Grand Entertainment Group v. Star Media Sales

Decision Date20 March 1992
Docket NumberCiv. No. 86-5763.
PartiesGRAND ENTERTAINMENT GROUP, LTD., and Entertainment Industries, Inc. v. STAR MEDIA SALES, INC., et al.
CourtU.S. District Court — Eastern District of Pennsylvania

E. Parry Warner, Obermayer, Rebmann, Maxwell & Hippel, Philadelphia, Pa., for plaintiffs.

Janet S. Kole, Cohen, Shapiro, Polisher, Shiekman & Cohen, Philadelphia, Pa., for defendants Nostra, S.A., Ricardo Sanz, S.A., and Ricardo Sanz Perez.

MEMORANDUM

LOUIS H. POLLAK, District Judge.

This matter came before me on the motion of defendants Ricardo Sanz Perez, Ricardo Sanz, S.A., and Nostra, S.A., to open or set aside a default, and on plaintiffs' competing motion to approve the report and recommendation of Magistrate Judge William F. Hall, Jr., recommending entry of default judgment in the amount of $34.4 million.1 The defendants, Spanish citizens and residents, objected to the report and recommendation, claiming that they had not been properly served and thus had never become parties to the action. In a bench opinion rendered March 4, 1991, I determined that under Federal Rule of Civil Procedure 4(i)(1)(A) service was proper. Rule 4(i)(1)(A) provides that service of process on a foreign defendant in a foreign country is sufficient if the method of service comports with methods of service permitted for actions initiated in the foreign country's courts. I concluded that, in this case, service of the complaint had been accomplished in a manner permitted under Spanish law. Having concluded that service was proper, I nonetheless concluded that other considerations counseled that the default should be set aside if defendants satisfied several conditions.2 Among the reasons that counseled against confirming the default and approving the default judgment in the amount recommended by Magistrate Judge Hall was my conclusion that plaintiffs' counsel should have made greater efforts to inform defendants' New York counsel of the damages hearing held before Magistrate Judge Hall, a hearing at which defendants made no appearance. There are now three motions before this court; these will be addressed in turn.

I. Plaintiffs' motion for reconsideration

Plaintiffs ask that I revisit my ruling sustaining service of process. Plaintiffs are, of course, not dissatisfied with the ruling, but they ask that I broaden it by also adopting additional rationales (rationales that plaintiffs have previously advanced) that would provide independent support for the ruling. Having determined that the service was satisfactory under Rule 4(i)(1)(A) of the Federal Rules of Civil Procedure, I found it unnecessary to address those other rationales when I rendered my earlier bench opinion. Plaintiffs now ask that I rule on those other theories, apparently in an effort to buttress their position in advance of an effort to pursue collection proceedings in Spain. Although I initially declined plaintiffs' invitation to provide additional grounds in support of my ruling, I have come to the conclusion that considerations of judicial economy merit addressing those asserted additional grounds at this time.

The facts regarding service of process are as follows: Plaintiffs engaged an American attorney practicing in Madrid, Elizabeth Powers, to effect service upon defendants Nostra, S.A., Ricardo Sanz, S.A., and Ricardo Sanz Perez. Powers, in turn, engaged the services of a notary public to deliver the summons and complaint to defendants. On July 24, 1987, the notary public took the summons and complaint to Gran Via 40 in Madrid, where, Powers had ascertained, defendants maintained offices. The notary public presented himself to an individual who identified herself as the telephone operator and receptionist for the building. That individual stated that defendants did have an office in the building, but that the office was vacant because the individuals who worked there were on vacation. The operator/receptionist agreed to accept the summons and complaint and to deliver them to defendants when their offices reopened.3

I have previously determined that the above manner of service was in accordance with Spanish law, and thus was proper service of process under Rule 4(i)(1)(A). Plaintiffs assert that there are three additional grounds on which service upon defendants in this case may be held proper. These will be addressed in turn.

1. Federal Rule of Civil Procedure 4(i)(1)(C)

Federal Rule of Civil Procedure 4(i)(1)(C) states that service in a foreign country is sufficient if service is made "upon an individual, by delivery to the individual personally, and upon a corporation or partnership or association, by delivery to an officer, a managing or general agent." Plaintiffs argue that service was accomplished pursuant to this rule because, although the notary engaged by plaintiffs did not deliver the summons and complaint to Ricardo Sanz directly, the receptionist/telephone operator with whom the notary left the summons and complaint did in fact deliver them to Mr. Sanz. As an initial matter, I note that Mr. Sanz does not affirmatively deny receipt of the summons and complaint; for the purposes of this motion, I am willing to accept that the receptionist/operator did, in fact, deliver the documents to Mr. Sanz.

