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March 2020



Walter Judge
Downs Rachlin Martin
Burlington, Vermont

Sutton v. Vermont Regional Center, 2019 VT 71 (Oct. 14, 2019)

Despite its longstanding reputation as liberal and sympathetic to plaintiffs, the Vermont Supreme Court has for a very long time strictly enforced the Economic Loss Rule (prohibiting tort claims to recover for purely economic harms).  See, e.g., Breslauer v. Fayston School District, 163 Vt. 416, 659 A.2d 1129 (1995) (dismissing tort claim against former employer by disappointed applicant seeking teaching job in new school district, and discussing need to “maintain a dividing line between contract and tort theories of recovery”); Paquette v. Deere & Co., 168 Vt. 258, 719 A.2d 410 (1998) (denying tort claims of purchasers of allegedly defective motor home); Gus’ Catering, Inc. v. Menusoft Sys., 171 Vt. 556, 762 A.2d 804 (2000) (“Negligence law does not generally recognize a duty to exercise reasonable care to avoid intangible economic loss to another unless one’s conduct has inflicted some accompanying physical harm”).  As recently as 2015 the Court reaffirmed its longstanding policy of strong adherence to the rule, as demonstrated by Walsh v. Cluba, 2015 VT 2, 117 A.3d 798 (2015), where the Court dismissed a landlord’s tort claims against a tenant even where the claim involved physical damage to the leased property.  In a few cases the Court has suggested that there could be an exception to the rule for "professional services" involving a “special relationship” between the parties, Springfield Hydroelectric Co. v. Copp, 172 Vt. 311, 779 A.2d 67 (2001) (recognizing possibility of an exception, but holding that it would not apply where defendants did not hold themselves out as providers of any licensed professional service, and affirming dismissal of tort claims), but to date it has never found such an exception. 

Now, in Sutton v. Vermont Reginal Center, 2019 VT 71 (Oct. 14, 2019), it has done so. 

Reversing a dismissal of the plaintiffs’ Complaint, the Court in Sutton found, among other things, that the plaintiffs’ negligence claims against the Vermont Agency of Commerce and Community Development (ACCD) were not barred by the rule. 

The plaintiffs in this case were investors in Vermont’s EB-5 visa program.  They lost their investments due to the now-infamous Ariel Quiros EB-5 scandal, in which Mr. Quiros, a real estate developer, used the investors’ money for purposes other than the stated real estate developments.  The EB-5 program is a federal immigration program wherein foreigners can obtain “green card” visas by investing in certain development projects in the United States that create employment for U.S. workers.  In this case, the ACCD, an agency of the State of Vermont, was licensed by the federal government to operate the program in Vermont.  The facts showed that representatives of the ACCD partnered with Quiros and shared a table with his representatives at development tradeshows, where they would jointly solicit foreign investors for Quiros’ development projects in Vermont (the “Jay Peak Projects”).  The ACCD employees would represent to potential investors that, unlike EB-5 programs in other states, the development projects in Vermont benefitted from state, i.e., ACCD, approval and oversight and therefore were sound investments.  In fact, however, the state never oversaw, examined, inspected, or audited the projects, and plaintiffs’ financial investments were lost due to Quiros’ fraud.  Plaintiffs sued the ACCD and its employees for negligence, negligent misrepresentation, gross negligence, breach of contract, breach of warranty, etc., for soliciting their investments and failing to safeguard them.

 The trial court dismissed the plaintiffs’ Complaint on grounds, inter alia, of the economic loss rule.  Plaintiffs appealed.  The Vermont Supreme Court reversed the dismissal.  Concluding that the economic loss rule did not bar plaintiffs’ claims, the Court stated:

Here, plaintiffs have alleged sufficient facts to make out a special relationship between defendants and plaintiffs such that they may recover for their purely economic losses.  ACCD initiated a close relationship with the plaintiffs by recruiting them to invest their life savings in the Jay Peak Projects by promising exceptional oversight and management of the investment.  As discussed above, ACCD demonstrated awareness of the risk that it was inducing plaintiffs to undertake – a risk it represented it would minimize – when it told plaintiffs it would provide a safeguard for their investments.  ACCD did not simply endorse the Jay Peak projects to members of the public generally; it personally solicited investors, and entered into individualized relationships with each of the plaintiffs, who paid substantial fees directly to [ACCD] in connection with that relationship.  It intended to influence a narrow class of identified people –prospective investors in the Jay Peak Projects – and those who actually invested relied on their representations and promised oversight.  This is the kind of relationship that can give rise to liability for purely economic harms.

2019 VT 71 at 12, ¶ 33.

            The Court went on to hold that the plaintiffs’ negligent misrepresentation claims also were not barred by the economic loss rule because the tort of negligent misrepresentation specifically applies to “pecuniary loss.”  (For reasons I will not go into here, the Court also found that the ACCD and its employees were not protected from suit by sovereign immunity.)

            Thus, the Court reversed the dismissal of the plaintiffs’ Complaint.

This decision represents a significant departure from more than two decades of Vermont Supreme Court jurisprudence affirming a strict adherence to the economic loss rule.  It may make it much more difficult, if not impossible, to get a complaint dismissed at the Rule 12(b) stage where the economic loss rule should apply to bar the plaintiff’s claims.  Superior courts may be more likely to say that the claims should survive a dismissal attempt and that the existence of, and extent of, a “special relationship,” as alleged by the plaintiff, should await summary judgment or be decided by a jury.



February 2020

Amazon as “Seller” under Restatement (2nd) of Torts 402A: Paradigm or Paradox? OBERDORF v. AMAZON.COM, INC.

By James M. Beck, Esquire, Reed Smith, Philadelphia, PA; William J. Ricci, Esquire, Ricci, Tyrrell, Johnson & Grey, LLP, and Walter “Pete” Swayze, Lewis Brisbois Bisgaard & Smith LLP


On December 2, 2014, Heather Oberdorf purchased a dog collar on sold by a third-party vendor, “the Furry Gang.” Over a year later, on January 12, 2015, the dog collar broke, injuring one of her eyes. She did not sue until June, 2016, a month after “The Furry Gang” ceased activity on Amazon.  Unable to locate “The Furry Gang,” Oberdorf sued Inc. (hereafter "Amazon") in federal court in Pennsylvania alleging strict product liability, negligence. breach of warranty, misrepresentation, and loss of consortium.

Amazon moved for summary judgment on the product liability claims, arguing that was not a "seller" under § 402A of the Restatement (Second) of Torts because it never took title to or possession of the products sold by third-party vendors, and that characterizing Amazon as a “seller” would be inconsistent with the policy considerations inherent in Pennsylvania product liability law.




Amazon is a multinational technology company best known for hosting online sales. Products are offered for sale at Amazon in three ways. First, Amazon sources, sells, and ships some products as the seller of its own brand products. Second, third-party manufacturers sell products through Amazon Marketplace “Fulfilled by Amazon,” retaining Amazon to store and ship their products. Third – and the means of sale at issue in this casethird-party sellers may use the Amazon Marketplace like a shopping mall, selling their products on the site without adopting the additional Amazon “fulfillment” services. These sellers, like “The Furry Gang,” supply and ship products directly to consumers without their ever being in Amazon's possession.

Amazon Marketplace has seen enormous growth in recent years. More than one million businesses of all sizes sell products on Amazon Marketplace.




