Opinion
19 Civ. 5329 (VB) (AEK)
11-16-2022
ORANEFO OKOLO, as assignee of ST. LUKE'S HOSPITAL CONSORTIUM, Plaintiff, v. CROSS RIVER STATE GOVERNMENT, Defendant.
REPORT AND RECOMMENDATION
HONORABLE VINCENT L. BRICCETTI, U.S.D.J.
Plaintiff Oranefo Okolo, as assignee of St. Luke's Hospital Consortium (“St. Luke's”), has brought suit against Cross River State Government (“Defendant” or “CRSG”), the government of one of the constituent states that make up the Federal Republic of Nigeria. Amended Complaint, ECF No. 29 (“Am. Compl.”) ¶¶ 9-10. The suit arises out of a 2014 contract executed by St. Luke's and CRSG whereby St. Luke's allegedly agreed to finance, renovate, manage, and operate a hospital located in Cross River State (the “Concession Agreement”). Id. ¶ 15 & Ex. E. Before the Court is Plaintiff's motion for a default judgment pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure. ECF Nos. 40-41. For the reasons that follow, I respectfully recommend that Plaintiff's motion for a default judgment be DENIED because Plaintiff has not properly served CRSG.
BACKGROUND
Prior to filing this lawsuit, Plaintiff-represented by the same counsel who represents him here-initiated a similar action against CRSG in this District, alleging breach of contract and quantum meruit in connection with the Concession Agreement. See Dkt. No. 18-cv-9479 (CS), ECF No. 1. In the 2018 action, Plaintiff moved for a default judgment on March 23, 2019, but the Honorable Cathy Seibel denied the motion without prejudice on March 25, 2019 because Plaintiff had “made no effort to explain how the service in this case complies with the requirements for service on a political subdivision of a foreign country,” and because it “appears to the court that the method of service used here is insufficient.” See Dkt. No. 18-cv-9479 (CS), ECF No. 12. Plaintiff re-filed his motion for default judgment on April 22, 2019, but Judge Seibel again denied the motion, and also dismissed the action without prejudice, because Plaintiff had failed to strictly comply with the requirements for service of process detailed in 28 U.S.C. § 1608(a) and failed to explain his failure to effect proper service. See Okolo v. Cross River State Gov't, No. 18-cv-9479 (CS), 2019 WL 10248104, at *2 (S.D.N.Y. May 31, 2019).
Plaintiff filed this action days later, on June 6, 2019, asserting the same causes of action as in the 2018 lawsuit. See Complaint, ECF No. 1 (“Compl.”).On June 17, 2019, the Clerk of Court prepared a certificate of mailing confirming that one copy of the summons, complaint, civil cover sheet, and notice of suit were sent that same day by FedEx to CRSG, care of the Commissioner for Health at the Ministry of Health. ECF No. 7. A docket entry dated July 3, 2019 indicates that the FedEx mailing was received. Defendant failed to answer or otherwise respond to the complaint, and upon Plaintiff's application, the Clerk of Court issued a certificate of default on September 26, 2019. ECF No. 11; see ECF Nos. 8-10 (supporting documents filed by Plaintiff). On November 14, 2019, Plaintiff filed his initial motion for default judgment in this action. ECF Nos. 12-16. Judge Batts passed away while the motion was pending, and the case was reassigned to the Honorable Analisa Torres on February 20, 2020.
Plaintiff's counsel appropriately noted on the civil cover sheet that “this action, case, or proceeding, or one essentially the same, [had] been previously filed in SDNY,” and referenced the 18-cv-9479 matter that was dismissed by Judge Seibel on May 31, 2019. See ECF No. 2 at 1. At the same time, counsel also indicated that the case should be assigned to the Manhattan courthouse, id. at 2, and the matter was assigned to the Honorable Deborah A. Batts on June 7, 2019.