The mere fact that Mr. Sanz may have received the summons and complaint, however, is not sufficient to make service acceptable under Rule 4(i)(1)(C). It is true that the Federal Rules do not explicitly specify who is to effect personal delivery to an individual: Rule 4(c)(2) permits service by "any person who is not a party and is not less than 18 years of age." It is also true, however, that accomplishing service of process is ultimately plaintiff's responsibility: the person whom plaintiff engages to serve process may not simply deliver the summons and complaint to a third party with instructions to pass the documents on to the defendant. This is so even if the person to whom the process server delivers the summons and complaint works closely with defendant, unless that person has been designated by defendant to receive process. See, e.g., Lensel Lopez v. Cordero, 659 F.Supp. 889, 890 (D.P.R.1987) ("Service through a secretary, even a personal secretary, ... is invalid if not authorized); Christian Populist Party v. Secretary of State, 650 F.Supp. 1205, 1212 (E.D.Ark. 1987) (service on workers in reception area of defendants' offices is ineffective); Betlyon v. Shy, 573 F.Supp. 1402, 1405-06 (D.Del.1983) (service on defendant's supervisor and on second defendant's secretary were ineffective as personal service on defendants). Delivery by the receptionist/operator to Mr. Sanz, if it indeed occurred, does not constitute "delivery" within the meaning of Rule 4(i)(1)(C).

This conclusion is not inconsistent with the general policy that, where a defendant has received actual notice of a law suit, Rule 4 is to be liberally construed. See F.T.C. v. Compagnie de Saint-Gobain-Pont-a-Mousson, 636 F.2d 1300, 1312 n. 61 (D.C.Cir.1980); Concepcion v. Veb Backereimaschenbau Halle, 120 F.R.D. 482, 485 (D.N.J.1988); Hagmeyer v. United States Dep't of Treasury, 647 F.Supp. 1300, 1303 (D.D.C.1986). Those cases that have upheld service of process despite technical failures in performance have done so on the theory that service was made in a manner reasonably calculated to bring the summons and complaint to the attention of the defendant. They have therefore concluded that service complied with the spirit of Rule 4, even if it did not literally comply with any of the rule's specific provisions. See Hagmeyer, 647 F.Supp. at 1303-04. Such a theory, however, cannot be held to support the validity of service under Rule 4(i)(1)(C), which is the declaration that plaintiffs here seek. Service on the telephone operator and receptionist of the building in which defendants maintained offices may have been within the spirit of Rule 4, and I have already determined that it was in compliance with Rule 4(i)(1)(A). There can be no doubt, however, that service was not in literal compliance with Rule 4(i)(1)(C). Plaintiff's request that service be held valid pursuant to that particular facet of Rule 4 must be denied.

2. Pennsylvania Rule of Civil Procedure 402(a)(2)

Rule 4(e) provides that, where the individual sought to be served is not present in the state in which the district court sits, service may be accomplished by any means that state law provides for service upon such individuals. See Fed. R.Civ.P. 4(e). Plaintiffs therefore look to Pennsylvania law to support their service upon the Spanish defendants in this case.

Plaintiffs first point to Rule 402(a)(2) of the Pennsylvania Rules of Civil Procedure. That rule provides for service:

by handing a copy
(iii) at any office or usual place of business of the defendant to his agent or to the person for the time being in charge thereof.

Plaintiffs contend that the receptionist/operator of defendants' office building was "the person for the time being in charge" at the time that plaintiffs' agent delivered the summons and complaint, even though the receptionist/operator was not employed by defendants.4

The question of who qualifies as a "person for the time being in charge" has scarcely been litigated, either under Rule 402 or the former Rule 1009 (the predecessor to Rule 402, repealed in 1985). Instead, virtually all challenges to service under these rules have focused on the question of whether the location at which service was attempted constituted an "office or usual place of business of the defendant." See, e.g., Pincus v. Mutual Assurance Co., 457 Pa. 94, 321 A.2d 906, 910 (1974) (service under Rule 1009); Williams v. Office of Public Defender, 402 Pa.Super. 188, 586 A.2d 924, 925 (1990) (service under Rule 402); Martin v. Gerner, 332 Pa.Super. 507, 481 A.2d 903, 907 (1984) (service under Rule 1009); Loprete v. Langcliffe Collieries, Inc., 67 Pa.D. & C. 438, 441-42 (Lack. Co.1948) (service under Rule 1009). The...

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