IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 00-20136
_____________________
NINA SCHRODER MAGNESS;
AGNES SCHRODER ATKINS;
LEE ALEXANDER MAGNESS,
Plaintiffs-Appellees,
versus
RUSSIAN FEDERATION; ET AL.,
Defendants,
RUSSIAN FEDERATION; RUSSIAN
MINISTRY OF CULTURE;
RUSSIAN STATE DIAMOND FUND,
Defendants-Appellants.
_________________________________________________________________
Appeal from the United States District Court for the
Southern District of Texas, Houston
_________________________________________________________________
April 24, 2001
Before JOLLY and DAVIS, Circuit Judges, and RESTANI, Judge.*
E. GRADY JOLLY, Circuit Judge:
During the Bolshevik Revolution of 1918, the Soviet government
expropriated a piano factory and mansion owned by the Magness
family in St. Petersburg, Russia. In 1994, the appellees,
descendants of the Magness family, believed that changes in the
*
Judge of the U.S. Court of International Trade, sitting by
designation.
laws of the Russian Federation may now authorize the recovery of
their property. The Magness descendants met with Russian officials
in St. Petersburg in an unsuccessful attempt to regain the real
estate. This suit followed and a default judgment was entered
against the Russian defendants in the amount of $234 million plus
interest.
In this appeal we are called upon to interpret the service of
process provisions of the Foreign Sovereign Immunities Act
(“FSIA”), 28 U.S.C. § 1608(a-b), which outlines the methods for
serving process upon foreign entities. Specifically, we must
determine whether those provisions demand strict compliance
therewith, or whether either of these provisions can be satisfied
by some form of substantial compliance. In keeping with the plain
language of the FSIA, we conclude that Congress intended to require
strict compliance with section 1608(a) as to service upon foreign
states and their political subdivisions. However, we also hold
that substantial compliance--that is, actual notice of the suit and
the consequences thereof--can be sufficient to satisfy the
requirements of section 1608(b) as to service upon an agency or
instrumentality of a foreign state. In conclusion, we vacate the
default judgment and remand to allow proper service on the
defendants.
I
2
We turn first to the procedural history of this case. In July
1997, the Magness descendants filed this suit in the Southern
District of Texas, seeking a TRO that would prevent a traveling
exhibit of Russian Romanov family jewels, then on display in
Houston, from leaving the jurisdiction. The named defendants
included the Russian Federation, the Russian Ministry of Culture,
the Russian State Diamond Fund,1 and the Cultural Foundation
sponsoring the exhibition.2 The suit alleged that the defendants
had nationalized the Magness family property in 1918 and further
had expropriated several antique pianos owned by the plaintiffs in
the 1990s. The Russian Federation obtained United States counsel,
who represented its interest at the TRO hearing. The court denied
the TRO request.
After a year-long dormancy, in August 1998 the district court
ordered the Magness descendants to serve the summons and complaint
on the defendants, and to do so before September 1, 1998. They
attempted to serve the defendants in several ways. They first
served the attorneys who represented the Russian Federation at the
TRO hearing. In addition, they served the Texas Secretary of
1
The State Diamond Fund is an agency of the Russian Federation
created to house and oversee Russia’s collection of precious
stones.
2
The default judgment eventually awarded against the American-
Russian Cultural Cooperation Foundation was later dropped by the
court, and the Foundation is not a party to this appeal.
3
State, with instructions that the Secretary forward the summons and
complaint to “the Russian Federation c/o Boris Yeltsin and the
Russian Ministry of Culture/Russian State Diamond Fund c/o Deputy
Minister of Culture Mikhail Schvidkoy.” The Magness descendants
also forwarded the summons and complaint to the Director of Special
Consular Affairs at the State Department, with instructions to
serve all defendants through diplomatic channels.3 Finally, the
Magness descendants purported to serve process by sending the
summons and complaint directly to the Russian Deputy Minister of
Culture in Moscow.4
On November 13, 1998, the State Department informed the
Magness descendants that it could not serve the defendants because
of several procedural errors.5 On November 19, 1998, the Magness
descendants filed a motion for a default judgment. The court held
a hearing on the motion the following day, during which the Magness
descendants submitted evidence that they had served the defendants
3
While the Magness descendants recognize that service was
never completed through the State Department, they allege that the
defendants received service through the Texas Secretary of State
and otherwise had actual notice of the suit.
