United States District Court, D. Minnesota
IDS Property Casualty Insurance Company as subrogee of Chad and Andrea Murphy, Plaintiff,
Gree USA, Inc., MJC America, LTD., Gree Electric Appliances, Inc. of Zhuhai, and Hong Kong Gree Electric Appliance Sales, LTD., Defendants.
L. Saber, Esq. and Cozen O'Connor, counsel for plaintiff.
A. Fredrickson, Esq. and Lind Jensen Sullivan & Peterson,
PA, counsel for defendants.
S. Doty, Judge
matter is before the court upon defendants Gree Electric
Appliances, Inc. of Zhuhai's (Gree China) and Hong Kong
Gree Electric Appliance Sales, Ltd.'s (Gree Hong Kong)
motion to vacate the clerk's entry of default pursuant to
Federal Rule of Civil Procedure 60(b) and to dismiss
plaintiffs' complaint pursuant to Federal Rule of Civil
Procedure 12(b)(5). Based on a review of the file, record,
and proceedings herein, and for the following reasons, the
court grants the motion.
product liability case arises out of defendants'
manufacture and distribution of an allegedly defective
household dehumidifier. Defendants Gree China and Gree Hong
Kong are Chinese corporations. Compl. ¶¶ 5-6.
Defendants Gree USA, Inc. and MJC America, Ltd. are
California corporations. Id. ¶¶ 3-4. Gree
Hong Kong is the wholly owned subsidiary of Gree China and
the majority owner of Gree USA. Id. ¶ 47. Gree
China manufactures dehumidifiers and, through Gree Hong Kong,
sells the dehumidifiers under assorted brand-names to Gree
USA and MJC America. Id. ¶¶ 16-18. Gree
USA and MJC America, in turn, sell the dehumidifiers to
retailers in the United States. Id. ¶ 19.
Plaintiff IDS Property Casualty Insurance Company (IDS) is a
Wisconsin corporation, and plaintiffs Chad Murphy and Andrea
Murphy are Minnesota residents. Id. ¶ 2. The
Murphys insured their home through IDS. Id. ¶
September 12, 2013, the United States Consumer Product Safety
Commission (USCPSC) recalled 2.2 million Gree China
manufactured dehumidifiers because of a suspected
fire-causing defect. Id. ¶ 64. In January 2014,
USCPSC expanded the recall to an additional 300, 000
dehumidifiers. Id. ¶ 66. On March 25, 2016,
Gree China, Gree Hong Kong, and Gree USA collectively paid a
$15, 450, 000 civil penalty to settle a product safety
investigation initiated by USCPSC. Id. ¶ 73.
Murphys owned a Gree China manufactured dehumidifier.
Id. ¶ 24. On April 15, 2016, their dehumidifier
allegedly failed, causing a fire. Id. ¶ 27. IDS
compensated the Murphys for smoke, water, and other property
damage. Id. ¶ 29.
11, 2018, plaintiffs commenced this diversity action, raising
negligence and strict liability-product liability claims. On
May 16, 2018, defendants were served copies of the summons
and complaint. See ECF Nos. 13-16. Gree China and
Gree Hong Kong do not have authorized service of process
agents in the United States. See ECF Nos. 15-16. To
perfect service, plaintiffs delivered the summons and
complaint to “Richard, the person in charge of 4195
Chino Hills Avenue #1026, Chino Hills, CA to be given to Ming
Chu Dong President of [Gree China and Gree Hong Kong] and
Director of Gree USA ... business and mailing address 4195
Chino Hills Avenue #1026, Chino Hills, CA.” ECF No. 16.
On the same day, plaintiffs mailed first-class copies of the
summons and complaint to Ms. Dong on Gree China's and
Gree Hong Kong's behalf to Gree USA's Chino Hills,
California, business location. Id.
August 21, 2018, Gree USA and MJC America answered the
complaint; Gree China and Gree Hong Kong did not. ECF No. 17.
On October 19, 2018, plaintiffs filed an application for
entry of default against Gree China and Gree Hong Kong. ECF
No. 33. On October 22, 2018, the clerk of court entered the
requested default. ECF No. 34. The next day, Gree China and
Gree Hong Kong filed the instant motion to dismiss the
complaint against them, or alternatively to quash, for
failure to perfect service and to vacate the clerk's
entry of default. They argue that as foreign corporations,
plaintiffs were required to serve them under the Hague
Convention on the Service Abroad of Judicial and
Extrajudicial Documents in Civil or Commercial Matters (Hague
Convention). They also argue that plaintiffs failed to
perfect service on them under either California or Minnesota
law. Plaintiffs argue that they properly served Gree China
and Gree Hong Kong under the Federal and California Rules of
Civil Procedure and that the Hague Convention does not apply.
Standard of Review
may be dismissed for insufficient service of process.
Fed.R.Civ.P. 12(b)(5); Marshall v. Warwick, 155 F.3d
1027, 1030 (8th Cir. 1998). However, dismissal is not always
required when service has been deemed improper. See Haley
v. Simmons, 529 F.2d 78, 79 (8th Cir. 1976). “[A]
federal court is without jurisdiction to render personal
judgment against a defendant if service of process is not
made in accordance with applicable federal or state statutory
requirements.” Sieg v. Karnes, 693 F.2d 803,
807 (8th Cir. 1982).
a party against whom a judgment for affirmative relief is
sought has failed to plead or otherwise defend, and that
failure is shown by affidavit or otherwise, the clerk must
enter the party's default.” Fed.R.Civ.P. 55(a).
“The court may ...