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What was wrong with Megaupload case?

“Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied.” In short, a corporation such as Megaupload could not be brought within the jurisdiction of eastern district of Virginia court for criminal proceedings absent its consent.

By its clear terms Rule 4(c)(2) does not allow for service of a summons on a foreign defendant in a foreign country. Rule 4(c)(3)(c) imposes two conjunctive requirements: First, the summons must be served upon an individual in one of the categories enumerated in the Rule. Second, and in addition, a copy must be mailed to the corporation’s last known address in its district or principal place of business in the United States. The government has failed to comply with either requirement.

This failure to serve the company is not surprising, because Megaupload did not have any officers or authorized agents for service of process in the United States. Even if the government could find a Megaupload officer or agent within the United States — if, for example, Mr. Dotcom is eventually extradited to USA — the government could not properly serve Megaupload. Megaupload does not have an office in the United States, nor has it had one previously. Service of a criminal summons on Megaupload is therefore impossible, which forecloses the government from prosecuting Megaupload.

A corporate defendant such as Megaupload is entitled to due process of law. Due process includes both procedural and substantive components. The government has seized Megaupload’s property and domain name, ruined its reputation, and destroyed its business pursuant to an indictment which is fatally flawed as a jurisdictional matter. Megaupload has found itself in a state of abeyance, with no end in sight.

As a result of the government’s inability to properly serve the summons on Megaupload, court lacks jurisdiction over the company. In the absence of effective service of process, criminal proceedings against Megaupload cannot commence. Megaupload is thus deprived of any procedure to clear its name or recoup its property, in clear violation of its due process rights.

The government answered that Megaupload could cure this defect by simply accepting service, waiving its jurisdictional arguments, and voluntarily appearing to challenge the allegations. As a foreign corporation with no agents or offices in the United States, Megaupload lies beyond the intended class of criminal defendants amenable to service of process under Federal Rule of Criminal Procedure 4. To suggest that the government is free to indict such defendants and to impose the substantial harms that necessarily accompany an indictment, only to insist that the defendant must subject itself to the court’s jurisdiction in order to challenge the government’s overreach, is to render the Federal Rules less than meaningless.

The court proposed to dismiss superseding indictment against Defendant Megaupload Limited.

But later the court held that rule 4 does not require a result so extreme as dismissal, and to the court’s knowledge, no court has ever dismissed an indictment for failure to meet rule 4’ secondary mailing requirement.