The Pennsylvania Supreme Court has not ruled on whether an online sales listing service like Amazon Marketplace qualifies as a “seller” under § 402A of the Restatement (Second) of Torts. Nor have any other Pennsylvania appellate courts.  Therefore, given the absence of a controlling decision by the Pennsylvania Supreme Court, “a federal court applying that state's substantive law must predict how Pennsylvania’s highest court would decide th[e] case.” Berrier v. Simplicity Mfg., Inc., 563 F.3d 38, 45-46 (2009).


In Oberdorf v., Inc, 295 F. Supp.3d 496 (M.D. Pa. 2017), the district court granted Amazon’s motion for summary judgment and found that Amazon is not a “seller” under Pennsylvania law,[1] and thus is not subject to strict products liability claims.[2] Judge Matthew Brann emphasized that while the Pennsylvania Supreme Court has liberally defined “seller” under §402A of the Restatement (Second) of Torts, it has not left that category “boundless.” He relied primarily on Musser v. Vilsmeier Auction Co. Inc., 562 A.2d 279 (1989), which held that an auctioneer is not a “seller” for purposes of § 402A.


In Musser, the Pennsylvania Supreme Court held that it is improper to impose strict liability on a defendant unless doing so furthers the underlying policy of §402A, namely the “special responsibility for the safety of the public undertaken by one who enters into the business of supplying human beings with products which may endanger the safety of their persons and property, and the forced reliance upon that undertaking on the part of those who purchase such goods.”


Judge Brann held that, despite Amazon’s influence over the sales process,[3] its role is akin to the Musser auctioneer deemed not a §402A “seller.” Like an auctioneer, or a brick-and-mortar shopping center, Amazon is merely a third-party vendor’s “means of marketing,” since third-party vendors - not Amazon – “choose the products and expose them for sale by means of” the Amazon Marketplace. 295 F. Supp. at 501. Because of the enormous number of third-party vendors (and, presumably, the correspondingly enormous number of goods sold by those vendors), Amazon is “not equipped to pass upon the quality of the myriad of products” available on its Marketplace. Further, because Amazon has “no role in the selection of the goods to be sold,” it also cannot have any "direct impact upon the manufacture of the products" sold by the third-party vendors. Id.


In sum,


            Amazon Marketplace serves as a sort of newspaper classified ad section, connecting         potential consumers with eager sellers in an efficient, modern, streamlined manner. Because subjecting it to strict liability would not further the purposes of § 402A, as           revealed by Musser and other Pennsylvania cases, it cannot be liable to the Oberdorfs    under a strict products liability theory.






In July 2019, a split three-judge panel of the United States Court of Appeals reversed judge Brann’s grant of summary judgment in Amazon’s favor.[4] 930 F.3d 136 (3d Cir. 2019), vacated, 936 F.3d 182 (3d Cir. 2019).


Like the district court, the Third Circuit panel based its decision primarily on the Pennsylvania Musser decision. Unlike the District Court, the panel majority found that in Amazon’s case, the policy at Musser’s core compelled the opposite conclusion.


Writing for the two-judge majority, Judge Roth relied on a four-factor test originating in Francioni v. Gibsonia Truck Corp., 372 A.2d 736, 739 (Pa. 1977), which Musser had also applied.  Those factors are:


(1)   Whether the actor is the “only member of the marketing chain available to the injured       plaintiff for redress;”


(2)   Whether imposition of strict liability upon the [actor] serves as an incentive to safety;


(3)   Whether the actor is “in a better position than the consumer to prevent the circulation of defective products;” and


(4)   Whether “the [actor] can distribute the cost of compensating for injuries resulting from defects by charging for it in business, i.e., by adjustment of [contractual] terms.


The Third Circuit panel two-judge majority held that all four Francioni factors weigh in favor of imposing strict liability on Amazon. 930 F.3d at 145-48.


As to factor one, “Amazon may be the only member of the marketing chain available to the injured plaintiff for redress,” as the Furry Gang could not be located. Unlike the plaintiff in Musser, Oberdorf (having waited well over a year to bring suit) was unable to sue other parties in the distribution chain. The Court construed Amazon’s Agreement with third-party vendors as allowing vendors to “conceal themselves.” Amazon does not require third-party vendors to stay in good standing under the laws of the country in which their business is registered. Id. at145.


Second, the “imposition of strict liability upon [Amazon] would serve as an incentive to safety.” The Court reasoned that although Amazon does not have a direct influence over the design and manufacture of third-party products, it exerts significant control over the vendors and is capable of removing unsafe products from its website. Id. at 145-46. To do so would require Amazon independently to assess the safety of all of the millions of products sold through its site.


Third, Amazon is “in a better position than the consumer to prevent the circulation of defective products” because Amazon has established relationships with third-party vendors. Amazon also communicates directly with customers for feedback, providing a basis for itto exert its influence over the products being sold. Id. at 146-47.


Fourth, Amazon can “distribute the cost of compensating for injuries resulting from defects.” Id at 147-48.


The two-judge majority opted for an expansive view of the meaning of “seller,” noting that “Comment f to § 402A makes clear that the term ‘seller’ is not limited by its dictionary definition, as it ‘applies to any manufacturer of such a product, to any wholesale or retail dealer or distributor . . .” The Court referenced the policy articulated in Francioni, supra, in 1978, that strict product liability should be applied broadly to those who market products, “whether by sale, lease or bailment, for use and consumption by the public.” Id. at 738.


The majority judged that its conclusion is consistent with other Pennsylvania appellate decisions, but cited nothing more recent than 1982. For example, in Hoffman v. Loos & Dilworth, Inc., 452 A.2d 1349 (Pa. Super. 1982), the Pennsylvania Superior Court decided that a sales agent was a “seller” under § 402A, and thus subject to strict product liability under Pennsylvania law. The Superior Court relied upon the exclusive relationship between sales agent and manufacturer to find the sales agent to be a “seller” under Pennsylvania law even though that agent never had title to or possession of the products being sold. 452 A.2d at 1354-55.


None of the decisions relied upon by the 2-judge majority involved an online retailer such as Amazon.  Indeed, the Internet did not exist when those cases were decided.


Notably, the majority decision was, as of July 2019, the lone departure from other federal Courts grappling directly with the “Amazon as 402A seller” issue, regardless of the nuances of the involved states’ substantive law. See, e.g., Fox v., Inc., 930 F.3d 415, 425 (6th Cir. 2019) (applying Tennessee law); Erie Ins. Co. v., Inc., 925 F.3d 135, 141-42 (4th Cir. 2019) (applying Maryland law); Stiner v., Inc., 120 N.E.3d 885, 893-94 (Ohio App. 2019); Garber v., Inc., 380 F. Supp.3d 766, 776-78 (N.D. Ill. 2019); Carpenter v., Inc., 2019 WL 1259158, at *5 (N.D. Cal. March 19, 2019); Eberhart v., Inc., 325 F. Supp.3d 393, 398-400 (S.D.N.Y. 2018); Allstate N.J. Insurance Co. v., Inc., 2018 WL 3546197, at *7-12 (D.N.J. July 24, 2018). Each of these decisions involved the interpretation of a particular state’s product liability law as to whether Amazon was a “seller” under § 402A.


However, the majority disregarded other states’ law.


[I]n deciding whether Amazon is a “seller” within the meaning of § 402A, we must predict what the Pennsylvania Supreme Court would decide under Pennsylvania law interpreting the Second Restatement of Torts. It is of little consequence whether Amazon is a "seller" for purposes of other states' statutes, as each of those statutory schemes is based on distinct language and policy considerations. 150 (footnotes omitted).




