Match Group, LLC v. Bumble Trading Inc.

Western District of Texas, txwd-6:2018-cv-00080

Opposed MOTION to Substitute Service by Match Group, LLC.

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5 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS WACO DIVISION MATCH GROUP, LLC § § § Plaintiff, § § v. § § BUMBLE TRADING INC., BUMBLE § HOLDING, LTD., BADOO TRADING § No. 6:18-cv-00080-ADA LIMITED, MAGIC LAB CO., WORLDWIDE VISION LIMITED, § BADOO LIMITED, BADOO § SOFTWARE LIMITED, and BADOO § JURY TRIAL DEMANDED TECHNOLOGIES LIMITED, § § Defendants. § § BUMBLE TRADING INC. and BUMBLE § HOLDING, LTD., § § Cross-Plaintiffs, v. § § § MATCH GROUP, LLC and § IAC/INTERACTIVECORP., § § § Cross-Defendants. § MATCH GROUP, LLC'S OPPOSED MOTION FOR SUBSTITUTE SERVICE 5 TABLE OF CONTENTS I. INTRODUCTION ................................................................................................................... 1 II. BACKGROUND ..................................................................................................................... 1 III. ARGUMENT........................................................................................................................... 3 A. The Court Has Discretion to Authorize Service via Cooley LLP. ....................................... 3 B. Serving the Non-Bumble Defendants Through Cooley LLP Is Not Prohibited by the Hague Convention (or Any Other International Agreement). .................................. 4 C. Serving the Non-Bumble Defendants via Cooley LLP Comports with Due Process. ......... 6 D. This Court Should Exercise Its Discretion to Allow Alternative Service. .......................... 7 IV. CONCLUSION ....................................................................................................................... 9 i 5 TABLE OF AUTHORITIES Cases Affinity Labs of Texas, LLC v. Nissan N. Am. Inc. No. WA:13-CV-369, 2014 WL 11342502 (W.D. Tex. July 2, 2014)............................. 4, 5, 7, 8 Brown v. China Integrated Energy, Inc. 285 F.R.D. 560 (C.D. Cal. 2012) ................................................................................................ 7 Canal Indem. Co. v. Castillo No. DR-09-CV-43-AM-CW, 2011 WL 13234740 (W.D. Tex. Mar. 30, 2011) ..................... 5, 6 Fundamental Innovation Sys. Int'l, LLC v. ZTE Corp. No. 3:17-CV-01827-N, 2018 WL 3330022 (N.D. Tex. Mar. 16, 2018) ................................. 4, 6 In re Chinese-Manufactured Drywall Prod. Liab. Litig. No. CV 09-02047, 2015 WL 13387769 (E.D. La. Nov. 9, 2015) ........................................... 4, 5 Knit With v. Knitting Fever, Inc. No. CIV.A. 08-4221, 2010 WL 4977944 (E.D. Pa. Dec. 7, 2010) ............................................. 6 Lexmark Int'l, Inc. v. Ink Techs. Printer Supplies, LLC No. 1:10-CV-564, 2013 WL 12178588 (S.D. Ohio Aug. 21, 2013) ........................................... 4 LG Elecs., Inc. v. ASKO Appliances, Inc. No. CIV.A.08-828 (JAP), 2009 WL 1811098 (D. Del. June 23, 2009)...................................... 7 Nabulsi v. H.H. Sheikh Issa Bin Zayed Al Nahyan No. CIV.A. H-06-2683, 2007 WL 2964817 (S.D. Tex. Oct. 9, 2007) ........................................ 5 Nuance Commc'ns, Inc. v. Abbyy Software House 626 F.3d 1222 (Fed. Cir. 2010) ................................................................................................... 6 Prediction Co. LLC v. Rajgarhia No. 09 CIV.7459(SAS), 2010 WL 1050307 (S.D.N.Y. Mar. 22, 2010) ..................................... 6 Richmond Techs., Inc. v. Aumtech Bus. Sols. No. 11-CV-02460-LHK, 2011 WL 2607158 (N.D. Cal. July 1, 2011) ...................................... 5 Rio Props., Inc. v. Rio Int'l Interlink 284 F.3d 1007 (9th Cir. 2002) ..................................................................................................... 5 RSM Prod. Corp. v. Fridman No. 06 Civ. 11512(DLC), 2007 WL 2295907 (S.D.N.Y. Aug. 10, 2007) .................................. 5 ii 5 Sheets v. Yamaha Motors Corp., U.S.A. 891 F.2d 533 (5th Cir. 1990) ....................................................................................................... 