Opinion
2:23-cv-02519-BHH-MGB
02-09-2024
J.R., a minor, and Jane Roe, individually and in her capacity as guardian and parent of Plaintiff J.R., Plaintiffs, v. Michele Mancino, Thomas E. Aspinwall, Telegram Messenger Inc. d/b/a “Telegram”, and Perry Street Software d/b/a “Scruff”, Defendants.
ORDER AND REPORT AND RECOMMENDATION
MARY GORDON BAKER UNITED STATES MAGISTRATE JUDGE
Plaintiffs filed this civil action on June 7, 2023, alleging, inter alia, claims of assault and battery, negligence, civil conspiracy, intentional infliction of emotional distress, invasion of privacy, products liability, unfair trade practices, and violations of 18 U.S.C. §§ 1595, 1591, and 2255. (Dkt. No. 1.) Currently before the court is a Motion to Dismiss and Set Aside Clerk's Entry of Default filed by Defendant Perry Street Software (“Defendant Perry”). (Dkt. No. 24.) Pursuant to the provisions of Title 28, United States Code, Section 636(b)(1) and Local Rule 73.02(B)(2)(e), D.S.C., all pretrial matters in cases involving pro se litigants are referred to a United States Magistrate Judge for consideration.Accordingly, this motion has been referred to the undersigned. For the reasons set forth below, the undersigned RECOMMENDS that Defendant Perry's Motion to Dismiss (Dkt. No. 24) be DENIED, and ORDERS that its request to set aside the clerk's entry of default against it (Dkt. No. 23) be GRANTED.
Defendant Mancino is proceeding pro se in this civil action.
DISCUSSION
I. Motion to Dismiss
Defendant Perry moves to dismiss pursuant to Rules 12(b)(2), 12(b)(4), and 12(b)(5) of the Federal Rules of Civil Procedure. (See generally Dkt. No. 24.) Federal Rule of Civil Procedure 12(b)(2) permits dismissal of an action for lack of personal jurisdiction. “When a nonresident defendant challenges personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure, the plaintiff has the ultimate burden of proving facts supporting jurisdiction over the defendant by a preponderance of the evidence. See Grayson v. Anderson, 816 F.3d 262, 268 (4th Cir. 2016). “When personal jurisdiction is addressed under Rule 12(b)(2) without an evidentiary hearing, the party asserting jurisdiction has the burden of establishing a prima facie case of jurisdiction.” Hawkins v. i-TV Digitalis Tavkozlesi zrt., 935 F.3d 211, 226 (4th Cir. 2019). “This prima facie case analysis resembles the plausibility inquiry governing motions to dismiss for failure to state a claim under Rule 12(b)(6).” Id. (internal quotation marks omitted). Here, Defendant Perry claims that this court lacks personal jurisdiction solely on account of insufficient process and service of process under Federal Rules of Civil Procedure 12(b)4 and 12(b)(5).
Federal Rule of Civil Procedure 12(b)(4) allows dismissal for insufficient process, and Federal Rule of Civil Procedure 12(b)(5) allows dismissal when service of process failed to comply with the requirements of Federal Rule of Civil Procedure 4. Rule 4 governs the service of process upon corporations in the United States and provides that it can be accomplished by (i) following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made, or (ii) delivering a copy of the summons and complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process and-if the agent is one authorized by statute and the statute so requires-by also mailing a copy of each to the defendant. Fed.R.Civ.P. 4(h).