At the outset of his dissent, Judge Scirica framed the issue as follows: “this case implicates an important yet relatively uncharted area of law. No Pennsylvania court has yet examined the product liability of an online marketplace like Amazon's for sales made by third parties through its platform.” 930 F.3d at 154.


Our task, as a federal court applying state law, is to predict how the Pennsylvania Supreme Court would decide the case.  We must take special care to apply state law and not to participate in an effort to change it.

Id. (citation and quotation marks omitted). Judge Scirica cautioned that the majority opinion “substantially widens” what has previously been a narrow, case-specific exception to the typical rule for identifying products liability defendants sufficiently within the chain of distribution. “A ‘seller’ in Pennsylvania is almost always an actor who transfers ownership from itself to the customer, something Amazon does not do for Marketplace sellers like The Furry Gang.” 154. See, e.g., Chelton v. Keystone Oilfield Supply Co., 777 F. Supp. 125 (W.D. Pa. 1991) (wholesaler); Burch v. Sears, Roebuck & Co., 467 A.2d 615 (Pa. Super. 1983) (retailer); Francioni, supra, at 739-40 (lessor); Villari v. Terminix Int'l, Inc., 663 F. Supp. 727 (E.D. Pa. 1988) (pest control company supplying insecticide as part of service). Each of these cases holds liable a “seller” who transferred the right to possess the product from itself to the customer.[5]


Judge Scirica expressed concern that the two-judge majority decision sets it apart from sets the Third Circuit apart from all other United States Courts of Appeals which have dealt with issue whether Amazon is a “seller” within the meaning of § 402A for transactions using the online Amazon Marketplace.[6] He considers these federal decisions significant, because despite the “nuances” of the particular state’s substantive product liability law, each like Pennsylvania has adopted § 402A of the Restatement (Second) of Torts and the federal courts were all dealing with the same question - whether and under what circumstances Amazon could justifiably and fairly be considered a “seller” subjecting it to strict liability for Amazon Marketplace transactions.


Judge Scirica cautioned that “policy factors alone cannot create seller status.” Unlike the two-judge majority, Scirica would resolve each of the four Francioni factors in Amazon’s favor in this case.


More important to Judge Scirica was the threshold question: whether Amazon’s Marketplace played the role of a true product supplier for The Furry Gang in this case? As the Pennsylvania Supreme Court explained, the Francioni test applied in Musser guides “whether a particular supplier of products, whose status as a supplier is already determined, is to be held liable for damages caused by defects in the products supplied.” Cafazzo v. Cent. Med. Health Servs., 668 A.2d 521, 525 (Pa. 1995).


According to Judge Scirica, “as Cafazzo makes evident, once a court has determined a defendant is ‘too tangential’ to be considered a supplier of the product at issue, applying the Francioni policy factors is unnecessary. Id. at 523-24.” Reiterating that Amazon neither stored nor shipped the product, id. at 159, the dissent concluded that the Amazon Marketplace is “too tangential” to the sales of third-party products to be considered a supplier or seller of those products under Pennsylvania law. “The Francioni policy factors therefore cannot establish seller liability.” Id.


Interestingly, Cafazzo was decided after Musser, yet played no role in the Oberdorf panel’s majority decision. The Cafazzo court stated, “It is . . . not clear enough that strict liability has afforded the hoped for panacea in the conventional products area that it should be extended so cavalierly in cases such as the present one.”  668 A.2d at 527.


Finally, Judge Scirica suggested that The Third Restatement of Torts offers guidance to the meaning of “seller” consistent with his analysis. Id. at 162.[7]




Following the Third Circuit panel’s July 3, 2019 split decision in favor of plaintiff Oberdorf, Amazon immediately filed a petition for rehearing en banc. On August 23, 2019, that petition was granted and the July 3, 2019 opinion and judgment were vacated. Oberdorf v. Inc., 936 F.3d 182 (3d Cir. 2019) (per curiam). As of this publication, the rehearing has not yet been briefed or scheduled.



In obtaining reargument, Amazon forcefully argued that the Third Circuit, exercising diversity jurisdiction, should not have interpreted Pennsylvania law in a novel fashion to expand tort liability in the absence of any state court precedent for doing so.  “A federal court in diversity is not free to engraft onto those state rules exceptions or modifications which may commend themselves to the federal court, but which have not commended themselves to the State in which the federal court sits.”  Day & Zimmerman, Inc. v. Challoner, 423 U.S. 3, 4 (1975); see Hicks v. Feiock, 485 U.S. 624, 630 n.3 (1988) (federal courts are “not free to apply a different rule however desirable it may believe it to be”).


In this respect, the panel’s majority decision was contrary to these decisions of the Supreme Court, and other Third Circuit precedent holding that federal courts sitting in diversity cannot “act as … judicial pioneer[s]” by deciding “whether and to what extent they will expand state common law.”  City of Phila. v. Lead Indus. Ass’n, 994 F.2d 112, 123 (3d Cir. 1993).  The majority’s adoption of unprecedented “seller” liability under Pennsylvania law − with far-reaching consequences for all other online businesses and service providers departed from a long line of Third Circuit precedent.[8]


Pa. R. A. P. 3341. Petitions for Certification of Questions of Pennsylvania Law Will the Third Circuit Court of Appeals certify the question for decision by the Pennsylvania Supreme Court whether - and under what circumstances - Amazon is or may be a “seller” under § 402A of the Restatement (Second) of Torts?[9] This tool is available to the Third Circuit and that Court has used this process before in the product liability context. See, e.g., Berrier v. Simplicity Mfg., Inc., 563 F.3d 38, 45-46 (2009) (requesting certification of the question of bystander liability under the then Azzarello-based body of Pennsylvania law, since abrogated by Tincher and progeny.).[10] There is no indication at this time that the Third Circuit Court of Appeals is considering taking such a step, nor is there any way to predict how The Pennsylvania Supreme Court would respond in the post-Tincher area, since the Tincher court expressly espoused the incremental development of the common law in the absence of legislation. 104 A.3d at 397.




1)      Amazon would be saddled with unprecedented and unjustified product liability exposure, based not on a duty undertaken but rather on Amazon’s size and stature. However, that same size and stature means that any novel “duty” to ensure the safety of products marketed by others on its online marketplace would require it somehow to ascertain the safety of millions of products.


2)      It is fundamentally unfair to impose on Amazon liability for defects in products it does not manufacture, where its connection to the myriad of vendors’ products sold through its online platform is extremely remote. Typically, Amazon does not even supply the products (other than its own brands, or “fulfillment” setups). Here, “The Furry Gang” continued to operate on Amazon for over a year after Oberdorf’s injury, so if the plaintiff had acted more quickly, the actual seller remained available.


3)      The new realities of online marketing require judicial restraint, not judicial pioneering, especially in diversity cases in which the federal courts have to predict how the Pennsylvania Supreme Court and others like it would deal with the realities of e-commerce and on-line retail.


4)      Such decision will affect many other online retailers, much smaller and more limited than Amazon. The effect will be a chilling one, resulting in third-party vendors losing valuable markets and consumers having fewer choices.  This new duty could embrace other similarly situated entities, such as newspapers with product-related want ads and shopping center owners operating brick-and-mortar marketplaces.


5)      Any such novel expansion is best left to a state’s highest Court or legislature, where the decision will ultimately have to be made.






