Opinion
No. 4:01-cv-120.
July 16, 2002
MEMORANDUM AND ORDER
The complaint identifies the defendant as Stanley Tools. In its answer filed on May 13, 2002, the defendant says its correct corporate name is The Stanley Works. [Court File No. 7]. Accordingly, the style of this civil action is hereby MODIFIED and CORRECTED to state that the defendant's name is The Stanley Works. The Clerk of Court is DIRECTED to make the necessary change and correction of the defendant's name in the official record.
On May 10, 2002, the Court ordered plaintiffs Timothy Craig Taylor ("Taylor") and Hoyt Fields ("Fields") to show good cause why their complaint should not be dismissed without prejudice pursuant to FED. R. CIV. P. 4(m) on the ground of failure to effect service of process within the 120-day time limit. [Court File No. 5]. Defendant subsequently made a motion under FED. R. CIV. P. 12(b)(5) to dismiss the complaint for insufficiency of service of process. [Court File No. 9]. Defendant contends the complaint should be dismissed because the plaintiffs did not effect service of process within 120 days as required by Rule 4(m). Defendant further requests that it be awarded costs and attorney's fees.
Plaintiffs have responded to the show cause order, and they oppose the motion to dismiss. After reviewing the record, the Court concludes that the defendant's Rule 12(b)(5) motion to dismiss is DENIED at this time. The complaint will not be dismissed at this juncture under Rule 4(m). Plaintiffs have not effected proper service of process upon the defendant and have not shown good cause for their failure to do so. In the exercise of its discretion under Rule 4(m), the Court will allow the plaintiffs additional time within which to serve process. If the plaintiffs should fail to serve process pursuant to FED. R. CIV. P. 4 within the new deadline set by the Court and cannot show good cause for such failure, the plaintiffs' complaint will be subject to dismissal under Rule 4(m). The defendant's request for an award of its costs and attorney's fees is DENIED.
I. Facts
Plaintiffs have made three unsuccessful attempts to effect service of process. Plaintiffs filed their complaint in federal district court on December 6, 2001. Defendant is incorporated outside the State of Tennessee and its principal place of business/corporate headquarters is located in Connecticut. Plaintiffs initially sent the complaint and summons to C.T. Corporation Systems, Knoxville, Tennessee, in December 2001 because it was the entity identified by the Tennessee Secretary of State as being the defendant's registered agent for service of process. On February 8, 2002, C.T. Corporation Systems wrote a letter to the plaintiffs' counsel, Phillip L. Davidson ("Davidson"), stating it is not the registered agent for The Stanley Works (Stanley Tools).
Plaintiffs next attempted to serve process through the United States Postal Service by a certified letter return receipt requested. The certified letter was not addressed to a specific corporate officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process on behalf of The Stanley Works. Instead, the certified letter was generally addressed to Stanley Tools, 1000 Stanley Drive, New Britain, CT 06053. On March 25, 2002, Davidson received the return receipt from the Postal Service, but the green card receipt is unsigned and does not show a delivery date. [Court File No. 3]. Davidson says he requested an explanation from the Postal Service. Davidson submits his affidavit [Court File No. 14] stating that the Postal Service traced the certified letter and told him that, as far as the Postal Service could determine, the letter containing the complaint and summons was probably delivered to the defendant in Connecticut on or about March 15, 2002. The Court finds that this is nothing more than an educated guess by the Postal Service based on the return date. The explanation from the Postal Service satisfied Davidson that the plaintiffs had effected service of process by certified mail on or about March 15, 2002.
The certified mail return receipt or "green card" is not sufficient proof that the summons and complaint were actually delivered to the defendant at its corporate headquarters in Connecticut on or about March 15, 2002. The return receipt is not signed by anyone on the defendant's behalf and it does not contain a delivery date. These two critically important sections of the return receipt are entirely blank. This is not satisfactory proof of service. Cf. Coil Co., Inc. v. Weather-Twin Corp., 539 F. Supp. 464, 469 (S.D.N.Y. 1982). This Court cannot assume the certified mail was delivered to the defendant on the basis of the blank return receipt.
