## Facts

- Rio Properties, Inc. operated a Las Vegas hotel and casino and owned federally registered “RIO” trademarks, including use on the Internet.
- Rio International Interlink, a Costa Rica–based Internet sports gambling business, operated an online sportsbook through “riosports.com” and a toll-free telephone number, and used “Rio” in its business names and marketing.
- Rio Properties learned of Rio International’s “Rio” branding through Nevada-facing advertisements in gambling publications and radio advertisements aired in Las Vegas.
- Rio Properties sued in the District of Nevada for trademark infringement based on Rio International’s use of “RIO” marks in connection with Internet gambling and marketing aimed at Nevada residents.
- Rio Properties attempted traditional service at an advertised Miami address that was a courier/forwarding location; Rio International’s counsel contacted opposing counsel but refused to accept service, and no workable physical address was found.
- The district court authorized alternative service by (1) regular mail to Rio International’s attorney, (2) regular mail to the courier/forwarder, and (3) email to Rio International.
- The district court denied motions challenging service and personal jurisdiction; after Rio International failed to comply with discovery orders despite warnings, the court imposed monetary sanctions and entered default judgment as a terminating sanction.

## Issues

1. Whether court-authorized service by email and regular mail on a foreign defendant under Federal Rule of Civil Procedure 4(f)(3) satisfied Rule 4 and due process.
2. Whether Nevada courts could exercise specific personal jurisdiction over a foreign Internet gambling business based on its website and Nevada-targeted advertising.
3. Whether the district court abused its discretion by entering default judgment and awarding fees and costs as sanctions for repeated discovery noncompliance.

## Decision

- The Ninth Circuit affirmed the judgment in full.
- Service authorized under Rule 4(f)(3), including service by email, was valid because it was court-directed, not prohibited by international agreement, and reasonably calculated to provide notice.
- Nevada had specific personal jurisdiction because Rio International purposefully directed conduct at Nevada, the trademark claims arose from that forum-directed conduct, and jurisdiction was reasonable.
- Default judgment and monetary sanctions were within the district court’s discretion given repeated discovery violations, explicit warnings, and consideration of lesser sanctions.

## Legal Principles

- Rule 4(f)(3) is not subordinate to Rule 4(f)(1) or 4(f)(2); a plaintiff need not exhaust other methods before seeking court-ordered alternative service.
- Service under Rule 4(f)(3) must (1) be directed by the court and (2) not be prohibited by an applicable international agreement.
- Any authorized method of service must satisfy due process by being reasonably calculated, under the circumstances, to apprise the defendant of the action.
- Email service may be appropriate for foreign defendants, particularly where the defendant conducts business online, uses email as a reliable channel of communication, and traditional service is impracticable or evaded.
- Specific personal jurisdiction may be exercised over a foreign Internet business when the defendant purposefully directs activities at the forum (including targeted advertising and commercial interactions), the claims arise out of those activities, and the exercise of jurisdiction is reasonable.
- Terminating sanctions, including default judgment, may be imposed for willful or repeated discovery misconduct when the court has warned of consequences and reasonably determined that lesser sanctions would be ineffective.

## Conclusion

The Ninth Circuit upheld alternative service by email and mail under Rule 4(f)(3), sustained specific jurisdiction over a foreign online gambling operator that targeted Nevada, and affirmed default judgment and fee awards as permissible sanctions for persistent, warned discovery violations.


Rio Properties, Inc. v. Rio Int’l Interlink, 284 F.3d 1007 (9th Cir. 2002)