[1] Pennsylvania has adopted § 402A of the Restatement (Second) of Torts, which states that: “(1) [o]ne who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property if (a) the seller is engaged in the business of selling such a product, and (b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold. (2) The rule stated in Subsection (1) applies although (a) the seller has exercised all possible care in the preparation and sale of his product, and (b) the user or consumer has not bought the product from or entered into any contractual relation with the seller.” Restatement (Second) of Torts § 402A (1965); Tincher v. Omega Flex, Inc., 104 A.3d 328 (Pa. 2014); Webb v. Zern, 220 A.2d 853 (Pa. 1966). Tincher v. Omega Flex, Inc., 180 A.3d 386 (Pa. Super. 2018)(Tincher II).


[2] The Court also found Oberdorf’s claims of Amazon’s liability as the online publisher of a third party’s content are barred by the Communications Decency Act (“CDA”). This article is limited to a discussion of the meaning of “seller” for purposes of Pennsylvania product liability law.


[3] By the terms of the Amazon's Services Business Solutions Agreement with third-party vendors, Amazon serves as the conduit through which payment flows, collecting money from purchasers and directing it to third-party vendors after deducting a fee. Amazon requires third-party vendors, as a condition of utilizing the Amazon Marketplace, to agree to conduct all communication with consumers through Amazon’s messaging platform. Amazon retains the right to edit the content and determine the appearance of product listings. Finally, Amazon imposes rules on how third-party vendors should handle shipping and returns.

[4] Judge Roth wrote the majority opinion, and Judge Shwartz joined in that opinion. Judge Scirica authored an opinion dissenting from the majority holding that Amazon was a “seller” for purposes of Restatement (Second) of Torts § 402A. The portion of the decision concerning CDA preemption (see n.2) was unanimous and is not subject to en banc reconsideration.

[5] In Pennsylvania, “sellers” have included traditional wholesalers and retailers, as well as those who supply a product through a transaction other than a sale.

[6] Even in cases involving “fulfillment” services, the Federal Appeals Courts’ decisions have reached the same conclusion. See, e.g., Erie Ins. Co. v., Inc., supra.

[7] In Tincher v. Omega Flex, Inc., supra, the Pennsylvania Supreme Court expressed its willingness to adopt sections of the Third Restatement of Torts “if the cause of action and its contours are consistent with the nature of the tort and Pennsylvania’s traditional common law formulation.” 104 A.3d at 354.


[8] Sheridan v. NGK Metals Corp., 609 F.3d 239 (3d Cir. 2010); Travelers Indemnity Co. v. Dammann & Co., 594 F.3d 238 (3d Cir. 2010); Lexington Nat’l Ins. Corp. v. Ranger Ins. Co., 326 F.3d 416 (3d Cir. 2003); Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002), Camden County Board of Chosen Freeholders v. Beretta, U.S.A. Corp., 273 F.3d 536 (3d Cir. 2001); Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78 (3d Cir. 2000); Leo v. Kerr-McGee Chemical Corp., 37 F.3d 96 (3d Cir. 1994); Adams v. Madison Realty & Development, 853 F.2d 163 (3d Cir. 1988), Falcone v. Columbia Pictures Industries, 805 F.2d 115 (3d Cir. 1986); Bruffett v. Warner Communications, 692 F.2d 910 (3d Cir. 1982); McKenna v. Ortho Pharmaceutical Corp., 622 F.2d 657 (3d Cir. 1980).


[9] Pa. R. A. P. 3341. Petitions for Certification of Questions of Pennsylvania Law (a)  General Rule.—“On the motion of a party or sua sponte, any of the following courts may file a petition for certification with the Prothonotary of the [Pennsylvania] Supreme Court:


(2) Any United States Court of Appeals.

(c) Standards.-- The [Pennsylvania] Supreme Court shall not accept certification unless all facts material to the question of law to be determined are undisputed, and the question of law is one that the petitioning court has not previously decided. The [Pennsylvania] Supreme Court may accept certification of a question of Pennsylvania law only where there are special and important reasons therefor, including, but not limited to, any of the following:

(1) The question of law is one of first impression and is of such substantial public importance as to require prompt and definitive resolution by the Supreme Court;

(2) The question of law is one with respect to which there are conflicting decisions in other courts; or

(3) The question of law concerns an unsettled issue of the constitutionality, construction, or application of a statute of this Commonwealth.”


[10] The Supreme Court denied that petition because at that time (pre-Tincher) Pennsylvania products law was in a great state of flux.


Full Article


October 2019

Liability Issues with Machine Learning Artificial Intelligence

By:  Sarah B. Jansen and Holly Whitlock

HeplerBroom LLC


Advanced technology is now prevalent in many industries such as e-commerce, medicine, construction and transportation. In fact, many of these industries have been immersed in advanced technology over the past few decades and are no strangers to the use of artificial intelligence (“AI”). For instance, Amazon (the world’s largest e-commerce marketplace) reportedly uses over 200,000 robots in sorting distribution centers worldwide.[i] 


Much advanced technology in use involves “machine learning,” a branch of artificial intelligence. Computer Scientist and machine learning pioneer, Tom M. Mitchell, defines machine learning as “the study of computer algorithms that allow computer programs to automatically improve through experience.[ii] In other words, “machine learning” involves computers that train themselves rather than simply following detailed programs inputted by humans.


Due to the anticipated insufficiency of negligence theories for claims involving machine learning AI (i.e., negligence principles generally focus on human conduct that may not appropriately be extended to AI), many legal scholars predict new, potential liability theories in future litigation. For example, a common enterprise theory of liability has been suggested.[iii]  Under such theory, all individual persons and entities creating, implementing and utilizing AI would jointly bear some responsibility for any damages the AI may cause.[iv] The system would not attempt to assess degrees of culpability or find fault, recognizing that such a finding “may be impossible because of the black-box nature of AI.” The implementation of such a system would require significant oversight to avoid resulting in a windfall to potential claimants since the system would include an “inference of liability” as to all relevant parties “allowing the injured party to be made whole.”[v]

Some commentators have also proposed expanding products liability theories against the creators of autonomous robots, based on the idea that, if a robot causes harm, this is implicit proof of some defect with the robot.[vi] This would likely resemble a strict liability standard—if a robot causes harm, the creator must pay. This approach may make sense in that the creator is in the best position to prevent harm and absorb economic losses stemming from such harm, but it may also go too far in removing any inquiry into human fault for the harm and may stifle innovation with autonomous AI.[vii]

Attorney Matthew Wagner, in his article, “You Can’t Sue a Robot: Are Existing Tort Theories Ready for Artificial Intelligence?” also points to another possible solution in looking to modern worker’s compensation schemes. [viii] As Wagner notes, “the purpose of workers’ compensation laws is to avoid endless litigation over who is at fault when an employee suffers an injury at work.” [ix] Workers’ compensation insurance spreads the risk across all employers, provides remedies for individual workers, and shields individual employers from catastrophic damages.[x] This approach may properly expand into AI use as well.

Other possible theories have also been recognized, including treating robots as chattel or children for legal purposes, or requiring robot creators and/or users to register robots as some variation of a corporate entity.[xi] However, each of these theories have their respective downfalls and do not quite cover all aspects of machine learning AI liability issues. As such, it has been suggested that a new synthesis be developed based on the strengths and weaknesses of existing legal theories, much like what was done for corporations in the 19th and 20th centuries; courts attempted to fit corporations into one of the existing folds, but in time the shortcomings of such an approach became apparent and courts and legislators went to work, over many decades, crafting litigation rules for corporations that were attentive to the unique nature and functioning of corporations.[xii] This is likely where machine learning AI is headed—toward a new set of legal rules and standards governing liability issues.