4 WorldVentures Holdings, LLC v. Mavie No. 4:18CV393, 2018 WL 6523306 (E.D. Tex. Dec. 12, 2018) ........................................ 5, 6, 8 Rules Fed. R. Civ. P. 1 .............................................................................................................................. 8 Fed. R. Civ. P. 4(f) ...................................................................................................................... 3, 5 Fed. R. Civ. P. 4(f)(1) ..................................................................................................................... 5 Fed. R. Civ. P. 4(f)(2) ..................................................................................................................... 5 Fed. R. Civ. P. 4(f)(3) ......................................................................................................... 4, 5, 6, 8 Fed. R. Civ. P. 4(h) ......................................................................................................................... 3 Fed. R. Civ. P. 4(h)(2)..................................................................................................................... 3 iii 5 I. INTRODUCTION Match's case against Bumble and Bumble Holding, Ltd. (collectively, the "Bumble Defendants")—and more significantly, the Bumble Defendants' claims against Match and IAC— intimately involves Bumble's parent companies Badoo Trading Ltd. ("Badoo Trading") and Worldwide Vision Ltd. ("Worldwide Vision"), as well as affiliated companies Badoo Limited, Badoo Software Ltd., and Badoo Technologies Ltd.. Bumble Holding, Ltd. is owned by Badoo Trading Ltd. Dkt. 100 ¶ 84. Badoo Ltd., Badoo Software Ltd., and Badoo Technologies Ltd. are also all owned by Worldwide Vision and have been involved with the creation and operation of the Bumble app. Id. ¶ 83. Worldwide Vision and Badoo Trading have the same in-house counsel, and, on information and belief, the remaining non-Bumble entities do as well. Each of these entities has retained Cooley LLP as outside counsel to represent them in this case. Ex. A. Despite the non-Bumble Defendants controlling this litigation and retaining the same counsel as the Bumble Defendants, the non-Bumble Defendants have "not authorized" their U.S. counsel Cooley to accept service of Match's Fourth Amended Complaint. Id. Cooley has disclosed no basis for this decision not to authorize service, leading to the conclusion that it is based on Bumble and the non-Bumble Defendants' collective desire to increase costs, delay the lawsuit, and otherwise litigate on issues other than the merits by seeking to force Match to proceed through expensive and lengthy international procedures for service of process through the Hague Convention. For the reasons discussed in further detail below, Match asks the Court, in its discretion, to permit alternative service through the non-Bumble Defendants' counsel, Cooley. II. BACKGROUND The Bumble Defendants are subsidiaries of a group of companies owned by Worldwide Vision. The majority of Bumble Holding, Ltd. is owned by Badoo Trading, which in turn is owned 1 5 by Worldwide Vision. Badoo Ltd., Badoo Software Ltd., and Badoo Technologies Ltd. are also all owned by Worldwide Vision and are involved with the creation and distribution of technology involved in the operation of the Bumble app. Dkt. 100 ¶¶ 83-85. And as the Court is aware, Worldwide Vision, not Bumble, was the primary entity negotiating in the acquisition discussions underpinning Bumble's State Law Counterclaims in this case. See, e.g., Dkts. 78-5; 78-6. Indeed, Bumble's State Law Counterclaims hinge largely on information obtained from entities other than Bumble. Dkt. 66 at ¶¶ 75-678. Each of these entities is ultimately controlled by Andrey Andreev.1 Dkt. 100 ¶¶ 83-85; see also Dkt. 99 ¶¶ 50-54. When discovery opened in this case and it became clear that information from Bumble's parent companies and members of the Worldwide Vision group were critical to Match's claims and defenses in this case, Match proposed obtaining this information without expanding the scope of parties in this case. Specifically, Match proposed