U.S. v. Ziegler Bolt and Parts Co.

• Decision Date: 14 April 1997
• Docket Number: 95-1419,Nos. 95-1408,s. 95-1408
• Parties: , 37 Fed.R.Serv.3d 842 THE UNITED STATES, Plaintiff-Appellant, v. ZIEGLER BOLT AND PARTS COMPANY, Defendant/Cross-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 878

111 F.3d 878

19 ITRD 1033, 37 Fed.R.Serv.3d 842

THE UNITED STATES, Plaintiff-Appellant, v. ZIEGLER BOLT AND PARTS COMPANY, Defendant/Cross-Appellant.

Nos. 95-1408, 95-1419.

United States Court of Appeals, Federal Circuit.

April 14, 1997.

Jeanne E. Davidson, Assistant Director, Commercial Litigation Branch, Civil Division, Department of Justice, Washington, D.C., argued for plaintiff-appellant. With her on the brief were Frank W. Hunger, Assistant Attorney General, and David M. Cohen, Director.

Matthew Yackshaw, Day, Ketterer, Raley, Wright & Rybolt, Ltd., Canton, OH, argued for defendant/cross-appellant.

Before RICH, CLEVENGER, and RADER, Circuit Judges.

RADER, Circuit Judge.

The United States Court of International Trade quashed the Government's service of process and dismissed its complaint for lack of personal jurisdiction over Ziegler Bolt and Parts Company (Ziegler). Because the Government did not serve a summons and complaint on Ziegler in a timely and legally adequate manner, this court affirms.

I.

Ziegler is a distributor of nuts, bolts, screws, fasteners, and other related products. During the 1980s, Ziegler imported some of its products from foreign manufacturers. After an investigation, the Government discovered that Ziegler had imported and sold products without complying with customs labeling laws. On this evidence, the Government brought criminal charges, to which Ziegler pled guilty.

Later, the United States Customs Service (Customs) initiated administrative proceedings to impose civil penalties for Ziegler's activities. On November 9, 1989, Customs issued Ziegler a Notice of Penalty seeking $5,926,801 for ninety-eight entries of nuts and bolts between June 1983 and April 1988. When Ziegler did not pay this penalty, Customs referred the case to the Department of Justice for civil enforcement. On March 15, 1993, the Government filed the present civil penalty case in the Court of International Trade under 19 U.S.C. § 1592.

At the outset of this suit, the Government attempted to serve Ziegler by mailing to Matthew Yackshaw a copy of the complaint, together with a summons and CIT Form 14, entitled "Acknowledgment of Receipt of Summons and Complaint" (Acknowledgment Form). Mr. Yackshaw is Ziegler's attorney. On April 5, 1993, Mr. Yackshaw returned the Acknowledgment Form, which he signed in his capacity as "Attorney for Defendant," along with an answer. The answer asserted, inter alia, affirmative defenses eight and nine--specifically, the court lacks personal jurisdiction over Ziegler and the complaint was barred because of insufficient service of process.

Over the next twenty-two months, Ziegler defended itself before the trial court. Among other things, Ziegler served interrogatories and document requests, deposed Customs agents, and filed motions to compel discovery. Ziegler also filed a motion for summary judgment, which the trial court denied. Mr. Yackshaw represented Ziegler throughout these proceedings. At no point during this period did Ziegler raise the issue of insufficient service.

On January 20, 1995, the parties filed a proposed pretrial order in which Ziegler stated its intention to prove the lack of personal jurisdiction due to inadequate service of process. This statement prompted the trial judge to invite briefing on the issue. Ziegler filed a motion to quash service of process and dismiss the Government's complaint for lack of personal jurisdiction.

The trial court granted Ziegler's motion and dismissed the case. In doing so, the trial court rejected the Government's arguments that Mr. Yackshaw was implicitly authorized to accept service for Ziegler and that Ziegler had waived its right to object to improper service by affirmatively participating in the case for almost two years. The Government appeals from this dismissal order.

II.

"Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirements of service of summons must be satisfied." Omni Capital Int'l Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104, 108 S.Ct. 404, 409, 98 L.Ed.2d 415 (1987). The Rules of the Court of International Trade (CIT Rules) dictate those procedural requirements for this case. ^*

Because the trial court decided Ziegler's motion without an evidentiary hearing, the Government had only to make a prima facie case of proper service in order to survive the motion. See, e.g., Mylan Lab., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir.1993); Delong Equip. Co. v. Washington Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir.1988); see also 2A James W. Moore, Moore's Federal Practice p 12.07[2.-2], at 12-70 (2d ed. 1996) ("If the district court chooses not to hold an evidentiary hearing, then the party asserting jurisdiction need only make a prima facie showing that jurisdiction exists...."). Thus, the first question before this court for de novo review, see Mylan Lab., 2 F.3d at 60, is whether the Government made a prima facie showing of proper service under the CIT Rules.

