TAGC Management, LLC v. Lehman, 10 Civ. 6563, 2012 U.S. Dist. LEXIS 12277 (S.D.N.Y. Feb. 1, 2012)
Plaintiffs are a group of companies that attempted to start a credit card business in China. Defendants are a law firm as well as business entities and individuals related to the firm, all located in China, that Plaintiffs had retained for legal and other professional services. After Plaintiffs transferred over $1 million to Defendants to begin the credit card business project, the relationship broke down and Plaintiffs requested that their money be returned. Defendants refused and Plaintiffs filed suit in the District Court for the Southern District of New York alleging violations of various federal statutes and several state law causes of action. All of the Defendants were allegedly served by hand delivery on an office suite in New York.
Defendant Lehman Jones & Partners (HK) Ltd. moved to dismiss on the basis of defective service of process. Plaintiffs alleged that the papers were served on a woman that the affidavits of service identified as “Jane Smith,” who apparently refused to provide her real name, but held herself out as authorized to accept service on behalf of the Defendants. Plaintiffs also made the “puzzling claim that ‘[t]he process server effectuated service on the security guard of the building who refused to allow the process server access to the office suite listed as [D]efendants’] proper business address.’” The court stated that it was unclear whether the security guard and “Jane Smith” were the same person, and whether the process server effectuated service by gaining access to the office suite at another time or by serving “Jane Smith” in the lobby.
The Court set forth the rule that ‘[i]n tendering service, the process server may rely upon the corporation’s employees to identify the individuals authorized to accept service. As long as the process server’s reliance in corporate personnel is reasonable, the defendant may not later complain that it lacked notice even if the complaint was mistakenly delivered to a person who was not authorized to accept service.’ The court found that the process server’s service upon a non-employee security guard who identified herself as authorized to accept service but refused to provide her real identity was unreasonable on the server’s part, especially given the complete lack of supporting evidence.
In addition, the court determined that service of process on the two individual Defendants was invalid. Plaintiffs failed to show that either of these two Defendants held out the office suite in New York as their actual place of business by receiving business mail there, advertising it as their place of business or any other action that may have induced Plaintiffs’ reliance. The court found that a webpage submitted by the Plaintiffs showing the contact information for the Lehman firm’s New York office failed to demonstrate that the individual Defendants held that address out as their actual place of business. The webpage could not overcome the individual Defendants’ sworn affidavits that their actual place of business was in China.
The court further found that it lacked personal jurisdiction over the remaining corporate Defendants. The Plaintiffs failed to provide evidence of a single transaction or tortious act within or affecting the United States that would allow the Court to exercise general or specific jurisdiction over those foreign corporations.
Finally, the court denied Plaintiffs’ request to allow them to serve the documents via email. The court found that the Plaintiffs failed to make a showing of impracticable service by traditional methods such as previous unsuccessful efforts to locate and serve defendants.