Service of Process on Evasive Defendants

Service of Process for Evasive Defendants

On September 15, 2018, the U.S. District Court for the Southern District of Florida granted an order authorizing service of process by electronic mail in a trademark infringement case where the plaintiff was unable to make personal service due to evasive conduct by the Defendants, according to SGR partner Bruce McDonald, representing the plaintiff. See Transamerica Corp. v. TransAmerica Multiservices Inc. et al., No. 1:18-cv-22483 (S.D.Fla.). While the federal courts have granted motions for “substituted service” in cases of fictitious and anonymous websites registered to individuals and entities ostensibly located overseas, this was the first known federal court decision authorizing electronic service on a resident of the forum state based on evidence that the individual was evading service.

Florida Federal Court Grants Order for

Alternate Service of Process on Evasive Defendants

 Trademark owners are familiar with the challenges of serving process on fictitious and anonymous operators of websites engaged in the offer and sale of goods and services.  The availability of “substituted service of process” by electronic mail in cases of foreign fictitious and anonymous website operators in trademark infringement cases has been authorized by U.S. courts under Rule 4(f)(3) of the Federal Rules of Civil Procedure.[2]  But Fed. R. Civ. P. 4(f)(3) is only available in the case of individuals located in a foreign country, so what about trademark scofflaws located in the United States who are evading service of process?

In Transamerica v. TransAmerica Multiservices, the district court granted a trademark infringement plaintiff’s motion for substituted service on the grounds that:

(1)        the defendants concealed their whereabouts by registering fictitious addresses with the Florida Secretary of State where they could be located or served;

(2)        the individual defendant was not located at his last known address and was evading service of process;

(3)        the plaintiff complied with state statutory requirements for substituted service on the defendants by certified mail and delivery to the Florida Secretary of State;

(4)        the plaintiff was unable to effect personal service on either the corporate or the individual defendant despite diligent efforts;

(5)        the defendants had a record of responding to email communications directed to their email address;

(6)        the defendants were on actual notice of the proceeding by reason of the plaintiff’s communications to their email address;

(7)        the defendants were in actual receipt of the Complaint by reason of delivery to their email address; and

(8)        on that basis, electronic service was reasonably calculated to provide actual notice of filings and correspondence in this case

Standard of Review

Different standards govern service of process on individuals and corporate entities, and there are different standards for defendants located in the United States and those abroad.

Individual Defendant

Rule 4(e) of the Federal Rules of Civil Procedure governs the methods by which service of process may be effected on an individual.  Rule 4(e) provides:

(e)        Serving an Individual Within a Judicial District of the United States. Unless federal law provides otherwise, an individual—other than a minor, an incompetent person, or a person whose waiver has been filed—may be served in a judicial district of the United States by:

(1)       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

(2)       doing any of the following:

(A)       delivering a copy of the summons and of the complaint to the individual personally;

(B)       leaving a copy of each at the individual’s dwelling or usual place of abode with someone of suitable age and discretion who resides there; or

(C)       delivering a copy of each to an agent authorized by appointment or by law to receive service of process.

Fed. R. Civ. P. 4(e) (emphasis added).  Because the individual Defendant had concealed his whereabouts and was evading service of process, the plaintiff argued, he could not be served by the methods provided in Fed. R. Civ. P. 4(e)(2), so the question was whether Plaintiff had followed state law for serving a summons on her as provided in Fed. R. Civ. P. 4(e)(1).

  1. Corporate Defendant

 Rule 4(h)(1) of the Federal Rules of Civil procedure governs the methods by which service of process may be effected on a limited liability company:

(h)       Serving a Corporation, Partnership, or Association. Unless federal law provides otherwise or the defendant’s waiver has been filed, a domestic or foreign corporation, or a partnership or other unincorporated association that is subject to suit under a common name, must be served:

(1)       in a judicial district of the United States:

(A)       in the manner prescribed by Rule 4(e)(1) for serving an individual; or

(B)       by delivering a copy of the summons and of the 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)(1) (emphasis added).  Because it registered false and fictitious addresses with the Florida Secretary of State, Plaintiff argued, the corporate defendant could not be served by the method provided in Fed. R. Civ. P. 4(e)(1), so the question was whether Plaintiff had followed state law for serving a summons as provided in Fed. R. Civ. P. 4(h)(1)(B).