CIT Rule 4(c)(1)(C)(ii) authorizes service "by mailing a copy of the summons and complaint by first-class mail, postage prepaid to the person to be served, together with two copies of a notice and acknowledgment which shall be substantially in the form set forth in Form 14." CIT Rule 4(d)(3) instructs that the "person to be served" for a corporate defendant is "an officer, a managing or general agent, or ... any other agent authorized by appointment or by law to receive service."

The undisputed evidence shows that Mr. Yackshaw is neither an officer, nor a managing or general agent of Ziegler. Nor does the Government proffer any evidence to contradict Ziegler's affidavit evidence that Ziegler never expressly authorized Mr. Yackshaw to accept service of process. Instead, the Government argues that Mr. Yackshaw's authority to accept service was implicit in the circumstances of Mr. Yackshaw's relationship to Ziegler.

An agent's authority to accept service may be implied in fact. See, e.g., Gibbs v. Hawaiian Eugenia Corp., 581 F.Supp. 1269, 1271 (S.D.N.Y.1984); see also 2 Moore's Federal Practice p 4.10, at 4-173 to 4-174 ("The agency for the receipt of process may be implied from the surrounding circumstances."); 4A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1097, at 84-85 (2d ed. 1987) ("[A]lthough authority to accept process need not be explicit, it must either be express or implied from the type of relationship between defendant and the alleged agent."); 1 Robert C. Casad, Jurisdiction in Civil Action § 3.01[b], at 3-12 to 3-13 (1991) ("Some cases have found actual appointment in the absence of any express grant of authority, however, by resort to the doctrine of apparent authority or agency by estoppel."). A party, however, cannot fabricate such implied authority from whole cloth to cure a deficient service, but must present facts and circumstances showing the proper relationship between the defendant and its alleged agent. See 2 Moore's Federal Practice p 4.10, at 4-174 to 4-175 ("[T]he mere appointment of an agent, even with broad authority, is not enough; it must be shown that the agent had specific authority, express or implied, for the receipt of service of process."). In this case, the Government can point to no aspect of the relationship between Ziegler and Mr. Yackshaw that implies the latter's authority to accept service.

The mere relationship between a defendant and his attorney does not, in itself, convey authority to accept service. See, e.g., Grandbouche v. Lovell, 913 F.2d 835, 837 (10th Cir.1990); Ransom v. Brennan, 437 F.2d 513, 518-19 (5th Cir.1971); United States v. General Int'l Mktg. Group, 742 F.Supp. 1173, 1177 (Ct. Int'l Trade 1990); see also 4A Wright & Miller § 1097, at 85-86 ("[D]efendant's attorney probably will not be deemed an agent appointed to receive process absent a factual basis for believing that an appointment of this type has taken place."). Even where an attorney exercises broad powers to represent a client in litigation, these powers of representation alone do not create a specific authority to receive service. See, e.g., Santos v. State Farm Fire & Cas. Co., 902 F.2d 1092, 1094 (2d Cir.1990) (no basis for inferring that client had authorized its attorney to accept service); Schultz v. Schultz, 436 F.2d 635, 639-40 (7th Cir.1971) (general grant of authority to attorney is not enough to imply authority to receive process). Instead, the record must show that the attorney exercised authority beyond the attorney-client relationship, including the power to accept service.

In this case, the Government has shown, at most, that Mr. Yackshaw had broad powers to represent Ziegler throughout the course of Customs' administrative proceedings. As the trial court properly concluded, this evidence is insufficient to show that Ziegler had empowered Mr. Yackshaw to receive service in the current action. See, e.g., Royal Swan Navigation Co. v. Global Container Lines, Ltd., 868 F.Supp. 599, 602 (S.D.N.Y.1994) (attorney appointed to accept arbitration demands is not necessarily appointed to accept service of process); J. & L. Parking Corp. v. United States, 834 F.Supp. 99, 102 (S.D.N.Y.1993) ("[A]n attorney does not become a client's agent for service of process simply because she represented the client in an earlier action."), aff'd, 23 F.3d 397 (2d Cir.1994).

Further, Mr. Yackshaw's execution of the Acknowledgment Form is insufficient to imply his authority to accept service. First, the Government cannot show Mr. Yackshaw's alleged agency with reference to his actions alone. See, e.g., Federal Deposit Ins. Corp. v. Oaklawn Apartments, 959 F.2d 170, 175 (10th Cir.1992) ("An agent's authority to act cannot be established solely from the agent's actions; the authority must be established by an act of the principal)." (quoting Pytlik v. Prof'l Resources Ltd., 887 F.2d 1371, 1376 (10th Cir.1989)); United States v. Marple Community...