IN RE BIBOX GROUP HOLDINGS LIMITED SECURITIES LITIGATION

Background

Lead plaintiff Alexander Clifford moved under Federal Rule of Civil Procedure 4(f)(3) for permission to use alternative methods to serve Bibox Technology Ltd., Bibox Technology OÜ, Wanlin “Aries” Wang, Ji “Kevin” Ma, and Jeffrey Lei. The opinion calls these parties the “Unserved Defendants.” Clifford requested permission to serve them through social-media accounts, corporate and personal email, and the registered agent of Bibox Group Holdings, Ltd., the only defendant already served.

The underlying case is a securities class action seeking damages based on allegations that the defendants bought and sold digital tokens that were unregistered securities. The complaint alleged that the defendants operated almost exclusively online. Bibox’s website listed an email address and electronic messaging services but no physical mailing address for any entity.

Clifford had served the registered agent for Bibox Holdings in the British Virgin Islands, but Bibox Holdings had not appeared. Attempts to serve Bibox Technology Ltd. and Bibox Technology OÜ at an Estonian address under the Hague Convention were unsuccessful because the address lacked an apartment number and mailbox number. Clifford also initiated service on Ma through China’s Central Authority but could not determine the status of that request. Attempts to locate Wang at addresses connected to him and Bibox Ltd. were unsuccessful, and a private investigator could not identify a physical address for Lei.

Court’s analysis

Rule 4(f)(3) gives a court broad discretion to authorize alternative service on a defendant outside the United States. A plaintiff seeking that relief must show why service under the Hague Convention is not required and that the proposed method does not violate the Hague Convention or other applicable international law.

The court concluded that Clifford had made the reasonable efforts required under the Hague Convention. The defendants’ addresses were essentially unknown, making the Hague Convention’s procedures inapplicable in these circumstances. The court also found that continuing the Hague Convention process for Ma risked significant delay because the request had been pending for two months and there was no way to monitor its status through China’s Central Authority.

The court determined that service by email, through known social-media accounts, and through Bibox Holdings’s registered agent did not violate the Hague Convention or applicable international law. Although China had objected to certain alternative service methods listed in Article 10 of the Hague Convention, the court understood that objection as not extending to service by email or known social-media accounts.

The court separately found that the proposed methods satisfied due process. Due process requires notice reasonably calculated, under the circumstances, to inform interested parties that an action is pending. Because the defendants operated online and the registered agent was connected to Bibox Holdings, the court found the proposed methods reasonably likely to reach the Unserved Defendants.

Disposition

The court granted Clifford’s July 31 request for alternative service. The opinion did not decide the merits of the underlying securities class action.