Commercial Litigation and Arbitration

Service of Process: Rule 4(d) Does Not Impose Duty to Pay Costs on Foreign Party Who Declines to Accept Service — Sanctions: No FRAP 38 or § 1927 Sanctions for Appeal That Is Weak But Not Frivolous

Cox v. Koninklijke Philips, NV, 2016 U.S. App. LEXIS 8688 (6th Cir. May 9, 2016):

Former employees at a glass and bulb manufacturing plant brought this action against their employer, Philips Electronics North America Corporation ("Philips"), and its Dutch parent company, Koninklijke Philips, N.V. ("KPNV"), for injuries arising from exposure to hazardous chemicals during their employment. The district court dismissed the employees' claims against KPNV for want of personal jurisdiction, dismissed their claims against Philips as statutorily barred, and declined to award them costs in serving KPNV [*2]  process. The employees appeal those rulings, while KPNV and Philips seek sanctions. We affirm the district court's order but decline to award sanctions.


Philips's facility in Danville, Kentucky contained hazardous substances including asbestos, mercury, arsenic, lead, and PCB compounds. The employees sued Philips and KPNV for concealing or misrepresenting workplace dangers and deliberately exposing them to hazardous substances, causing physical and emotional injuries. They assert claims sounding in negligence, strict liability, negligent infliction of emotional distress, fraud, and fraudulent concealment.

After filing the initial complaint, the employees requested that KPNV--a Dutch holding company with no agent in the United States--allow its American-retained counsel to accept service of process on its behalf. KPNV refused. The employees served process internationally and then moved to recover the associated costs, arguing that Federal Rule of Civil Procedure 4(d) obligated KPNV to avoid unnecessary expenses. The court denied the motion, noting that Rule 4(d) imposes no duty on foreign parties.

While the employees' costs motion pended, KPNV moved to dismiss the complaint for lack of personal jurisdiction. After an evidentiary [*3]  hearing, the court determined that preponderating evidence failed to show that KPNV's activities satisfied Kentucky's long-arm statute. See Ky. Rev. Stat. Ann. § 454.210. Without a basis to exercise jurisdiction, the court granted KPNV's motion to dismiss.

Philips also moved to dismiss the complaint, arguing that the exclusive-remedy provision of the Kentucky Workers' Compensation Act (KWCA) barred the employees' claims. The employees countered that their claims either satisfied the KWCA's deliberate-intention exception or fell outside of its exclusive-remedy provision. The court initially granted Philips's motion in part and denied it in part, dismissing all but the employees' fraud claims as barred by the KWCA. Philips then moved for reconsideration, arguing that because the employees failed to allege that Philips misrepresented workplace dangers with the specific intent to harm, the KWCA also barred the fraud claims. Agreeing, the district court dismissed the remaining claims. This appeal followed.



C. The Employees' Motion to Recover Costs for Serving Process

Employees appeal the district court's denial of its motion for costs incurred in serving KPNV process, maintaining that Federal Rule of Civil Procedure 4(d) obliged KPNV to accept service. Under that rule, courts must award costs "[i]f a defendant located within the United States fails, without good cause, to sign and return a waiver requested by a plaintiff located within the United States." Fed. R. Civ. P. 4(d)(2) (emphasis added). KPNV is located in the Netherlands; the rule imposed no obligation on it, and the district court committed no error in denying the employees' motion.

D. KPNV's and Philips's Motion for Sanctions

KPNV and Philips move for sanctions under Federal Rule of Appellate Procedure 38 and 28 U.S.C. § 1927. Rule 38 allows this court to award damages if appellants' "arguments essentially had no reasonable expectation of altering the [*12]  district court's judgment based on law or fact." B & H Med., L.L.C. v. ABP Admin., Inc., 526 F.3d 257, 270 (6th Cir. 2008) (quoting Wilton Corp. v. Ashland Castings Corp., 188 F.3d 670, 677 (6th Cir. 1999)). Similarly, under 28 U.S.C. § 1927, this court may award costs if "an attorney kn[ew] or reasonably should [have] know[n] that a claim pursued [was] frivolous, or that his or her litigation tactics [would] needlessly obstruct the litigation of non-frivolous claims." Shepherd v. Wellman, 313 F.3d 963, 969 (6th Cir. 2002) (quoting Jones v. Cont'l Corp., 789 F.2d 1225, 1232 (6th Cir. 1986)). Though the employees' arguments proved unconvincing--with their service-of-process-costs argument being particularly weak--they are not frivolous.


For the above reasons, we AFFIRM the district court's orders and DENY KPNV's and Philips's motion for sanctions.

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