In re Pangang Group Company, Ltd.; Pangang Group Steel Vanadium & Titanium Company, Ltd.; Pangang Group Titanium Industry Company, Ltd.; Pangang Group International Economic & Trading Company,
United States District Court for the Northern District of California, Oakland, Respondent, Pangang Group Company, Ltd.; Pangang Group Steel Vanadium & Titanium Company, Ltd.; Pangang Group Titanium Industry Company, Ltd.; Pangang Group International Economic & Trading Company, Petitioners, United States of America, Real Party in Interest.
and Submitted June 13, 2018
Petition For Writ Of Mandamus No. 4:11-cr-00573-JSW
Before: Michael R. Murphy, [*] Richard A. Paez, and Sandra S.
Ikuta, Circuit Judges.
/ Fed. R. Crim. P. 4(c)(3)(D)
panel denied a petition for a writ of mandamus, brought by
companies owned and controlled by the Chinese government,
asking this court to vacate the district court's order
denying their motion to quash service of criminal summonses
the government had delivered to attorneys for the companies.
companies argued that the delivery of the summonses did not
effect service on them under Fed. R. Crim. P. 4(c)(3)(D). The
panel held that where such delivery provides actual notice to
a foreign organization, it satisfies Rule 4. The panel
concluded that because the evidence established that the
companies had actual notice of the summonses, the district
court did not err, let alone clearly err, in denying their
motion to quash service. The panel therefore denied the
petition for a writ of mandamus.
the government delivered criminal summonses to attorneys for
the Pangang Group Company, Ltd. and its subsidiaries Pangang
Group Titanium Industry Company, Pangang Group Steel Vanadium
& Titanium Company, Ltd., and Pangang Group International
Economic & Trading Company (collectively, the
"Pangang Companies"), the attorneys made a special
appearance on behalf of their clients to quash service of the
summonses. The district court denied their motion. The
Pangang Companies petition for a writ of mandamus directing
the district court to vacate its order, arguing that the
delivery of the summonses did not effect service on the
Pangang Companies under Rule 4(c)(3)(D) of the Federal Rules
of Criminal Procedure (which we refer to as the Criminal
Rules). We conclude that where such delivery provides actual
notice to a foreign organization, it satisfies Criminal Rule
4. Because the evidence established that the Pangang
Companies had actual notice of the summonses, the district
court did not err, let alone clearly err, in denying the
Pangang Companies' motion to quash. Therefore, we deny
petition requires us to review the intertwined history of the
2016 amendments to Criminal Rule 4 and the government's
repeated attempts at service on the Pangang Companies.
February 7, 2012, the government indicted the Pangang
Companies on charges of conspiracy to commit economic
espionage, in violation of 18 U.S.C. § 1831(a)(5), and
attempted economic espionage, in violation of 18 U.S.C.
§ 1831(a)(3) and (4). The Pangang Companies are
enterprises owned and controlled by the Chinese government.
According to the indictment, the Pangang Companies conspired
with individuals to illegally obtain trade secrets from E.I.
du Pont de Nemours & Company related to chloride-route
titanium dioxide production technology.
federal magistrate judge issued summonses to each of the
Pangang Companies. The government served the summonses at the
New Jersey office of a U.S. subsidiary of one of the Pangang
Companies, Pan America, Inc., and mailed copies to the same
location. At the time, the government attempted service
pursuant to the 2011 version of Criminal Rule 4, which
provides the process for issuing and executing an arrest
warrant or summons to a defendant if a criminal complaint
establishes probable cause to believe that an offense has
been committed and that the defendant committed it. Fed. R.
Crim. P. 4(a). A summons "require[s] the defendant to
appear before a magistrate judge at a stated time and
place." Fed. R. Crim. P. 4(b)(2). The 2011 version of
Criminal Rule 4 provided that a summons is served on an
organization "by delivering a copy to an officer, to a
managing or general agent, or to another agent appointed or
legally authorized to receive service of process." Fed.
R. Crim. P. 4(c)(3)(C) (2011). A copy must also "be
mailed to the organization's last known address within
the district or to its principal place of business elsewhere
in the United States." Id.
March 29, 2012, the Pangang Companies made a special
appearance in district court through two attorneys from Quinn
Emanuel Urquhart & Sullivan, LLP (the "Quinn Emanuel
attorneys"), and filed a motion to quash service of the
summonses on the grounds that service on Pan America was
defective under Criminal Rule 4. On July 23, 2012, the
district court granted the motion, reasoning that service had
not complied with the delivery requirement of Criminal Rule 4
for three of the Pangang Companies, and had not satisfied the
mailing requirement as to all four Pangang Companies,
see Fed. R. Crim. P. 4(c)(3)(C) (2011).
