A judge has ruled that it’s still possible for the U.S. government to establish jurisdiction over Megaupload.
Back in May, lawyers for Kim Dotcom’s beleaguered Megaupload filed a motion seeking dismissal of the U.S. government’s case against the company, claiming that the government lacked jurisdiction over the company because it had not properly and legally served a summons against it. A technicality in Rule 4 of the Federal Rules of Criminal Procedure, they argued, meant that the U.S. not only failed to properly serve Megaupload, but could not legally do so.
But U.S. District Judge Liam O’Grady has denied the motion, declaring that “Rule 4 does not require a result so extreme as dismissal,” and that even if it was applied as narrowly as Megaupload lawyers would like, a proper service of summons remains possible.
“It is doubtful that Congress would stamp with approval a procedural rule permitting a foreign corporate defendant to intentionally violate the laws of this country, yet evade the jurisdiction of the United States’ courts by purposefully failing to establish an address here,” O’Grady wrote in his ruling. “But even assuming arguendo that the mailing provision is necessary to effect service, the Court cannot find to a legal and factual certainty that the United States will be unable to serve the corporate defendant properly.”
The judge ruled that when a court “pierces the corporate veil, the legal distinction between a corporation and its alter ego is eliminated.” If the government can prove that one of the individually-named defendants in the case is an alter ego of Megaupload, then serving a summons to that individual once he is extradited would be sufficient to establish jurisdiction.
“The Court acknowledges that the individual Defendants may never be extradited,” the judge noted. “Be that as it may, the present motion is based on the argument that the government could never serve Megaupload. Because the alter ego analysis provides a means by which it may be possible to serve the Corporate defendant, it is appropriate to deny Defendant’s motion without prejudice.”
The ruling “leaves open the possibility for future motions and briefing as to whether the Defendant has been denied due process by this delay” and also suggests that the indictment could be temporarily dismissed, until Megaupload can be properly served. That led to an angry Twitter response from Dotcom, who wrote, “US judge denies to permanently dismiss Megaupload case. Suggests we could have asked for temporary dismissal. But we did ask for that. Wow?!” and added, “US Gov now has jurisdiction over any company worldwide using US Internet infrastructure (incl. domains)? Just extradite & serve on arrival.”