Dismissal for insufficiency of service of process under Rule 12(b)(5) is within the discretion of the court. See Causey v. Paitsel, No. 4:13-cv-0970-RBH-TER, 2014 WL 1400789, at *3 (D.S.C. Apr. 10, 2014) (citing Reinhold v. Tisdale, No. 8:06-cv-3311-MBS-BHH, 2007 WL 2156661, at *3 (D.S.C. April 30, 2007)), adopted, 2007 WL 2173368 (D.S.C. July 26, 2007). Further, the “provisions of [Rule 4] should be liberally construed to effectuate service and uphold the jurisdiction of the court, thus insuring the opportunity for a trial on the merits.” Karlsson v. Rabinowitz, 318 F.2d 666, 668 (4th Cir. 1963). “Ordinarily, dismissal is proper when there is prejudice to the defendant or where proper service is unlikely to be accomplished.” Reinhold, 2007 WL 2156661, at *3. Noncompliance with Rule 4 does not require dismissal where, as here, the necessary parties have received actual notice of the suit and are not prejudiced by the technical defects in service. Karlsson, 318 F.2d at 668-69. Indeed, “the real purpose of service of process is to give notice to the defendant, and mere technicalities should not stand in the way of consideration of a case on its merits.” Scott v. Md. State Dep't of Labor, 673 Fed. App'x 299, 304 (4th Cir. 2016) (internal quotation marks and citation omitted). Still, actual notice is not the controlling standard. Scott, 673 Fed.Appx. at 304. Although actual notice typically warrants liberal construction of the rules, the rules are nonetheless “there to be followed, and plain requirements for the means of effecting service of process may not be ignored.” Armco, Inc. v. Penrod-Stauffer Bldg. Sys., Inc., 733 F.2d 1087, 1089 (4th Cir. 1984); Scott, 673 Fed.Appx. at 304.
Defendant Perry contends that Plaintiffs did not effectuate service because the summons and complaint were delivered to doormen, not officers of the company. (Dkt. No. 24 at 1-3; Dkt. No. 34 at 3-5.) More specifically, Defendant Perry explains that the process server hired by Plaintiffs delivered the summons and complaint to a doorman at the residence of Defendant Perry's Chief Executive Officer, Eric Silverberg, and to a doorman at the residence of Defendant Perry's Chief Operating Officer, Todd Sowers. (Dkt. No. 24 at 1-3; Dkt. No. 34 at 3-5.) Defendant Perry contends that the doormen were not authorized to accept service on behalf of the company, and that delivery to the doormen does not equate to proper service under the Federal Rules of Civil Procedure, the laws of South Carolina, or the laws of New York. (Dkt. No. 24 at 1-3; Dkt. No. 34 at 3-5.)
New York is the home state of Defendant Perry and the state in which service was made.
By contrast, Plaintiffs contend that delivering the summons and complaint to doormen at Defendant Perry's officers' residences complied with New York law for effective service. (Dkt. No. 32 at 7-10.) As support, Plaintiffs point to Rule 308 of the New York Civil Practice Law and Rules, which permits personal service upon a natural person through “delivery of a summons within New York's borders to ‘a person of suitable age and discretion at the actual place of business, dwelling place or usual place of abode of the person to be served' along with mailing the summons to the person to be served by first class mail with a ‘personal and confidential' heading.” (Id. at 8.) Plaintiffs contend that all of these conditions were met, so Defendant Perry was effectively served. (Id.)
It is undisputed that Plaintiffs mailed the summons to Defendant Perry. (See generally Dkt. Nos. 24, 32, 34.) It is also undisputed that this mailing did not constitute effective service on its own. (See generally Dkt. Nos. 24, 32, 34.)
In reply, Defendant Perry argues that Rule 308 of the New York Civil Practice Law and Rules only covers service upon a natural person. (Dkt. No. 34 at 4-5.) Defendant Perry contends that Rule 311 of the New York Civil Practice Law and Rules is the law applicable here, as Rule 311 dictates the permissible methods for service on a corporation. (Id.) Under that rule, “[p]ersonal service upon a corporation . . . shall be made by delivering the summons . . . to an officer, director, managing or general agent, or cashier or assistant cashier or to any other agent authorized by appointment or by law to receive service.” See N.Y.C.P.L.R. § 311. Defendant Perry contends that the doormen served were not authorized to accept service on behalf of Defendant Perry, and service was therefore improper. (Dkt. No. 34 at 5.)
Plaintiffs do not point the court to any authority indicating that Rule 308 is applicable here, where the defendant at issue is a corporation and not a natural person. (Dkt. Nos. 32, 32-1, 32-2.) Similarly, Plaintiffs do not provide evidence to suggest that the doormen were authorized to accept service on behalf of Defendant Perry. (Dkt. Nos. 32, 32-1, 32-2.) As such, it does not appear that Defendant Perry was properly served.
