In Search of Monsters Abroad: Serving Summonses on Foreign Organizations under Rule 4 and Fifth Amendment Due Process

By Druding, Kyle M. | Duke Law Journal, December 2014 | Go to article overview

In Search of Monsters Abroad: Serving Summonses on Foreign Organizations under Rule 4 and Fifth Amendment Due Process


Druding, Kyle M., Duke Law Journal


ABSTRACT

Recently, federal prosecutors' increased interest in criminally charging foreign organizational defendants has revealed a "jurisdictional gap" in Rule 4 of the Federal Rules of Criminal Procedure. Rule 4, which has operated largely unchanged since its adoption in 1944, requires that a copy of a compulsory summons be served on an organizational defendant by mailing it either to the defendant's "last known address" in the relevant district or to its "principal place of business elsewhere in the United States. " The courts have divided over how to confront jurisdictional challenges brought by certain foreign corporations--those without domestic principal places of business and addresses--that appear to be legally incapable of receiving service. As it stands, the jurisdictional gap threatens to effectively immunize large swaths of illegality over which the United States would otherwise have jurisdiction. The Department of Justice and the Advisory Committee on Rules of Criminal Procedure have responded to this concern with dueling proposals to close Rule 4's jurisdictional gap.

This Note agrees that the jurisdictional gap should be closed, but in a narrowly fashioned manner. Relaxing the service regime for foreign organizational defendants too much may enable, for the first time, prosecutions of wholly extraterritorial conduct that would violate the Fifth Amendment's Due Process Clause. This Note sketches the contours of such a case, and concludes that any risk is best cabined by reasonably limited means of service under Rule 4 coupled with the responsible exercise of prosecutorial discretion.

INTRODUCTION

America, in the assembly of nations, since her admission among them, has invariably, though often fruitlessly, held forth to them the hand of honest friendship, of equal freedom, of generous reciprocity.... But she goes not abroad, in search of monsters to destroy. (1)

An ongoing contract dispute involving alleged violations of intellectual property and trade secrets against an American corporation by a Chinese state-owned enterprise has evolved into an extraterritorial federal criminal prosecution, garnering serious political attention. AMSC, formerly American Superconductor, has accused the Beijing-based Sinovel Wind Group (Sinovel) of offering an AMSC employee an employment contract worth more than $1.5 million in exchange for illegally procuring protected source code for the operation of wind turbines. (2) The pirated software was then reimported for use in four wind turbines located mere miles from AMSC headquarters in Devens, Massachusetts, allegedly costing AMSC more than $1 billion and forcing it to shrink its worldwide staff by five-hundred employees. (3)

Four civil suits based on this pirating were filed in China but stalled for years, and Chinese officials declined to prosecute. (4) The U.S. Department of Justice (DOJ) stepped in to indict Sinovel on charges of conspiracy, trade-secret violations, and wire fraud. (5) Secretary of State John Kerry, then the senior senator from Massachusetts, characterized the controversy as "a mugging in broad daylight and a real test of China's commitment to the rule of law." (6) The Sinovel-AMSC incident, however, is not an isolated case. The U.S. International Trade Commission estimated that in 2009 alone, similar "muggings in broad daylight" by Chinese companies cost the U.S. economy $50 billion and 900,000 jobs. (7)

Whatever the underlying merits of the DOJ's charges in this case, an obscure procedural hurdle may prevent it and similar prosecutions from moving forward in federal court. Sinovel specially appeared to quash the government's efforts to serve it process pursuant to Rule 4 of the Federal Rules of Criminal Procedure (Rule 4). (8) For organizational defendants, Rule 4 requires the government to personally serve an officer or agent and to mail a copy of the summons to the defendant's "last known address within the district" or "its principal place of business elsewhere in the United States. …

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