MEMORANDUM OPINION AND ORDER

JORGE A. SOLIS, District Judge.

Now before the Court for consideration are Defendant's Rule 12(b)(4) and (5) Motion to Dismiss, filed on September 13, 1999; Plaintiff's Response to Defendant's Rule 12(b)(4) and (5) Motion to Dismiss, filed on December 9, 1999; Defendant's Reply to Plaintiff's Response to Defendant's Rule 12(b)(4) and (5) Motion to Dismiss, filed on December 28, 1999; and Plaintiff's Reply to Defendant's Argument and Briefing in Support of Motion to Dismiss, filed on January 10, 2000. After reviewing the arguments along with the applicable law, the Court hereby DENIES Defendant's Motion to Dismiss.

FACTUAL BACKGROUND

On May 24, 1999, Plaintiff filed its Original Petition against the Defendants in the 101st Judicial District Court of Dallas County, Texas, seeking damages for breach of contract. The suit stemmed from a dispute regarding a contract for video game development between Paradigm Entertainment, Inc. ("Plaintiff"), a Texas corporation, and Video System Co., Ltd. ("Defendant"), a Japanese corporation. Plaintiff's president, Dave Gatchel ("Gatchel"), and Defendant's president, Koji Furukawa ("Furukawa"), negotiated the contract. Also involved in the business activities between the parties — although the parties dispute the extent of that involvement — was Mitsuo Kimura ("Kimura"), president of Defendant's subsidiary Video System USA, Inc., a California corporation.

Soon after the lawsuit's filing, the parties agreed to put the litigation process on hold while working to reach a settlement agreement. Pl's Resp. ¶ 12. Plaintiff claims that Defendant agreed to file an answer in the litigation if settlement talks were unsuccessful. Pl's Resp. ¶ 12. Defendant states that it agreed only to "respond" to Plaintiff's petition to avoid a default judgment, not specifically to file an answer in state court. Def's Repl. ¶ 5. During this time, Plaintiff began the process of formally serving Defendant.

On June 16, 1999, Plaintiff attempted to serve Defendant through personal service upon Video System USA, Inc., on the basis that the subsidiary is either Defendant's express or implied/involuntary agent for service or that the subsidiary is the control entity/person in charge of Defendant's business in Texas. Plaintiff also attempted to serve Defendant through substituted service on the Texas Secretary of State on June 14, 1999, and directly through the Japanese Minister of Foreign Affairs on September 28, 1999. Pl's Resp. ¶ 2.

On June 24, 1999, the parties and their counsel met in Fort Worth, Texas, to structure a settlement agreement, but ultimately the negotiations fell through. Pl's Resp. ¶ 13. Defendant then did "respond" to Plaintiff's petition by removing the action to federal court on September 3, 1999, and filing the instant Motion to Dismiss for insufficiency of service of process. Pl's Resp. 6 ¶ 15.

DISCUSSION

Service of process is essential to any procedural imposition on a defendant in a court of law. See Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 119 S.Ct. 1322, 1326 (1999). As Plaintiff originally instituted this action in Texas state court, under Texas law Plaintiff bears the burden of showing on the face of the record that service was properly performed. See McKanna v. Edgar, 388 S.W.2d 927, 929-30 (Tex. 1965). If service of process is not executed in strict compliance with Texas state law, a court will not acquire proper jurisdiction over a defendant. See Whitney v. LL Realty Corp., 500 S.W.2d 94, 96 (Tex. 1973).

A foreign corporation authorized to do business in Texas is required to designate a registered agent in Texas and may properly be served through that agent. See Tex. Bus. Corp. Act Ann. art. 8.08-.10 (West 1980 Supp. 2000). The record does not indicate whether Defendant was subject to this requirement; in any event, Defendant did not maintain a registered agent in Texas. Therefore, the Court will evaluate the service of process in this case under other methods of service.

