Opposition Brief — Gordon v. Hunt

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No. 87-1577 |“) Supreme Court, U.S,

In the APR 20 198g

Supreme Court of the United Spate@sern F. sranion, yp

October Term, 1987 — ee

RONALD GORDON, PHILIP and DOROTHY KORWEK, MARTY

FINKELSTEIN, WILLIAM L. COHN, and JAMES G. WILLIAMS,

Petitioners,

VS.

NELSON BUNKER HUNT, WILLIAM HERBERT HUNT, LAMAR

HUNT, INTERNATIONAL METALS INVESTMENT, CO., LTD.,

SHEIK MOHAMMET ABOUD AL-AMOUDI, SHEIK ALI BIN

MUSSALEM, FAISAL BEN ABDULLAH AL SAOUD, MAHMOUD

FUSTOK, NAJI ROBERT NAHAS, BACHE HALSEY STUART

SHIELDS, INC., BACHE GROUP, INC., MERRILL LYNCH,

PIERCE FENNER & SMITH, INC., CONTICOMMODITY SER-

VICES, INC., CONTICAPITAL MANAGEMENT, INC., CONTI-

CAPITAL LTD., NORTON WALTUCH, MELVIN SCHNELL,

GILION FINANCIAL, INC., BANQUE POPULAIRE SUISSE, AD-

VICORP ADVISORY AND FINANCIAL CORPORATION, S.A.,

COMMODITY EXCHANGE, INC., THE BOARD OF TRADE OF

THE CITY OF CHICAGO, ACLI INTERNATIONAL COMMODITY

SERVICES, INC., LITRADEX TRADERS, S.A., and JOHN DOES 1

THROUGH 15,

Defendants,

MAHMOUD FUSTOK,

Respondent.

BRIEF OF MAHMOUD FUSTOK IN OPPOSITION TO A

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

HERBERT STOLLER

Attorney for Respondent

101 Park Avenue

CURTIS, MALLET-PREVOST New York, NY 10178

COLT & MOSLE (212) 696-6000

Of Counsel

Dick Bailey Printers, 203 Richmond Avenue @™ Staten Island, New York 10302

Tel: (212) 608-7666 — (718) 447-5358 — (516) 222-2470 — (914) 682-0848

QUESTION PRESENTED

Whether the decision of the court below, affirming

the dismissal of petitioners’ actions pursuant to Fed. R.

Civ. P. 4(j) for failure without good cause to effect timely

service of the summons and complaint, raises an impor-

tant issue of federal law that has not been, and should be,

settled by this Court.

li

TABLE OF CONTENTS

Pages

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ARGUMENT

I. There Is No Basis In Law Or Fact For Creating An

- Exception To The Express Language Of Rule 4(j) For

Non-Resident Alien Defendants And The Failure Of

The Courts Below To Create Such An Exception

Does Not Raise An Important Question Of Federal

eth Nees saensdebbeswieneaceeodineasases 4

II. Given The Findings Below That There Was No

Evidence Of Actual Delivery Of The Summons And

Complaint, No Important Question Of Federal Law

Is Raised By The Holding That Service Was Not

Deemed Effective Merely By Mailing ...................00085 6

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TABLE OF AUTHORITIES

Cases Pages

Bersch v. Drexel Firestone, Inc., 389 F. Supp. 446

(S.D.N.Y. 1974), modified on other grounds, 519 F.

2d 974 (2d Cir. 1975), cert. denied, 423 U.S. 1018

COTO kins cancvadas cushanticacseaennuneincakantasesstandaaeeneuun: 6,7

Hunt v. Mobil Oil Corp., 410 F. Supp. 4 (S.D.N.Y.

DGD ccncvsaniutsicniissavaketiaskeccr sp cseaaulentnanecaamiiel 6

Montalbano v. Easco Hand Tools, Inc., 766 F.2d 737

Ce Oar SE acc anoncacedeenabans sian Re Oe RR oe 5

Morse v. Elmira Country Club, 752 F.2d 35 (2d Cir

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Statutes

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In the -

Supreme Court of the United States

October Term, 1987

RONALD GORDON, PHILIP and DOROTHY KORWEK,

MARTY FINKELSTEIN, WILLIAM L. COHN, and JAMES

G. WILLIAMS,

Petitioners,

VS.

NELSON BUNKER HUNT, WILLIAM HERBERT HUNT,

LAMAR HUNT, INTERNATIONAL METALS _INVEST-

MENT, CO., LTD., SHEIK MOHAMMET ABOUD AL-

AMOUDI, SHEIK ALI BIN MUSSALEM, FAISAL BEN AB-

DULLAH AL SAOUD, MAHMOUD FUSTOK, NAJI

ROBERT NAHAS, BACHE HALSEY STUART SHIELDS,

INC., BACHE GROUP, INC., MERRILL LYNCH, PIERCE

FENNER & SMITH, INC., CONTICOMMODITY SER-

VICES, INC., CONTICAPITAL MANAGEMENT, INC.,

CONTI-CAPITAL LTD., NORTON WALTUCH, MELVIN

SCHNELL, GILION FINANCIAL, INC., BANQUE

POPULAIRE SUISSE, ADVICORP ADVISORY AND

FINANCIAL CORPORATION, S.A., COMMODITY EX-

CHANGE, INC., THE BOARD OF TRADE OF THE CITY

OF CHICAGO, ACLI INTERNATIONAL COMMODITY

SERVICES, INC., LITRADEX TRADERS, S.A., and JOHN

DOES 1 THROUGH 15,

Defendants,

MAHMOUD FUSTOK,

Respondent.