that: (1) Bumble would agree that the information housed with these entities, including witnesses, was within Bumble's custody and control and would be made available to Match without the need for international subpoenas; and (2) the remaining entities would agree to be bound by any judgment against Bumble on Bumble's State Law Counterclaims. Ex. B. Match offered to do the same for information residing with its parent company, Match Group, Inc. Ex. C. Match proposed this deal in part because it knew that "Badoo" was directing this litigation on behalf of Bumble, making Badoo-housed discovery easily obtained, and obtaining express agreement that these Badoo entities would not raise essentially 1 In a Forbes Magazine article appearing in the August 31, 2019 issue, the entire corporate structure, all lead by Andrey Andreev, was described by former employees as "a Byzantine corporate structure revolving around tax avoidance, that encompasses subsidiaries in places ranging from Cyrus to the British Virgin Islands, with strategy meetings in Malta thrown in for good measure." Angel Au-Yeung, Exclusive Investigation: Sex, Drugs, Misogyny And Sleaze At The HQ Of Bumble's Owner, https://www.forbes.com/sites/angelauyeung/2019/07/08/exclusive- investigation-sex-drugs-misogyny-and-sleaze-at-the-hq-of-bumbles-owner/#3526e4263080. 2 5 identical claims once Bumble's counterclaims fail is important to bring clarity to the parties' respective rights. Bumble rejected the deal. Match then added the non-Bumble Defendants in its Fourth Amended Complaint. After Match filed the Fourth Amended Complaint, Match asked the Bumble Defendants' counsel of record at Cooley to accept service, just as Match's counsel of record accepted service, upon request from Cooley, for IAC. Ex. A; Ex. D. Cooley initially responded that it did not represent the non-Bumble Defendants. Ex. A. Given Cooley's representation that did not represent the non-Bumble Defendants, Match requested that Cooley disclose all communications it had with the non-Bumble Defendants. Id. When pressed, however, Cooley then responded that they in fact had just been retained to represented the non-Bumble Defendants after all. Id. Yet, despite the non-Bumble Defendants' awareness of the Fourth Amended Complaint, retention of Cooley for purposes of defending against it, and Match's counsel's previous acceptance of service for IAC, the non-Bumble Defendants have not "authorized" Cooley to accept service. Id. III. ARGUMENT A. The Court Has Discretion to Authorize Service via Cooley LLP. Federal Rule of Civil Procedure 4(h) governs service of process upon a foreign entity. Rule 4(h)(2) authorizes service of process in the same "manner as prescribed by Rule 4(f) for serving an individual, except personal delivery." Fed. R. Civ. P. 4(h)(2). Federal Rule of Civil Procedure 4(f) provides three methods to serve a foreign entity: (1) "by any international agreed means of service. . . such as those authorized by the Hague Convention," (2) "if there is no internationally agreed means, or if an international agreement allows but does not specify other means," service is proper according to the foreign country's laws, or (3) "by other means not prohibited by international agreement, as the court orders." Fed. R. Civ. P. 4(f). 3 5 The Court has "considerable discretion to authorize an alternative means of service" in accordance with Federal Rule of Civil Procedure 4(f)(3). Affinity Labs of Texas, LLC v. Nissan N. Am. Inc., No. WA:13-CV-369, 2014 WL 11342502, at *1 (W.D. Tex. July 2, 2014); see also Fundamental Innovation Sys. Int'l, LLC v. ZTE Corp., No. 3:17-CV-01827-N, 2018 WL 3330022, at *5 (N.D. Tex. Mar. 16, 2018) (determining whether alternative service is warranted "is placed squarely within the sound discretion of the district court"); In re Chinese-Manufactured Drywall Prod. Liab. Litig., No. CV 09-02047, 2015 WL 13387769, at *4 (E.D. La. Nov. 9, 2015) ("The decision whether to allow alternative methods of serving process under Rule 4(f)(3) is committed to the sound discretion of the district court."). Upon determining alternative service is appropriate, the