The provisions of Florida law applicable to substituted service of process where defendants have concealed their whereabouts and evaded service are found in Sections 48.161, 48.171 and 48.181 of the Florida Statues.[3]  Florida Statute § 48.161, titled “Method of substituted service on nonresident,” states in relevant part:

When authorized by law, substituted service of process on a nonresident or a person who conceals his or her whereabouts by serving a public officer designated by law shall be made by leaving a copy of the process with a fee of $8.75 with the public officer or in his or her office or by mailing the copies by certified mail to the public officer with the fee. The service is sufficient service on a defendant who has appointed a public officer as his or her agent for the service of process. Notice of service and a copy of the process shall be sent forthwith by registered or certified mail by the plaintiff or his or her attorney to the defendant, and the defendant’s return receipt and the affidavit of the plaintiff or his or her attorney of compliance shall be filed on or before the return day of the process or within such time as the court allows. . . [Emphasis added.]

Florida Statute § 48.171, titled “Service on nonresident motor vehicle owners, etc.,” states similarly:

Any nonresident of this state, being the operator or owner of any motor vehicle, who accepts the privilege extended by the laws of this state to nonresident operators and owners, of operating a motor vehicle … within the state, or any resident of this state, being the licensed operator or owner of or the lessee, or otherwise entitled to control any motor vehicle under the laws of this state, who becomes a nonresident or conceals his or her whereabouts, by the acceptance or licensure and by the operation of the motor vehicle … within the state constitutes the Secretary of State his or her agent for the service of process in any civil action begun in the courts of the state against such operator or owner, lessee, or other person entitled to control of the motor vehicle, arising out of or by reason of any accident or collision occurring within the state in which the motor vehicle is involved.  [Emphasis added.]

Finally, Florida Statute § 48.181, titled “Service on nonresident engaging in business in state,” states in relevant part:

The acceptance by any person or persons, individually or associated together…, who are residents of any other state or country, and all foreign corporations, and any person who is a resident of the state and who subsequently becomes a nonresident of the state or conceals his or her whereabouts, of the privilege extended by law to nonresidents and others to operate, conduct, engage in, or carry on a business or business venture in the state … constitutes an appointment by the persons and foreign corporations of the Secretary of State of the state as their agent on whom all process in any action or proceeding against them, or any of them, arising out of any transaction or operation connected with or incidental to the business or business venture may be served. The acceptance of the privilege is signification of the agreement of the persons and foreign corporations that the process against them which is so served is of the same validity as if served personally on the persons or foreign corporations.  [Emphasis added.]

  1. Grounds for Motion

While service of process is the responsibility of the plaintiff, “[a] defendant who beclouds his whereabouts should not be entitled to benefit from the process server’s consequent confusion.”[4]  Moreover, “[t]he rules governing service of process are not designed to create an obstacle course for Plaintiffs to navigate, or a cat-and-mouse game for defendants who are otherwise subject to the court’s jurisdiction.”[5]  Alternate service is necessary where a defendant has concealed his whereabouts and is evading services, making it impossible to effect personal service despite its diligent efforts.  Hernandez v. State Farm Mut. Auto. Ins. Co., 32 So. 3d 695, 698 (Fla. Dist. Ct. App. 2010).  In Transamerica, Plaintiff successfully argued that the motion for alternative service should be granted for the following reasons.

  1. Alternate Service of Process by Electronic Mail and Publication is Authorized by the Federal Rules of Civil Procedure.

Courts have discretion to determine the appropriate means of service in a given case.[6]  In exercising this discretion, the court must ensure that the alternate service comports with due process requirements.[7]  This means that the alternative method of service must provide “notice reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”[8]  Service via e-mail has been permitted as a proper means of alternate service of process.[9]

  1. Plaintiff is in Compliance with Florida Statutory Requirements for Substituted Service on Defendants Who Have Concealed Their Whereabouts and Evaded Service of Process.

