New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

Commercial Litigation and Arbitration

New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
Commercial Litigation and Arbitration
« Back to Complex Lit Blog

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

Download PDF

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.

I.

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.

II.

***

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.

III.

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

Share this article:

Facebook
Twitter
LinkedIn
Email

Recent Posts

Criminal Spoliation Can Be A Due Process Violation — Defendant Must Show That (1) The Evidence Had Exculpatory Value Before It Was Destroyed, (2) Defendant Is Unable to Obtain Comparable Evidence by Reasonable Means, and (3) Bad Faith Failure to Preserve

1) Rule 11 Sanctions: “No First Amendment Exception to a Rule 11 Violation” — “[T]he First Amendment Covers Novel, Nonfrivolous Arguments, But Many Frivolous Arguments Are Also Novel” (Good Quotes) — Frivolous To Continue To Make Rejected Novel Arguments; (2) FRAP 38 Sanctions: District Court In Best Position to Set Sanctions, Attorney’s Fees and Costs

3 Prerequisites for Inherent Power and § 1927 Sanctions in Second Circuit: (1) Bad Faith, (2) Conduct That Is Entirely Without Color [Thus, An Ill-Motivated Colorable Position Appears to Be Protected in the Second Circuit], and (3) Improper Purpose— “To Gain A Strategic Advantage” Is An Improper Purpose — Due Process Satisfied by Opponent’s Motion and Multiple Court Conferences, After Which Target Was Allowed to Submit Additional Letters

Inherent Power Sanctions — Untimeliness as Laches — Laches Properly Applied to Deny Sanctions Motion — Note Waived Defenses to Laches

Rule 37(c)(1) Sanctions: Substantial Justification or Harmless Error (Ninth Circuit Factors) — Erie: When State Supreme Court Has Not Squarely Addressed an Issue, Circuit Must Predict How It Would Rule, Using Intermediate Appellate Decisions, Decisions from Other Jurisdictions, Statutes, Treatises And Restatements for Guidance

(1) Appellate Review of Inherent Power Sanctions (7th Circuit): Factual Findings Reviewed for Clear Error, Choice of Sanction for Abuse of Discretion — 4-Element Test for Reversal; (2) Sanctions and Class Actions: Monetary Sanctions Properly Imposed on Defendants for Improper Communications with Class Members (Represented Parties) — “[I]f The Class And The Class Opponent Are Involved In An Ongoing Business Relationship, Communications From The Class Opponent To The Class May Be Coercive” (Good Quote); (3) Monetary Sanctions under Goodyear v. Haeger: If Same Fact-Gathering Would Have Been Conducted Absent The Misconduct, No But-For Causation — But Only “Rough Justice” Required, “Not Accountant-Like Precision” (Good Quote) — Once Misconduct Is Clear, Time Spent Ferreting It Out Compensable under Goodyear; (4) Goodyear Did Not Overrule Long-Standing Rule That Courts May Impose Modest Civil Monetary Sanctions to Curb Litigation Abuse; (5) Appellate Jurisdiction Lacking Where Sanctioned Attorney Fails to File Notice of Appeal and Lawyer’s Intent to Appeal Not Apparent from Client’s Notice; (5) Rule 11 Improper Purpose — Party May Have Many Purposes for Pursuing Claim — As Long As Claim Is Supported by Good Faith Belief in the Merits, “A Parallel Reason Does Not Violate Rule 11” — To Deny A Motion for Sanctions, The District Court Need Not Address Every Argument: “Arguments Clearly Without Merit Can, And For The Sake Of Judicial Economy Should, Be Passed Over In Silence” (Good Quote); Non-Monetary Sanction on Counsel: Complete Twice The Required Amount Of Professional Responsibility Hours For Her Next Continuing Legal Education Cycle Imposed By The State Bar

(1) Spoliation: Sanctions Are Warranted Only If the Movant Establishes That A Reasonable Trier of Fact Could Find That The Destroyed Evidence Would Support A Claim Or Defense — § 1927 Sanctions: “Courts Often Refuse to Award Sanctions When Both Parties Contributed to the Waste of Judicial Resources” (Good Quote)

No Sanctions Imposed on Counsel Who Submitted A.I.-Generated Phony Cases Without Checking Them in Good Faith on The Mistaken Assumption They Had Been Provided by Highly Respected Co-Counsel Rather Than His Criminally-Convicted, Disbarred Client — No Sanctions on Client Who Had No Access to LEXIS or Westlaw to Check the Phony Cases and Submitted Them in Good Faith: “It Would Have Been Downright Irrational For Him To Provide Fake Cases For [His Lawyer] To Include In The Motion Knowing They Were Fake —

(1) Electronic Spoliation — Rule 37(e)(2) Dismissal Sanction — Temporal Proximity of Spoliation to Production Due Date = Circumstantial Evidence of Intent; (2) While Discovery Sanctions Are Reviewed For Abuse Of Discretion, Findings Of Fact Related To Discovery Sanctions Are Reviewed For Clear Error; (3) Dismissal under Rule 37(e)(2) Plus Attorney’s Fees under Inherent Power Appropriately Combined [But see 2015 Advisory Committee Note: “New Rule 37(e) … authorizes and specifies measures a court may employ if information that should have been preserved is lost, and specifies the findings necessary to justify these measures. forecloses reliance on inherent authority or state law to determine when certain measures should be used.”]; (4) Compensatory Sanctions under Goodyear v. Haeger Appropriately Include Fees and Costs Resulting from Attempts to Settle Spoliation Motion

(1) FRAP 38 Sanctions Inapt for Appeal That Is Weak — “Borderline Frivolous” — Test Is Whether Appellant Should Have Known the Appeal Had Absolutely No Chance of Success — (2) Lay Opinion Testimony under Rule 701: Nub of Helpfulness Requirement Is to Exclude Testimony When the Witness Is No Better Suited Than the Jury to Assess the Issue; (3) Appeals: No Appeal from Denial of Motion for Judgment As a Matter of Law Unless Appellant Made That Motion Before Case Was Submitted to Jury

Archives
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

New York Office

© 2024 Joseph Hage Aaronson LLC  
Disclaimer | Attorney Advertising Notice | Legal Notice