By Nathan Hale

Law360 (June 3, 2021, 10:07 PM EDT) -- A group of American citizens and businesses attempting to hold the Chinese government liable for damages resulting from alleged failures to curb the spread of COVID-19 asked a Florida federal judge Thursday for guidance on how to move forward after China rejected their first attempt to serve their complaint.

In a Zoom hearing before U.S. District Judge Aileen M. Cannon, plaintiffs' counsel Matthew T. Moore of Berman Law Group argued that an invocation of sovereign immunity by China's Ministry of Justice in a December letter rejecting service should not slow further service efforts. He also suggested jumping ahead to the last of four methods prescribed by the Foreign Sovereign Immunities Act: diplomatic channels.

"They shouldn't be able to just willy-nilly avoid getting called into our courts if they've done things," Moore said, adding, "The FSIA is set by Congress, and it allows the service to continue."

But Moore also acknowledged the sensitivity of the situation and the fact that the court did not have an opportunity to hear from the other side, with the Chinese defendants not making an appearance. He said his clients, led by named plaintiffs Marta Reyes and Lawrence Wood, are uncertain whether each FSIA service step must be followed in order and noted that the fourth method calls for the clerk of court's involvement to notify the U.S. State Department of the request.

"We're asking a case to proceed that involves a world superpower," Moore said. "We want to proceed carefully. We want to proceed correctly."

Moore explained that the plaintiffs skipped a first service method, which comes into play only when there is a special arrangement between the U.S. and the foreign state, and instead started by attempting service through China's central authority. The third step under FSIA would be service by direct mail, but China declared in a public notification to The Hague Convention that it opposed that method, Moore said, leaving the fourth method, diplomatic channels, as the logical next step.

Judge Cannon pressed Moore on how he reads the text of the FSIA to allow the plaintiffs to bypass the third method, to which the attorney replied that the court may find that the steps of the FSIA "must be adhered to" but it could choose to follow The Hague Convention and China's opposition to mail service.

The plaintiffs had previously urged the court to find China's response to be inadequate and find the defendants in default, but Moore said further research had prompted them to back off that argument.

However, he insisted that China's claim of sovereign immunity, which it raised under Article 13 of The Hague Convention, should not halt the proceedings at this stage. Case law, he argued, holds that once the FSIA steps have been undertaken, service is considered complete and the court has jurisdiction.

Moore said the plaintiffs believe that the People's Republic of China and other defendants will never appear in the case — and could be subject to default at that point — but if they do, they will have the opportunity to raise sovereign immunity and other defenses later.

The plaintiffs also argued that the Communist Party of China, or CCP, the ruling political party in China, is not a "foreign state" and thus not subject to FSIA service requirements. But Moore said they intend to complete service as if it is a sovereign, so the court does not need to answer that question now.

The plaintiffs do not dispute that the PRC and other defendants qualify as sovereign entities, but they believe that certain FSIA exceptions, including a "commercial activity" exception based on their activities in the international pharmaceutical marketplace, apply, Moore said.

He also explained that the plaintiffs recently moved for an extension on a court deadline to file a second amended complaint because they are concerned that if they do so before service is completed, the law may require them to restart the service process from scratch.

The latest version of the suit, which was initially filed on March 12, 2020, in the Southern District of Florida, asserts claims for negligence, negligent and intentional infliction of emotional distress, strict liability for conducting ultra-hazardous activity, intentional torts of toxic battery and civil assault, wrongful death and gross negligence.

It names as defendants the People's Republic of China and its National Health Commission, Ministry of Emergency Management and Ministry of Civil Affairs, as well as the CCP, the governments of Hubei province and the city of Wuhan, where the virus allegedly originated, the Wuhan Institute of Virology and the Chinese Academy of Sciences.

During Thursday's hearing, Moore noted that the plaintiffs and their counsel were criticized as conspiracy theorists when they raised the possibility that the novel coronavirus that causes COVID-19 may have originated in the Wuhan Institute's labs but that in the past few weeks, there have been numerous media reports that government officials in the U.S. and other countries have been reexamining that possibility.

The plaintiffs seek to certify national and Florida noncommercial tort and commercial classes, consisting of all persons and legal entities who suffered injury, damage and loss related to the COVID-19 outbreak.

Judge Cannon asked the plaintiffs to let her know of any cases in which the Chinese government or CCP has made an appearance in U.S. court, and she gave them until June 11 to file a short brief on the question concerning the timing of the second amended complaint.

"I was encouraged by Judge Cannon's interest in the case and happy that she's allowed us to address these issues," Moore told Law360 following the hearing.

A representative of the Chinese government did not immediately respond to a request for comment Thursday.

The plaintiffs are represented by Matthew T. Moore and Joseph F. Stallone of Berman Law Group.

Counsel information for the defendants is not available.

The case is Reyes et al. v. People's Republic of China et al., case number 1:20-cv-21108, in the U.S. District Court for the Southern District of Florida.

--Editing by Rich Mills.

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