Opinion
Civil Action No. 02-3121, (Refers to 02-3133, 02-3242, 02-3276, 02-3327), Section "A"(1).
March 12, 2003
ORDER AND REASONS
Before the Court are four Rule 12(b) Motions to Dismiss (Rec. Docs. 112, 113, 114 115) filed by Canadian National Railway Company. Defendant Canadian National Railway Company ("CNR") moves to dismiss Plaintiffs' claims pursuant to Rule 12(b)(2) and (5) on the grounds of insufficiency of service of process and lack of personal jurisdiction. The Downing and Cook plaintiffs oppose the motions in Civil Actions 02-3242 and 02-3276, respectfully. The motions, taken under advisement on February 13, 2003, are before the Court on the briefs without oral argument.
CA 02-3242 (Downing plaintiffs); CA 02-3133 (Harrell plaintiffs); CA 02-3276 (Cook plaintiffs); CA 02-3327 (Walker plaintiffs).
Background
Plaintiffs have asserted individual and class claims against CNR and CN/IC (Canadian National/Illinois Central Railroad) arising out of the October 12, 2002, train derailment in Amite, Louisiana. CN/IC has answered Plaintiffs' petition and admits that it operated the train and had custody of the tracks at the time of the derailment.
CNR is a Canadian company chartered by the Canadian government. CNR asserts that it has no direct ownership interest in CN/IC and that it does no direct business with the state of Louisiana. CNR has no registered agent for service of process in Louisiana.
In Civil Action 02-3242, the Downing plaintiffs attempted to serve CNR via mail at CNR's business office in Montreal, Quebec. CNR asserts that the attempted service was insufficient under the Federal Rules of Civil Procedure and the Hague Convention.
In Civil Action 02-3276, the Cook plaintiffs attempted to serve CNR via mail at CN/IC's business office in Jackson, Mississippi. CNR asserts that the attempted service was ineffective because CNR and CN/IC are distinct legal entities. CNR also argues that service on CNR by mail via the Louisiana long-arm statute does not comply with the Federal Rules and the Hague Convention.
In Civil Actions 02-3133 and 02-3327, the Harrell and Walker plaintiffs attempted to serve CNR through CN/IC's Louisiana agent for service of process. CNR argues that service upon CN/IC's agent was ineffective because CNR and CN/IC are distinct legal entities. CNR also argues that service on CNR by mail via the Louisiana long-arm statute does not comply with the Federal Rules and the Hague Convention.
The Harrell and Walker plaintiffs did not file oppositions to CNR's motions.
Finally, CNR argues that it lacks the requisite minimum contacts with this forum for this Court to exercise personal jurisdiction.
Service of Process
a. Civil Action 02-3242, (Downing)
CNR argues that service on its Montreal office via mail fails to comply with federal law. CNR asserts that because it is a federally chartered Canadian corporation operating outside of the United States, it cannot be served via the normal mailing procedures for corporations provided for in Federal Rule 4(h)(1). Rather, CNR must be served in accordance with the Hague Convention because Canada is a signatory party.
The Downing plaintiffs concede that mail service upon CNR's Montreal office was improper. Therefore, they are currently attempting to serve CNR via CN/IC's Jackson, Mississippi office. They therefore adopt the arguments in opposition made by the Cook plaintiffs, as explained below. b. Civil Action 02-3276, (Cook)
By letter to the Court dated February 18, 2003, counsel for CNR has objected to the Downing plaintiffs' filing of a supplemental memorandum in opposition to CNR's motion. It is via this supplemental memorandum that the Downing plaintiffs attempt to adopt the Cook plaintiffs' arguments.
CNR argues that service upon CN/IC is ineffective as to CNR because CN/IC, although a subsidiary of CNR, is a distinct legal entity. Further, CNR argues that even if service upon CN/IC was effective against CNR, service via the Louisiana long-arm statute does not comply with the Hague Convention. Because CNR is located in Canada, and because Canada is a signatory to the Hague Convention, its terms trump inconsistent means of service available under Louisiana law.
In opposition, the Cook plaintiffs argue that service upon CN/IC's Mississippi office via the Louisiana long-arm statute, La. R.S. 13:3201, is proper under Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 108 S.Ct. 2104, 100 L.Ed.2d 722 (1988). The Cook plaintiffs assert thatSchlunk makes service pursuant to the Hague Convention optional where the forum state's long-arm statute alternatively satisfies the Convention's goals.
