California Beach Co., LLC v. Exqline, Inc.

Background

California Beach Co., LLC (CBC) alleged that it was the exclusive distributor of the POP N GO PLAYPEN® and that Exqline, Inc. sold a knockoff playpen in the United States through its website and online marketplaces. CBC’s complaint asserted patent-infringement, trademark-infringement, California Unfair Competition Law, and California False Advertising Law claims against Exqline and Shopify Inc.

CBC made several unsuccessful attempts to serve Exqline at listed addresses in Chicago and Chino. The businesses at those locations reportedly did not appear to be Exqline. CBC also asked Jeffrey Yee, identified as Exqline’s U.S. counsel, to accept service. Yee said he was not authorized to accept service, but he later communicated with CBC’s counsel on Exqline’s behalf about resolving the case and confirmed that Exqline knew about the complaint.

CBC made several unsuccessful attempts to serve Shopify at its Canadian business addresses. The locations were closed during the COVID-19 pandemic. A Shopify representative told the process server that service had to be made by email and provided Legal-orders@shopify.com. CBC then asked the court under Federal Rule of Civil Procedure 4(f)(3) to authorize alternative service and to extend the service deadline.

Legal standard

Rule 4(f)(3) permits a federal court to order a method of serving a defendant in a foreign country when the method is not prohibited by an international agreement. The method must also be reasonably calculated to give the defendant notice of the lawsuit and an opportunity to respond. The court explained that a plaintiff does not have to try every possible method of service before requesting alternative service, but must show that the circumstances require the court’s intervention.

Court’s analysis

The court concluded that serving Exqline through its U.S.-based counsel was not prohibited by the Hague Convention. The court found that service through Yee was reasonably calculated to notify Exqline because Yee was acting as Exqline’s U.S. counsel, was discussing the case with CBC’s counsel, and had confirmed that Exqline knew about the summons and complaint.

The court likewise concluded that email service on Shopify was not prohibited by an international agreement and satisfied due process. Shopify operated an e-commerce platform, relied on electronic communications, had provided a specific email address for service, and had stated that physical locations could not accept service during the office closures.

Order

Judge Thomas S. Hixson granted CBC’s motion for substitute service. CBC was authorized to serve Exqline through Jeffrey Yee of Lewis Brisbois & Smith, LLP. CBC was also authorized to serve Shopify by email, with a return receipt requested. Any proof of service on Shopify had to include evidence that CBC attempted, at a minimum, to verify that Shopify actually received the email. The court extended the deadline to serve the defendants by 60 days, to August 17, 2020, and continued the case-management conference to October 1, 2020.