Stratia Inc. v. Liquid Gold Hair, LLC
| Docket Number | Civil Action 3:23-cv-00159 |
| Decision Date | 05 July 2023 |
| Parties | STRATIA INC., Plaintiff, v. LIQUID GOLD HAIR, LLC AND LIQUID GOLD HAIR PRODUCTS, INC., Defendants. |
| Court | U.S. District Court — Western District of North Carolina |
This matter is before the Court on Defendants Liquid Gold Hair LLC and Liquid Gold Hair Products, Inc.'s Motion to Dismiss. (Doc. No. 33.) For the reasons stated below Defendants' Motion to Dismiss is GRANTED IN PART.
On October 21, 2022, Plaintiff Stratia Inc. filed suit in the Central District of California against Defendants, both companies formed and based in the state of North Carolina, related to Defendants' assertion that Plaintiff's “LIQUID GOLD” skincare product infringed upon Defendants' “LIQUID GOLD” trademark used for hair and skincare products. (Doc. No. 1.)
On October 28, 2022, Plaintiff filed an affidavit of service in which a process server attested that the day prior, she, a person over twenty-one years old and not a party to the action, successfully served Defendants' owner, LaNiece Okwara, with the Complaint and summons in Charlotte, North Carolina. (Doc. Nos. 15 at 1; 34-8 at 2.) The attached summonses were addressed to “Liquid Gold Hair, LLC” and “Liquid Gold Hair Products, Inc.,” but did not name Okwara. (Doc. No. 34-8 at 3, 5.) The affidavit detailed four initial, unsuccessful attempts, including an attempt to serve Okwara at two office spaces and a separate residence. (Id. at 2.) The final attempt, described as successful, noted that the process server served Okwara at the residence at 8:29 p.m., and that although Okwara would not open the door, she confirmed her identity. (Id.) The affidavit further provided that the process server informed Okwara of the contents of the documents, and that she told Okwara she would leave the documents on a chair right outside the door for Okwara to retrieve once she left. (Id.) After the process server left the property, Okwara opened the door and retrieved the documents related to the instant suit. (Doc. No. 34 at 7.)
On December 15, 2022, Defendants filed a motion to dismiss, claiming lack of personal jurisdiction, improper venue, improper process, and improper service of process pursuant to Federal Rules of Civil Procedure 12(b)(2)-(5). (Doc. No. 19.) Defendants' personal jurisdiction argument included that it was not subject to the court's general jurisdiction and did not have sufficient minimum contacts with the state of California. (Id. at 9-15.) Defendants further contended that venue was improper because Defendants are not domiciled in California and cannot be found there, and the relevant trademarks are solely registered in North Carolina. (Id. at 17.) Defendants argued that if the court would not dismiss the action, it should transfer it to an appropriate jurisdiction. (Id.) Further, Defendants challenged Stratia's service of process, stating that the filed Affidavit of Service was “insufficient to show Plaintiff's compliance with [Federal Rule of Civil Procedure] 4(h), California Code of Civil Procedure, or North Carolina Rules of Civil Procedure” in that it “failed to establish that a non-party over the age of 21 had ‘delivered' a copy of the summons and complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process on either Defendant.” (Id. at 18.) Defendants denied that Okwara's identity was verified by the process server prior to the attempted service and argued that service was insufficient as the documents were not handed to Okwara and thus cannot be said to have been personally delivered to her. (Id. at 20-21.) Defendants further contended that Plaintiff failed to effectuate service under North Carolina law by, among other things, failing to engage the Mecklenburg County sheriff to serve Okwara. (Id. at 21-24.) With respect to the Federal Rule for service of process, Defendants contended that Plaintiff's summonses were defective in that they failed to designate an individual to be served on either Defendant's behalf. (Id. at 26-27.)
On February 24, 2023, Plaintiff opposed Defendants' motion. (Doc. No. 24.) As to Defendants' personal jurisdiction and venue arguments, Plaintiff agreed to the case's transfer to this Court. (Id. at 1-2.) As to the process and service of process arguments, Plaintiff asked the court to deny Defendants' motion, contending that they were properly served under the California and federal rules. (Id. at 4-7.) The court granted Defendants' motion with respect to the venue transfer issue and denied the remainder of the motion without prejudice to refiling in the transferee court. (Doc. No. 26). The case was transferred to this Court on March 14, 2023. (Doc. No. 27).