In reply, CNR asserts that the holding in Schlunk is not so broad but rather only permits service in lieu of the Hague Convention where the forum state's law renders the subsidiary an "involuntary agent for service of process" upon the foreign parent. CNR asserts that there is no authority recognizing involuntary agent status in Louisiana. Moreover, even if such status was applicable, service would still be ineffective because CN/IC has an agent for service of process in Louisiana. Thus, service in Mississippi would still be invalid.
c. Law and Analysis
Service upon a corporation in a foreign country may be effected "by any international agreed means reasonably calculated to give notice, such as those means authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents." FRCP 4(f); 4(h)(2). The Hague Convention, where applicable, preempts inconsistent methods of service prescribed by state law. Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 699, 108 S.Ct. 2104, 2108, 100 L.Ed.2d 722 (1988). The Fifth Circuit interprets the Convention so as to preclude service by mail. Nuovo Pignone, SpA v. Storman Asia M/V, 310 F.3d 374, 384 (2002). Defendants of signatory countries can insist on service pursuant to the Hague Convention where it applies. See Sheets v. Yamaha Motors Corp., 891 F.2d 533, 537 (5th Cir. 1990).
In so concluding, the Fifth Circuit recognized the split among the circuit courts on the issue but nonetheless found persuasive the reasoning employed by those courts finding that the Convention does not allow for service by mail. Nuovo Pignone, 310 F.3d at 383-84.
Regardless of whether the defendant is located outside of the United States, service upon a subsidiary is generally insufficient to effect service upon a parent corporation. Wright Miller, 4A Federal Practice Procedure § 1104, at 592 (2002); see Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634 (1925). Absent evidence that the corporations are not independently operated, the legal distinctness of the legal entities will be preserved. See Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159-60 (5th Cir. 1983). Of course, where the subsidiary is the agent or alter ego of the parent, service upon the subsidiary can be effective against the parent. See Id.
Based on the foregoing, the Court concludes that service upon CN/IC within the United States is not sufficient service as to CNR, which is located within the borders of Canada. As noted above, service upon a subsidiary is generally ineffective against a parent corporation. Although under certain facts, such as those that might permit piercing of the corporate veil, service upon the subsidiary will be effective, Plaintiffs have submitted no evidence to suggest that CNR and CN/IC have done anything so as to deprive themelves of the legal distinctness to which they are otherwise entitled. This is true regardless of where the two corporations are located.
Even more problematic, however, is Plaintiffs' failure to serve CNR in accordance with the Hague Convention. Canada is a signatory country to the Hague Convention and CNR is located within Canada's borders. The Convention provides for service upon the designated Canadian Central Authority and service through other diplomatic or judicial persons. See Convention arts. 8 9, 1969 WL 97765. Clearly, Plaintiffs' attempt to serve CNR via CN/IC's Mississippi or Louisiana offices is not in compliance with the Hague Convention.
Contrary to Plaintiffs' assertion, the Schlunk case does not allow Plaintiffs to resort to service under state law as a way of circumventing the Convention's requirements. Nor does Schlunk stand for the broad proposition that service upon a subsidiary in this country is effective against a foreign parent corporation. The Hague Convention only applies "where there is occasion to transmit a judicial or extrajudicial document for service abroad." Schlunk, 486 U.S. at 699, 108 S.Ct. at 2108 (citing 20 U.S.T. at 362). Schlunk merely recognizes that when the law of the forum state deems the local subsidiary as the parent's agent, then service on the parent can be made locally thereby eliminating the need to transmit documents abroad. In such a case, where no documents need be transmitted abroad, then the Convention, pursuant to its express terms, does not apply.
Thus, the Schlunk plaintiffs had two options for service upon the parent corporation: Plaintiffs could either serve the local subsidiary, as agent for the parent, or plaintiffs could serve the parent directly. The first option would not implicate the Hague Convention since no documents were being transmitted abroad but the second option clearly would since the parent was not located within the United States. In Schlunk, however, the key to determining whether service abroad could be avoided was the state law of the forum.
In Schlunk, the local subsidiary was deemed, by operation of Illinois state law, to be the involuntary agent of the parent. Thus, the key ingredient that must be present in order for Plaintiffs to avail themselves of Schlunk is a provision under Louisiana state law which would involuntarily "transform" CN/IC into CNR's agent for service of process. As CNR points out, there is no support for such a concept under Louisiana law and the Fifth Circuit has yet to address the issue. Plaintiffs' reliance on Schlunk is therefore misplaced.
In sum, defendants CNR and CN/IC are distinct legal entities, each entitled to proper service of process. Because service upon CNR will require the transmission of judicial documents abroad, CNR is entitled to require service pursuant to the Hague Convention. Plaintiffs have failed to do so and CNR is therefore entitled to dismissal.
Given that Defendants are entitled to dismissal on the sufficiency of service of process issue, the Court declines to foray into the personal jurisdiction quagmire until such time as CNR is properly served.
Accordingly;
IT IS ORDERED that the Rule 12(b) Motions to Dismiss (Rec. Docs. 112, 113, 114 115) filed by Canadian National Railway Company should be and are hereby GRANTED. Plaintiffs' claims against defendant CNR in Civil Actions 02-3133, 02-3242, 02-3276, 02-3327 are DISMISSED WITHOUT PREJUDICE due to Plaintiffs' failure to properly serve CNR.