On February 27, 2020, Judge Torres terminated the motion and directed Plaintiff to refile it by April 1, 2020 in accordance with her requirements for seeking default judgment. ECF No. 17. Plaintiff failed to meet this deadline, which prompted Judge Torres, on July 2, 2020, to issue an order to show cause why the case should not be dismissed for failure to prosecute. ECF No. 18. After receiving Plaintiff's response to the order to show cause, ECF Nos. 19-20, Judge Torres issued an order stating that the action would not be dismissed at that time, and set a deadline of August 14, 2020 for Plaintiff to resubmit his materials for default judgment in accordance with Judge Torres's individual rules. ECF No. 21. Plaintiff again moved for a default judgment on August 11, 2020. ECF No. 22. On March 21, 2021, Judge Torres denied the motion and directed Plaintiff to file another motion for default judgment addressing Defendant's liability with respect to the Nigerian choice-of-law provision in the Concession Agreement and the Court's ability to exercise personal jurisdiction over CRSG pursuant to the Foreign Sovereign Immunities Act, 28 U.S.C. § 1608 (“FSIA”). ECF No. 26. On April 13, 2021 Judge Torres granted Plaintiff leave to file an amended complaint to include changes that, according to Plaintiff, were “necessary to properly and fully plead the bases for the Court's jurisdiction pursuant to the [FSIA].” ECF No. 28. Plaintiff filed the amended complaint on April 17, 2021; among other things, the amended pleading added claims for tortious interference with a prospective advantage and unlawful expropriation of property. See Am. Compl. ¶¶ 36-45, 50-54.
On April 27, 2021, Plaintiff requested that the Clerk of Court serve a copy of the summons, amended complaint, and notice of suit on CRSG via the Nigerian Minister of Foreign Affairs, and supplied a FedEx International Air Waybill that he had completed for the mailing. ECF No. 31. The Clerk of Court prepared a certificate of mailing on April 29, 2021 confirming that one copy of the summons, amended complaint, civil cover sheet, and notice of suit were sent by FedEx to the Nigerian Minister of Foreign Affairs. ECF No. 32. Plaintiff filed a FedEx “proof-of-delivery” document on August 4, 2021, which reflects that the package was delivered on May 5, 2021; the document states that “no signature is available for this FedEx Express shipment because a signature was not required.” ECF No. 34 at 2.
Plaintiff again moved for a default judgment in August 2021.ECF Nos. 40-41. This matter was reassigned to Your Honor on August 17, 2021. On August 18, 2021, Your Honor issued an order to show cause scheduling a hearing for October 13, 2021, at which CRSG was directed to “show cause . . . why this Court should not grant default judgment as prayed for” by Plaintiff. ECF No. 36.Plaintiff sent the order to show cause and motion for default judgment to the Nigerian Minister of Foreign Affairs via FedEx and filed a proof of service on August 25, 2021. ECF No. 43. CRSG did not appear for the October 13, 2021 hearing. 10/13/2021 Minute Entry. By order dated October 13, 2021, Your Honor referred this matter to the undersigned for the purpose of issuing a report and recommendation with respect to whether a default judgment should be entered. ECF No. 44.
Plaintiff's initial attempts to file the motion on August 9, 2021 and August 20, 2021 were rejected due to procedural errors, and the Clerk of Court directed Plaintiff to re-file the motion. Plaintiff successfully filed the motion on August 23, 2021.
Despite the fact that Plaintiff did not successfully file the motion for default judgment without procedural errors until August 23, 2021, Your Honor's text-only order dated August 24, 2022 made clear that the August 18, 2021 order to show cause (ECF No. 36) remained in effect. ECF No. 42.
DISCUSSION
A. Legal Standards
“[B]efore a court grants a motion for default judgment, it may first assure itself that it has personal jurisdiction over the defendant.” Sinoying Logistics Pte Ltd. v. Yi Da Xin Trading Corp., 619 F.3d 207, 213 (2d Cir. 2010). Although the Second Circuit has “left open the question whether a district court must investigate its personal jurisdiction over [a] defendant before entering a default judgment,” City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 133 (2d Cir. 2011) (quotation marks omitted) (emphasis in original), where a plaintiff's “filings raise questions as to whether the court may permissibly exercise personal jurisdiction over a defendant who has never appeared, it is well-settled that the court should . . . consider sua sponte whether the plaintiff has set forth facts justifying the assertion of personal jurisdiction,” Chen v. Best Miyako Sushi Corp., No. 16-cv-2012 (JGK) (BCM), 2021 WL 707273, at *6, (S.D.N.Y. Feb. 1, 2021) (quotation marks omitted), adopted by 2021 WL 706412 (S.D.N.Y. Feb. 19, 2021).