BRIEF OF MAHMOUD FUSTOK IN OPPOSITION TO

A PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

2

Respondent, Mahmoud Fustok, submits this brief in

opposition to a petition for a writ of certiorari to review

the judgment and opinion of the United States Court of

Apeals for the Second Circuit which affirmed, per curiam,

the orders and final judgment entered by the United States

District Court for the Southern District of New York (the

Hon. Morris E. Lasker).

Statement of the Case

These actions, which were consolidated for appeal,

are brought on an individual and class basis for violations

of federal and state law arising out of events in the silver

market in 1979 and 1980. Respondent Fustok is one of ap-

proximately twenty named defendants. He is a citizen of

Saudi Arabia who resides and has business interests in

London, Paris and the United States. (7a.)* Fustok is a

regular visitor to the United States and has spent the

winter months each year in Fort Lauderdale, Florida since

prior to 1981. (/d.) In 1986, he was present in a courtroom

of the federal courthouse for the Southern District of New

York during each day of a four-week trial in which he was

the plaintiff and which also related to certain events in the

silver market in 1979-80. (8a.)

Although Fustok was named and successfully served

in four other actions arising out of the events in the silver

market in 1979 and 1980, Fustok was not served in the

these actions until almost five years after the filing of the

Gordon complaint and more than two years after the filing

of the Korwek complaint. (11la.)

On Fustok’s motion to dismiss the actions under Fed.

R. Civ. P. 4(j) for failing to effect timely service of the

complaints, the district court dismissed both actions

*Citations are to the decisions and orders of the courts below

assembled in the appendix to petitioners’ writ.

3

without prejudice, holding that petitioners had failed to

show ‘‘good cause”’ for failing to serve Fustok within the

120 days provided by Rule 4. (29a, 30a.) The district court

also held that petitioners’ initial attempts in the Gordon

case to serve Fustok by mail did not of themselves con-

stitute effective service in view of the court’s further fin-

ding that the mailings had never been received by Fustok.

(13a-14a.) The decision of the district court was affirmed

in its entirety on appeal for the reasons stated in the

district court’s opinion at 116 F.R.D. 313 (S.D.N.Y.

1987). (la-3a.)

Summary of Argument

The decisions below are correct as a matter of law and

fact. Notwithstanding the initial attempts to serve Fustok

by mail in the Gordon action (no attempt to serve by mail

was made in Korwek), petitioners failed to show good

cause for failing to serve Fustok for up to five years after

the first complaint was filed, or for failing to request addi-

tional time (as provided by Fed. R. Civ. P. 6(b)) from the

district court to effect service.

Nothing in the findings and decisions by the courts

below is in conflict with existing federal precedent nor do

the decisions raise important questions of federal law that

have not been, or should be, settled by this Court. Fustok

was served personally in New York and the validity of that

service must be tested by the standards of Rule 4(j). The

fact that Fustok resides primarily abroad does not create

an exception to the 120 day rule of Fed. R. Civ. P. 4(j),

which governs service in the United States. Moreover,

where the evidence showed that the summonses and com-

plaints mailed by petitioners were never received by

Fustok, the district court correctly held that merely mail-

ing the summons and complaint in conformity with the

rule did not constitute effective service.

ARGUMENT

POINT I

THERE IS NO BASIS IN LAW OR FACT FOR

CREATING AN EXCEPTION TO THE EXPRESS

LANGUAGE OF RULE 4(j) FOR NON-RESIDENT

ALIEN DEFENDANTS AND THE FAILURE OF

THE COURTS BELOW TO CREATE SUCH AN

EXCEPTION DOES NOT RAISE AN IMPOR-

TANT QUESTION OF FEDERAL LAW.

Although petitioners attempted service upon Fustok

by mail to his office address in London, that mail was

never received by Fustok. He was later served in hand with

the summons and complaint but that service was not ef-

fected until he appeared for a deposition in another case in

New York. Service made personally upon a defendant in

the United States is governed by Rule 4(j) and subject toa

120-day limitation.

Petitioners’ argument that in these circumstances they

should be exempted from the clear and unambiguous re-

quirements of Rule 4(j), would have the effect of creating

an unlimited -- and clearly unintended -- exception for ser-

vice made upon defendants who reside primarily abroad.

Rule 4(j) requires that service be completed within 120

days of filing unless good cause can be shown for not do-

ing so. The rule states that these requirements shall not ap-

ply to ‘‘service in a foreign country’’ pursuant to Rule 4(i).

