Opinion
C.A. No. 99-5118 (DRD).
May 24, 2001.
Hugo A. Hilgendorff IV, Esq., Bressler, Amery Ross, Morristown, N.J., Counsel for plaintiffs.
Michael S. Reines, Granada Hills, CA., Defendant pro se ipso.
OPINION
This matter is before the court on the plaintiffs' application for entry of judgment by default against defendants HealthWISE Beverages, Inc. ("HealthWISE") and Vatican Millennium Collectibles Company, L.L.C. ("Vatican Millennium"), but not against defendant Michael Reines ("Reines"). For the reasons that follow, the application shall be granted.
INTRODUCTION
It must be noted at the outset that Reines, who is not an attorney, represents himself and himself alone in this litigation. Reines does not and cannot represent HealthWISE, a corporation, or Vatican Millennium, a limited liability company. "It has been the law for the better part of two centuries . . . that a corporation may appear in the federal courts only through licensed counsel." Rowland v. Cal. Men's Colony, 506 U.S. 194, 201-02, 113 S.Ct. 716, 721, 121 L.Ed.2d 656 (1993), quoted in United States v. Cocivera, 104 F.3d 566, 572 (3rd Cir. 1996). This rule applies to limited liability companies. Int'l Ass'n of Sheet Metal Workers Local 16 v. A J Mech., 1999 WL 447459, at *1, *2 (D.Or. June 16, 1999); In re ICLNDS Notes Acquisition, LLC, 259 B.R. 289, 294 (Bankr.N.D.Ohio 2001). Neither HealthWISE nor Vatican Millennium has appeared in this litigation through licensed counsel; they remain unrepresented.
Reines has filed two documents on HealthWISE and Vatican Millennium's behalf: a motion to dismiss plaintiffs' claims against HealthWISE and Vatican Millennium, and opposition to plaintiffs' application for entry of judgment by default against HealthWISE and Vatican Millennium. These documents must be disregarded, as Reines has not moved in his own behalf to dismiss the plaintiffs' claims against him, and can file neither moving nor opposition papers on behalf of HealthWISE or Vatican Millennium. Plaintiffs' application for entry of judgment by default against HealthWISE and Vatican Millennium thus is unopposed.
DISCUSSION
Personal Jurisdiction
Though plaintiffs' application is unopposed, "a district court must determine whether it has jurisdiction over the defendant before entering judgment by default against a party who has not appeared in the case." Dennis Garberg Assocs., Inc. v. Pack-Tech Int'l Corp., 115 F.3d 767, 772 (10th Cir. 1997). "Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of service of [process] must be satisfied." Omni Capital Int'l, Ltd. v. Rudolf Wolff Co., 484 U.S. 97, 104, 108 S.Ct. 404, 409, 98 L.Ed.2d 415 (1987). Accordingly, the liminal inquiry into whether personal jurisdiction lies over HealthWISE and Vatican Millennium is whether process has been properly served upon them.
" [S]ervice upon a domestic . . . corporation or upon a partnership or other unincorporated association that is subject to suit under a common name, and from which a waiver of service has not been obtained and filed, shall be effected . . . by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process. . . ." Fed.R.Civ.P. 4(h) (1993) (emphasis added).
Service upon Vatican Millennium
Reines judicially admitted in his Answer and Counterclaim dated January 24, 2000 that he was the Chairman of Vatican Millennium. See Complaint, Exhibit C to Affidavit of Hugo A. Hilgendorff IV in Further Support of Request for Entry of Default Judgment signed 4/30/01, ¶ 3, at 2; Answer and Counterclaim filed by Defendant Michael S. Reines, Ex. D. to Hilgendorff Aff., ¶ 2, at 1. Reines also has held himself out as Vatican Millennium's Chief Executive Officer; see Letter from Michael S. Reines, CEO of Vatican Millennium, to Barbara Khouri, 9/5/98, Exhibit A to Supplemental Affidavit of Barbara T. Khouri in Further Support of Plaintiffs' Request for Entry of Default Judgment signed 4/25/01.
