## Facts

- A Virginia resident entered a written employment contract in Virginia with a German corporation to serve as president of the corporation’s wholly owned U.S. subsidiary.
- The subsidiary allegedly failed to generate revenue, and the corporation terminated the employment under a contract provision requiring three months’ notice for a termination without cause.
- After an audit, the corporation alleged the employee breached fiduciary duties and failed to return records, reclassified the termination as “for cause,” and refused to pay the three months’ severance.
- The employee filed a federal breach-of-contract action in the Eastern District of Virginia against the German corporation.
- The employee first attempted service by using Virginia substituted service on the Clerk of the Virginia State Corporation Commission, which resulted in mailing process to the defendant in Germany.
- The defendant moved to dismiss for insufficient service; the court granted the employee 60 days to complete proper service.
- The employee then attempted service by serving the defendant’s U.S.-based outside counsel in Virginia, who was also the registered agent and corporate secretary for the U.S. subsidiary, but was not formally designated as the German parent’s agent for service.
- The defendant again moved to dismiss under Rule 12(b)(5) for insufficient service of process.

## Issues

1. Whether service effectuated through Virginia substituted-service procedures that resulted in mailing process to Germany was valid when the Hague Service Convention applied and Germany had objected to service by mail.
2. Whether service on the defendant’s U.S. attorney (who also served as the U.S. subsidiary’s registered agent) constituted service on the German parent as an authorized agent under Rule 4.
3. Whether service on the subsidiary’s registered agent could be imputed to the foreign parent based solely on the parent–subsidiary relationship.

## Decision

- The court granted the defendant’s motion to dismiss for insufficient service of process.
- Service through the state substituted-service mechanism was invalid because the Hague Service Convention governed service in Germany and Germany had objected to mail service.
- Service on the defendant’s attorney was invalid because there was no clear evidence the attorney was authorized to accept service for the defendant.
- Service on the subsidiary’s registered agent was not service on the parent absent proof of agency, alter-ego status, or explicit authorization.
- Dismissal was warranted because the plaintiff had already received additional time to cure defective service and again failed to effect proper service.

## Legal Principles

- When a defendant must be served in a country to which the Hague Service Convention applies, the Convention’s methods are mandatory and displace inconsistent state-law service mechanisms.
- If the destination country has objected to service by mail under the Hague Service Convention, service methods that rely on mailing process into that country are ineffective.
- An attorney’s representation of a client does not, by itself, confer authority to accept service of process; authorization to accept service must be shown by clear evidence of appointment or other legally sufficient authority.
- A parent corporation and its wholly owned subsidiary are separate legal entities; service on the subsidiary or its registered agent is not imputed to the parent without a showing of agency/alter ego or explicit designation for service.

## Conclusion

The court dismissed the action because the plaintiff twice failed to serve the German corporation in a manner permitted by the Hague Service Convention and Rule 4, and neither service through state substituted procedures resulting in mail to Germany nor service on counsel or the U.S. subsidiary’s agent established valid service on the foreign parent.


Davies v. Jobs & Adverts Online, GmbH, 94 F. Supp. 2d 719 (E.D. Va. 2000)