Rule 4(j)(1) of the Federal Rules of Civil Procedure requires parties to serve foreign states, political subdivisions of foreign states, or agencies or instrumentalities of foreign states in accordance with 28 U.S.C. § 1608, which is part of the FSIA. See Okolo, 2019 WL 10248104, at *2. Section 1608(a) governs service on foreign states or political subdivisions thereof; as set forth in the amended complaint, CRSG is “a government of a constituent part and political subdivision of the Federal Republic of Nigeria,” Am. Compl. ¶ 10, and therefore 28 U.S.C. § 1608(a) provides the requirements for service of process here. “Personal jurisdiction over a foreign sovereign exists only where service satisfies § 1608(a) of the FSIA.” CCM Pension-A, L.L.C. v. Republic of Argentina, No. 16-cv-1650 (TPG), 2016 WL 4154892, at *3 (S.D.N.Y. Aug. 2, 2016). Pursuant to 28 U.S.C. § 1608(a), a political subdivision of a foreign state must be served in accordance with one of four available methods, which appear in the statute in “hierarchical order.” Republic of Sudan v. Harrison, 139 S.Ct. 1048, 1054 (2019). The first method is service “by delivery of a copy of the summons and complaint in accordance with any special arrangement for service between the plaintiff and the foreign state or political subdivision.” 28 U.S.C. § 1608(a)(1). If no special arrangement exists, the statute permits service “by delivery of a copy of the summons and complaint in accordance with an applicable international convention on service of judicial documents.” 28 U.S.C. § 1608(a)(2). In the absence of an applicable international convention, service may be effectuated “by sending a copy of the summons and complaint and a notice of suit, together with a translation of each into the official language of the foreign state, by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the head of the ministry of foreign affairs of the foreign state concerned.” 28 U.S.C. § 1608(a)(3). If service cannot be made within 30 days under the third method, service may be made “by sending two copies of the summons and complaint and a notice of suit . . . to the Secretary of State in Washington, District of Columbia, to the attention of the Director of Special Consular Services.” 28 U.S.C. § 1608(a)(4).
“Courts have been unequivocal that § 1608(a) mandates strict adherence to its terms, not merely substantial compliance.” Friedman v. Mission of Gabonese Republic, No. 17-cv-8142 (AJN), 2019 WL 95479, at *2 (S.D.N.Y. Jan. 2, 2019) (quotation marks omitted) (emphasis in original); accord Okolo, 2019 WL 10248104, at *2 (actual notice of lawsuit is insufficient under § 1608(a) because “the statute requires strict compliance”). “Accordingly, defective service is rarely, if ever, excused.” Lewis & Kennedy, Inc. v. Permanent Mission of Republic of Botswana to United Nations, No. 05-cv-2591 (HB), 2005 WL 1621342, at *3 (S.D.N.Y. July 12, 2005).
B. Analysis
a. Adequacy of Service of Process
Plaintiff has not asserted that he has any special arrangement for service with CRSG, and Nigeria is not a signatory to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. See Okolo, 2019 WL 10248104, at *2. Accordingly, subsections (1) and (2) of 28 U.S.C. § 1608(a) are inapplicable as methods for service of process in this matter, and Plaintiff was required to serve CRSG pursuant to § 1608(a)(3), which specifies that a copy of the summons, complaint, and notice of suit must be sent by the Clerk of Court to the head of the Nigerian ministry of foreign affairs using a form of mail requiring a signed receipt. See 28 U.S.C. § 1608(a)(3).
Because English is the official language of Nigeria, see Nigeria, CIA World Factbook, available at https://www.cia.gov/the-world-factbook/countries/nigeria/ (last visited Nov. 15, 2022); ECF No. 31, Plaintiff was not required to include any translation with the service package.
