Commodity Futures Trading Commission v. Nahas

The Commodity Futures Trading Commission (the commission) (plaintiff), as part of its investigation into alleged violations of the Commodity Exchange Act, issued a subpoena duces tecum directing Naji Robert Nahas (defendant), a citizen and resident of Brazil, to appear and produce certain documents at the commission’s office in Washington, D.C. The United States Department of State advised the commission that Brazilian law did not prohibit the service of an administrative subpoena in Brazil by a Brazilian attorney upon a Brazilian citizen. The commission chose a Brazilian attorney from a list furnished by the State Department to effectuate service on behalf of the commission. The selected Brazilian attorney served the subpoena upon Nahas via substituted service by delivering copies to individuals at Nahas’s office and residence in Sao Paolo, Brazil. Nahas failed to comply with the subpoena. The commission motioned the district court for an order directing Nahas to show cause why he should be relieved of compliance with the subpoena. When Nahas ignored the order to show cause, the district court froze Nahas’s assets in the United States and held a contempt proceeding. Nahas appeared for the first time at the contempt proceeding, asserting that the commission had exceeded its authority pursuant to 7 U.S.C. § 15 in issuing the subpoena. Nahas also argued that the method of service violated Brazilian and international law, evidenced by formal letters of protest sent by the Brazilian government to United States officials. The district court rejected Nahas’s arguments, held Nahas in contempt, and imposed civil sanctions. Nahas appealed.