Pending cases may also assist in giving some direction as to future litigants and causes of action involving liability for malfunctions/losses due to autonomous AI.  Two cases – purportedly the first of their kind - are currently being played out; both are in their nascent stages though so only time will tell how useful either of them will be in providing direction for future claims.


The first case is Wood v. State of Arizona, filed on March 18, 2019, involving an autonomous vehicle designed by Uber Technologies Inc. that struck and killed a pedestrian while autonomously driving with a distracted “back up” human driver.[xiii] Shortly after the incident, Uber settled with the decedent’s family, and almost a year later, Uber was relieved of all criminal liability, most likely due to a lack of proof of any criminal mens rea.[xiv] But after the criminal investigation results became known, the decedent’s family filed the March 2019 civil lawsuit against two entities: the State of Arizona and the City of Tempe. The Complaint alleges two counts of negligence against both, accusing them of inadequate oversite of driverless vehicles and a violation of a non-delegable duty to provide reasonably safe roads.[xv]


Interestingly, a year or so after the incident, in conducting their own independent investigation, the National Transportation Safety Board determined the accident was, in fact, caused by a variety of factors, none of which involved the State of Arizona’s or the City of Tempe’s negligence. An article in The Economist Magazine summarized the NTSB’s findings as follows:


“The vehicle recognized the pedestrian in the road, but its perception system got confused: it classified her as an unknown object, then as a vehicle and finally as a bicycle, whose path it could not predict. Just 1.3 seconds before impact, the self-driving system realized that emergency braking was needed. But the car’s built-in emergency braking system had been disabled, to prevent conflict with the self-driving system; instead a human safety operator in the vehicle is expected to brake when needed. But the safety operator, who had been looking down at the self-driving system’s display screen, failed to brake in time.”[xvi] 


            So, according to the findings, a system-design flaw and human oversight error caused the accident, but nevertheless the decedent’s family seeks to hold the State of Arizona and the City of Tempe responsible for even allowing autonomous vehicles on the streets. Time will tell about these entities’ culpabilities, but regardless, it is fascinating to see where liability for damages caused by artificial intelligence may be assessed, now and in the future.


The second suit, filed in the UK in May 2019, seeks $23 million in damages allegedly caused by artificial intelligence.[xvii] The plaintiff, Samathur Li Kin-kan, is suing Tyndaris Investments, a company that utilized a supercomputer called “K1” to manage plaintiff’s investment money.[xviii] The supercomputer engaged in machine learning and studied Internet sources such as news and social networks for forecasting of investment transactions in the United States. Then, based on the information it gathered, it made investment transactions, and continued to study and adjust investment strategies according to its own research.[xix] The plaintiff alleges K1 did not perform as promised—the supercomputer lost him over $20 million in a single day.[xx]


This case has garnered significant publicity as an opportunity for courts to finally address where liability should fall for decisions made entirely by a machine.[xxi] However, it is worth noting the actual allegations are against Tynardis’ CEO, Raffaele Costa, who convinced Li Ki-kan to utilize K1 for investment trading, and the crux of the lawsuit centers around Costa’s representations to Ki-kan about K1’s money-making abilities.[xxii] So while this case has the potential to iron out some liability issues for cases involving damages caused by AI—for example who is responsible for the losses: Tyndaris as the company selling the product? Costa as the CEO who personally marketed K1’s capabilities? K1’s software developer or other vendors who contributed to making K1? Li Kin-kan himself for how he utilized K1?—in the end, it may amount only to a misrepresentation/false advertising issue.[xxiii] The case will reportedly proceed to trial in early 2020.[xxiv] 


[i] Peter Holley, Amazon’s One-Day Delivery Depends on the Work of Thousands of Robots, THE WASHINGTON POST, June 15, 2019,



[ii] Iriondo, Roberto Differences Between AI and Machine Learning, and Why it Matters. Data Driven Investor, October 15, 2018, Accessed on August 18, 2019.



[iii] Sullivan, Hannah and Scott J. Schweikart, “Are Current Tort Liability Doctrines Adequate for Addressing Injury Caused by AI?”  AMA J Ethics. 2019;21(2):E160-166. doi: 10.1001/amajethics.2019.160.


[iv] Id.





[vi] Wagner, Matthew. You Can’t Sue a Robot: Are Existing Tort Theories Ready for Artificial Intelligence? Frost, Brown, Todd LLC, February 7, 2018, Accessed on August 18, 2019.




[vii] Id.




[viii] Id.




[ix] Id.




[x] Id.



[xi] Michalski, Roger (2018) "How to Sue a Robot," Utah Law Review: Vol. 2018 : No. 5 , Article 3.


[xii] Id.


[xiii] Christine Wood, et. al. v. State of Arizona, et. al., Case No. CV2019 090948 (Sup. Ct. Az. March 18, 2019).



[xiv] Zaveri, Mihir. Prosecutors Don’t Plan to Charge Uber in Self-Driving Car’s Fatal Accident. The New York Times, March 5, 2019,



[xv] Christine Wood, et. al. v. State of Arizona, et. al., Case No. CV2019 090948 (Sup. Ct. Az. March 18, 2019).


[xvi] T.S. Why Uber’s self-driving car killed a pedestrian. The Economist, May 29, 2018. Accessed on August 18, 2019.


[xvii] Blythe, Liz and Zoe Sims. The Case of the Robot and the $23 million – Who to sue when things go wrong?  July 5, 2019,


[xviii] Beardsworth, Thomas and Nishant Kumar, Bloomberg, Future Finance: Who to Sue When a Robot Loses Your Fortune.



[xix] 2019: Submission of the claim against bad operation of the robot. Accessed on August 18, 2019.



[xx] Beardsworth, Thomas and Nishant Kumar, Bloomberg, Future Finance: Who to Sue When a Robot Loses Your Fortune.


[xxi] Blythe, Liz and Zoe Sims. The Case of the Robot and the $23 million – Who to sue when things go wrong?  July 5, 2019,



[xxii] 2019: Submission of the claim against bad operation of the robot. Accessed on August 18, 2019.


[xxiii] Id.



[xxiv] Blythe, Liz and Zoe Sims. The Case of the Robot and the $23 million – Who to sue when things go wrong?  July 5, 2019,



June 2019


Lessons Learned in Three Decades as National Coordinating Counsel

By Scott Dickens

Scott Dickens is the managing member of Fultz Maddox Dickens PLC, a 27-lawyer firm with offices in Louisville, Kentucky, and Indianapolis, Indiana. In addition to his role as national coordinating counsel, Mr. Dickens has represented a variety of clients in pharmaceutical, nursing home and assisted living facility, mass tort, insurance coverage, personal injury, property damage, landlord-tenant, and trucking litigation throughout the United States. Mr. Dickens also volunteers weekly in a faith-based reentry program for incarcerated fathers at a state prison. He is a member of the Federation of Defense and Corporate Counsel, DRI, and Trial Attorneys of America.


Click here to view the full article.