When a defendant has concealed his whereabouts and evaded service of process, “The test … is not whether it was in fact possible to effect personal service in a given case, but whether the [plaintiff] reasonably employed knowledge at [its] command, made diligent inquiry, and exerted an honest and conscientious effort appropriate to the circumstances, to acquire information necessary to enable [it] to effect personal service on the defendant.”[10]

The technical requirements for substituted service under Florida law are as follows: “(1) the plaintiff must send notice of service and a copy of the process by registered or certified mail to the defendant;[11] (2) the plaintiff must file the defendant’s return receipt; and (3) the plaintiff must file an affidavit of compliance.”[12]  Plaintiff had taken the first and third of these measures, its counsel argued, but was unable to file the defendants’ return receipts because all available addresses for the defendants, including but not limited to the relevant address for purposes of Fla. Stat. § 48.161 (i.e., the defendants’ address registered with the Florida Secretary of State) were false and fictitious.  Moreover, the plaintiff’s counsel “reasonably employed knowledge at [his] command, made diligent inquiry, and exerted an honest and conscientious effort appropriate to the circumstances, to acquire information necessary to enable [him] to effect personal service on the defendant.”[13]

Despite the requirement of strict compliance with statutory requirements, “the courts have created an exception to the requirement that the plaintiff file the defendant’s return receipt for those situations in which the defendant is actively refusing or rejecting the substituted service of process.”[14]  The failure to file the defendant’s return receipt has been excused when the record shows that the party to be served is deliberately refusing to accept delivery.[15]  As stated in Jennings v. Montenegro, 792 So. 2d 1258, 1261 (Fla. 4th DCA 2001), “Plaintiffs who use substituted service but fail to obtain a return receipt … must allege that the defendant is concealing his whereabouts, or that they had exercised due diligence in attempting to locate him.”

The exception to Florida state law requirements on substituted service of process has been stated as follows in a case where a Florida resident is concealing his whereabouts:

When a resident conceals his whereabouts, obviously it is impossible to serve him by mail or otherwise.  When a defendant makes it impossible for the plaintiff to serve him by mail or otherwise, the failure to file defendant’s return receipt does not prevent this court from acquiring jurisdiction.

Verizon Trademark Servs., supra, 2011 WL 3296812, at *5 (quoting Fernandez v. Chamberlain, 201 So. 2d 781, 786 (Fla. 2nd DCA 1967)).  A defendant “[w]ith knowledge of th[e] action . . . cannot be allowed to avoid personal and substitute service of process by failing to retrieve his own mail . . . and by failing to provide relevant information about his whereabouts to Plaintiffs in order to permit personal service[.]”  Verizon Trademark Servs., 2011 WL 3296812, at *6.

In Delancy, substituted service was deemed appropriate because the plaintiff attempted to personally serve the defendant but was unsuccessful because the defendant lived in a gated community.  26 So. 3d at 78.  In Robb v. Picarelli, 319 So. 2d 645, 647 (Fla. 3d DCA 1975), the court determined that substituted service was justified because the plaintiff established that the defendant was concealing his whereabouts.  There, the plaintiff made numerous unsuccessful attempts to personally serve the defendant, employed private detectives, and checked with the Department of Motor Vehicles, the National Crime Center and various police departments in an effort to find the defendant’s last known address to no avail.  See also 818 Asset Mgmt. v. Neiman, 22 So. 3d 659, 661 (Fla. 3d DCA 2009) (concurring opinion) (denying motion to set aside default judgment premised on insufficient service of process because defendant, for a period spanning eight months, “did not claim her mail while at home and made no arrangements whatsoever to either have it forwarded or to otherwise obtain it.”).

In Verizon Trademark Servs., id., the court drew a distinction between decisions denying substituted service of process where a party “moved [and] left no address,” id., at *6, and cases where the defendants are refusing to accept service:

If Verizon had sent the service package to a burned down mobile home as in Turcotte,[16] or to the wrong address as in Wyatt[17] and Crews,[18] this Court would not be justified in excusing Verizon’s failure to obtain a signed receipt for the service package.  However, in this case, after diligent and exhaustive attempts to personally serve Solares (at least twenty attempts by this Court’s calculation), Verizon resorted to substituted service and sent the service package to Solares’s correct address.  The package was delivered to Solares’s home via certified mail, but Solares did not sign for the package.

Id.  Under these facts, the plaintiff argued, substituted service of process was justified by the plaintiff’s “persistent attempts to serve” the defendants, “coupled with [the defendants’] actual knowledge of the suit.”  Verizon Servs., 2011 WL 3296812, at * 7.