Courts repeatedly have found service on a foreign state or political subdivision to be improper under § 1608(a)(3) when a plaintiff failed to satisfy any one requirement of the statute. See, e.g., Friedman, 2019 WL 95479, at *2 (service pursuant to 28 U.S.C. § 1608(e)-which must be made in the manner set forth in § 1608(a)-was improper where documents were not sent by form of mail “requiring a signed receipt”); Lewis & Kennedy, Inc., 2005 WL 1621342, at *4-5 (service was improper where, among other deficiencies, documents were not addressed to the ministry of foreign affairs and were not dispatched by the clerk of court); Adetoro v. King Abdullah Acad., No. 19-cv-1918 (TNM), 2019 WL 3457989, at *2-3 (D.D.C. July 30, 2019) (service was improper where documents were not dispatched by the clerk of court). The Supreme Court has also emphasized the necessity of strict compliance with § 1608(a)(3), notwithstanding any seeming “unfairness”:
We . . . recognize that enforcing compliance with § 1608(a)(3) may seem like an empty formality in this particular case, which involves highly publicized litigation of which the [government defendant] may have been aware But there are circumstances in which the rule of law demands adherence to strict requirements even when the equities of a particular case may seem to point in the opposite direction. The service rules set out in § 1608(a)(3), which apply to a category of cases with sensitive diplomatic implications, clearly fall into this category.Republic of Sudan, 139 S.Ct. at 1062.
Here, Plaintiff failed to strictly adhere to § 1608(a)(3) in serving both the original complaint and the now-operative amended complaint. With respect to the initial complaint, the relevant documents were appropriately dispatched through the Clerk of Court, but rather than sending the document to the head of the Nigerian ministry of foreign affairs, Plaintiff addressed the documents to CRSG directly. See ECF No. 40 (Okoli Decl.) ¶ 10 (“service of the summons and complaint, together with other papers (process) was duly effected upon Defendant [CRSG] itself”); ECF No. 7 (certificate of mailing showing documents sent to “Cross River State Government c/o Commissioner for Health”). This attempt at service was improper and does not amount to “strict compliance” with § 1608(a)(3). See Republic of Sudan, 139 S.Ct. at 1056-57 (service was improper where it was addressed to the foreign minister, but was mailed to the U.S. embassy of the foreign state, rather than to the foreign minister's office in the foreign state); Lewis & Kennedy, Inc., 2005 WL 1621342, at *4 (service was improper where it was not addressed to the head of the ministry of foreign affairs).
Plaintiff's attempt to serve the amended complaint was also deficient. While Plaintiff properly sent the documents through the Clerk of Court to the Nigerian Minister of Foreign Affairs, the mailing did not require a signature upon receipt. See ECF No. 34 at 2 (FedEx confirmation indicating “no signature is available . . . because a signature was not required”). This method of service is also insufficient under the statute. Friedman, 2019 WL 95479, at *2 (service was improper under 28 U.S.C. § 1608(a)(3) where documents were mailed by the clerk of court to the applicable head of the ministry of foreign affairs, but no signature was required upon receipt); cf. Republic of Sudan, 139 S.Ct. at 1057 (“It is also significant that service under § 1608(a)(3) requires a signed returned receipt, a standard method for ensuring delivery to the addressee.”).
The remaining service issue in this case bears a striking resemblance to the service error at issue in Friedman. In Friedman, as here, the court found that service was insufficient where the FedEx delivery confirmation provided by plaintiffs indicated that no signature was required upon receipt, and therefore service was not in accordance with the statute's requirement that service be made “by any form of mail requiring a signed receipt.” 2019 WL 95479, at *2; see Dkt. No. 17-cv-9142 (AJN), ECF No. 37-3 (proof of service). The Friedman plaintiffs were eventually able to cure the deficient service by serving the documents using a mode of delivery that required signature upon receipt and providing the court with a copy of the signed proof of delivery. See Dkt. No. 17-cv-9142 (AJN), ECF Nos. 45-3 (proof of delivery), 46 at 2 (order granting motion to enforce judgment, noting documents were delivered “and a signature was provided upon receipt” and that plaintiffs “therefore satisfy the notice requirement”).