February 2018

Submitted by: Jean Faure



MT Supreme Court creates Asbestos Claims Court


(Click here to read the order)


The Montana Supreme Court on November 28, 2017 ordered the creation of an Asbestos Claims Court to resolve hundreds of asbestos-related claims pending in Montana courts.  The Order is based on legislation from the 2001 Legislature which authorized the creation of an Asbestos Claims Court contingent on a determination by the Montana supreme court that, based on decisions reached in the federal bankruptcy proceedings involving W.R. Grace and other circumstances that the court deems advisable to consider, there exists sufficient need to implement the provisions of the Act. The preamble attached to legislation provided:


“WHEREAS, the Legislature finds that there are a large number of asbestos-related claims by Montana citizens that are primarily within the venue of the 19th Judicial District; and


WHEREAS, the large number of asbestos-related claims will impede the ability of the single District Court Judge in the 19th Judicial District to handle the normal case load of the District and will raise several potential conflicts of interest; and


WHEREAS, it is imperative that asbestos-related claims be dealt with expeditiously in order to allow Montana citizens with life-threatening illnesses to receive a speedy resolution of their claims; and


WHEREAS, Article VII, section 1, of the Montana Constitution allows additional courts to be provided by law.”


Despite the focus of the legislation being on the 19th Judicial District (Lincoln County, Montana), the order affects cases filed in any county in the State of Montana.  In what can only be described as forum shopping, Plaintiff’s counsel elected to file all of the asbestos-related claims arising from any Lincoln County commercial activity in Cascade County, Great Falls, Montana, which long has been considered as a plaintiff-friendly forum. 


And although the statutes authorizing the Asbestos Claims Court provide that a civil action involving an asbestos-related claim may be tried by a judge pro tempore or special master, agreed upon in writing by the parties litigant or their attorneys of record, the Court on its own appointed Flathead County District Court Judge Amy Eddy to preside over the all pre-trial proceedings.  The Order suggests that consolidating the cases will allow discovery and settlement discussions to proceed quickly.  Any cases that are not settled will be tried in the Judicial District in which the cases originated. The order requires attorneys representing parties in cases arising from asbestos-related claims to file a notice of appearance with the Asbestos Court by Dec. 28, 2017.  What happens after that point remains to be seen.







Welcome to the 2017-2018 Products Liability Section!  The overall goal for the year is increased engagement of our membership as well as growing our membership.  I am honored to again by the Section Chair and want to introduce you to your Leadership Team, in alphabetical order:

Tiffany Alexander – Vice Chair for Membership --

Drilling down into the goals, and here is where you can get involved, we have identified 5 key areas and one exciting project for the Section.  They are:

  1. Make sure our Section has a column in the monthly newsletter. This is a chance for you to write a short article about something going on with the Section or in the Products Liability universe.  If you are interested in this, please contact Pete Doody.

  2. Grow our in-house section membership both from existing members and by recruiting new FDCC members. And to recruit new private practice attorneys to FDCC.  Tiffany Alexander is heading up this project, and its success relies on each one of us.  We ask that Section members submit as potential FDCC members 1 outside lawyer and 1 industry person to Tiffany, and provide the following information:

  3. Have a meaningful blog post or article monthly, but at the very least every quarter. Teresa Arnold-Simmons is your go to person for this.  In this issue of the Newsletter, Dart Meadows has written a piece on the Hague Convention.  What have you worked on that  you want to share with the Section?
  4. Partner with Toxic Torts and Environmental Law for the Amelia Island program.  Dart Meadows is working with the TTEL Section on this and if you want to be involved, reach out NOW because the clock is ticking.
  5. Work on a developing programs for Maui. Miranda Soto drew this tough duty and I am sure that many folks would love to have a reason to go to Maui.

The exciting project that our Section has been asked to pilot is the use of #Slack ( as the communications platform for the Section.  The Data Breach, Privacy and Cyber Insurance Section has been using it since March as their bulletin board for new developments, introductions, direct messaging and information sharing.  We are going to try to take it up a notch or two.  Two useful articles to get you oriented to Slack are How to Use Slack and Be A Productivity Hero for Your Remote Team and How To Use Slack For Team Communication | Workzone.  Our #Slack community is set up with “Channels” for our members to use to communicate and share on items of general interest as well as for specific practice areas.  So far we have set up Channels for specialty areas Machinery, Medical Devices, Recreational Products, and Automotive. We also have Channels for our members to get involved with Section goals and obligations – Membership, Amelia Island, Maui, LMC, CCS, I3, and blog posts. It is quite easy to get set up by going to the Get Started Page and look for the fdccproductssection channel and start posting! The goal is to reduce “email noise”, create value and increase engagement. We hope to have a webinar on using Slack in the coming months but for now, please just noodle around with it to see if it is something the FDCC should be adopting more broadly.  I will be championing this project and welcome any assistance.

As you can see, there is a lot going on and a lot for you to get involved in. Please reach out to your leadership team on any issue, not just our assigned duties.  We are here to serve you and the FDCC.  Put us to work!

We look forward to a great year.



APRIL 2017

It was a pleasure seeing some of  you at the DRI Products Conference cocktail get together and at the conference generally.  It was even better seeing y’all in Charleston for the Winter meeting.  The attendance at our joint program with the Transportation Section on autonomous vehicles was one of the better attended morning programs (helps being early in the week!) and the feedback was universally positive.  Thanks to all who attended.


I want to also remind everyone to get their Swiss on and be sure to register for the Annual Meeting in Montreux.  Besides being a fantastic location filled with fantastic sites, food, wine and chocolate, it will be yet another opportunity to spend time with FDCC friends and get involved with the Section.  Our Section will be sponsoring a presentation “Emerging Issues in Third-Party Litigation Funding” with Scott Incerto and Dan McGrath leading the program.  The brochure summary should read something like this:


Third-party litigation funding generally means that someone other than party, the party’s counsel, or other entity with a pre-existing contractual relationship with the party (like an indemnitor or liability insurer) provides non-recourse funding for a dispute.  From humble beginnings as a mechanism to pursue (mainly) personal injury claims, litigation funding is now a global growth industry that encompasses multiple funding options for a wide field of civil disputes -  from antitrust to all manner of class actions.  In this program our focus is on the United States, the European Union, the United Kingdom and Canada.  We discuss the basics of third party litigation funding; various funding-related regulatory and legal developments; the impact of litigation funding on defendants; and some of the special issues that arise from its use (e.g., disclosure, privilege; forum shopping). 


Finally, and not to be too blunt, the level of participation in our Section has a lot of room to grow.  There is no reason why this Section should not be leading the way in blogs, newsletters, membership recruitment, speaking and other of the benefits available to members of the FDCC.  If you think you don’t have time to get more involved, you are wrong.  If you think that you are too new to the organization to get involved, you are wrong.  If you think you are too old to get involved, you are wrong. If products isn’t a big part of your practice so you thing why bother getting involved, you are wrong.  Like any aspect of the FDCC, what you put in is multiplied in what you get back.  Please complete this survey to help us better serve you and help us find a way to get you involved: FDCC Products Liability Section Survey.

Have a great Spring!!


Matthew Cairns

Products Liability Section Chair


August 2017 Blog

Effect of Water Splash, Inc. v. Menon, No. 16-254, 2017 WL 2216933 (U.S. May 22, 2017), on Service of Process Upon Foreign Manufacturer


This memorandum addresses the impact of the U.S. Supreme Court’s recent decision in Water Splash, Inc. v. Menon, No. 16-254, 2017 WL 2216933 (U.S. May 22, 2017), on whether compliance with the Hague Convention is required to serve a foreign manufacturer.  This will specifically address an Italian entity.

