Zhang v. Valaris plc
- Naomi Buchwald
- 1:19-cv-07816
- U.S. District Court · Southern District of New York
- 11
In Zhang v. Valaris plc, Judge Buchwald granted alternative service and more time to serve Thomas P. Burke, but did not authorize publication.
The ruling directly affected lead plaintiff Charles Moosa’s ability to serve Thomas P. Burke in the securities class action. It also addressed service through Valaris’s U.S.-based counsel, Gibson Dunn.
What happened
In Zhang v. Valaris plc, lead plaintiff Charles Moosa asked to serve Thomas P. Burke, who had not yet been served, using email, Valaris’s U.S. counsel, and newspaper and other publication. The request arose after COVID-19 disrupted service through the United Kingdom’s usual process.
The court found that the plaintiff had made reasonable efforts to serve Burke and did not have to wait for the United Kingdom’s service process to reopen. It authorized service by email to Burke and by email and certified mail to Valaris’s U.S.-based counsel, Gibson Dunn, because those methods were likely to give Burke notice. The court found publication unnecessary and did not authorize it.
Judge Naomi Reice Buchwald granted the motion in part and extended the deadline for serving Burke until April 15, 2021. The ruling concerned how Burke could be served; it did not decide the securities claims.
The detailed version
- Zhang v. Valaris plc · No. 1:19-cv-07816
- Naomi Buchwald
- Mar. 16, 2021
Background
Xiaoyuan Zhang brought a securities class action against Valaris plc, Thomas P. Burke, and Jonathan H. Baksht, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Charles Moosa was later appointed lead plaintiff. Valaris and Burke were in the United Kingdom, while Baksht was in Texas. By the time of this motion, Valaris and Baksht had been served, leaving Burke as the only unserved defendant.
The plaintiff had attempted to serve Burke through procedures under the Hague Convention, an international agreement governing service of legal documents across countries. Those efforts were disrupted by the COVID-19 pandemic and the suspension of judicial-document service by the United Kingdom’s Central Authority. The plaintiff also learned that Gibson Dunn would no longer accept service for Burke, despite an earlier representation that it would do so after Valaris was served. The plaintiff therefore sought alternative service under Federal Rule of Civil Procedure 4(f)(3), an extension of time, and authorization to use email, email and certified mail to Gibson Dunn, and publication in The Daily Telegraph, Business Wire, and Oil and Gas Journal.
Legal standard and analysis
Rule 4(f)(3) allows a court to order service on an individual outside the United States by a method that is not prohibited by an international agreement. The method must also satisfy due process, meaning it must be reasonably likely under the circumstances to notify the person of the case and give the person an opportunity to respond.
The court rejected defendants’ argument that the plaintiff had to exhaust Hague Convention procedures before seeking alternative service. The court found that the plaintiff had reasonably attempted Hague Convention service more than once and that the United Kingdom’s indefinite suspension of service justified court intervention. The court also rejected the argument that the plaintiff should simply wait for the United Kingdom’s process to reopen, noting the age of the case and the prior order allowing efforts to serve the individual defendants during Valaris’s bankruptcy-related stay.
The court authorized service on Burke by email and by email and certified mail to Gibson Dunn, Valaris’s United States-based counsel. It found those methods reasonably calculated to reach Burke, particularly because Burke was communicating with Gibson Dunn and Gibson Dunn had previously indicated that it would accept service under specified circumstances. The court did not authorize publication because the plaintiff knew Burke’s name and addresses and publication was less targeted than the approved methods.
Disposition
The court granted in part the plaintiff’s motion for alternative service and extension of time. It granted permission to serve Burke by email and by email and certified mail to Gibson Dunn, and granted the request for additional time to complete service until April 15, 2021. The court did not authorize the proposed publication. This order addressed service procedure and did not resolve the underlying securities claims.
Read the full 11-page opinion on CourtListener, the free public archive maintained by the Free Law Project.