Defendant Perry also argues that Plaintiffs cannot show effective service because Plaintiffs did not serve a summons that was signed by the clerk of court, as is required by Federal Rule of Civil Procedure 4. (Dkt. No. 24 at 3-6; Dkt. No. 34 at 1-3.) In response, Plaintiffs assert that “[t]he Summons issued to [Defendant Perry] plainly bears the Court's seal and the e-signature of the clerk's office representative.” (Dkt. No. 32 at 9.) Based upon the record currently before the court, the undersigned cannot conclude that the summons Defendant Perry received bore the clerk's signature. Indeed, Defendant Perry has presented two signed affidavits to the court confirming that the summons received was unsigned. (See Dkt. Nos. 24-1, 24-2.) Plaintiffs have provided the court with a screenshot of a signed summons issued by the court. (Dkt. No. 32-10.) However, evidence that a summons issued by the court was signed is not evidence that a signed summons was served on Defendant Perry. Thus, Plaintiffs have not shown that Defendant Perry was served with a signed summons. Service upon Defendant Perry was improper for this reason, as well.
Nonetheless, Defendant Perry's contention that Plaintiffs' case against it should be dismissed in its entirety based on insufficient service and service of process is unconvincing. The record before the court makes clear that that Plaintiffs diligently attempted service on Defendant Perry, and Defendant Perry has obviously received actual notice of this lawsuit. (See generally Dkt. Nos. 24, 32, 32-1, 32-2, 34.) In fact, the record shows that Defendant Perry was likely aware of Plaintiffs' claims against it as early as August of 2023, just two months after Plaintiffs filed their initial complaint. (Dkt. No. 32 at 11; Dkt. Nos. 32-1, 32-2.) Further, Defendant Perry has not articulated prejudice based upon the technical service defects noted above. (See generally Dkt. Nos. 24, 34.); see also Heaton v. Stirling, No. 2:19-cv-0540-RMG, 2020 WL 729780, at *3 (D.S.C. Feb. 13, 2020) (finding no prejudice where defendant knew of claim less than eight weeks after plaintiff filed amended complaint); Alexander v. Stirling, No. 6:19-cv-0215-HMH, 2019 WL 7605892, at *3 (D.S.C. Dec. 6, 2019) (finding no prejudice to defendants where they had notice of claim and were represented by same counsel).
In addition to the efforts described above, Plaintiffs' response in opposition to Defendant Perry's motion indicates that Plaintiffs attempted to serve Defendant Perry's registered agent via certified mail, but the mailing was returned by the post office as unable to forward (the undersigned notes that Plaintiffs now appear to have the correct address for Defendant Perry's registered agent). (Dkt. No. 32 at 3.) Plaintiffs' response also indicates that they hired a process server who attempted service on Defendant Perry at two different addresses, called and texted Defendant Perry's CEO and COO, and emailed Defendant Perry's purported general counsel (who claimed that he had little interaction with the company and could not accept service). (Id. at 4-5.)
As previously noted, noncompliance with Rule 4 does not require dismissal where the necessary parties have received actual notice of the suit and are not prejudiced by the technical service defects. Karlsson, 318 F.2d at 668-69. “[T]he real purpose of service of process is to give notice to the defendant, and mere technicalities should not stand in the way of consideration of a case on its merits.” Scott, 673 Fed. App'x at 304. As such, the undersigned RECOMMENDS that Defendant Perry's Motion to Dismiss (Dkt. No. 24) be DENIED. The undersigned further RECOMMENDS that Plaintiffs be given additional time to serve Defendant Perry with a signed summons to ensure that this court may properly exercise personal jurisdiction over Defendant Perry when considering this case on its merits. See e.g., James v. Univ. of N. Carolina Health Care Hosp., No. 1:18-cv-0339, 2018 WL 4518700, at *5 (M.D. N.C. Sept. 20, 2018) (amending summons and allowing plaintiff time to serve the amended summons on defendant where defendant received actual notice of the civil action); see also Koehler v. Dodwell, 152 F.3d 304, 306 (4th Cir. 1998) (citing Armco, 733 F.2d at 1089) (“Absent waiver or consent, a failure to obtain proper service on the defendant deprives the court of personal jurisdiction over the defendant.”). In the interest of efficiency, the undersigned also RECOMMENDS that the District Judge request that Defendant Perry's counsel of record in this litigation accept service on Defendant Perry's behalf.