1.              Impact of Water Splash on Service by Mail


                           Article 10(a) of the Hague Convention states, “[p]rovided the State of designation does not object, the [Hague] Convention shall not interfere with (a) the freedom to send judicial documents, by postal channels, directly to persons abroad.”  In Graphic Styles/Styles Int’l LLC v. Men’s Wear Creations, 99 F. Supp. 3d 519 (E.D. Pa. 2015), the court analyzed Article 10(a) and held service of process by registered mail upon a foreign defendant outside the United States is improper under the Hague Convention.  The Graphic Styles court held the drafters’ use of the word “send” instead of “serve” or “service” in Article 10(a) was intentional.  “Service of process refers to a formal delivery of documents that is legally sufficient to charge the defendant with notice of a pending action.”  99 F. Supp. 3d at 523 (quoting Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 700 (1988)).  “Service,” however,


does not refer to subsequent filings in the same action. Having established a highly formalized methodology to ensure that foreign defendants would have timely, effective notice that an action is pending against them, it appears that the drafters wanted to make clear [in Article 10(a)] that the same deliberate, albeit time-consuming, methodology would not also be necessary for subsequent pleadings, once the defendant already had received formal notice of the lawsuit.  Making clear that the method of service the Convention created was only required for the initial service of process and not for later “sending of judicial documents” is not superfluous, it is language that appears to be designed to ensure that parties can process with alacrity the many documents they must exchange during litigation.

Id.  In other words, the court held, the intent of Article 10(a) is that the procedures of the Hague Convention do not have to be utilized for sending subsequent filings in an action to a defendant in a foreign country; compliance with Hague Convention procedures is required, however, to effect initial service of process on a foreign defendant.  See id.

                 This argument was recently expressly rejected by the U.S. Supreme Court in Water Splash, Inc. v. Menon, No. 16-254, 2017 WL 2216933 (U.S. May 22, 2017),[1] in which the Court, resolving a conflict among courts, held Article 10(a)’s phrase “send judicial documents” encompasses sending documents abroad for purposes of service of process.  Article 10(a) accordingly does not prohibit service of process abroad by mail. 

                 The Court held the text and structure of the Convention strongly suggest Article 10(a) pertains to service of documents.  The key word in Article 10(a) – “send” – is a broad term, and there is no apparent reason why it would exclude the transmission of documents for the purpose of service.  The Convention’s preamble and Article 1 limit the scope of the Convention to service of documents abroad, and its full title includes the phrase “Service Abroad.”  “[T]the text of the Convention reveals … the scope of the Convention is limited to service of documents.  In light of that, it would be quite strange if Article 10(a) – apparently alone among the Convention’s provisions – concerned something other than service of documents.”   2017 WL 2216933 at *4.  Since Article 1 already eliminates the possibility that the Convention would apply to any communications that do not culminate in service, “in order for Article 10(a) to do any work, it must pertain to sending documents for the purposes of service.”  Id. at *5 (emphasis in original).  Suggesting that Article 10(a) applies not to service of process but only to the service of “post-answer judicial documents” lacks any plausible textual footing in Article 10.  See id.


                  The Court found unpersuasive the counterargument that Article 10(a)’s “send judicial documents” should mean something different than “effect service of judicial documents.”  Compelling structural considerations strongly suggest Article 10(a) pertains to service of documents.  And reading the word “send” as a broad concept that includes, but is not limited to, service is more plausible than interpreting the word to exclude service, and it does not create the same superfluity problem.  See id. at *6.


                   The Court further found three extratextual sources support this reading.  One, the Convention’s drafting history strongly suggests the drafters understood service by postal channels was permissible.  See id. at *6-7.  Two, in the 50 years since the Convention was adopted, the Executive Branch has consistently maintained the Hague Service Convention allows service by mail.  See id. at *7.  And three, other signatories to the Convention have consistently adopted this view.  See id. at *7-8.


                   The Court cautioned its conclusion does not mean the Convention affirmatively authorizes service by mail, but “Article 10(a) simply provides that, as long as the receiving state does not object, the Convention does not ‘interfere with ... the freedom’ to serve documents through postal channels.”  Id. at *8.  “In other words, in cases governed by the Hague Service Convention, service by mail is permissible if two conditions are met: first, the receiving state has not objected to service by mail; and second, service by mail is authorized under otherwise-applicable law.”  Id.  The Court vacated the judgment of the Texas Court of Appeals, which had concluded the Convention prohibited service by mail outright, and remanded for consideration whether Texas law authorizes the methods of service used by the plaintiff.


                    As to the “two conditions” that must be satisfied in order to effect international service by mail,  first, Italy has not objected to service by mail under Article 10(a).  See, e.g., Blue Underground Inc v. Caputo, CV 14-1343-GW(PJWX), 2014 WL 12573679, at *3 (C.D. Cal. Sept. 8, 2014); Shoham v. Islamic Republic of Iran, 922 F. Supp. 2d 44, 50 (D.D.C. 2013); The Knit With v. Knitting Fever, Inc., No. CIV. A. 08-4221, 2010 WL 2788203, *7 (E.D. Pa. July 13, 2010).


                   Second, service by mail must be “authorized under otherwise-applicable law,” meaning “the law of the state where the action is pending [must] authorize the particular method of service employed.”  The Knit With, 2010 WL 2788203 at *7; see also Valdez v. Takata Corp., No. CV 09-533 LH/DJS, 2010 WL 11505704, at *4 (D.N.M. June 24, 2010) (“Affirmative authorization for such service [abroad by mail], and any requirements as to how it must be accomplished, must come from the law of the forum in which the suit is filed, in this case from the United States’ Federal Rules of Civil Procedure.”); Kita v. Superior Court, No. B239971, 2013 WL 164707, at *6 (Cal. App. Jan. 16, 2013) (validity of plaintiff’s service upon defendant in Japan “by ordinary mail must [be determined by reference to] California law” where case was filed in California state court). 


2.              Authorized Methods for Service Abroad in Cases Filed in Federal Court


                        With regard to cases filed in federal district courts, Federal Rule of Civil Procedure 4(h)(2) provides that a foreign corporation may be served “at a place not within any judicial district of the United States, in any manner prescribed by Rule 4(f) for serving an individual” (except personal delivery).  Thus, a plaintiff must comply with the requirements of Rule 4(f).  See The Knit With, 2010 WL 2788203 at *4.[2] 


                         Rule 4(f)(1) provides that a foreign corporation may be served abroad “by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention ….”  Some courts have held that, because Article 10(a) of the Hague Convention allows for service by mail, to comply with Rule 4(f)(1) a plaintiff may simply send the summons and complaint directly to the defendant by registered mail or private mail delivery service.  See, e.g., Ghostbed, Inc. v. Casper Sleep, Inc., 315 F.R.D. 689, 692 (S.D. Fla. 2016) (granting plaintiff permission to serve defendant in Cayman Islands “via international mail” pursuant to Rule 4(f)(1) and Hague Convention); Zelasko v. Comerio, No. CIV.08-366-MJR, 2008 WL 2755463, at *1 (S.D. Ill. July 14, 2008) (plaintiff’s sending untranslated complaint and summons directly to defendant corporation by “registered certified mail,” rather than through central authority for process in Italy, was proper under Article 10(a) of Hague Convention and Rule 4(f)(1)); Schiffer v. Mazda Motor Corp., 192 F.R.D. 335, 339 (N.D. Ga. 2000) (service of untranslated complaint and summons on Japanese corporation directly by registered mail, without going through central authority, held permissible under Article 10(a) of Hague Convention and Rule 4(f)(1)); EOI Corp. v. Med. Mktg. Ltd., 172 F.R.D. 133, 143 (D.N.J. 1997) (service of summons and complaint via DHL delivery directly to private residence of corporate defendant’s managing director was sufficient to comply with Hague Convention and Rule 4(f)(1)); R. Griggs Group Ltd. v. Filanto SpA, 920 F. Supp. 1100, 1107 (D. Nev. 1996) (mailing of summons and complaint directly to defendant corporation’s president at corporation’s offices in Italy via Federal Express was sufficient service under Hague Convention and Rule 4(f)(1)). 