Moreover, Davidson's affidavit [Court File No. 14] concerning his oral conversations with an unidentified employee of the United States Postal Service does not salvage the matter for the plaintiffs. When Davidson seeks to repeat what he alleges he was told by someone at the United States Postal Service, this is hearsay and inadmissible under the FEDERAL RULES OF EVIDENCE. The Court will not rely on hearsay. In the absence of a plausible and properly documented explanation from the Postal Service itself, the Court does not see how the plaintiffs can possibly say with any reasonable degree of certainty that the summons and complaint were delivered to the defendant by certified mail on or about March 15, 2002.
On April 8, 2002, Davidson wrote a letter to defendant's counsel, Ashley Abel, stating that the defendant had been served with process on March 15, 2002, and inquiring when an answer to the complaint would be filed. Attorney Abel did not reply. On April 30, 2002, plaintiffs moved for entry of default under FED. R. CIV. P. 55. [Court File No. 3]. Plaintiffs contended that the defendant had been duly served with process by certified mail at its corporate business address on or about March 15, 2002. Defendant responded to the motion for default arguing that it had not been served with process and there is no proof of service. [Court File No. 4].
On May 10, 2002, the Court denied the plaintiffs' Rule 55(a) motion for entry of default because the plaintiffs have not shown that they have achieved service of process. [Court File No. 5]. The Court ordered the plaintiffs to show good cause why their complaint should not be dismissed without prejudice pursuant to FED. R. CIV. P. 4(m) for failing to effect service of process within the 120-day time limit.
The show cause order prompted the plaintiffs to make a third attempt to achieve service of process. Plaintiffs arranged to have the summons and a copy of the complaint delivered to defendant at its corporate headquarters in Connecticut on May 17, 2002, via a private delivery service, Federal Express (FedEx Express). The package was generally addressed only to Stanley Tools. Plaintiffs did not address the package or envelope and arrange for it to be delivered to a particular corporate officer or specific agent authorized to receive service of process for the defendant. The delivery from Federal Express was signed for by someone named V. Perry. [Court File No. 8]. The record does not disclose what position of authority or employment, if any, that V. Perry holds at The Stanley Works. There is nothing in the record showing that V. Perry is a corporate officer, managing agent, general agent, or other agent authorized by appointment or law to receive service of process on behalf of The Stanley Works. For all the Court knows, V. Perry could very well be a lower level employee who works in the "mail room" or mail processing center at The Stanley Works.
In the meantime, the defendant, acting out of an abundance of caution, filed an answer to the complaint on May 13, 2002. [Court File No. 7]. Defendant understandably wants to be certain its position is covered just in case the Court should determine that the plaintiffs may have properly effected service of process Despite filing an answer, defendant continues to maintain there is insufficient service of process and that process was not served within the 120-day time limit provided in Rule 4(m).
II. Analysis
A. Lack of Service of Process
In Friedman v. Estate of Presser, 929 F.2d 1151, 1156 (6th Cir. 1991), the Sixth Circuit explains that the requirement of proper service of process "is not some mindless technicality." (Quoting Del Raine v. Carlson, 826 F.2d 698, 704 (7th Cir. 1987)). Constitutional due process requires proper service of process in order for a federal court to obtain and exercise personal jurisdiction over a defendant. Omni Capital Int'l Ltd. v. Rudolph Wolff Co., 484 U.S. 97, 104 (1987); Friedman, 929 F.2d at 1156; Amen v. City of Dearborn, 532 F.2d 554, 557 (6th Cir. 1976).
FED. R. CIV. P. 4(m) provides:
Time Limit for Service. If service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint, the court, upon motion or on its own initiative after notice to the plaintiff, shall dismiss the action without prejudice as to that defendant or direct that service be effected within a specified time; provided that if the plaintiff shows good cause for the failure, the court shall extend the time for service for an appropriate period.