August 2012 and November 2012, the government attempted to
serve the Pangang Companies by mailing and delivering the
summonses to various individuals and addresses within the
United States that were associated with the Pangang
Companies. In addition, the Department of Justice (DOJ)
formally requested that an agency of the Chinese government
serve the Pangang Companies. The Chinese government refused.
February 7, 2013, the Pangang Companies made a second special
appearance in district court through the Quinn Emanuel
attorneys, and filed another motion to quash. The district
court granted the motion, holding that none of the agents and
addresses bore the requisite connection to the Pangang
Companies required under Criminal Rule 4(c)(3)(C). The
government asked the district court to reconsider its
rulings, arguing that the service of the summonses had
substantially complied with Criminal Rule 4. The court denied
the government's motion.
the government was struggling to serve the Pangang Companies,
the DOJ asked the Advisory Committee on the Criminal Rules to
make changes to Criminal Rule 4. For those unfamiliar with
the rulemaking process, we provide a brief overview. The
Rules Enabling Act of 1934, 28 U.S.C. §§ 2071-2077,
authorized the Supreme Court to promulgate rules of procedure
which have the force and effect of law. The work of
formulating and revising such rules has been delegated to the
Judicial Conference of the United States (the principal
policy-making body of the U.S. Courts). Id. §
2073. The Judicial Conference formed a Committee on Rules of
Practice and Procedure (referred to as the Standing
Committee) and five advisory rules committees, the Advisory
Committees on Appellate, Bankruptcy, Civil, Criminal, and
Evidence Rules. See id. § 2073(a)(2), (b). By
statute, the meetings of each Advisory Committee are
generally open to the public, and minutes of each meeting are
maintained by the committee and made available to the public.
Id. § 2073(c)(1).
rulemaking process proceeds as follows. After evaluating
proposals for new rules or amendments to existing rules, an
Advisory Committee may recommend a proposed change to the
Standing Committee. See id. § 2073(b). If the
Standing Committee approves the proposal, the Advisory
Committee notifies the public regarding the proposed rule or
amendment and solicits public comment. See
Procedures for the Judicial Conference's Committee on
Rules of Practice and Procedure and Its Advisory Rules
Committees, § 440.20.40 (2011). After evaluating and
responding to such comments, the Advisory Committee may
recommend a final rule or amendment to the Standing
Committee. See id. § 440.20.50. The Standing
Committee then makes an independent recommendation to the
Judicial Conference, see id. §§
440.30.10(d), 440.30.20(d), which in turn recommends the
proposed changes to the Supreme Court. If the Supreme Court
approves the proposal, it will promulgate the revised rules
to take effect on December 1 of the same year unless Congress
enacts legislation to the contrary. See 28 U.S.C.
asked the Advisory Committee to amend Criminal Rule 4 to
allow service on an organization outside of the United States
either by serving the organization under the laws of the
foreign jurisdiction or through a non-exhaustive list of
other means of service. Letter from Lanny A. Breuer,
Assistant Attorney General, Dep't of Justice, to Judge
Reena Raggi, Chair of Advisory Comm. on Criminal Rules (Oct.
25, 2012). The Advisory Committee developed a revised
version of the proposal. Advisory Comm. on Criminal Rules,
May 2014 Report to Standing Committee, at 2, 6 (May 5, 2014),
[hereinafter Initial Advisory Committee
Report]. In its report to the Standing Committee,
the Advisory Committee proposed three amendments to Criminal
Rule 4. Id. at 2. First, it proposed adding the
following sentence to the end of Criminal Rule 4(a): "If
an organizational defendant fails to appear in response to a
summons, a judge may take any action authorized by law."
Id. at 3. Second, it proposed eliminating the
requirement that a summons be separately mailed to an
organizational defendant within the United States, except in
cases where service is "made on a statutorily appointed
agent when the statute itself requires a mailing as well as
personal service." Id. Finally, it proposed
adding a new subdivision (D) to Criminal Rule 4(c)(3), which
would authorize serving a summons on an organization not
within a judicial district of the United States by (1)
delivery on an appropriate individual in compliance with the
foreign jurisdiction's law; or (2) "any other means
that gives notice," including by a method stipulated by
the parties, undertaken by a foreign authority in response to
a formal request, or "permitted by applicable
international agreement." Id. at 4-5.