I. Service upon Kimura as Person in Charge

If Defendant is not required to designate a registered agent in the state, then Texas Civil Practice Remedies Code provides another avenue for service of process:

In an action arising from a nonresident's business in this state, process may be served on the person in charge, at the time of service, of any business in which the nonresident is engaged in this state if the nonresident is not required by statute to designate or maintain a resident agent for service of process.

Tex. Civ. Prac. Rem. Code Ann. § 17.043 (West 1997). Assuming that Defendant is not required to maintain a resident agent in Texas, this section of the Code is applicable because the action arises from Defendant's business in Texas of contracting with Plaintiff to develop video games. See Tex. Civ. Prac. Rem. Code Ann. § 17.042(1) (West 1997); Def's Repl. ¶ 23. Plaintiff claims that it complied with this provision by serving Kimura, president of Defendant's subsidiary, with process and mailing notice of service to Defendant as required by Texas law because Kimura was the person in charge of Defendant's business with Plaintiff in Texas. See Pl.'s Resp. 24; Tex. Civ. Prac. Rem. Code Ann. § 17.045(c) (West 1997). Plaintiff supports its characterization of Kimura as the person in charge by claiming that Furukawa instructed it either to direct or copy all correspondence between the parties to Kimura. Plaintiff asserts that Kimura was "heavily involved" in Defendant's business activities with Plaintiff. Plaintiff also claims that Furukawa instructed it to direct any questions or problems about the game development project to Kimura. See Gatchel Aff., Pl's Repl.

For its part, Defendant denies that Kimura was its person in charge. Kimura did in fact serve as a contact person to relay communications between the parties. See, e.g., Exh. A-3, Gatchel Aff., Pl's Repl. ("Following our meeting, I had a lengthy discussion on the future of . . . [the] project with Mr. Furukawa. . . . Mr. Furukawa decided to further pursue the possibilities of completing the project. . . . Mr. Furukawa has asked me to propose the following. . . ."). However, Defendant maintains that Kimura was merely a "translator" and "coordinator" whose role was "to facilitate the negotiations and operation of the agreements because of his familiarity with both languages and cultures" of the parties. Furukawa Aff., Def's Repl. Furthermore, Kimura's signature does not appear on any of the contracts.

The extent of the communications and contact do not necessarily indicate that Kimura played a dominant role in the parties' business dealings. Plaintiff bases its characterization of Kimura as the person in charge largely on its perception or claimed understanding of what his role in the process entailed. Upon the evidence before the Court, Kimura was not the person in charge of Defendant's business in Texas. Furukawa traveled to Texas, directed Defendant's activities and decisions regarding the game development project, and led Defendant's course of business in Texas. See Furukawa Aff., Def's Repl.; Kimura Aff., Def's Repl. While Kimura was seemingly integral to the process, he did not assume the role of the person in charge of the business. Therefore, Plaintiff's attempted service upon Kimura under Section 17.043 is invalid.

II. Service upon Video Systems USA, Inc. as Agent for Service of Process

Service upon a subsidiary does not usually constitute service on the parent corporation. However, Plaintiff's service of process on Video System USA, Inc. may constitute service on Video System Co., Ltd. if the facts show that the Japanese parent exercised such a degree of control over its California subsidiary that the two corporations cannot be considered separate entities for jurisdictional purposes. The mere existence of a wholly-owned subsidiary, without more, is not enough to prove that the subsidiary is an "alter ego" of the parent. A plaintiff must show "proof of control by the parent over the internal business operations and affairs of the subsidiary. . . . The degree of control exercised by the parent must be greater than normally associated with common ownership and directorship." Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983).

Plaintiff has not offered sufficient evidence to show that such a control relationship existed between Video System USA, Inc. and Video System Co., Ltd. As stated above, the Japanese parent transacted its own business in Texas. The two corporations have separate offices and employees, and no facts indicate that the two companies have the same officers, directors, or business activities. See id. at 1161 (parent-subsidiary status not sufficient to establish an alter ego relationship when such "corporate formalities were scrupulously observed"). Furthermore, Plaintiff has not proven that Defendant controls the internal business operations of Video Systems USA, Inc. Therefore, the Court cannot conclude that Defendant's subsidiary was so controlled by Defendant that service upon the subsidiary constituted service upon Defendant in Japan.

