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Department of Justice Calling for Rule Change to Pursue Foreign Businesses
Author: Scarinci Hollenbeck, LLC
Date: April 24, 2013
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The federal government has recently stepped up its efforts to pursue legal action against foreign businesses that have broken U.S. laws. After a series of legal setbacks, the Department of Justice (DOJ) is looking to amend the Federal Rules of Criminal Procedure.
Companies and individuals may be held liable to breaking U.S. criminal laws without ever stepping foot in this country. However, the Federal Rules of Criminal Procedure require the government to serve an organizational defendant by delivering a summons to a representative of the entity as well as mailing the summons to the defendant’s last-known domestic address or principal place of business. Problems arise when a foreign company does not maintain either an office or mailing address in the United States.
Most recently, the rules threatened an economic espionage case against four Chinese corporations accused of purchasing DuPont trade secrets. A similar issue arose in the criminal copyright infringement case against Megaupload and its founder, Kim Dotcom.
Accordingly, the DOJ has recommended that Rule 4 be amended to remove the requirement that a copy of the summons be sent to the organization’s last known mailing address within the district or principal place of business within the United States. The agency has also requested that Rule 4 be amended to provide the means to serve a summons upon an organization located outside the United States.
As explained by the DOJ, “The proposed amendments are necessary to ensure that organizations that commit domestic offenses are not able to avoid liability through the simple expedients of declining to maintain an agent, place of business and mailing address within the United States.”
Prosecutors maintain that it would be absurd to let foreign companies evade the U.S. justice system by simply failing to open a post office box. However, the remedy that they are requesting—amending the rules of criminal procedure—is also a tall order.
If you have any questions about the DOJ’s proposal or how it may impact your operations, please contact me, Jay Surgent, or the Scarinci Hollenbeck attorney with whom you work.
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