Serenium, Inc. v. Zhou

Background

Serenium, Inc. sued Jason Zhou, Jia Xiaofeng, Juan Zhao, New Century Healthcare Holding Co. Limited, and Beijing Jiarun Yunzhong Health Technology Company Ltd. Serenium alleges that it disclosed proprietary sleep-apnea technology during negotiations under a nondisclosure agreement, that the proposed business relationship did not proceed as agreed, and that defendants refused to return the technology. Serenium further alleges that defendants used the technology to compete with it. The opinion does not decide those underlying claims.

Serenium said it had been unable to serve the defendants despite efforts to contact them by email, search for them online, hire a private investigator, and obtain assistance from lawyers specializing in international service. Serenium stated that service in China could take a year or longer and that service in the Cayman Islands was impossible during a hard COVID-19 lockdown. The opinion states that Zhou and Jia had counsel make a limited appearance to oppose the application, giving defendants actual notice of the application.

Serenium’s Request and Defendants’ Opposition

Serenium requested permission under Federal Rule of Civil Procedure 4(f)(3) to use alternative service methods. That rule allows a federal court to order a method of serving an individual in a foreign country when the method is not prohibited by an international agreement and is reasonably calculated to provide notice. Serenium proposed serving Zhou and Jia by WeChat message and email; New Century by certified mail to its corporate agent, through the agent’s email address, and through Zhou; Beijing Jiarun through Jia; and Zhao through Zhou. Serenium also requested a 90-day extension to complete service.

Defendants argued that the application was procedurally improper and lacked sufficient grounds for emergency relief. They also argued that Serenium should use formal procedures under the Hague Convention on service abroad or accept substitute service through defendants’ U.S. counsel. Defendants separately requested translated documents and asked that service not become effective until at least three weeks after the translations were provided.

Court’s Analysis

The court rejected the procedural objection. It reasoned that defendants had actual notice and had opposed the application through counsel, so the application was not truly a motion filed without notice. The court also concluded that Serenium had provided a declaration describing its efforts to give notice and explaining why alternative service was needed. The declaration stated that company filings suggested Zhou might take New Century private, potentially causing the company’s assets to disappear into China and leaving it unable to pay a judgment.

The court found the application meritorious. Based on Serenium’s counsel’s declaration, the court stated that defendants may have been deliberately evading service. It concluded that the proposed methods were reasonably calculated to inform defendants of the lawsuit and were not prohibited by international law. The court stated that the Hague Convention did not apply to the individual defendants because their addresses were unknown. For New Century, the court concluded that certified mail to its Cayman Islands agent was not prohibited because the Cayman Islands had not objected to the relevant provision of the Convention. The court also relied on its prior conclusion that electronic service on China-based defendants was not prohibited by the Convention.

The court declined to require a three-week delay before service became effective because defendants had not shown good cause for that delay. It did, however, require Serenium to provide English-language documents and certified Chinese translations because the record did not clearly establish that all defendants were proficient in English.

Order and Disposition

The court granted Serenium’s application. It granted Serenium a 90-day extension to complete service. Subject to providing both the English versions and certified Chinese translations of the summons, first amended complaint, and cover letter, the court authorized service as follows:

- Jason Zhou: by WeChat message and email. - Jia Xiaofeng: by WeChat message and email. - New Century Healthcare Holding Co. Limited: by certified mail to its corporate agent’s address, through the agent’s email address, and through its chief executive officer, Jason Zhou, using the methods authorized for him. - Beijing Jiarun Yunzhong Health Technology Company Ltd.: through its chief executive officer, Jia Xiaofeng, using the methods authorized for him. - Juan Zhao: through her husband, Jason Zhou, using the methods authorized for him.

The order also states that the application terminated docket entry 18.