As a result of these deficiencies, this Court respectfully recommends finding that CRSG has not been properly served pursuant to 28 U.S.C. § 1608(a).
b. Next Steps
Having determined that Plaintiff has failed to properly serve CRSG, the next question to be addressed is whether this matter should be dismissed sua sponte for lack of personal jurisdiction, or whether Plaintiff should be given a final opportunity to properly serve the amended complaint on CRSG. “Where a plaintiff has failed to effect service on a non-appearing defendant before seeking a default judgment, ‘the [c]ourt has discretion to dismiss the action, but dismissal is not mandatory.'” Chen, 2021 WL 707273, at *12 (quoting Li v. Ichiro Sushi, Inc., No. 14-cv-10242 (AJN), 2016 WL 1271068, at *4 (S.D.N.Y. Mar. 29, 2016)). “The Second Circuit has suggested that when it is likely that the plaintiff will be able to effect proper service, the proper remedy may be to quash service rather than dismiss the case.” Cooney v. Barry Sch. of L., 994 F.Supp.2d 268, 271 (E.D.N.Y. 2014). Generally, pursuant to Rule 4(m) of the Federal Rules of Civil Procedure, a defendant must be served within 90 days after a complaint is filed. Fed.R.Civ.P. 4(m). The specific deadline set forth in Rule 4(m) does not apply, however, “to service in a foreign country under Rule . . . 4(j)(1).” Fed.R.Civ.P. 4(m). That said, the exemption in Rule 4(m) regarding service in a foreign country “does not give litigants an unlimited time in which to complete service.” Hadwan v. U.S. Dep't of State, No. 17-cv-578 (WHP), 2019 WL 4889373, at *3 (S.D.N.Y. Oct. 3, 2019).
This case has been pending for more than three years. Plaintiff has had two opportunities to serve the operative pleadings on CRSG, and both times has failed to comply with the exacting requirements of 28 U.S.C. § 1608(a); further, Plaintiff also failed to properly serve CRSG with a substantially similar complaint in his 2018 action that was dismissed by Judge Seibel. At the same time, while it does not excuse Plaintiff's errors, it is nevertheless true that a certain amount of the delay in this matter has occurred because of the length of time that Plaintiff's motions for default judgment have been pending before the various judges to whom this matter has been assigned. Moreover, Plaintiff's most recent attempt at service would have been sufficient had he simply required a signed receipt for the FedEx delivery to the Nigerian foreign minister. On balance, it seems likely that Plaintiff will be able to effect proper service if given one final opportunity to do so. Ideally, proceeding this way will prompt CSRG to appear and defend the case on the merits; if not, Plaintiff may seek a default judgment yet again, and the Court can evaluate that application on the merits rather than adjudicating it based on procedural shortcomings.
Accordingly, this Court respectfully recommends that Plaintiff be given one final opportunity to serve the amended complaint within 14 days of Your Honor's final disposition regarding this Report and Recommendation. See Friedman, 2019 WL 95479, at *2 (allowing plaintiff opportunity to cure defective service); Lewis & Kennedy, Inc., 2005 WL 1621342, at *4-5 (allowing plaintiff 60 days to properly serve complaint); Adetoro, 2019 WL 3457989, at *3 (allowing leave to effect proper service pursuant to 28 U.S.C. § 1608(a)(3)); Barot v. Embassy of the Republic of Zambia, 785 F.3d 26, 27 (D.C. Cir. 2015) (reversing district court dismissal for failure to effect proper service pursuant to 28 U.S.C. § 1608(a)(3) where plaintiff's “attempts at service came so close to strict compliance with the [FSIA] as to demonstrate a good faith effort at timely compliance”).
CONCLUSION
For the foregoing reasons, I respectfully recommend that Plaintiff's motion for a default judgment (ECF No. 40) be DENIED because Plaintiff has not properly served CRSG, and I further respectfully recommend that Plaintiff be given one final opportunity to serve the amended complaint within 14 days of Your Honor's final disposition regarding this Report and Recommendation.
NOTICE
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this Report and Recommendation to file written objections. See also Fed.R.Civ.P. 6(a). A party may respond to another party's objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any responses to such objections, shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Vincent L. Briccetti, United States District Court, Southern District of New York, 300 Quarropas Street, White Plains, New York, 10601, and to the chambers of the Honorable Andrew E. Krause at the same address.
Any request for an extension of time for filing objections or responses to objections must be directed to Judge Briccetti, and not to the undersigned.
Failure to file timely objections to this Report and Recommendation will result in a waiver of objections and will preclude appellate review. See Thomas v. Arn, 474 U.S. 140 (1985); Smith v. Campbell, 782 F.3d 93, 102 (2d Cir. 2015).