III. Substituted Service on Secretary of State

Plaintiff also attempted service of process on Defendant by serving the Texas Secretary of State. Texas law provides that the secretary of state is an agent for service of process on a nonresident who "is required by statute to designate or maintain a resident agent or engages in business in this state, but has not designated or maintained a resident agent for service of process." Tex. Civ. Rem. Prac. Code Ann. § 17.044(a)(1) (West 1997). In addition, the secretary of state is an agent for service of process on a nonresident "who engages in business in this state, but does not maintain a regular place of business in this state or a designated agent for service of process, in any proceeding that arises out of the business done in this state and to which the nonresident is a party." Tex. Civ. Rem. Prac. Code Ann. § 17.044(b) (West 1997). Whether Section 17.044(a)(1) or (b) applies in this case, the result is the same in that the secretary of state properly acted as an agent for service of process on Defendant.

For proper service of process upon a nonresident defendant the Texas statute also requires that the secretary of state send notice to the nonresident. The record shows that the secretary of state forwarded the service of process to Defendants via registered mail. Exh. B-3, Cheatham Aff., Pl's Repl. Defendant contends that under these circumstances the Hague Convention governs the method of sending notice and that this avenue of service of process is invalid under the Hague Convention.

To determine whether the Hague Convention applies to Plaintiff's method of serving Defendant, the Court looks to the internal law of Texas. See Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 700 (1988). If Texas law defines the applicable method of serving process as requiring the transmittal of documents abroad, then the Hague Convention applies. See id. The Convention pre-empts any inconsistent methods of service prescribed by Texas law in all cases to which the Convention applies. See id. at 699.

Properly read, the Texas statute allows the secretary of state to serve as a defendant's agent for service of process provided that he forwards the service to the defendant as required by the statute. See Whitney v. LL Realty Corp., 500 S.W.2d 94, 96 (Tex. 1973). Accordingly, "a showing in the record that the Secretary of State forwarded a copy of the process is essential to establish the jurisdiction of the court," Id. Because Texas law requires that documents be transmitted to Japan in order to complete service of process upon Defendant, the Hague Convention applies. Therefore, the Court must determine whether, under the Hague Convention, proper service of process was completed by the secretary of state's forwarding a copy of the service to Defendant in Japan via registered mail.

The Hague Convention is a product of the Hague Conference on Private international Law, an international forum established for the purpose of exploring and proposing procedures for unifying rules of private international law. See R. Griggs Group Ltd. v. Filanto Spa, 920 F. Supp. 1100, 1103 (D. Nev. 1996) (citing 1 B. Ristau, International Judicial Assistance (Civil and Commercial § 1-1-2 (1990)). The stated purpose of the Hague Convention was "to create appropriate means to ensure that judicial and extrajudicial documents to be served abroad shall be brought to the notice of the addressee in sufficient time, . . . [and] to improve the organisation of mutual judicial assistance for that purpose by simplifying and expediting the procedure." Convention on Service Abroad, preamble. To accomplish this goal of facilitating international service of process, the Hague Convention requires each signatory state to establish a Central Authority for receiving and carrying out requests for service of process from litigants in foreign states. See Convention on Service Abroad, art. 2. In addition to the Central Authority system, the Hague Convention provides alternate methods of service in Articles 8 through 11.

The parties' argument in this case involves one of these alternate methods of service, found in Article 10(a) of the Hague Convention. Article 10(a) states, "Provided the State of destination does not object, the present Convention shall not interfere with — (a) the freedom to send judicial documents, by postal channels, directly to persons abroad." Convention on Service Abroad, art. 10(a).