Both the Return of Service and Affidavit of Process Server signed by process server Peter J. Palumbo ("Palumbo") on November 17, 1999 indicate that the Summons issued to "Michael S. Reines, Vatican Millennium Collectibles Company, L.L.C." and a copy of the Complaint were served upon Reines on that date. See Return of Service (reverse side of Summons), Exhibit B to Affidavit of Edwin A. Zipf in Support of Request for Entry of Default filed 9/7/00; Affidavit of Process Server, Ex. B to Hilgendorff Aff. Reines has judicially admitted that he was on that date an officer of Vatican Millennium. Therefore, Vatican Millennium has been properly served.
Service upon HealthWISE
Reines further judicially admitted in his Answer and Counterclaim that he was the Chairman of HealthWISE. See Compl., Ex. C to Hilgendorff Aff., ¶ 3, at 2; Answer Countercl., Ex. D to Hilgendorff Aff., ¶ 2, at 1. Both the Return of Service and Affidavit of Process Server signed by Palumbo on November 17, 1999 indicate that the Summons issued to "HealthWISE Beverages, Inc." and a copy of the Complaint were served upon Reines on that date. Return of Service, Ex. B to Zipf Aff.; Aff. of Process Server, Ex. B to Hilgendorff Aff. Reines has judicially admitted that he was on that date an officer of HealthWISE. Therefore, HealthWISE has been properly served.
Palumbo's Returns of Service indicate that defendants Vatican Millennium and HealthWISE were "served personally"; his Affidavits name the defendants served as "Michael S. Reines." These defects in the proofs of service do not affect the validity of service upon Vatican Millennium or HealthWISE, Fed.R.Civ.P. 4(l) (1993); 4A Charles Alan Wright Arthur R. Miller, Federal Practice and Procedure § 1130 n. 3 (2nd ed. 1987), and may freely be cured, id. § 1130 n. 18.
Having established the propriety of service upon Vatican Millennium and HealthWISE, it remains to determine whether they are subject to this court's personal jurisdiction under the Federal Rules of Civil Procedure, applicable federal statutory law, and the United States Constitution.
Worldwide Personal Jurisdiction on Claims under the Securities Exchange Act of 1934
Plaintiffs allege in their complaint that Reines, HealthWISE, and Vatican Millennium violated Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) (1934), and Rule 10b-5, 17 C.F.R. § 240.10b-5 (1948, as amended). Civil actions arising under Section 10(b) may be brought in any district wherein any act or transaction constituting a violation of Section 10(b) occurred, or in the district wherein the defendant is found or is an inhabitant or transacts business, "and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found." 15 U.S.C. § 78aa (1934, as amended).
The quoted language is a federal statutory provision for worldwide service of process. E.g. United Elec., Radio Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1086 n. 6 (1st Cir. 1992). "Service of a summons . . . is effective to establish jurisdiction over the person of a defendant when authorized by a statute of the United States." Fed.R.Civ.P. 4(k)(1)(D) (1993). As the Summons and Complaint were served upon Vatican Millennium and HealthWISE in New Jersey, see Affs. of Process Server, Ex. B to Hilgendorff Aff., the exercise of personal jurisdiction over Vatican Millennium and HealthWISE comports with the Federal Rules of Civil Procedure and applicable federal statutory law. It remains to determine whether such exercise comports with the Constitution.
National Minimum Contacts Suffice under the Fifth Amendment
Personal jurisdiction over a defendant served with process under 15 U.S.C. § 78aa will be constitutionally exercised so long as the defendant has sufficient minimum contacts with the United States to satisfy the strictures of the Due Process Clause of the Fifth Amendment to the United States Constitution. Busch v. Buchman, Buchman O'Brien, 11 F.3d 1255, 1258 (5th Cir. 1994); Miller v. Asensio, 101 F. Supp.2d 395, 402 (D.S.C. 2000) (citing cases).