4
The record shows that some persons signed for these mailed
documents. However, there is no indication of who specifically
signed for the documents. Nor is there any evidence of who in the
Russian government may have seen the documents.
5
The State Department gave the Magness descendants’ counsel
advice on correcting these errors and offered a contact should they
have any further questions.
4
by the methods previously described. The court determined that the
defendants had been properly served and entered a default judgment.
The court approved the Magness descendants’ proposed findings of
facts and conclusions of law on June 8, 1999, and entered a final
judgment against the defendants. See Magness v. Russian
Federation, 54 F.Supp.2d 700 (S.D. Tex. 1999).
In October 1999, the defendants retained United States counsel
in an attempt to vacate the default judgment under Rule 60. On
January 12, 2000, the district court denied the motion, ruling that
the Magness descendants had “substantially complied” with the
service of process requirements of the FSIA and provided sufficient
notice of the suit to the defendants. This appeal followed.
II
A district court’s denial of a motion to vacate under Rule 60
is reviewed for abuse of discretion. See CJC Holdings v. Wright &
Lato, Inc., 979 F.2d 60, 63 (5th Cir. 1992). Because of the
seriousness of a default judgment, “even a slight abuse [of
discretion] may justify reversal.” Seven Elves, Inc. v. Eskenazi,
635 F.2d 396, 402 (5th Cir. 1981)).
The FSIA outlines specific provisions for service of process
upon foreign governments and agencies in 28 U.S.C. § 1608.6 The
6
In full, § 1608(a-b) reads (emphasis added):
(a) Service in the courts of the United States and of the
5
States shall be made upon a foreign state or political
subdivision of a foreign state:
(1) by delivery of a copy of the summons and
complaint in accordance with any special
arrangement for service between the plaintiff
and the foreign state or political
subdivision; or
(2) if no special arrangement exists, by
delivery of a copy of the summons and
complaint in accordance with an applicable
international convention on service of
judicial documents; or
(3) if service cannot be made under paragraphs
(1) or (2), by sending a copy of the summons
and complaint and a notice of suit, together
with a translation of each into the official
language of the foreign state, by any form of
mail requiring a signed receipt, to be
addressed and dispatched by the clerk of the
court to the head of the ministry of foreign
affairs of the foreign state concerned, or
(4) if service cannot be made within 30 days
under paragraph (3), by sending two copies of
the summons and complaint and a notice of
suit, together with a translation of each into
the official language of the foreign state, by
any form of mail requiring a signed receipt,
to be addressed and dispatched by the clerk of
the court to the Secretary of State in
Washington, District of Columbia, to the
attention of the Director of Special Consular
Services–-and the Secretary shall transmit one
copy of the papers through diplomatic channels
to the foreign state and shall send to the
clerk of the court a certified copy of the
diplomatic note indicating when the papers
were transmitted.
(b) Service in the courts of the United States and of the
States shall be made upon an agency or instrumentality of
6
Magness descendants acknowledge that they failed strictly to comply
with the service provisions of the FSIA.7 The provisions for
a foreign state:
(1) by delivery of a copy of the summons and
complaint in accordance with any special
arrangement for service between the plaintiff
and the agency or instrumentality; or
(2) if no special arrangement exists, by
delivery of a copy of the summons and
complaint either to an officer, a managing or
general agent, or to any other agent
authorized by appointment or by law to receive
service of process in the United States; or in
accordance with an applicable international
convention on service of judicial documents;
or
(3) if service cannot be made under paragraphs
(1) or (2), and if reasonably calculated to
give actual notice, by delivery of a copy of
the summons and complaint, together with a
translation of each into the official language
of the foreign state–-
(A) as directed by an authority of the foreign state
or political subdivision in response to a letter rogatory
or request or
(B) by any form of mail requiring a signed receipt,
to be addressed and dispatched by the clerk of the court
to the agency or instrumentality to be served, or
(C) as directed by order of the court consistent
with the law of the place where service is to be made.
