On July 17, 2023, Justice Reed of the New York County Commercial Division issued a decision extending the time for service and permitting the Plaintiff in Zantaz Enter. Archive Solution, LLC v. Adecco IT Servs., Inc., Index No. 656419/2022, Doc. No. 16, 191 N.Y.S.3d 922 (Sup. Ct. N.Y. Cnty. July 17, 2023), to serve process on the foreign Defendants through alternative means—including email. This decision provides an example of how a plaintiff can obtain an extension of time for service under CPLR § 306-b and permission to serve process by alternative means under CPLR § 311.
As outlined in the complaint, Zantaz is a case about a software licensing agreement.[i] In 2007, the predecessor in interest to the Plaintiff—Zantaz—entered into an End Use License and Maintenance Agreement with Adecco for a software that handles “email archiving, eDiscovery, regulatory compliance, recovery, and storage optimization.”[ii] Zantaz claims that it discovered in 2015 that Adecco had exceeded the number of installations permitted under the agreement, and that attempts to resolve the issue between 2015 and 2021 failed.
Subsequently, the Plaintiff brought claims in New York Supreme Court on May 23, 2022 against four Adecco entities.[iii] While the Plaintiff stated that the Defendants were “foreign corporations, unauthorized to do business in the State of New York,” the Plaintiff argued that jurisdiction and venue were still proper, since the agreement “specif[ied] New York as the exclusive venue for disputes thereunder” and the Defendants had substantial revenue from business activities as well as contacts relative to such business in New York.[iv]
After filing the complaint, counsel for the Plaintiff attempted to serve process on the Defendants. Under CPLR § 311(a)(1), service can be made on a domestic or foreign corporation by, inter alia, delivering the summons “to an officer, director, managing or general agent, . . . or to any other agent authorized by appointment or by law to receive service” or through the procedures specified in BCL §306—for domestic and authorized foreign corporations—or §307—for unauthorized foreign corporations.[v] In August 2022, Plaintiff attempted the method of service specified in BCL §307. The Plaintiff delivered copies of the summons and complaint to the New York Secretary of State and sent copies via registered mail to one of the Adecco Defendants at an address in France specified for notice in the licensing agreement and to another Adecco Defendant at another French address that counsel identified as the last corporate address for that entity.[vi] The attempts to serve process on those Defendants were unsuccessful, as were the attempts at the addresses for the other Defendants that counsel believed were their last known corporate addresses.[vii]
On December 7, 2022, after the initial attempts at service failed, the Plaintiff moved for an order permitting service through alternative means under CPLR § 311(b).[viii] Attached to the notice of motion was an affirmation from Plaintiff’s counsel recounting the attempts at service and laying out the arguments in support of the motion. In the affirmation, counsel noted that there was another address for a representative of the Defendants. This address was entirely different from the previously served corporate addresses; however, the Plaintiff “maintained business contacts and communicated the issues underlying the Agreement and scope of services provided thereunder.”[ix] The Plaintiff requested an order permitting service at the physical address of the representative, as well as service to his email address.[x] Furthermore, given that more than 120 days had passed since the matter commenced, the Plaintiff also moved to extend the time for service under CPLR § 306-b.[xi]
In its decision, the Court first addressed the Plaintiff’s request for an extension of time. Under CPLR § 306-b, a court can extend the time for service beyond the 120-day limit in the rules “upon good cause shown or in the interest of justice.”[xii] Justice Reed noted that “[t]o demonstrate good cause, a plaintiff must show that reasonable diligence was exercised in attempting to timely serve a defendant.”[xiii] In contrast, the interest of justice is a broader standard, and does not require a showing of diligence as a threshold matter; however, diligence, or lack thereof, may be considered “along with any other relevant factor . . . including the expiration of the Statute of Limitations, the meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff's request for the extension of time, and prejudice to defendant.”[xiv]
Applying this framework, the Court held that the time for service should be extended in the interest of justice. Justice Reed found that the “plaintiff has established its diligence in attempting service . . . and this motion was filed promptly in December 2022.”[xv] He further stated that “Plaintiff has a meritorious claim, and the court can discern no prejudice that defendants would suffer as a consequence of plaintiff being granted additional time to serve.”[xvi]
The Court then addressed the Plaintiff’s request to serve the Defendants by alternative means. Under CPLR § 311(b), if service on a corporation within the aforementioned 120 days is impracticable under the manner specified CPLR § 311(a) or any other law, a court may specify an alternative manner of service and proof of service.[xvii] Justice Reed found that the “Plaintiff has, by counsel’s affirmation, established the impracticability of service” and that the Plaintiff would be permitted to “attempt service upon defendants, by registered mail and email, inaccordance with the terms of the Hague Convention” to the physical and email address for the representative of the Defendants that the Plaintiff previously communicated with.[xviii]
Shortly after Justice Reed issued his decision, the Plaintiff attempted service in the manner specified by the Court—first on July 31, 2023, and then again on August 16, 2023.[xix] The Defendants appeared in the litigation a month later by filing a motion to dismiss on September 8, 2023.[xx]
The Commercial Division decision in Zantaz provides an example of how a plaintiff can successfully move for an extension of time to serve process under CPLR § 306-b and for permission to serve process by alternative means under CPLR § 311.