Court need only find the method of service (1) is not prohibited by international agreement, and (2) comports with the Constitutional notions of due process. Lexmark Int'l, Inc. v. Ink Techs. Printer Supplies, LLC, No. 1:10-CV-564, 2013 WL 12178588, at *2 (S.D. Ohio Aug. 21, 2013); see also Affinity Labs, 2014 WL 11342502 at *2-4 (discussing the justifications for the plaintiff requesting an alternative method of service that complied with due process). B. Serving the Non-Bumble Defendants Through Cooley LLP Is Not Prohibited by the Hague Convention (or Any Other International Agreement). The Hague Convention does not prohibit serving Cooley LLP because service does not require transmitting documents internationally. While each of the Defendants are located in countries that are signatories to the Hague Convention, they may only insist on service pursuant to the Hague Convention where its terms apply. Sheets v. Yamaha Motors Corp., U.S.A., 891 F.2d 533, 537 (5th Cir. 1990). "[S]ervice pursuant to the Hague Convention procedures is required only if the method of serving process involves the transmittal of documents abroad." Sheets, 891 F.2d at 537 (emphasis added); Affinity Labs 2014 WL 11342502 at *1. 4 5 Where the procedures set forth in the Hague Convention are not mandatory—i.e., where, as here, domestic service is requested—Fifth Circuit courts have consistently held there is no hierarchy amongst the subsections in Rule 4(f). Thus, "a plaintiff does not have to attempt to effect service under Rule (f)(1) or Rule (f)(2) prior to requesting the authorization of an alternative method of service pursuant to Rule 4(f)(3)." Affinity 2014 WL 11342502, at *1. 2 Notably, "[n]othing in the Hague Convention prohibits [service on a foreign defendant's United States- based counsel]." Id. at 3, 5; see also Richmond Techs., Inc. v. Aumtech Bus. Sols., No. 11-CV- 02460-LHK, 2011 WL 2607158, at *13 (N.D. Cal. July 1, 2011) ("Nothing in the Hague Convention prohibits such service."); RSM Prod. Corp. v. Fridman, No. 06 Civ. 11512(DLC), 2007 WL 2295907, at *3 (S.D.N.Y. Aug. 10, 2007) ("The Hague Service Convention does not prohibit an order pursuant to Rule 4(f)(3) permitting service through American counsel."). Here, Match seeks to serve the non-Bumble Defendants through their domestic counsel, Cooley LLP, in 2 See also Canal Indem. Co. v. Castillo, No. DR-09-CV-43-AM-CW, 2011 WL 13234740, at *2 (W.D. Tex. Mar. 30, 2011) (finding "a plaintiff need not demonstrate futility under Rule 4(f)(1) and the Hague Convention before seeking judicial relief pursuant to Rule 4(f)(3)"); Nabulsi v. H.H. Sheikh Issa Bin Zayed Al Nahyan, No. CIV.A. H-06-2683, 2007 WL 2964817, at *4 (S.D. Tex. Oct. 9, 2007) (recognizing that "Rule(f) does not denote any hierarchy or preference for one method of service over another"); In re Chinese-Manufactured Drywall, 2015 WL 13387769 at *4 (concluding that "[s]erving a foreign entity "under Rule 4(f)(3) is 'neither a last resort nor extraordinary relief." (quoting Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1015 (9th Cir. 2002)); see WorldVentures Holdings, LLC v. Mavie, No. 4:18CV393, 2018 WL 6523306, at *14 (E.D. Tex. Dec. 12, 2018) ("[C]ourts routinely direct service on an international defendant's counsel under Rule 4(f)(3)."). 5 5 accordance with Federal Rule of Civil Procedure 4(f)(3). Because this does not require transmittal of documents abroad, the Hague Convention does not apply. C. Serving the Non-Bumble Defendants via Cooley LLP Comports with Due Process. Because service through Cooley does not conflict with any international agreement, service is permissible so long as it complies with due process. Courts have consistently found serving a foreign entity's retained US counsel comports with Constitutional due process.3 This method comports with due process because "service on a party's counsel erases any 'material doubt that [a defendant] will be provided notice of th[e] suit." WorldVentures, 2018 WL 6523306 at *14; see Canal Indem. Co., 2011 WL 13234740 at *2 (finding where counsel is actively representing the foreign entity, he or she "has sufficient