7
All parties agree that service upon the Russian Federation
(as a foreign state) and the Russian Ministry of Culture (as a
political subdivision) is dictated by § 1608(a), while service upon
the Russian State Diamond Fund (as an instrumentality of Russia) is
governed by § 1608(b). Under 28 U.S.C. § 1603(a), the term
“political subdivision” includes all governmental units beneath the
7
service under section 1608 are hierarchical, such that a plaintiff
must attempt the methods of service in the order they are laid out
in the statute.8 Regarding the Russian Federation and the Russian
Ministry of Culture under section 1608(a), they must first be
served in accordance with any special arrangement between the
parties or in accordance with an applicable international
convention. See 28 U.S.C. § 1608(a)(1-2). Given that there was no
special arrangement or international convention governing service
here, the Magness descendants are required to have attempted
service on the head of the Russian Ministry of Foreign Affairs.
See 28 U.S.C. § 1608(a)(3). Finally, if service could not be made
through the Ministry of Foreign Affairs within thirty days, they
could resort to service through the State Department. See 28
U.S.C. § 1608(a)(4).
central government. An “agency or instrumentality” of a foreign
state, on the other hand, is defined as any organ or political
subdivision of a foreign state which is a separate legal person or
entity. 28 U.S.C. § 1603(b). Whether an entity is a “separate
legal person” depends upon the nature of its “core functions”--
governmental vs. commercial--and whether the entity is treated as
a separate legal entity under the laws of the foreign state. See
Transaero v. La Fuerza Aerea Boliviana, 30 F.3d 148, 151 (D.C. Cir.
1994); Hyatt Corp. v. Stanton, 945 F.Supp. 675, 683 (S.D.N.Y.
1996). Under this formulation, the Russian Ministry of Culture is
governed by § 1608(a), while the Russian State Diamond Fund is a
separate legal entity governed by § 1608(b).
8
The legislative history of the FSIA confirms this structure
of the service provisions, in that Congress expressly provided that
“[t]here is a hierarchy in the methods of service.” H.R. Rep. No.
1487, 94th Cong., 2d Sess. (1976), at 11.
8
Instead of asking the clerk of the district court to send the
summons and notice of suit by return receipt mail to the head of
the Russian foreign ministry under section 1608(a)(3), the Magness
descendants sent their complaint to the Texas Secretary of State
for forwarding to Boris Yeltsin, and sent the complaint directly to
the Russian Deputy Minister of Culture. Thus, the FSIA was not
strictly complied with as to the Russian Federation and Ministry of
Culture.9
9
As to the defendant Russian Federation, the Magness
descendants argue that any service of process defense was waived
when the Russian Federation sent counsel to appear at the TRO
emergency hearing in July 1997. At the time of the TRO hearing,
the Magness descendants had not yet attempted service; thus,
Russia could not have been expected to raise a faulty service
defense. The law establishes that waiver under the FSIA occurs
“only when the sovereign/state fails to assert immunity in a
responsive pleading.” MCI Telecomm. Corp. v. Alhadhood, 82 F.3d
658, 661-62 (5th Cir. 1996).
The cases cited by the Magness descendants fail to support
sufficiently their argument that Russia’s appearance at an
emergency TRO hearing before any attempted service waived any
faulty service defense. The Magness descendants primarily rely on
Broadcast Music, Inc. v. M.T.S. Enterprises, Inc., 811 F.2d 278,
281 (5th Cir. 1987), for this proposition. However, the defendants
in Broadcast Music actively participated in events surrounding the
trial for months by accepting deposition notices, engaging in
settlement discussions, and attending pretrial meetings. Here,
Russia made only one appearance--at an emergency TRO hearing held
one day after the claim was filed--and Russia’s TRO counsel
informed the Magness descendants that they were unable to accept
service on behalf of Russia.
Even the district court apparently did not think the Russian
Federation had waived its right to proper service. After a year of
inaction following the TRO denial, the court threatened to dismiss
the Magness descendants’ suit if they did not properly serve the
defendants by September 1, 1998. The court, it appears to us,
would not have ordered such service upon Russia if it believed the
9
As to the Russian State Diamond Fund, section 1608(b)
(applicable to instrumentalities of a foreign state) was similarly
not strictly followed. A plaintiff must first attempt service in
accordance with any special arrangement between the parties. See
28 U.S.C. § 1608(b)(1). Next, a plaintiff may serve through an
authorized agent in the United States or according to an applicable
international convention. See 28 U.S.C. § 1608(b)(2). If no such
agent or convention exists, as was the case here, a plaintiff may
serve papers via a letter rogatory,10 through the clerk of the
court, or as directed by the court, if these methods are
“reasonably calculated to give actual notice.” See 28 U.S.C.