On March 28, 2023, Defendants filed a renewed Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(4) and 12(b)(5), making the same process-related arguments as in its motion filed in the Central District of California. (Doc. No. 34.) As alternative relief, Defendants requested that the Court quash Plaintiff's service of process and require Plaintiff to re-serve Defendants. (Id. at 18-19.)
On April 10, 2023, Plaintiff re-issued summonses to both Defendants, care of Defendants' owner, LaNiece Okwara. (Doc. Nos. 40-41.) On the same day it filed its updated summonses and proofs of service, Plaintiff opposed Defendants' Motion to Dismiss, contending that “in a good faith effort to resolve any issues with service of process,” Plaintiff reissued the summonses, reserved both Defendants, and filed new affidavits of service. (Doc. No. 42 at 1, 3.) Plaintiff argues that Okwara was served appropriately under Federal Rule of Civil Procedure 4 and the California rules for service in the first instance, and that although Defendants unquestionably have received actual notice of the suit, they continue to file 12(b) motions to delay the suit's process based on alleged technical defects. (Id. at 2.) Plaintiff contends that although it has been more than ninety days since the suit was initially filed, Federal Rule 4(m) provides that the Court “must” extend the time to serve a defendant if good cause is shown, and such good cause is shown here. (Id. at 3-4.) Further, Plaintiff states that Defendants will suffer no prejudice as a result of allowing Plaintiff to re-serve the suit as no deadlines have been impacted, and allowing re-service permits the parties to reach the merits of the case in a more expeditious manner. (Id. at 4.)
On April 26, 2023, Defendants answered Plaintiff's Complaint and asserted a Counterclaim. (Doc. No. 43.) On May 17, 2023, Plaintiff filed an Answer to Defendants' Counterclaim. (Doc. No. 44.)
The Federal Rules of Civil Procedure allow for defendants to assert certain defenses by motion, including insufficient process and insufficient service of process. Fed.R.Civ.P. 12(b)(4)-(5). Courts may not exercise personal jurisdiction over a defendant where the procedural requirements of service or the summons are not satisfied. Omni Cap. Int'l v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987). A “plaintiff bears the burden of establishing that the service of process has been performed in accordance with the requirements of Federal Rule of Civil Procedure 4.” Elkins v. Broome, 213 F.R.D. 273, 275 (M.D. N.C. 2003); see also Cunningham v. Wells Fargo N.A., No. 3:19-cv-00528, 2020 WL 5300843, at *2 (W.D. N.C. Sept. 4, 2020) (). Though the “plain requirements for the means of effecting service of process may not be ignored,” actual notice of the litigation entitles courts to liberally construe the rules regarding service of process and “every technical violation of the rule or failure of strict compliance may not invalidate the service of process.” Armco, Inc. v. Penrod-Stauffer Bldg. Sys., Inc., 733 F.2d 1087, 1089 (4th Cir. 1984).
Here, Defendants argue that both service of process and the process itself were insufficient. The Court addresses each argument in turn.
Defendants first contend that the Complaint must be dismissed because Plaintiff did not properly effectuate service on Defendants under Rule 12(b)(5)-specifically, that the original affidavit of service filed by Plaintiff is insufficient to comply with Federal Rule of Civil Procedure 4(h) or the North Carolina or California Rules of Civil Procedure. (Doc. No. 34 at 8-9.) Defendants argue that the initial process server's affidavit of service contains falsities in that, while the process server affirmed that Okwara verified her identity, at no point did Okwara confirm her identity and only asked why the process server was looking for her. (Id. at 11; Doc. No. 34-8 at 2.)
Under Federal Rule of Civil Procedure 4(h), the rule governing service of process on corporate defendants, a corporation must be served by 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 “by delivering a copy of the summons and complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process.” Fed.R.Civ.P. 4(e)(1); 4(h)(1). As this action was originally brought in a district court located in California and service was effected in North Carolina, the Court has considered the respective state rules of civil procedure, see CCP §§ 415.20, 416.10; N.C. G.S. § 1A-1, Rule 4(a), as well as Federal Rule of Civil Procedure 4(h)(1).
As an initial matter, the Court considers the original process server's...
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