Plaintiffs argue they have made sufficient service of process within the 120-day time limit in Rule 4(m) predicated on the theory that a copy of the complaint and summons must have been received by the defendant at its corporate headquarters in Connecticut and the defendant has actual notice of the lawsuit because the defendant has filed an answer to the complaint. This argument is not persuasive. The mere fact that the defendant has filed an answer does not necessarily mean there has been proper service of process in compliance with Rule 4. By answering the complaint, the defendant has not waived its objection to the sufficiency of service of process. On the contrary, the defendant has exercised its right under FED. R. CIV. P. 12(b)(5) to raise a timely objection based on insufficient service of process. For purposes of determining whether there is proper service of process, it is immaterial whether The Stanley Works has actual knowledge of the lawsuit. A defendant's actual knowledge of a lawsuit is no substitute for proper service of process under FED. R. CIV. P. 4. LSJ Investment Co., Inc. v. O.L.D., Inc., 167 F.3d 320, 322 (6th Cir. 1999); Friedman, 929 F.2d at 1155-56.
As discussed infra, a defendant's actual knowledge of a lawsuit is a factor that may be considered by the Court in making a determination under Rule 4(m) whether to exercise judicial discretion to allow additional time to effect service of process.
Plaintiffs are responsible for service of the summons and complaint within the time limit set forth in Rule 4(m). See FED. R. CIV. P. 4(c)(1). Based on these facts and circumstances, the Court finds that the plaintiffs have not met their burden of showing that proper service of process has been made upon the defendant pursuant to FED. R. CIV. P. 4 within the 120-day time limit provided in Rule 4(m). The plaintiffs' effort to serve process by certified mail through the United States Postal Service in March 2002 does not constitute proper service of process under FED. R. CIV. P. 4(h)(1).
Rule 4(h)(1) provides that service upon a domestic corporation shall be effected in at least one of two different ways. First, service can be effected in a judicial district of the United States in the same manner prescribed for individuals in Rule 4(e)(1), i.e., service of process pursuant to Tennessee law. Plaintiffs here do not seek to rely on the first method of service provided in Rule 4(h)(1) and Rule 4(e)(1) with good reason. Plaintiffs clearly have not complied with Rule 4.05(3) of the TENNESSEE RULES OF CIVIL PROCEDURE which makes the following provision for service by mail upon corporations outside Tennessee: "Service by mail upon a corporation shall be addressed to an officer or managing agent thereof, or to the chief agent in the county wherein the action is brought, or by delivering the copies to any other agent authorized by appointment or by law to receive service on behalf of the corporation." Plaintiffs do not contend that they have complied with TENN. R. CIV. P. 4.05(3).
Plaintiffs instead rely on the last part of FED. R. CIV. P. 4(h)(1) which provides, in the alternative, that service upon a corporation shall be effected by the plaintiff delivering a copy of the summons and 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 "and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the defendant." (Emphasis supplied). Plaintiffs argue they properly effected service of process upon the defendant by mail in accordance with this language contained in Rule 4(h)(1).
This argument fails. Plaintiffs misconstrue and misapply Rule 4(h)(1). The plain language of Rule 4(h)(1) provides that a copy of the complaint and summons shall be delivered to a corporate officer, a managing or general agent, or to any other agent authorized by appointment or law to receive service of process. See 4A CHARLES ALAN WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE: CIVIL 3D §§ 1100-1104 (2002) ("WRIGHT MILLER"). Plaintiffs have not come forward with satisfactory proof that they have accomplished service in this manner.
The latter part of Rule 4(h)(1) does not provide for service of process upon corporations by mail as a matter of federal procedure. Miles v. WTMX Radio Network, 2002 WL 1359398 (N.D.Ill. June 20, 2002); Amnay v. Del Labs, 117 F. Supp.2d 283, 286-87 (E.D.N.Y. 2000) (Rule 4(h)(1) does not authorize service on corporations via mail). Plaintiffs are required to deliver the complaint and summons personally to a corporate officer or agent authorized to receive service on the corporation's behalf. The term "delivering" in the latter part of Rule 4(h)(1) does not include service by mail. See FED. R. CIV. P. 4(e)(1) and TENN. R. CIV. P. 4.05(3).
Plaintiffs could have sought to effect service of process by mail pursuant to FED. R. CIV. P. 4(d) by asking the defendant to execute a waiver of service, but plaintiffs chose not to avail themselves of Rule 4(d). Defendant has not executed a waiver of service pursuant to Rule 4(d). Consequently, service by mail is not permitted on the defendant corporation under Rule 4(h)(1) unless the plaintiffs comply with the Tennessee laws governing service of process by mail.