§ 1608(b)(3). Instead of following the statute, the Magness
descendants forwarded a copy of their papers to the State
Department and the Texas Secretary of State for service upon the
Fund. Thus, the requirements of section 1608(b) were not strictly
followed as to the Russian State Diamond Fund.11
III
Federation’s appearance at the TRO had waived service.
10
A letter rogatory is a formal request from a court in one
country to the appropriate judicial authorities in another country
that can effectuate service of process.
11
All parties acknowledge that no “special arrangement” existed
between the parties in this case, and no applicable “international
convention” authorizes service in any way. Therefore, § 1608(a)(1-
2) and § 1608(b)(1-2) are inapplicable and not at issue in this
appeal.
10
The question before this court, therefore, is whether strict
compliance is required for service of process under section
1608(a), for a foreign state, and under section 1608(b), for an
instrumentality of a foreign state. The Magness descendants
contend that, even if their attempts at service of process upon the
defendants did not strictly comply with section 1608, they
substantially complied with the FSIA, and that the defendants had
actual notice of the suit. They further argue that, in any event,
the Russian Federation waived its right to contest service by
appearing at the TRO hearing. The defendants, however, argue that
the FSIA makes no provision for anything other than strict
compliance with its service of process requirements, and that
actual notice cannot substitute for proper service under either
section 1608(a) or (b). In addition, the appellants and the United
States, as amici, contend that, in any event, the Magness
descendants failed to even substantially comply with section
1608(a) or (b). Because service was never effectuated, the
district court had no personal jurisdiction over the defendants,
they claim, and thus the default judgment should be vacated
pursuant to Rule 60(b)(4).12
12
The appellants alternatively argue that the default judgment
should have been vacated under Rule 60(b)(3), because the judgment
was secured through fraud, misrepresentation, and misconduct. They
claim that the Magness descendants never informed the court that
they had been instructed by the State Department that service was
11
A
Section 1608(a)
We conclude that the provisions for service of process upon a
foreign state or political subdivision of a foreign state outlined
in section 1608(a) can only be satisfied by strict compliance. The
express language of the statute requires that service “shall” be
made upon a foreign state in the manner prescribed. Moreover, the
committee report on the FSIA states that “section 1608(a) sets
forth the exclusive procedures for service on a foreign state.”
H.R. Rep. No. 94-1487, at 24 (1976) (emphasis added).13 This
language simply does not support a finding that anything less than
strict compliance will suffice under the law.
This interpretation is in accord with decisions of the Second,
Seventh, and D.C. Circuits.14 In Gray v. Permanent Mission of
People’s Republic of Congo to United Nations, 443 F.Supp. 816, 821
(S.D.N.Y.), aff’d, 580 F.2d 1044 (2d Cir. 1978), the Second Circuit
ineffectual, and thus they obtained the default judgment under
fraudulent means.
13
Incidentally, this “exclusive procedures” language is missing
in the discussion of § 1608(b) in the legislative history.
14
Although the Ninth Circuit appears to have adopted a blanket
“substantial compliance” test for § 1608 in Straub v. Green, Inc.,
38 F.3d 448, 453 (9th Cir. 1994), that decision dealt only with
service under § 1608(b), and the court’s decision in Gerritsen v.
Consulado General De Mexico, 989 F.2d 340, 345 (9th Cir. 1993),
suggests that plaintiffs must strictly comply with the service
provisions on a foreign state under § 1608(a).
12
affirmed a district court holding that, under section 1608(a),
“informal notification through channels clearly outside the obvious
requirements of the applicable statute cannot be substituted for
those which meet the requirements.” The court determined that
actual notice given the defendant, a foreign state to be served
under section 1608(a), was insufficient to meet the requirements of
the FSIA. See also Shen v. Japan Airlines, 918 F.Supp. 686, 692
(S.D.N.Y. 1994).