Plaintiff contends that, because Japan signed the treaty without objecting to Article 10(a), service by sending documents directly to Defendant by registered mail was proper. Defendant responds that the use of the word "send" in Article 10(a) does not apply to service of process, so this attempt at service upon Defendant was ineffective. The parties point to two distinct lines of authority, each aligned on opposite sides of this issue of whether Article 10(a) allows service of process by mail.

Some courts have held that the word "send" in Article 10(a) is not the same as "service of process." See, e.g., Bankston v. Toyota Motor Corp., 889 F.2d 172, 174 (8^th Cir. 1989). One other court in this district has similarly construed Article 10(a) as used in the Hague Convention. It reasoned that because legal terms of art such as "serve," "service," and "to effect service" appear in other portions of the Hague Convention, the drafters must have chosen to use "send" in Article 10(a) as intended to apply to judicial papers other than those used to institute legal actions. See Postal v. Princess Cruises. Inc., 163 F.R.D. 497, 499 (N.D. Tex. 1995). However, many cases which found that Article 10(a) does not provide for service by mail have involved Japanese defendants. In light of this, at least one court has recognized that "Japan's internal law does not permit service by mail and many of these courts based their opinions at least in part on the Japanese prohibition." Trump Taj Mahal Assocs. v. Hotel Servs., Inc., 183 F.R.D. 173, 177 n. 3 (D. N.J. 1998).

The other line of cases holds that the use of the word "send" rather than "service" in Article 10(a) does not preclude mail as a means of service. Ackermann v. Levine, 788 F.2d 830, 839 (2d Cir. 1986) (quoting 1 B. Ristau, International Judicial Assistance (Civil and Commercial) § 4-28 (1984)); see also Smith v. Dainichi Kinzouku Kogyo Co., Ltd., 680 F. Supp. 847, 850-51 (W.D. Tex. 1988) ("Allowing such a distinction to prohibit service of process directly by mail under Article 10(a) would be to elevate form over substance."). The court in R. Griggs Group, Ltd. v. Filanto Spa, 920 F. Supp. 1100, 1104-06 (D. Nev. 1996) relied upon the location of the controversial language in ruling that "send" includes service. It noted that, while Articles 2 through 7 of the Hague Convention address service through the Central Authorities established by each party to the treaty. Articles 8 through 11 provide for other means of service outside the Central Authority framework. Article 10(a)'s appearance in this list of alternatives "suggest[s] that the word 'send' was used as a synonym for 'serve'. If 10(a) were intended only to preserve the right to use postal channels for non-service correspondence, it would be out of place in Article 10, in Chapter 1, and indeed in the Convention itself" Id. at 1004.

The overall scope of the Hague Convention encompasses, as its title indicates, the service abroad of judicial and extrajudicial documents. The preamble to the Convention states its intent to simplify and streamline international methods of service of process. Article I stipulates that the Hague Convention applies "in all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad." Convention on Service Abroad, art. 1. After an examination of the treaty's negotiating history, the Supreme Court has concluded that Article 1 "refers to service of process in the technical sense." Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 700 (1988). Delegates to the Hague Convention criticized early drafts of the Convention, concerned that its language might apply to transmissions which do not involve service. As a result, the Supreme Court noted, the final text of Article 1 was changed to clarify that the Convention "applies only to documents transmitted for service abroad." Id. at 701.

Articles 2 through 17 of the Hague Convention, then, provide methods and procedures for serving such documents. As the Griggs court recognized, "[t]he placement of one lone subprovision dealing with the mailing of nonservice documents in the midst of fifteen articles addressing service of process, would be inconsistent with the structure of the entire Convention."Griggs, 920 F. Supp. at 1105.

