On March 16, 2018, Judge Godbey entered an Order in Fundamental Innovation systems International, LLC v. ZTE Corp. (available here) resolving ZTE Corporation’s motion to dismiss for improper service.
In this case, Fundamental engaged a foreign process server to serve ZTE Corporation, based in China, through Hague Convention procedures and forwarded a copy of the required documents to the Central Authority of China. At the time of ZTE’s motion to dismiss for improper service, Fundamental had not received confirmation of service and the Central Authority in China does not “provide a means for checking the status of a service request.” At the same time, Fundamental tried to effectuate service by serving ZTE USA as ZTE Corporation’s general agent.
The Court first determined that, even though ZTE USA is a subsidiary of ZTE Corporation, ZTE USA is not the alter ego of ZTE Corporation—as such, proper service must be made upon each defendant separately. Because the two entities are distinct, the Court found that Fundamental’s attempt to serve ZTE Corporation by serving ZTE USA was improper. But the Court found that, “although [Fundamental] is attempting to serve ZTE Corporation in China in accordance with the Hague Convention, such service may take 18 months or longer—and the exact time needed for completion is unpredictable. . . . [A]lternative service on ZTE Corporation’s counsel is likely the best, fastest, and most reliable service method.” The Court therefore allowed Fundamental to serve process on ZTE USA’s counsel, which was also the counsel for ZTE Corporation.