Introduction
In BW Legal Services Limited v Glassdoor Inc
[2022] EWHC 979 (QB), the High Court considered whether the conditions for valid service had been met when the plaintiff served a company – whose registered office was in San Francisco – in the care of a London company, GGL, at the within the same group. Mr Justice Jay found that the service rendered was invalid as GGL was not the plaintiff’s representative in the UK. He also concluded that even if service had been effective, the English court had no jurisdiction to order the relief sought by the plaintiff (a Norwich Pharmacy Order) due to an exclusive jurisdiction clause in Defendant’s Terms of Service under which California was the competent jurisdiction for the litigation.
The Court applied the Court of Appeal’s test of
Adams vs. Cape Industries [1990] 1 Ch 443 concerning what was required for a company incorporated in one country to be considered present in another country, in order to be validly served there.
Facts
The Claimant is a law firm specializing in debt collection. Defendant is a company incorporated in Delaware, registered in Los Angeles and headquartered in San Francisco; it owns and operates a platform on a website where employees post reviews of their current or former employers. The plaintiff asked the defendant for the identity of the authors of the anonymous reviews published on the defendant’s website (the URL of which included a “co.uk” suffix). The claimant alleged that the reviews were defamatory and possibly breached contractual terms and conditions of employment.
Plaintiff issued a Part 8 claim form against Defendant requesting Norwich Pharmacy redress (request for disclosure prior to third party action). The claim form listed a service address for the defendant as ‘c/o Glassdoor Limited’ at an address in London, the registered address of a UK incorporated company (‘GGL’) in the same group of companies.
In November 2021, Maître Eastman granted the Norwich Pharmacy Order and grant the plaintiff permission to serve the defendant at GGL’s address, based on the provisions of CPR r.6.9 rather than the rules governing service out of court.
The defendant issued a notice of application seeking orders including: 1) a statement that the court has no jurisdiction to entertain the application for Norwich Pharmacy redress because no valid service has been effected, or alternatively that, even though leave to serve the Claim Form out of court had been sought, leave to serve could not be granted for the repair requested; or, alternatively, 2) for a statement that, if valid service was effective, the court should not exercise its discretion to adjudicate on such claim by reason of (a) the existence of an exclusive jurisdiction clause in Defendant’s Terms of Service (under which California was the proper jurisdiction for Plaintiff’s claim); or (b) the claimant obtained the Order of Master Eastman in an unfair or improper manner.
The jugement
Service validity
The plaintiff sought to serve the defendant under Rule 6.9 of the CPR, which provides that “any other company” may be served at “any place in the jurisdiction in which the company carries on business; or any place of business of the company in the jurisdiction” (emphasis added).
The decision of the Court of Appeal in Adams vs. Cape Industries [1990] 1 Ch 443 establishes that a foreign company would be likely to be considered present in another jurisdiction only when:
- It had established and maintained at its expense (whether as owner or lessee) a fixed place of business on its own initiative in the other country, and for more than a minimum period of time had carried on its own business at or from such premises by its servants or agents (branch); Where
- One representative had carried on the activities of the foreign company in the other country at or from a fixed place of business (a representative case).
In considering the question of whether a representative carried on the activities of the foreign company, the Court asked the essential question of whether the activities of GGL should properly be considered as its own activities or as those of the defendant. This question “requires an investigation into the activities of GGL and the relationship between it and the defendant”. The Court also considered that (i) if GGL did not have the power to enter into binding contracts on behalf of the defendant, this would be a significant factor preventing the defendant from having a place of business in that jurisdiction; (ii) if GGL were a branch, it would be likely that the court would find that the defendant had a place of business here; (iii) the Court would take into account the situation and activities of the entities participating in the tour de table; and (iv) the “single business unit” analysis, considering whether or not GGL’s economic activities were entirely related to the promotion of the defendant’s business interests, would be relevant.
Judge Jay reviewed GGL’s incorporation documents, noting the US nationality of the initial directors. He also considered the acquisition of the Defendant by RGF OHR USA Inc, a subsidiary of a public limited company listed on the Tokyo Stock Exchange, which became the ultimate parent company of the Defendant in 2018. GGL and the Defendant were part of the same group, but GGL was not a subsidiary of the defendant. He reviewed GGL’s most recent financial statements and GGL’s main business activity of providing marketing services to the defendant in the UK. It was relevant that the advertising contracts were concluded with the defendant and not with GGL. The court also received evidence from the defendant that GGL has no control over user content posted on the GlassDoor website, GGL’s office lease agreements are in the name of GGL and not in the name of the defendant, l GGL’s header does not refer to Defendant and GGL and Defendant have no directors.
The Court found that GGL did not have the authority to enter into contracts on behalf of the defendant and did not do so. “Notwithstanding the commercial nexus between GGL’s marketing activity and the contracts formally entered into by Defendant, those contracts are Defendant’s business (in every sense of the word) and GGL’s business is legally separate.” GGL’s letterhead also made it clear that it was not the defendant’s representative in the UK. To apply
Adams vs. Cape Industries, the Court held that since GGL did not have the authority to enter into binding contracts on behalf of the defendant, this would be a significant factor preventing the defendant from having a place of business in that jurisdiction. It was not a branch. The answer to the crucial question posed by the authorities is that the defendant’s business is not carried on from GGL’s offices in the City of London.
The Court rejected arguments based on the “wider economic reality” that it is a single business unit. Similar points were raised briefly in Tamiz v. Google Inc.
and Google UK Ltd. [2012] EWHC 449 (QB) and ABC vs. Google Inc. [2018] EWHC 137 (QB), in which the court found that Google (UK) Limited was engaged in the business of sales support and marketing in the jurisdiction and was not the proper defendant for defamation claims relating to a blog on blogger.com (proper defendant to be Google LLC).
Court’s lack of jurisdiction or refusal to exercise jurisdiction
Under Rule 11.11 of the CPR, a defendant can apply to the court for an order that it does not have jurisdiction, or should not exercise any jurisdiction it may have, in relation to a claim. The Court considered the construction of two clauses of the Respondent’s Terms of Service, noting the general principle that exclusive jurisdiction clauses are liberally construed and assuming that all disputes are covered by them unless otherwise specified. of their clear language (Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40).
The Court found that the claim was subject to the exclusive jurisdiction clause and that such claims are governed by California law and must be brought in the appropriate California court. He also found that the effect of Defendant’s Terms of Service was that Plaintiff had waived its right to sue in California for “pre-suit discovery.”
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