Reines has judicially admitted that HealthWISE is a Delaware corporation with its principal place of business in New Jersey, see Compl., Ex. C to Hilgendorff Aff., ¶ 4, at 2; Answer and Countercl., Ex. D. to Hilgendorff Aff., ¶ 2, at 1, and that Vatican Millennium is a limited liability company formed under the laws of New Jersey with its principal place of business in New Jersey, see Compl., Ex. C. to Hilgendorff Aff., ¶ 5, at 2; Answer and Countercl., Ex. D. to Hilgendorff Aff., ¶ 3, at 1. As HealthWISE and Vatican Millennium have their principal places of business in New Jersey, they would have sufficient minimum contacts with the State of New Jersey to legitimate this court's exercise of personal jurisdiction over them under the Due Process Clause of the Fourteenth Amendment to the Constitution. LG Elecs. Inc. v. Advance Creative Computer Corp., 131 F. Supp.2d 804, 813 (E.D.Va. 2001); Del Monte Fresh Produce Co. v. Dole Food Co., 2001 WL 300779, at *8 (S.D.Fla. Feb. 22, 2001). A fortiori, they have sufficient minimum contacts with the United States to legitimate this court's exercise of personal jurisdiction over them under the Due Process Clause of the Fifth Amendment.
Supplemental Personal Jurisdiction on Claims under New Jersey Law
Plaintiffs have brought a claim against Reines, HealthWISE, and Vatican Millennium under N.J. Stat. Ann. § 49:3-52 (1967, as amended 1985), and have brought claims of fraud, negligent misrepresentation, breach of fiduciary duty, and breach of contract against Reines, HealthWISE, and Vatican Millennium under New Jersey common law. See Compl., Ex. C. to Hilgendorff Aff., at 20-26. These claims arise from the same nucleus of operative facts as does the claim under Section 10(b) of the Securities Exchange Act of 1934.
As noted above, HealthWISE and Vatican Millennium have sufficient minimum contacts with New Jersey so that this court's exercise of personal jurisdiction over them would comport with the Fourteenth Amendment. However, even if this were not so, because they have sufficient minimum contacts with the United States for this court's exercise of personal jurisdiction over them to comport with the Fifth Amendment, and because the state-law claims against them arise from the same nucleus of operative facts as does the claim under Section 10(b), this court has supplemental personal jurisdiction over them on these state-law claims. Robinson Eng'g Co., Ltd. Pension Plan Trust v. George, 223 F.3d 445, 450 (7th Cir. 2000); Miller, 101 F. Supp.2d at 403.
Subject-Matter Jurisdiction
This court has jurisdiction over the subject matter of this action under 28 U.S.C. § 1331 (1948, as amended), 28 U.S.C. § 1337 (1948, as amended), and 28 U.S.C. § 1367 (1990).
Remaining Requirements for Entry of Judgment by Default
Plaintiffs have fulfilled the remaining requirements for entry of judgment by default set forth in Federal Rule of Civil Procedure 55(b)(2) and relevant federal law. The clerk of the court has noted on the record HealthWISE and Vatican Millennium's defaults; see Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2nd Cir. 1993). HealthWISE and Vatican Millennium are not natural persons, and so are not infants or incompetents; likewise, they are not entitled to the protections of Soldiers' and Sailors' Civil Relief Act of 1940, 50 U.S.C. App. 520(1) (1940, as amended). Plaintiffs have in their moving papers, which included appropriate affidavits, demonstrated their entitlement to the relief they seek. They have substantiated the amounts of their claims against HealthWISE and Vatican Millennium. They shall therefore be awarded money damages, with interest, in the amounts prayed for.
CONCLUSION
Plaintiffs' application for entry of judgment by default against defendants HealthWISE Beverages, Inc. and Vatican Millennium Collectibles Company, L.L.C. shall be granted.
An appropriate order shall enter.