Petitioners have argued that Rule 4(j) should, in effect, be

rewritten to siate that it also does not apply to service in

the United States if the defendant is a ‘‘foreign resident.’”’

That argument fails for two reasons.

First, Rule 4(j) is expressly written to exclude only ser-

vice made ‘‘in a foreign country.’’ For such service, Rule

4(i) sets forth the various methods that may be used to ef-

fect service in that country, including service through let-

ters rogatory, personal delivery in that country, or mail

addressed and dispatched through the clerk of the court.

Had the framers of Rule 4(j) intended to create the excep-

tion petitioners argue they are entitled to here, it would

have been a simple matter to state expressly that the 120

day limit also does not apply to service upon a foreign resi-

dent, wherever he may ultimately be served. No such ad-

ditional exception was stated and there is no basis for tak-

ing the extraordinary step of creating such an exception

through judicial interpretation.*

Second, even if service upon Fustok were to be

governed by Rule 4(i), that Rule is not without some

limitations. We know of no case in which service by mail

upon a person residing in another country could be effec-

tive without any limitation of time. In the absence of a fix-

ed number of days, such as the 120 day limit provided by

Rule 4(j), the effectiveness of service should be judged by

the standards of due diligence that prevailed prior to the

amendments to Rule 4. Whether measured by the 120 day

rule or the due diligence standard, the lapses of two and

five years between filing and serving these complaints is

not justified by any evidence of due diligence, and the

district court so found. (23a-24a.)

*Petitioners cite to a ‘‘suggestion’’ in a Second Circuit decision that

Rule 4(j) does not apply where a plaintiff attempted to serve a defen-

dant in a foreign country. Montalbano v. Easco Hand Tools, Inc., 766

F.2d 737, 740 (2d Cir. 1985). In fact, there is no such suggestion made

anywhere in that decision and Judge Lasker, in the district court opi-

nion in the instant actions, relied on Montalbano in dismissing the

very argument petitioners advance on this writ. (15a).

6

POINT Il

GIVEN THE FINDINGS BELOW THAT THERE

WAS NO EVIDENCE OF ACTUAL DELIVERY

OF THE SUMMONS AND COMPLAINT, NO IM-

PORTANT QUESTION OF FEDERAL LAW IS

RAISED BY THE HOLDING THAT SERVICE

WAS NOT DEEMED EFFECTIVE MERELY BY

MAILING.

Petitioners argue that having taken ‘‘all-the required

acts’’ to attempt service by mail in the Gordon case (they

concede no such steps were taken in Korwek), the service

should be deemed effective once those steps were com-

plete. In support of this argument, they rely upon Morse

v. Elmira Country Club, 752 F.2d 35, 39 (2d Cir. 1984),

and cases under Rule 4(c)(2)(C)(ii) where mailings were

made but no signed acknowledgments were received. Hunt

v. Mobil Oil Corp., 410 F. Supp. 4, 9 (S.D.N.Y. 1975);

Bersch v. Drexel Firestone, Inc., 389 F. Supp. 446, 462-63

(S.D.N.Y. 1974), modified on other grounds, $19 F.2d

972 (2d Cir.), cert. denied, 423 U.S. 1018 (1975).

Those cases are readily distinguishable from the cir-

cumstances in Gordon. In Gordon, the district court made

an affirmative finding that the summons and complaint

were never delivered to Fustok’s London office address.

(13a-14a.) In Morse v. Elmira Country Club, on the other

hand, there was no evidence that the complaint had not

been received and the court concluded that ‘“‘[iJn the

absence of any contrary indication we assume delivery in

due course,’’ 7§2 F.2d at 36 n.2. In the other two cases

(and the line of cases like them) the decisions turn on

evidence of actual receipt. See Hunt v. Mobil Oil Corp.,

410 F. Supp. at 9 (foreign defendant had received the com-

plaint and signed the return receipt; its only argument for

-

defective service was based on the fact that the complaint

had not been enclosed in official stationery of the court

clerk); Bersch v. Drexel Firestone, Inc., 389 F. Supp. at

462-63 (court made specific finding of actual receipt based

upon markings on the mailing envelope). See also cases

cited by Judge Lasker in the district court opinion below.

(13a.)

Fustok produced sufficient evidence to rebut any

assumption that the Gordon mailings had been received in

due course and the district court below made an affir-

mative finding of non-delivery. Based on that finding, the

court properly held that no valid service by mail under

Rule 4(c)(1)(D) had been made. That decision was proper

as a matter of law and fact and raises no important ques-

tion of federal law to be settled by this Court.

CONCLUSION

For the foregoing reasons, respondent respectfully re-

quests that petitioners’ writ be denied.

New York, New York

April 21, 1988

Respectfully Submitted,

HERBERT STOLLER

Attorney for Respondent

101 Park Avenue

New York, NY 10178

CURTIS, MALLET-PREVOST (212) 696-6000

COLT & MOSLE

Of Counsel