Service of process cannot be effected under Rule 4(h)(1) merely by mailing a copy of the summons and complaint to the corporation where it can be received along with general mail by lower level employees who have no authority and responsibility for accepting service. Service of a federal lawsuit is a vitally important matter that is not entrusted to low level employees who may not know what action must be promptly taken to defend and protect the corporation's legal interests. Federal law does not subject corporations to service of process through the vagaries and unpredictable nature of mail service to just any person or lower echelon employee who happens to be present at the corporation's place of business when the mail is delivered. In sum, it is insufficient service of process under Rule 4(h)(1) for plaintiffs Taylor and Fields to send the complaint and summons via certified mail to the defendant corporation's headquarters in Connecticut. This is especially true where the certified letter is not addressed to a particular corporate officer or other specific person authorized to receive and accept service.
If the plaintiffs did not know the identity of the correct corporate officer or authorized agent to make service upon once it was disclosed that C.T. Corporation System was no longer the defendant's registered agent for service of process, the plaintiffs could have easily contacted The Stanley Works to obtain such information.
Even if we assume arguendo that the latter part of Rule 4(h)(1) can be interpreted to allow service of process upon a corporation by certified mail (which it does not), the return receipt from the United States Postal Service submitted by the plaintiffs contains neither a delivery date nor the signature of any corporate officer or agent authorized to accept service on behalf of The Stanley Works. There is no probative proof in the record that the certified letter was ever actually delivered to The Stanley Works by the United States Postal Service on or about March 15, 2002.
The plaintiffs' reliance on the language at the end of Rule 4(h)(1) concerning mailing process to the defendant is misplaced. Plaintiffs erroneously interpret Rule 4(h)(1) to mean that proper service of process can be effected by sending the complaint and summons to The Stanley Works by certified mail return receipt requested without delivering it to a specific corporate officer or agent authorized by appointment or law to receive service. The plaintiffs' unreasonable interpretation of Rule 4(h)(1) and arguments on this point are without merit. Rule 4(h)(1) provides that if the corporation's agent for service of process is one authorized by statute and if the statute so requires, then the plaintiffs must also mail a copy of the complaint and summons directly to the defendant corporation. This text does not relieve the plaintiffs of the requirement that the complaint and summons must be delivered to the corporation's authorized or registered agent for service. All this language in Rule 4(h)(1) means is that a copy of the complaint and summons shall also be mailed to the corporation if it is required by statute. 14A WRIGHT MILLER § 1101. This language is not applicable in the present case. Plaintiffs mailed the certified letter directly to The Stanley Works in March 2002 without making service of process upon the defendant's registered agent.
Furthermore, the plaintiffs have not made proper service of process after the 120-day time limit elapsed by utilizing Federal Express to deliver the complaint and summons to the defendant's corporate headquarters in Connecticut on May 17, 2002. This belated attempt at service suffers from essentially the same deficiencies explained supra under Rule 4(h)(1). The package or envelope containing the complaint and summons was delivered to The Stanley Works corporate headquarters in Connecticut on May 17, 2002, but it was not addressed to a specific corporate officer or person authorized to receive service within the meaning of Rule 4(h)(1). The general delivery was received and signed for by a person only identified as V. Perry. There is no proof or explanation in the record as to what position of authority or employment, if any, that V. Perry may hold at The Stanley Works. Plaintiff offers no proof whether V. Perry is a corporate officer or an agent authorized to receive service of process on behalf of the corporation. Plaintiffs have not met their burden of showing that they effected proper service of process pursuant to Rule 4(h)(1) based on the May 17, 2002, delivery through Federal Express.