contact with the defendant to ensure" notice of the pending action). Here, the Bumble Defendants have asserted claims against Match and IAC that rightfully belong to at least some of the non-Bumble Defendants, and the non-Bumble Defendants retained Cooley LLP to represent them in the current case. The non-Bumble Defendants are 3 See e.g., Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1239 (Fed. Cir. 2010) ("[F]ederal law plainly permits service on Defendants' domestic subsidiaries or domestic counsel."); Fundamental Innovation Sys., 2018 WL 3330022 at *5 (holding although subsidiary, ZTE USA, was not the alter ego of foreign parent company, ZTE Corporation, alternative service of process on ZTE Corporation's US counsel who also served as counsel for ZTE USA was proper as the foreign entity was already aware of the action's pendency); Canal Indem. Co. v. Castillo, No. DR-09-CV-43-AM-CW, 2011 WL 13234740, at *2 (W.D. Tex. Mar. 30, 2011) ("[S]erving a defendant's attorney comports with due process and foreign law considerations, and is therefore permitted under Rule 4(f)(3)."); Knit With v. Knitting Fever, Inc., No. CIV.A. 08-4221, 2010 WL 4977944, at *4 (E.D. Pa. Dec. 7, 2010) (finding "service upon a foreign defendant through counsel is appropriate" in order to prevent delay in the litigation); Prediction Co. LLC v. Rajgarhia, No. 09 CIV.7459(SAS), 2010 WL 1050307, at *1 (S.D.N.Y. Mar. 22, 2010) ("Trial courts have authorized a wide variety of alternative methods of service including. . . delivery to the defendant's attorney. . . ."). 6 5 undeniably controlling this case, have actual knowledge of the pending action against them, and have already retained domestic counsel. D. This Court Should Exercise Its Discretion to Allow Alternative Service. As discussed above, the Court may allow alternative service in this circumstance. And the Court should exercise its power to do so. Courts across the country allow alternative service to avoid delays and costs inherent in international service. See Affinity Labs, 2014 WL 11342502 at *4 ("[S]aving time and expenses are valid reasons to request an alternative method of service."); Brown v. China Integrated Energy, Inc., 285 F.R.D. 560, 563 (C.D. Cal. 2012) (finding alternative service was proper when service through the Hague Convention "could take four to six months"); LG Elecs., Inc. v. ASKO Appliances, Inc., No. CIV.A.08-828 (JAP), 2009 WL 1811098, at *4 (D. Del. June 23, 2009) (holding service upon the defendant's attorney was necessary to prevent delay in the litigation). Avoidance of those unnecessary delays and expenses is precisely what Match seeks here. One entity, Badoo Software Ltd., is located in Malta, a country that has only recently adopted the Hague Convention and likely will take at least 6 months and up to a year simply to be served with the complaint. Thus, absent alternative service, Badoo Software Ltd. likely would not even been served prior to the close of fact discovery. Another entity, Badoo Technologies Ltd., is located in Cyprus. Despite its role in the English-speaking Worldwide Vision group, service in Cyprus would force Match to engage in costly translation services for its complaint and accompanying exhibits. Other of the non-Bumble Defendants could be served in one or two months, but only with costly fees for expediting the process, and even a month is still significant 7 5 with the current fact discovery schedule.4 The location of Magic Lab Co., meanwhile, is presently unknown.5 Delaying service in this way could also potentially undermine the Court's intention to complete trial before any IPR Final Written Decision concerning the Asserted Patents is due. This is precisely the situation where courts exercise their Rule 4(f)(3) discretion. See e.g., WorldVentures, 2018 WL 6523306 at *14 (finding that because Federal Rule of Civil Procedure 1 calls for the federal rules to be construed to "secure the just, speedy, and inexpensive determination of every action and proceeding," avoiding expense and delay are valid reasons to allow alternative service on a party's counsel); Affinity Labs, 2014 WL at *1-2 (finding avoiding wasting additional time and expenses are valid reasons to request an alternative method of service). Beyond avoidance of delays and costs, the Court should also exercise its discretion to allow alternative service in light the non-Bumble Defendants' control of this litigation throughout the process. But even putting that aside, alternative service is particularly appropriate here in light of the non-Bumble Defendants' active knowledge of and participation in this litigation far before Match's Fourth Amended Complaint. Of the non-Bumble Defendants, Badoo Software Ltd., Badoo Trading Ltd., and Badoo Ltd. are listed as real-parties-in-interest of Bumble Trading Inc.'s IPR petitions. And throughout the case, Match has communicated about this case with Badoo- affiliated individuals, including Mariko O'Shea—Head of Legal and Compliance for at least Badoo Trading and Worldwide Vision and, on information belief, all of the non-Bumble Defendants—and Idan Wallichman, Chief Financial Officer of "Badoo" and designated 4 Nevertheless, Match has begun the process to service at least Badoo Trading, Ltd., Badoo Ltd., and Worldwide Vision, Ltd. through the Hague procedures to ameliorate any delays were the Court to decline to allow substitute service. 5 Cooley has stated that it "understand[s] there is no entity named Magic Lab Co." Yet a press release available on magiclab.co stated that the entity was created and contains contact information from a magiclab.co e-mail address. Ex. E. 8 5 representative of Worldwide Vision for purposes of the acquisition discussions at issue in Bumble's State Law Counterclaims. Bumble's State Law Counterclaims also arise from acquisition discussions between Match Group, Inc. and Worldwide Vision for the sales of all Bumble and Badoo entities under the Worldwide Vision umbrella. See Dkts. 78-5; 78-6. Indeed, Bumble's accusations underpinning those counterclaims hinge in large part from information Bumble obtained from Mr. Wallichman and Mr. Andreev, two representatives of the non-Bumble Defendants, highlighting these entities long-time involvement with this case. Dkt. 66 at ¶¶ 75-78. In light of the intimate involvement of these representatives of the non-Bumble Defendants throughout this case, their refusal to "authorize" Cooley to accept service here reflects nothing but pure gamesmanship. This is particularly disheartening considering that all parties have "a duty to avoid unnecessary expenses of serving the summons." Fed. R. Civ. P. 4(d). Given this procedural posturing, the Court should exercise its discretion to permit alternative service of the non-Bumble Defendants through their domestic counsel, Cooley LLP. IV. CONCLUSION For the reasons stated above, Match requests this Court order service of the summons and complaint through the Defendants' United States counsel, Cooley LLP. 9 5 DATED: August 14, 2019 Respectfully submitted, CALDWELL CASSADY & CURRY By: /s/ Bradley W. Caldwell Bradley W. Caldwell Texas State Bar No. 24040630 Email: bcaldwell@caldwellcc.com John F. Summers Texas State Bar No. 24079417 Email: jsummers@caldwellcc.com Warren J. McCarty, III Texas State Bar No. 24107857 Email: wmccarty@caldwellcc.com CALDWELL CASSADY CURRY P.C. 2101 Cedar Springs Road, Suite 1000 Dallas, Texas 75201 Telephone: (214) 888-4848 Facsimile: (214) 888-4849 John P. Palmer State Bar. 15430600 Email: palmer@namanhowell.com Naman, Howell, Smith & Lee, PLLC 400 Austin Avenue, 8th Floor P.O. Box 1470 Waco, TX 76701 Telephone: (254) 755-4100 Facsimile: (254) 754-6331 ATTORNEYS FOR PLAINTIFF MATCH GROUP, LLC and IAC 5 CERTIFICATE OF SERVICE The undersigned certifies that the foregoing document was filed electronically with the Clerk of Court using the CM/ECF system which will send notification of such filing to all counsel registered as Filing Users on this 14th day of August, 2019. /s/ Bradley W. Caldwell Bradley W. Caldwell CERTIFICATE OF CONFERENCE On August 14, 2019, I e-mailed with Matt Caplan, counsel for the Bumble Defendants and the non-Bumble Defendants. Mr. Caplan informed me that the motion was opposed. /s/ John F. Summers John F. Summers 2