The Seventh Circuit similarly required strict compliance under
section 1608(a) in Alberti v. Empresa Nicaraguense De La Carne, 705
F.2d 250, 253 (7th Cir. 1983). In that case, noting that section
1608(a) “delineates the ‘exclusive procedures’ for effecting
service of process upon a foreign state,” the court refused to
excuse the plaintiff’s service on the Nicaraguan Ambassador in lieu
of the head of the foreign affairs ministry. See also Magnus
Elec., Inc., v. Royal Bank of Canada, 620 F.Supp. 387, 389
(N.D.Ill. 1985), aff’d in part, rev’d in part on other grounds, 830
F.2d 1396 (7th Cir. 1987) (holding that “noncompliance with the
[FSIA]’s literal requirements (though it certainly did provide
notice) deprives this Court of personal jurisdiction.”).
The District of Columbia Circuit, holding that “strict
adherence to the terms of 1608(a) is required,” also rejected the
substantial compliance test under section 1608(a) in Transaero,
13
Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 154 (D.C. Cir.
1994), cert. denied, 513 U.S. 1150, 115 S.Ct. 1101 (1995). The
court rejected the claim that service upon the Bolivian Ambassador
and Consul General in Washington was sufficient under section
1608(a), noting that foreign states, unlike foreign agencies or
instrumentalities, may lack the “sophisticated knowledge of the
United States legal system” that might otherwise authorize
substantial compliance with service provisions. Id.
Based on these decisions, the express language of section
1608(a), and the United States’ interest in ensuring that the
proper officials of a foreign state are notified when a suit is
instituted, we hold that plaintiffs must strictly comply with the
statutory service of process provisions when suing a foreign state
or political subdivision under section 1608(a).15
B
Section 1608(b)
The statutory language and case law concerning section 1608(b)
present a different question. As such, we are convinced that
substantial compliance with the provisions of service upon an
15
We leave open the possibility that, under extraordinary
circumstances not present in this case, when service of process
according to the express provisions of § 1608(a) is a manifest
impossibility, other methods of service that fully satisfy the
goals of section 1608(a) might be sufficient. However, we decline
to define any such exception until those extraordinary
circumstances come before this court.
14
agency or instrumentality of a foreign state--that is, service that
gives actual notice of the suit and the consequences thereof to the
proper individuals within the agency or instrumentality--is
sufficient to effectuate service under section 1608(b).
Perhaps most significant to this determination is the express
statement in section 1608(b)(3) that delivery under that subsection
is authorized “if reasonably calculated to give actual notice.”
This language reflects the fact that “Congress was there concerned
with substance rather than form.” Transaero, 30 F.3d at 154. This
reference to actual notice is absent from section 1608(a).
Our holding as to section 1608(b) is in accord with the Third,
Sixth, Ninth, Eleventh, and D.C. Circuits, all of which have
determined that substantial compliance with section 1608(b) is
sufficient so long as the defendants have actual notice of the
suit.16 The Third Circuit found that service under section 1608(b)
was sufficient absent strict compliance in Velidor v. L/P/G
Benghazi, 653 F.2d 812, 821 (3d Cir. 1981). The court noted that
16
We recognize that not all federal courts have found
substantial compliance sufficient under § 1608(b). See, e.g.,
LeDonne v. Gulf Air, Inc., 700 F.Supp. 1400 (E.D.Va. 1988)
(requiring strict compliance under 1608(b)); Lippus v. Dahlgren
Mfg. Co., 644 F.Supp. 1473, 1479 (E.D.N.Y. 1986) (requiring that
certain “exigencies” be present before excusing non-strict
compliance with § 1608(b)); Unidyne Corp. v. Aerolineas Argentinas,
590 F.Supp. 391, 395 (E.D.Va. 1984) (noting that “this Court is
directed to strictly interpret the requirements set forth in §
1608(b).”).
15
“[r]ather than making service on foreign instrumentalities a rigid,
technical, or cumbersome procedure, Congress sought to facilitate
the ability of private plaintiffs to serve foreign entities.” Id.
Again, the court concluded that actual notice was the determining
consideration. See also Obenchain Corp. v. Corporation Nacionale
de Inversiones, 665 F.Supp. 435, 437 (W.D.Pa. 1987), aff’d in part,
rev’d in part on other grounds, 898 F.2d 142 (3d Cir. 1990).
