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Rio Properties, Inc. v. Rio International Interlink

United States Court of Appeals, Ninth Circuit
284 F.3d 1007 (2002)
ELI5:

Rule of Law:

Under Federal Rule of Civil Procedure 4(f)(3), a court may authorize service of process on a foreign defendant by means not prohibited by international agreement, such as email, so long as the method is reasonably calculated to apprise the defendant of the pendency of the action and afford them an opportunity to respond.


Facts:

  • Rio Properties, Inc. ('RIO'), owner of the RIO All Suite Casino Resort in Las Vegas, holds numerous trademarks for the 'RIO' name and operates the website www.playrio.com.
  • Rio International Interlink ('RII'), a Costa Rican entity, operated an online sports gambling business using domain names such as www.riosports.com and www.betrio.com.
  • RII specifically marketed its services to consumers in Las Vegas through radio spots and print advertisements in local publications.
  • After RIO sent a cease-and-desist letter, RII disabled one infringing website but immediately activated another identical one under a different domain name.
  • RIO's attempts to find a physical address for RII in the United States or Costa Rica were unsuccessful, revealing only a mail courier address in Florida and an email address, which RII used as its preferred method of contact.
  • RII’s U.S.-based mail courier was not authorized to accept service of process on its behalf, and an attorney consulted by RII regarding the matter also declined to accept service.

Procedural Posture:

  • Rio Properties, Inc. (RIO) filed a trademark infringement lawsuit against Rio International Interlink (RII) in the U.S. District Court.
  • After being unable to serve RII through conventional means, RIO filed an emergency motion for alternative service of process.
  • The district court granted RIO's motion and ordered that service on RII could be effected via email, and by mail to its U.S.-based courier and its attorney.
  • RII filed a motion to dismiss for insufficient service of process and lack of personal jurisdiction, which the district court denied.
  • After RII failed to comply with discovery orders, the district court granted RIO's motion for terminating sanctions and entered a default judgment against RII.
  • The district court also awarded RIO attorneys' fees and costs.
  • RII, as appellant, appealed the district court's judgment to the U.S. Court of Appeals for the Ninth Circuit; RIO is the appellee.

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Issue:

Does service of process on an elusive foreign defendant by email and through its U.S.-based attorney and courier, as ordered by a district court under Federal Rule of Civil Procedure 4(f)(3), satisfy the requirements of the Rule and constitutional due process?


Opinions:

Majority - Trott, Circuit Judge.

Yes. Service of process on a foreign defendant via court-ordered email is permissible under FRCP 4(f)(3) and comports with due process when it is reasonably calculated to provide notice. The court held that FRCP 4(f)(3) is not a method of last resort but stands on equal footing with other methods of foreign service listed in Rule 4(f). A district court has discretion to order an alternative method of service when circumstances, such as a defendant's elusiveness, necessitate it. The constitutional due process standard from Mullane requires that the chosen method be 'reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action.' Here, service by email was not only constitutionally acceptable but was the method 'most likely to reach RII' because RII had structured its e-business to be contacted primarily via email. Service on RII's attorney and its U.S. courier were also reasonably calculated to provide notice.



Analysis:

This decision was a landmark case that formally approved service of process by email on a foreign defendant under FRCP 4(f)(3). It clarified that Rule 4(f)(3) is a flexible tool for courts, not a disfavored last resort, allowing legal procedures to adapt to modern technology. The ruling significantly impacts litigation against international e-businesses and other entities that lack a physical presence, making it more difficult for them to use their virtual nature to evade jurisdiction and service. This precedent empowers courts to craft practical service methods to ensure that plaintiffs can bring elusive foreign defendants to court.

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