  1. Alternate Service of Process by Electronic Mail is Constitutionally Permissible and Appropriate Under the Facts of the Present Case.

The Constitution does not mandate that service be effected in any particular way.  Due process considerations require only that service be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”[19]  Federal courts have allowed service by email where a plaintiff demonstrates that the proposed service is likely to notify a defendant of the action.[20]  Here, the plaintiff argued, service on the defendants by email would satisfy due process by apprising the defendants of the action and giving them the opportunity to answer the plaintiff’s claims.[21]

Although the defendants in Transamerica had concealed their whereabouts in a manner that prohibited the plaintiff from making personal service, the plaintiff verified that both defendants could be contacted at the email address associated with their website.  This email address was a reliable means, and the only reliable means, the plaintiff argued, of providing the defendants with notice of the action.  Email service on an online business defendant is warranted when a plaintiff is unable to personally serve a defendant at a physical address and has proven that email is the most effective means of providing the defendant with notice of the action.[22]  The Rio Properties and Popular Enters., LLC courts each approved email service in part because, as in Transamerica, the defendants conducted their business over the Internet, used e-mail regularly in their business, and encouraged parties to contact them via e-mail.  Electronic service is necessary and appropriate where it is the only effective means of communicating with an “e-business scofflaw.”[23]

 1.Plaintiff Has Created a URL for Service by Publication.

 The plaintiff posted a copy of the Complaint and Summonses on a website appearing at the URL created for this purpose.  Service by email and electronic publication in this manner has been authorized by the courts under Fed. R. Civ. P. 4(f)(3) in the case of individuals located in a foreign country, see Specialized Bicycle Components, Inc. v. 17 No.1-Own,  2017 WL 3016929 (S.D. Fla. July 14, 2017); now there is precedent for such “substituted service” in the case of individuals and entities located in the United States who are evading service

 III.       Conclusion

             Based on the above points and authorities, the Transamerica court granted Plaintiff’s Motion and authorized alternative service of process on Defendants by electronic mail and publication at a URL created by Plaintiff for such purpose.

[1]              Partner, Smith, Gambrell & Russell, LLP.  The author was the leader of the working group and principal author of the International Trademark Association (INTA) Report, Substituted Service of Process by Electronic Mail: Achieving Notice on Fictitious Owners of Commercial Websites (2009), posted at https://www.inta.org/Advocacy/Documents/INTA%20Service%20of%20Process%20by%20Electronic%20Mail.pdf.  See also McDonald,  Why Trademark Owners Must Lead the Fight for Accountability in E-Commerce, World Trademark Review (Aug./Sept. 2011).

[2]              Rule 4(f), titled “Serving an Individual in a Foreign Country,” authorizes service of process by any “other means not prohibited by international agreement, as the court orders.”  Fed. R. Civ. P. 4(f)(3).  See Hedges et al., Electronic Service of Process at Home and Abroad: Allowing Domestic Electronic Service of Process in the Federal Courts, 4 Fed. Cts. L. Rev. 55 (2010).

[3]              See Great American Assurance Co. v. Walters, 2016 WL 9526443, at *1-2 (M.D. Fla. April 14, 2016) (citing relevant Florida statutes).

[4]              National Labor Relations Bd. v. Clark, 468 F.2d 459, 464 (5th Cir. 1972).  In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981), the Eleventh Circuit adopted all cases decided by the Fifth Circuit Court of Appeals prior to the close of business on September 30, 1981, as binding precedent.

[5]              Verizon Trademark Servs., LLC v. Producers Inc., 2011 WL 3296812, at *5 (M.D. Fla. Aug. 2, 2011) (quoting TRW Inc. v. Derbyshire, 157 F.R.D. 59, 60 (D. Co. 1994)).

[6]              U.S. Commodity Futures Trading Com’n v. Aliaga, 272 F.R.D. 617, 619 (S.D. Fla. 2011).

[7]              Chanel, Inc. v. Lin, 2009 WL 1034627, at *1 (S.D. Fla. Apr. 16, 2009).

[8]              Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950).

[9]              Aliaga, 272 F.R.D. at 619 (citing, inter alia, Chanel, Inc. v. Zhixian, 2010 WL 1740695, at *4 (S.D. Fla. Apr. 29, 2010)).