The Sixth Circuit adopted a similar substantial compliance
test for section 1608(b) in Sherer v. Construcciones Aeronauticas,
987 F.2d 1246 (6th Cir. 1993). The court observed that “the common
theme running through [FSIA] cases, whether ‘substantial
compliance’ or ‘strict compliance,’ is the importance of actual
notice to the defendants.” Id. at 1249. The court adopted the
substantial compliance approach “under the circumstances in this
case,” where the defendant had answered the complaint despite the
defect in service and had raised twenty-one affirmative defenses.
Id. at 1250.
In Straub v. Green, Inc., 38 F.3d 448, 453 (9th Cir. 1994),
the Ninth Circuit “formally adopt[ed] a substantial compliance test
for the FSIA.” The court determined that, under section 1608(b),
“the pivotal factor is whether the defendant receives actual notice
16
and was not prejudiced by the lack of compliance.” Id.17 And in
Harris Corp. v. National Iranian Radio and Television, 691 F.2d
1344, 1352 (11th Cir. 1982), the Eleventh Circuit similarly adopted
the substantial compliance test under § 1608(b), finding that
actual notice should override technical deficiencies in service
under that section.18
Finally, the D.C. Circuit in Transaero, 30 F.3d at 154, noted
that “[t]he authorities generally hold that section 1608(b) may be
satisfied by technically faulty service that gives adequate notice
to the [defendant].” Id. at 153. In authorizing substantial
compliance under section 1608(b), the court observed that foreign
agencies and instrumentalities, which are “typically international
commercial enterprises, often possess a sophisticated knowledge of
the United States legal system that other organs of foreign
governments may lack.” Id. at 154.
C
17
The Fifth Circuit has expressly disagreed with Straub, albeit
on unrelated grounds. See Pere v. Nuovo Pignone, Inc., 150 F.3d
477, 480-81 (5th Cir. 1998).
18
The Harris court appeared to limit its holding by stating,
“[t]hough we find service adequate here, we admonish those seeking
to invoke the FSIA to follow the service provisions it
contains. . . . There is no excuse for departure from the dictates
of the statute.” Id. at 1352, n.16. Since the Harris decision, at
least one district court in the Eleventh Circuit has interpreted
this language to mean that strict compliance is required absent
extraordinary circumstances. See Shell Oil Co. v. M/V Itanage, 830
F.Supp. 1423, 1425 (M.D.Fla. 1993).
17
In sum, virtually no authority suggests that substantial
compliance would suffice under section 1608(a) as to foreign
governments--the Russian Federation and the Russian Minister of
Culture in this case. Nevertheless, the vast majority of the case
law does support a holding that substantial compliance under
section 1608(b), coupled with actual notice, can suffice to meet
the statutory service requirements for instrumentalities of a
foreign state. We formally adopt such a test for section 1608(b),
but decline to authorize substantial compliance as to section
1608(a).
Having already determined that the Magness descendants failed
strictly to comply with either section 1608(a) or (b), we now turn
to ascertain whether the plaintiffs substantially complied with the
provisions of section 1608(b) as to the Russian State Diamond Fund
in this case.
IV
The cases authorizing substantial compliance with the service
of process provisions under section 1608(b) note that it is actual
notice by the defendant that substantiates the compliance. The
Magness descendants assert that the defendants all had actual
notice of the suit, while the defendants deny having such notice.
As to the Russian State Diamond Fund, the defendants contend
that the mailing of process to Boris Yeltsin and the Russian State
18
Diamond Fund “c/o Deputy Minister of Culture Mikhail Schvidkoy” was
not substantial compliance with section 1608(b), which permitted
service via a letter rogatory, through the clerk of the court, or
as directed by the court. See 28 U.S.C. § 1608(b)(3). The Magness
descendants, in turn, assert that they substantially complied with
section 1608(b)(3)(B), which authorizes service upon an
instrumentality of a foreign state by any form of mail requiring a
signed receipt. They point out that they sent service papers to
the Texas Secretary of State with a request that those documents be
forwarded to the “Russian Ministry of Culture/Russian State Diamond
Fund.” Finally, the Magness descendants contend that all
defendants had actual notice of the suit, as evidenced by the
Russian Federation’s appearance at the TRO hearing and the
confirmation received by the Texas Secretary of State showing that
the return receipt for the service documents had been signed by
somebody at the “Russian Ministry of Culture/Russian State Diamond
Fund.”