Standing Committee approved the Advisory Committee's
recommendation to publish the proposed amendments for public
comment. Comm. on Rules of Practice and Procedure, September
2014 Report to the Judicial Conference, at 18-19 (Sept. 1,
2014); see also Comm. on Rules of
Practice and Procedure, Preliminary Draft of Proposed
Amendments to the Federal Rules of Criminal Procedure, at
333-34 (Aug. 14, 2014).
Advisory Committee received six public comments on its
proposal, including a comment letter from the Quinn Emanuel
attorneys who had previously represented the Pangang
Companies in their special appearances in 2012 and 2013.
Advisory Comm. on Criminal Rules, March 2015 Agenda Book, at
71 (Mar. 16-17, 2015). As explained in more detail below, the
Quinn Emanuel attorneys contended that allowing service on an
organization to be effected "by any other means that
gives notice" would result in a range of evils. Robert
P. Feldman & John M. Potter, Comment Letter on Proposed
Amendment to Federal Rule of Criminal Procedure 4, at 1 (Feb.
13, 2015) [hereinafter Quinn Emanuel Comment
Letter]. Among other things, it would allow the
government to serve a summons by informal means such as
"simply by sending a letter or an email," which
would "render superfluous the limitations imposed in the
other subsections." Id. at 2. It would also
"insulate service from judicial review" by
effectively eliminating special appearances. Id. at
1-2. In response to the Quinn Emanuel letter, the DOJ
submitted a comment letter arguing that the evils identified
by Quinn Emanuel were features, not flaws, of the proposed
amendment; indeed, the point of the amendment was to ensure
that "[i]f the defendant corporation has notice of a
summons, it ought to be considered served." Letter from
Jonathan Wroblewski, Dir., Office of Policy and Legislation,
Dep't of Justice, to Judge David M. Lawson, Chair of
Subcomm. on Rule 4, at 2 (Feb. 20, 2015). While an
organizational defendant could still make special appearances
to contest other threshold issues, the DOJ stated,
"[w]hen a party makes a special appearance, any
facts that a court learns as a result of that
appearance, including that a party has received actual notice
of the prosecution, may be considered by the court."
Id. at 74-75. According to the DOJ, "feigning
ignorance of a criminal summons of which the foreign
organization does have notice (either by declining to appear,
or by appearing and denying knowledge) is not a legitimate
interest the criminal rules should protect."
Id. at 75.
considering the comments, the Advisory Committee approved the
amendments to Criminal Rule 4 as published. In its report to
the Standing Committee, the Advisory Committee discussed at
some length "the open-ended provision in (c)(3)(D)(ii)
that allows service 'by any other means that gives
notice, '" and explained that this language
"provides flexibility for cases in which the Department
of Justice concludes that service cannot be made (or made
without undue difficulty) by the enumerated means."
Advisory Comm. on Criminal Rules, May 2015 Report to Standing
Committee, at 3 (May 6, 2015) [hereinafter Final Advisory
Committee Report]. Therefore, the Advisory Committee
chose not to require the government "to show other
options were not feasible or had been exhausted before
resorting to certain options for service." Id.
at 7. The Advisory Committee report also directly addressed
and rejected Quinn Emanuel's comments. Id. at
5-7. The Advisory Committee recommended that the Standing
Committee adopt the amendments to Criminal Rule 4 as
published. Id. at 5.
Standing Committee did so, and transmitted them to the
Judicial Conference. Comm. on Rules of Practice and
Procedure, September 2015 Report to the Judicial Conference,
at 2, 23-25 (Sept. 1, 2015). After approval by the Judicial
Conference, the Supreme Court promulgated the amendments to
Criminal Rule 4 and transmitted them to Congress on April 28,
2016. The transmittal instructed that the amendments
"shall take effect on December 1, 2016, and shall govern
in all proceedings in criminal cases thereafter commenced
and, insofar as just and practicable, all proceedings then
pending." Congress did not stop the rule from
amendments to Criminal Rule 4 took effect December 1, 2016.
The new subdivision, Criminal Rule 4(c)(3)(D), provides in
(D) A summons is served on an organization not within a
judicial district of the United States:
(i) by delivering a copy, in a manner authorized by the
foreign jurisdiction's law, to an officer, to a managing
or general agent, or to an agent appointed or legally