[10]             Delancy v. Tobias, 26 So.3d 77, 78 (Fla.. 3d DCA 2010); accord, Alvarado-Fernandez v. Mazoff, 151 So. 3d 8, 17-18 (Fla. App. 2014) (“Under the facts of this case, it is clear that Plaintiff made conscientious efforts appropriate to the circumstances to obtain service on a defendant who could be deemed to be actively avoiding personal service”); Wiggam v. Bamford, 562 So.2d 389, 391 (Fla. 4th DCA 1990) (“The test [for determining the sufficiency of constructive or substitute service] is not whether it was in fact possible to effect personal service in a given case, but whether the [plaintiff] reasonably employed knowledge at [her] command, made diligent inquiry, and exerted an honest and conscientious effort appropriate to the circumstances, to acquire the information necessary to enable [her] to effect personal service on the defendant.”).

[11]             Plaintiff is in compliance with this requirement.  See McDonald Decl., ¶¶ 7, 8.

[12]             The Declaration of Bruce A. McDonald meets this requirement.  Smith v. Leaman, 826 So.2d 1077, 1078 (Fla. 2nd DCA 2002).

[13]             Verizon Trademark Servs. LLC v. Producers Inc., 2011 WL 3296812, at *5 (M.D. Fla.) (quoting Delancy v. Tobias, 26 So. 3d at 78).

[14]             Smith v. Leaman, 826 So. 2d 1077, 1078 (Fla. 2nd DCA 2002).

[15]             Woodword v. Smith, 773 So.2d 1170, 1170 (Fla. 2nd DCA 2000); accord, Oteman, S.A. v. Napoles, 757 So.2d 1261 (Fla. 3d DCA 2000); Wyatt v. Hease, 649 So. 2d 905 (Fla. 4th DCA 1995).

[16]             In Turcotte v. Graves, 374 So. 2d 641, 643 (Fla. 4th DCA 1978), the court quashed substituted service when certified mail sent to comply with section 48.161 was returned with a note that the address was a vacant, burned down mobile home. The court held that “the failure of delivery of process was not caused by the defendant addressee’s rejection of the mail and where such failure might have resulted from a cause not chargeable to the defendant, then the statutory requirements have not been met and service of process is insufficient.”

[17]             Wyatt v. Haese, 649 So.2d 905, 907 (Fla. 4th DCA 1995) (quashing substituted service and holding that two attempts at service by mail, one marked ‘unclaimed’ and the other marked ‘not at this address,’ were insufficient to establish that the defendant intentionally failed or refused to claim the notices).

[18]             Crews v. Rohlfing, 285 So.2d 433 (Fla. 3d DCA 1973) (finding that mail returned and marked “moved left no address” was insufficient to fall within the exception to the statutory requirements).

[19]             Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950).  See also TracFone Wireless, Inc. v. Distelec Distribuciones Electronicas, S.A., 278 F.R.D. 687, 692 (S.D. Fla. 2010); Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1016 (9th Cir.2002).

[20]             See, e.g., Rio Props., 284 F.3d at 1017; In re Int’l Telemedia Assocs., Inc., 245 B.R. 713, 721 (N.D. Ga. 2000); National Association for Stock Car Auto Racing, Inc. v. Does, 584 F. Supp. 2d 824, 826 (W.D.N.C. 2008).

[21]             See Schimenti v. School Bd. Of Hernando Cty, 73 So. 3d 831, 834 (Fla. 5th DCA 2011); M.J.W. v. Dep’t of Children & Families, 825 So.2d 1038, 1040 (Fla. 1st DCA 2002).

[22]             See Rio Properties, 284 F.3d at 1017; Popular Enters., LLC v. Webcom Media Group, Inc., 225 F.R.D. 560, 562 (E.D. Tenn. 2004).

[23]             Accord, TracFone Wireless, Inc., 278 F.R.D. at 693; Popular Enters., LLC, 225 F.R.D. at 563; Chanel, Inc. v. Zhixian, 2010 WL 1740695 (S.D. Fla. April 29, 2010); In re Int’l Telemedia Associates, 245 B.R. at 722; Chanel, Inc. v. Zhibing, No. 09-cv-02835, 2010 WL 1009981, at *4 (W.D. Tenn. March 17, 2010).

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