While the words "serve" or "service" are used throughout the Hague Convention, they are not the sole terminology utilized by the Convention to indicate service of process. For example, Article 21 states in part, "Each contracting State shall similarly inform the Ministry, where appropriate, of — (a) opposition to the use of methods of transmission pursuant to articles 8 and 10." Convention on Service Abroad, art. 21 (emphasis added). Clearly, "methods of transmission" is synonymous with "service of process" as it is used in Article 21.See Griggs, 920 F. Supp. at 1105, quoting Schlunk, 486 U.S. at 707 ("The only transmittal to which the Convention applies is a transmittal abroad that is required as a necessary part of service."). Therefore, the drafters of the Hague Convention did not exclusively rely upon the term "service" throughout the treaty to represent the concept of formal service of process of judicial documents.

Furthermore, declarations of other signatory countries indicate that at least some of them understood Article 10(a) to refer to a method of service. See, e.g. declaration of Canada ("Canada does not object to service by postal channels"); declaration of Czechoslovakia ("In accordance with Article 10 . . . documents may not be served by another contracting State through postal channels. . . ."); declaration of Pakistan ("Pakistan . . . has no objection to such service by postal channels directly to the persons concerned [Article 10(a)]. . . .). See also Griggs, 920 F. Supp. at 1105.

Also helpful in interpreting the text of the Hague Convention is a handbook written by a special international commission of experts chosen by their respective countries to discuss the operation of the Convention. The publication serves as a guide to practicing law under the Convention. See Practical Handbook on the Operation of the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 44-45 (2d ed. 1992). The experts' position is that Article 10(a) provides a method for international service of process. The handbook criticizes the contrary holdings of the Bankston line of cases, and it also reasons that signatory States would not have been given the opportunity to object to Article 10(a) on the grounds that such use of postal channels would infringe upon their sovereignty unless such use constituted service of process. See id. at 42-45.

Based upon this reasoning of many courts and experts, and upon the construction and purpose of the Hague Convention itself; this Court finds that Article 10(a) provides for service by mail in the current situation. Regardless of the provisions for service of process found in Japan's internal law governing its domestic procedures, in international matters of service of process Japan did not object to Article 10(a)'s authorization of service through the postal channels by foreign parties abroad. Moreover, the Court does not read Article 10(a) to permit true service by mail. Rather, this provision directly addresses the situation at hand where substituted service occurs on an official within the country of origin who must then technically complete service by forwarding the documents to the party being served within the country of destination. Because Japan did not object to this provision of the Hague Convention, service upon Defendant was properly completed by the secretary of state's forwarding a copy of service of process to Defendant in accordance with Texas law.

IV. Service upon Defendant Through the Japanese Minister of Foreign Affairs

After Defendant objected to service upon Kimura, Video Systems USA, Inc., and itself through registered mail, Plaintiff complied with Defendant's demand for service under the Hague Convention. Plaintiff transmitted a Request for Service Abroad to the Japanese Minister of Foreign Affairs pursuant to Article 5 of the Convention. Exh. B-4, Cheatham Aff., Pl's Resp. The record shows that Plaintiff has received confirmation of the Japanese Minister's receipt of its request, and Plaintiff presently is awaiting the certificate of return.

Here, again, the parties dispute the state of the facts. Furakawa claims that no one has delivered service of process to Defendant. Furakawa Aff., Def's Repl. Plaintiff claims that Defendant has refused to accept the service by refusing to pick up the documents from the Japanese Minister. Pl's Repl. ¶ 13. Japan's internal method of service of process has not been pleaded before this Court, so whether Defendant must wait for the documents to come to it or go pick them up is unable to be determined upon the facts before the Court.

However, the record clearly shows that Plaintiff has complied with all requirements of the Hague Convention to forward service of process to Defendant. The Japanese Minister now has the duty under the Hague Convention to complete the service and return the certificate to Plaintiff. Perhaps Plaintiff should inquire about the Japanese Minister's delay in returning the certificate of service, because service under the Hague Convention will not be complete until the record reflects that Defendant did receive notice. However, the record does reflect that Defendant properly received notice of this action from the Texas secretary of state.

Service of process has been fully executed in compliance with Texas law through substituted service upon the Texas secretary of state. Therefore, Defendant's Motion to Dismiss is DENIED.

So ORDERED, this 3rd day of March, 2000.