plaintiffs request two forms of alternative service (1) email service and (2) service upon 23 Defendant's U.S. counsel. Mot. for Alternative Service at 2. 24 a. Email Service 25 Defendant is located in China, and China has objected to Article 10 of the Hague 26 Convention, which declares, "[p]rovided the State of destination does not object, the present 27 Convention shall not interfere with. . . the freedom to send judicial documents, by postal 28 channels, directly to persons abroad. . . ." The Hague Convention, art. 10. By its plain language, 3 1 Article 10 does not refer to email service. However, courts in this jurisdiction have disagreed, 2 with different degrees of analysis, as to whether it is practical to distinguish between "postal 3 channels" and email. See e.g., Agha v. Jacobs, No. C 07-1800 RS, 2008 WL 2051061, at *1-2 4 (N.D. Cal. May 13, 2008) (finding plaintiff's "attempt to distinguish email and facsimile from the 5 'postal channels' referred to in the text of Article 10. . . unavailing"); Williams-Sonoma Inc. v. 6 Friendfinder, Inc., 2007 U.S. Dist. LEXIS 31299, 2007 WL 1140639 (N.D. Cal. Apr. 17, 2007) 7 (permitting email service on defendants that had objected to Article 10 of the Hague Convention 8 because plaintiff had demonstrated that "service via email is not prohibited by an international 9 agreement"). 10 The Court need not weigh in on the disagreement between courts in this district because it 11 finds service on Defendant's U.S. counsel to be appropriate. 12 b. Service on Defendant's U.S. Counsel Northern District of California United States District Court 13 "Service upon a foreign defendant's United States-based counsel is a common form of 14 service ordered under Rule 4(f)(3)." Richmond Techs., Inc. v. Aumtech Bus. Sols., No. 11-CV- 15 02460-LHK, 2011 WL 2607158, at *13 (N.D. Cal. July 1, 2011). This form of service on a 16 Chinese defendant is not prohibited under the Hague Convention. See In re Cathode Ray Tube 17 (CRT) Antitrust Litig., 27 F. Supp. 3d 1002, 1010 (N.D. Cal. 2014); see also RSM Prod. Corp. v. 18 Fridman, No. 06 CIV. 11512(DLC), 2007 WL 2295907, at *3 (S.D.N.Y. Aug. 10, 2007) ("The 19 Hague Service Convention does not prohibit an order pursuant to Rule 4(f)(3) permitting service 20 through American counsel."). 21 Service upon Defendant's U.S. counsel is particularly appropriate here because Plaintiffs 22 have been attempting to serve Defendant since May 27, 2015, both through personal service and 23 the Hague Convention. The Court sees no reason to delay this action any longer. Moreover, the 24 Court is confident that service on Defendant's U.S. counsel is reasonably calculated to give 25 Defendant notice of this action and to provide Defendant the opportunity to present its objections. 26 See Mullane, 339 U.S. at 314; Rio Props., Inc., 284 F.3d at 1016. Indeed, Defendant has actual 27 notice of this action, and Mr. Ajay Krishnan of Keker & Van Nest LLP has already presented a 28 number of Defendant's objections through its previously filed motion to dismiss on grounds of 4 1 forum non conveniens, lack of personal jurisdiction, defective service, and failure to state a claim. 2 Dkt. No. 29; see also Richmond Techs., Inc., 2011 WL 2607158, at *13 (finding service upon 3 defendants' United States counsel appropriate because defendants had actual notice of the action 4 and counsel was representing defendants for purposes of contesting personal jurisdiction and 5 opposing substituted service). It also appears that Mr. Krishnan is communicating with 6 Defendant, given Ms. Lin'na Pan's declarations in support of Defendant's Motion to Dismiss. 7 Dkt. No. 68-5. Accordingly, service upon Mr. Krishnan in San Francisco, California comports 8 with due process requirements. 9 Defendant's attempt to distinguish the facts of this case from other cases in which courts 10 have permitted service on an international defendant's U.S. counsel is unavailing. Under clear 11 Ninth Circuit precedent, the only requirements for Rule 4(f)(3) service are that it is (1) directed by 12 the Court and (2) not prohibited by international agreement such as the Hague Convention. See Northern District of California United States District Court 13 Rio Props. 284 F.3d 1007 at 1014. 14 Accordingly, the Court finds that the facts of this case warrant service upon Defendant's 15 U.S. counsel and GRANTS Plaintiffs' Motion for Alternative Service. 16 B. Defendant's Motion to Dismiss 17 In addition to opposing Plaintiffs' Motion for Alternative Service, Defendant moves to 18 dismiss Plaintiffs' complaint for lack of service. Dkt. No. 66. 19 i. Legal Standard 20 In general, "[d]ismissal is not appropriate when there is a reasonable prospect that service 21 may yet be obtained." Chapman v. Teamsters Local 853, No. C 07-1527SBA, 2007 WL 3231736, 22 at *3 (N.D. Cal. Oct. 30, 2007) (citing Umbenhauer v. Woog, 969 F.2d 25, 30 (3d Cir. 1992)); 23 Rodriguez v. Lehigh Sw. Cement Co., No. 14-CV-03537-LHK, 2015 WL 1325528, at *8 (N.D. 24 Cal. Mar. 24, 2015). Further, it is within a district court's "sound discretion" to determine whether 25 dismissal or alternative service is justified. See Stevens v. Sec. Pac. Nat. Bank, 538 F.2d 1387, 26 1389 (9th Cir. 1976) ("The choice between dismissal and quashing service of process is in the 27 district court's discretion."); Rio Props., Inc., 284 F.3d at 1016 (holding that it is within the district 28 court's "sound discretion" to determine when an action requires alternative service). 5 1 ii. Analysis 2 Defendant cites no authority requiring the Court to dismiss this action for failure to 3 effectuate service. See generally Mot. to Dismiss. The Court finds that result would be 4 unreasonably harsh, especially when Plaintiff has been attempting to effectuate service since the 5 inception of the action and service can be completed easily through alternative means. As such, 6 the Court finds dismissal of this action inappropriate and alternative service justified. 7 Accordingly, the Court DENIES Defendant's Motion to Dismiss. 8 III. CONCLUSION 9 For the aforementioned reasons, the Court GRANTS Plaintiffs' Motion for Alternative 10 Service on Defendant's U.S. counsel and DENIES Defendant's Motion to Dismiss. Plaintiffs 11 shall properly effectuate service upon Mr. Ajay Krishnan of Keker & Van Nest LLP in San 12 Francisco, California, within 5 days of the date of this Order. Northern District of California United States District Court 13 The Court takes the previously noticed motion to dismiss on grounds of forum non 14 conveniens, lack of personal jurisdiction, defective service, and failure to state a claim under 15 submission. Dkt. No. 29. 16 17 IT IS SO ORDERED. 18 Dated: 7/28/2016 19 ______________________________________ HAYWOOD S. GILLIAM, JR. 20 United States District Judge 21 22 23 24 25 26 27 28 6