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A case described by Manhattan Supreme Court Justice Carol Edmead as “truly bizarre,” highlighted by allegations of anti-Semitism and a labyrinth of financial interests, turned finally on a simple principle of law — process service jurisdiction. The judge found that plaintiffs failed to properly serve process on an Austrian defendant and dismissed the case. The issue arose when a group of domestic and foreign plaintiffs accused defendants of insider trading and fraud. They demanded documents to prove their claims. In a June 28 decision, Justice Edmead spent little time on these claims, focusing instead on the issue of personal jurisdiction. The ruling, Hypo Bank Claims Group v. American Stock Transfer & Trust, 604562/2004, was published July 15. Personal jurisdiction has two components, she wrote. It starts with service of process. The second component involves a defendant’s connection to a forum, such as New York, in enabling a court to have jurisdiction over that party. Edmead did not rule on the second point, finding that plaintiffs failed to serve defendants with their court papers properly. Plaintiffs’ lawyer Edward Fagan arrived at Hypo Bank’s headquarters in Austria in May 2004 to serve the bank, said the judge. Fagan had gained public attention for representing Holocaust survivors in multibillion dollar suits against Swiss banks. In this case, plaintiffs claimed the political party led by Joerg Haider, a right-wing nationalist accused of harboring Nazi sympathies, controlled the majority of Hypo Bank’s shares. Plaintiffs further added that Hypo Bank pursued Haider’s political agenda and alleged that its directors made anti-Semitic remarks toward Fagan through their outside counsel. Edmead declined to address these allegations and looked instead at Fagan’s attempt to serve defendants. Inside Hypo Bank’s lobby, Fagan unsuccessfully attempted to hand court documents to bank employees — a procedure used in U.S. jurisdictions to serve process but unavailable under Austrian law. “[I]n cases involving a foreign corporation having its principal place of business overseas, the doctrine of comity trumps” New York’s rules governing service of process, the judge said. In such instances, service of process must comply “with the laws of the sovereignty where the foreign corporation is located.” In Austria’s case, she added, “service of legal documents is a governmental act performed in the exercise of sovereign authority.” This requires plaintiffs to use “letters rogatory” — documents specifically designed for serving foreign parties — obtained through diplomatic channels and provide German translations of all documents, she held. Plaintiffs failed to follow this process, nor did their explanations satisfy the judge. Plaintiffs argued that they resorted to posting court papers on the door of the Hypo Bank building because defendants interfered with Fagan’s service of process. Assuming such interference did exist, the judge said, plaintiffs still failed to follow the proper procedures. Hypo Bank’s alleged interference also failed to excuse plaintiffs’ failure to include German translations of their court papers, continued the judge. Only if Hypo Bank interfered with plaintiffs’ “good faith attempt … to serve process in accordance with Austrian law” could plaintiffs ask the court to approve an alternative method of service, she said. Defendant American Stock Transfer & Trust was represented by Matthew Feser based in the New York office of Jenkens & Gilchrist. Defendant Hypo Alpe Adria Bank was represented by John Renzulli of Renzulli, Pisciotti & Renzulli, also based in New York.

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