II. Motion to Set Aside Clerk's Entry of Default
Defendant Perry also moves for the court to set aside the clerk's entry of default against it. (Dkt. No. 23; Dkt. No. 24 at 6-10.) For the reasons set forth in greater detail below, this request is GRANTED.
To obtain default judgment, a party must first move the court for entry of default, and then it must move the court for default judgment. Fed.R.Civ.P. 55(a) and (b); United States v. Fox, No. 5:07-cv-82, 2007 WL 4395698, at *1 (W.D. N.C. Dec. 13, 2007). Here, Plaintiffs requested an entry of default on December 19, 2023. (Dkt. No. 22.) The Clerk of Court entered the default against Defendant Perry on December 20, 2023. (Dkt. No. 23.)
Rule 55(c) provides that “for good cause shown the court may set aside an entry of default.” Fed.R.Civ.P. 55(c). In determining whether a party merits relief from default, the Fourth Circuit has considered a variety of factors, including (i) the existence of a meritorious defense, (ii) the promptness of the moving party, (iii) the personal responsibility of the moving party, (iv) prejudice to the non-moving party, (v) any history of dilatory action, and (vi) the availability of less drastic sanctions. Fox, 2007 WL 4395698, at *2 (citing Payne v. Brake, 439 F.3d 198, 204-05 (4th Cir. 2006)); Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980)). The Fourth Circuit has further cautioned that Rule 55(c) “must be liberally construed in order to provide relief from the onerous consequences of defaults and default judgments.” Lolatchy v. Arthur Murray, Inc., 816 F.2d 951, 954 (4th Cir. 1987) (internal quotations and citations omitted). In fact, “[t]he Fourth Circuit has ‘repeatedly expressed a strong preference that, as a general matter, defaults be avoided and . . . claims and defenses be disposed of on their merits.'” W & Z, LLC v. Virginia Fam. Restaurants, LLC, No. 6:20-cv-03012-JD, 2021 WL 11143978, at *2 (D.S.C. Sept. 27, 2021) (quoting Colleton Prep. Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413, 417 (4th Cir. 2010)).
The undersigned finds that setting aside the clerk's entry of default against Defendant Perry is warranted in this instance. Indeed, it is does not appear that Defendant Perry was properly served with the summons and complaint. (See supra at 2-7.) Further, Defendant Perry has presented a meritorious defense, and promptly moved to set aside the default after it was entered. (See generally Dkt. Nos. 23, 24, 34.) Setting aside the default against Defendant Perry will not harm Plaintiffs' opportunity to fully litigate their claims and, due to the current procedural posture of the case, a scheduling order has not yet been entered. As noted, the Fourth Circuit has expressed a strong preference for claims and defenses to be resolved on their merits, and setting aside the entry of default against Defendant Perry in this instance will allow for resolution on the merits. See W & Z, LLC, 2021 WL 11143978, at *2.
Ultimately, this court has discretion to set aside an entry of default. Shanbhag v. Dupont, No. 7:20-cv-00120-BHH, 2020 WL 6689138, at *7 (D.S.C. Nov. 12, 2020); see also Consol Masonry & Fireproofing, Inc. v. Wagman Const. Corp., 383 F.2d 249, 251 (4th Cir. 1967) (describing a motion to set aside default as a matter that “lies largely within the discretion of the trial judge”). Here, setting aside the entry of default against Defendant Perry is the appropriate course of action. Accordingly, Defendant Perry's request to set aside the clerk's entry of default against it is GRANTED. The court DIRECTS the Clerk of Court to set aside the entry of default against Defendant Perry (Dkt. No. 23).
CONCLUSION
Based on the above, the undersigned RECOMMENDS that Defendant Perry's Motion to Dismiss (Dkt. No. 24) be DENIED. The undersigned RECOMMENDS that Plaintiffs be given two weeks from the date of the District Judge's Order resolving the instant motion to serve Defendant Perry with a signed summons. In the interest of efficiency, the undersigned also RECOMMENDS that the District Judge request that Defendant Perry's counsel of record in this litigation accept service on Defendant Perry's behalf.
The undersigned further ORDERS that Defendant Perry's request to set aside the clerk's entry of default against it is GRANTED. The Clerk of Court is directed to set aside the entry of default as to Defendant Perry only.
IT IS SO RECOMMENDED.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin1 L. Blume, Clerk
United States District Court
Post Office Box 835
Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).