                       Other courts, however, have held that, because the Hague Convention does not affirmatively authorize service by mail, service by mail is not an “internationally agreed means” of service under Rule 4(f)(1), and a plaintiff must go through the foreign country’s central authority to serve a defendant abroad under Rule 4(f)(1).  See Brockmeyer v. May, 383 F.3d 798, 804 (9th Cir. 2004); In re Coudert Bros. LLP, No. 16-CV-8237 (KMK), 2017 WL 1944162, at *8 (S.D.N.Y. May 10, 2017) (“because service via mail on a defendant residing in a country that is a signatory to the Hague Convention is not … an ‘internationally agreed means of service,’ Rule 4(f)(1) cannot serve as the basis for service of process” by registered mail).


                       But other provisions of Rule 4(f) do appear to authorize serving a defendant abroad by registered mail.  See Brockmeyer, 383 F.3d at 804-07; The Knit With, 2010 WL 2788203 at *8.  First, Rule 4(f)(2)(C)(ii) authorizes service by “using any form of mail that the clerk [of the federal district court in which the action is pending] addresses and sends to the [defendant] and that requires a signed receipt.”  See Brockmeyer, 383 F.3d at 808 (“Service by international mail is affirmatively authorized by Rule 4(f)(2)(C)(ii), which requires that service be sent by the clerk of the court, using a form of mail requiring a signed receipt.”); Ghostbed, Inc., 315 F.R.D. at 693 (approving of service via international mail under Rule 4(f)(2) and directing plaintiffs to deliver documents to clerk’s office for service); Ballard v. Tyco Int’l, Ltd., No. CIV. 04-CV-1336-PB, 2005 WL 1863492, at *4 (D.N.H. Aug. 4, 2005) (service abroad by mail is authorized only if done by clerk of federal district court in which suit is filed); cf. The Knit With, 2010 WL 2788203 at *8, 11 (plaintiff’s counsel’s serving corporate defendant by Federal Express directly to Italy was ineffective under either Hague Convention or Rule 4(f)).


                       Second, Rule 4(f)(3) allows service “by other means not prohibited by international agreement, as the court orders.”  See Brockmeyer, 383 F.3d at 808-09 (“Service by international mail is also affirmatively authorized by Rule 4(f)(3), which requires that the mailing procedure have been specifically directed by the district court.”).  This means of service requires prior authorization from the court in which the action was filed.


                      Third, Rule 4(f)(2)(A) allows service “as prescribed by the foreign country’s law for service in that country in an action in its courts of general jurisdiction.”  See Brockmeyer, 383 F.3d at 808.  The U.S. Department of State lists the following as the conditions for service of process in Italy:


Requests [for service of process of U.S. documents in Italy] should be completed in duplicate and submitted with two sets of the documents to be served, and translations, directly to Italy’s Central Authority for the Hague Service Convention. … The Italian Central Authority has informed the Hague Conference for Private International Law that only judicial officers working for the Italian courts may serve documents in Italy (Article 10(b and c)).  Private attorneys or individuals are not authorized to effect service in Italy.  International service of process by registered mail is allowed in Italy, but this method will only record delivery to an address and not to a person.; see also The Knit With, 2010 WL 2788203 at *9. 


                      Accordingly, it appears service by registered mail is generally considered a proper means of serving a foreign defendant abroad.  But whether a plaintiff may send the complaint and summons directly to the defendant or is required to have the clerk of court do so will depend on the jurisdiction in which the particular action is filed.  A foreign entity should look to the forum court’s precedents and interpretations of Rule 4(f) and the Hague Convention to determine whether the plaintiff has properly served them.


3.              Authorized Methods for Service Abroad in Cases Filed in State Court


                         Each state has its own set of procedural rules that set forth the proper methods of service of complaints filed in the state’s courts.  In the event the foreign entity is sued in state court, they should look to the particular state’s courts’ interpretations of its procedural rules governing service to determine whether the plaintiff has properly effectuated service.


                         In Georgia, for instance, O.C.G.A. § 9-11-4(f)(3) is very similar to Federal Rule of Civil Procedure 4(f) and authorizes various means by which “service upon persons in a foreign country” may be effected.  O.C.G.A. § 9-11-4(f)(3)(A) authorizes service of process on a person in a foreign country “[b]y any internationally agreed means reasonably calculated to give notice, such as those means authorized by the Hague Convention ….”  Under O.C.G.A. § 9-11-4(f)(3)(B)(iii)(II), such service may be made by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court in which the action has been filed to the party to be served.  O.C.G.A. § 9-11-4(f)(3)(C) authorizes such service “[b]y other means not prohibited by international agreement as may be directed by the court.”  And O.C.G.A. § 9-11-4(f)(3)(B)(i) authorizes service “[i]n the manner prescribed by the law of the foreign country for service in that country in an action in any of its courts of general jurisdiction.” 


                         While there do not appear to be any Georgia cases directly addressing the question, it is doubtful service may be effected upon persons in a foreign country by regular first-class mail.  O.C.G.A. § 9-11-4(f)(3) does not authorize such service and, because it is patterned after Federal Rule of Civil Procedure 4(f), federal cases barring service abroad by regular first-class mail will be persuasive in arguing against the propriety of such service under O.C.G.A. § 9-11-4(f)(3) in Georgia state court actions.


                          In addition, as an alternate method of serving a corporation, O.C.G.A. § 14-2-504(b) provides that, if a corporation has no registered agent in Georgia, “the corporation may be served by registered or certified mail or statutory overnight delivery, return receipt requested, addressed to the secretary of the corporation at its principal office.”  See Rovema Verpackungsmaschinen v. Deloach, 232 Ga. App. 212, 214 (1998) (plaintiffs could have served German corporate defendant, which had no agent for service of process in Georgia, in Germany pursuant to Hague Convention or any other acceptable means under Georgia law, including serving German defendant’s registered agent or corporate secretary at its principal office pursuant to OCGA § 14-2-504).  Under the court’s holding in Deloach, it appears service upon a corporation in a foreign country may be effected by registered mail.


                          If a foreign corporation is not registered to do business in Georgia but is subject to Georgia’s long-arm jurisdiction, it “may be served with a summons outside the state in the same manner as service is made within the state by any person authorized to make service by the laws of the … country in which service is made or by any duly qualified attorney, solicitor, barrister, or the equivalent in such jurisdiction.”  O.C.G.A. § 9-10-94; see also Deloach, 232 Ga. App. at 213.


[1] The Water Splash case originated in the Texas state court system.

[2] It appears generally accepted that service by regular first-class mail is ineffective.  See, e.g., Brockmeyer v. May, 383 F.3d 798, 804 (9th Cir. 2004) (“no part of Rule 4(f) authorizes service by ordinary international first class mail”); Ballard v. Tyco Int’l, Ltd., No. CIV.A.04-1336, 2005 WL 1863492, at *1 (D.N.H. Aug. 4, 2005) (plaintiffs’ mailing copy of summons and complaint by regular mail directly to defendant’s place of business in London ineffective under Rule 4(f)).  

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