In an earlier post, we reported that Judge William Orrick of the Northern District of California had authorized service of process on Ooki DAO (a DAO is a decentralized autonomous organization) through a Help Chat Box on Ooki DAO’s website, with contemporaneous notice through an Online Forum linked through its website. In another post, we reported that the Judge Orrick subsequently required the CFTC also to serve process on two Token Holders once it was revealed that the CFTC knew their identities. The judge has now issued his full opinion on the motion for reconsideration that was filed by four amici to challenge service of process.
The court first held that Ooki Dao was equivalent to an unincorporated association. Because Ooki DAO had no agents for service of process, the relevant statute was Cal. Corp. Code § 18220, which provides that “the court or judge may make an order that service be made upon the unincorporated association by delivery of a copy of the process to one or more of the association’s members designated in the order and by mailing a copy of the process to the association at its last known address.” The court explained that his December 12 order had required service on two members and that had been accomplished. However, the rest of § 18220 could not be met because the CFTC showed that Ooki DAO did not have an address. Accordingly, the catch-all service provision applied, which allows a court to “direct that summons be served in a manner which is reasonably calculated to give actual notice to the party to be served . . . .”
Amici argued that the CFTC failed to meet these requirements because service via the Chat Box and Forum was not reasonably calculated to provide actual notice to the voting Token Holders and that those methods of service did not in fact provide actual notice to the voting Token Holders. The court responded that permitting service through electronic means was not a novel concept. Indeed, California law authorizes it if certain conditions are met.
The court was persuaded by an earlier Ninth Circuit decision that had approved service by email on a defendant which structured its business such that it could be contacted only via its email address, leading the Ninth Circuit to hold that“[i]f any method of communication is reasonably calculated to provide [the defendant] with notice, surely it is email—the method of communication which [the defendant] utilizes and prefers.” Here, the judge explained, the Chat Box and Online Forum seem to be Ooki DAO’s chosen and preferred method of communication, which was only bolstered by the fact that posts recognizing service of the litigation documents for the case appeared in the Online Forum. And, posting on the defendant’s website’s online discussion forum, which was dedicated to conversation about the defendant’s business, was reasonably likely to apprise the defendant of the ongoing litigation. Furthermore, at least in this specific case, it seemed clear that Ooki DAO received actual notice. Service via the Chat Box and the Online Forum led to a flurry of discussion on the Forum and Ooki DAO’s other public communication channels, including its Twitter account.
In sum, the court held that service via the Chat Box and Online Forum meet the service requirements under California’s alternative service provision, and also meet constitutional due process requirements.