B. Lack of Good Cause
Once it has been established that proper service of process has not been made within the 120-day time limit, there is a two-step inquiry under Rule 4(m). The Court must next determine whether the plaintiffs have established good cause for failing to timely effect service of process. If good cause is shown, the Court shall extend the time for service of process for an appropriate period. If good cause does not exist, the Court in the exercise of its sound discretion may either dismiss the plaintiffs' complaint without prejudice or, in the alternative, direct that service be made within a specified time. The Court has discretion to permit late service even absent a showing of good cause. Henderson v. United States, 517 U.S. 654, 658 n. 5 (1996); Stewart v. Tennessee Valley Authority, 238 F.3d 424 (Table, text at 2000 WL 1785749, at **1 (6th Cir. Nov. 21, 2000)); Williams v. Smith, 191 F.3d 454 (Table, text at 1999 WL 777654 (6th Cir. Sept. 17, 1999)); Boley v. Kaymark, 123 F.3d 756, 758 (3rd Cir. 1997); Panaras v. Liquid Carbonic Industries Corp., 94 F.3d 338, 340-41 (7th Cir. 1996); Thompson v. Brown, 91 F.3d 20, 21 (5th Cir. 1996); Slenzka v. Landstar Ranger, Inc., 204 F.R.D. 322 (E.D.Mich. 2001); Wise v. Dep't of Defense, 196 F.R.D. 52 (S.D.Ohio 1999).
Plaintiffs bear the burden of showing good cause. Habib v. General Motors Corp., 15 F.3d 72, 73 (6th Cir. 1994); Friedman v. Estate of Presser, 929 F.2d 1151, 1157 (6th Cir. 1991). Good cause may exist if the defendant intentionally evades service. Id.; Slenzka, 204 F.R.D. at 324. In this case there is no allegation or proof that the defendant made any effort to intentionally evade or impede service of process. Inadvertence or negligence on the part of a plaintiff's attorney and the attorney's clerical employees does not constitute good cause. Davis v. Brady, 9 F.3d 107, (6th Cir. 1993); Friedman, 929 F.2d 1157; Wise, 196 F.R.D. at 54. Mistake of counsel or ignorance of the rules of procedure usually does not suffice to establish good cause. Moncrief v. Stone, 961 F.2d 595, 597 (6th Cir. 1992). Moreover, a defendant's actual notice of the complaint and lack of prejudice to the defendant are insufficient to demonstrate good cause. Moncrief, 961 F.2d at 596-97; Slenzka, 204 F.R.D. at 324; Wise, 196 F.R.D. at 54.
Plaintiffs have not shown good cause under Rule 4(m) for lack of service of process within the 120-day time limit. The conduct of the plaintiffs and their counsel can best be described as falling into the category of inadvertence, mistake, and ignorance of the rules governing service of process.
C. Discretion to Allow Additional Time for Service of Process
The Court will exercise its discretion under Rule 4(m) to allow the plaintiffs additional time to effect service of process. The Court has considered and balanced the following factors: (1) whether a significant extension of time is required; (2) whether an extension of time would cause actual prejudice to the defendant other than the inherent "prejudice" in having to defend the lawsuit; (3) whether the defendant had actual notice of the lawsuit; (4) whether dismissal of the complaint without prejudice under Rule 4(m) would substantially prejudice the plaintiffs, i.e., cause the plaintiffs' suit to be time-barred by the statute of limitations; and (5) whether the plaintiffs have made diligent, good faith efforts to effect proper service of process. Slenzka, 204 F.R.D. at 326; Wise, 196 F.R.D. at 57; see also Sprader v. Goodson, 2001 WL 506528 (S.D.Ohio April 17, 2001).
The majority of these factors weigh in favor of granting the plaintiffs additional time. An extension of time will not cause undue prejudice to the defendant. Defendant has had actual notice of this lawsuit since at least early April 2002. The most significant factor is that the plaintiffs have made good faith, diligent efforts to effect service of process.
Accordingly, the Court will GRANT the plaintiffs an extension of time under FED. R. CIV. P. 4(m). Plaintiffs shall effect service of process upon the defendant pursuant to FED. R. CIV. P. 4 on or before September 11, 2002. The Court will not dismiss the plaintiffs' complaint under FED. R. CIV. P. 4(m) at this time, but the Court RESERVES the right to reconsider dismissal under Rule 4(m) if the plaintiffs should fail to effect service of process by the deadline of September 11, 2002. The defendant's motion to dismiss the complaint pursuant to FED. R. CIV. P. 12(b)(5) on the ground of insufficient service of process [Court File No. 9] is DENIED at this time. However, the defendant is free to file another Rule 12(b)(5) motion to dismiss in the future if the plaintiffs fail to effect sufficient service of process in compliance with Rule 4. The defendant's request that it be awarded attorney's fees and costs is DENIED.
SO ORDERED.