As the United States notes, there is no evidence that the
Magness descendants included a “notice of suit” in the service
documents that allegedly were served. The notice of suit is an
integral part of the service requirements upon foreign states, and
is “designed to provide a foreign state with an introductory
explanation of the lawsuit, together with an explanation of the
19
legal significance of the summons, complaint, and service.” H.R.
Rep. No. 94-1487, at 12.
Most importantly, there is no evidence to establish that the
defendants had actual notice of the suit. The Magness descendants
bear the burden of proving that the defendants had actual notice.
See, e.g., Straub, 38 F.3d at 454; Hirsch v. Blue Cross, Blue
Shield, 800 F.2d 1474, 1477 (9th Cir. 1986). Under the FSIA,
proving “actual notice” requires more than a mere showing that
somebody in the foreign state knew of the claim. See Sherer, 987
F.2d at 1250 (finding actual notice only because defendant hired
counsel and moved to dismiss the complaint).
Because the plaintiffs have not established that they provided
the Russian State Diamond Fund actual notice of the suit,
substantial compliance with section 1608(b) was lacking.
V
Having determined that the Magness descendants failed to
perfect service under section 1608 as to any of the defendants in
this case, we now consider the district court’s denial of the
defendants’ Rule 60(b) motion.
In Seven Elves, 635 F.2d at 402, this court held that a
district court should consider eight factors when ruling on a Rule
60(b) motion to vacate a default judgment:
20
(1) that final judgments should not lightly be disturbed;
(2) that the Rule 60(b) motion is not to be used as a
substitute for appeal;
(3) that the rule should be liberally construed in order
to achieve substantial justice;
(4) whether the motion was made within a reasonable time;
(5) whether, if the judgment was a default or a dismissal
in which there was no consideration of the merits, the
interest in deciding cases on the merits outweighs, in
the particular case, the interest in the finality of
judgments, and there is merit in the movant’s claim or
defense;
(6) whether, if the judgment was rendered after a trial
on the merits, the movant had a fair opportunity to
present his claim or defense;
(7) whether there are intervening equities that would
make it inequitable to grant relief; and
(8) any other factors relevant to the justice of the
judgment under attack.
Analyzing these factors, we must conclude that the default
judgment in favor of the Magness descendants should be vacated as
to all three defendants.19 The motion to vacate was made within a
reasonable time; the motion is not being utilized as a substitute
for appeal; the interest in deciding the merits of the case
19
The defendants request that the judgment be vacated under
Rule 60(b)(3) or Rule 60(b)(4). Under Rule 60(b)(3), this court
has held that “a party may engage in Rule 60(b)(3) misconduct if he
fails to disclose evidence he knows about and the production of
such evidence was clearly called for.” Montgomery v. Hall, 592
F.2d 278, 279 (5th Cir. 1979). The Magness descendants evidently
convinced the district court that they had properly served the
defendants, even though the State Department repeatedly informed
them that service was incomplete. Rule 60(b)(4) authorizes a court
to vacate a judgment as “void” when personal jurisdiction is
lacking. Under such circumstances, this court has determined that
“the district court has no discretion, the judgment is either void
or it is not.” Recreational Properties, Inc. v. Southwest Mortgage
Serv. Corp., 804 F.2d 311, 313-14 (5th Cir. 1986).
21
outweigh the interest in finality; and, the diplomatic implications
of this case encourage a consideration of the claim on the merits.
The government has emphasized the weighty diplomatic
considerations underlying this case, noting that the United States
has fought jurisdiction in instances where foreign attorneys have
attempted to serve the United States via non-authorized government
employees. In its amici brief the United States suggests that it
would not consider itself to have been properly served under the
attempts utilized by the Magness descendants in this case.20 In
this light, and for the reasons we have explained, we conclude that
the default judgment should be vacated, that the case must be
remanded, and that the Magness descendants should be allowed a
reasonable time to perfect service upon the defendants.
Therefore, the judgment is VACATED and the case is REMANDED
for further proceedings not inconsistent with this opinion.
V A C A T E D and R E M A N D E D.
20
That is, the delivery of a package addressed to “George W.
Bush, the White House” to a random federal agency that lacks the
responsibility for foreign relations would not provide adequate
notice of suit to the United States.
22