Graen v. FCA US, LLC et al

Filing 22

OPINION AND ORDER denying 7 Motion to Dismiss filed by FCA US, LLC. Graen has until 7/13/16 to effect proper service on Chrysler. Signed by Honorable Timothy L. Brooks on June 24, 2016. (jn)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION
PLAINTIFF

DR. GEORGE GRAEN

v.

Case No. 5:15-cv-05289

FCA US, LLC;
CHRYSLER GROUP, LLC;
and DAIMLERCHRYSLER AG

DEFENDANTS
OPINION AND ORDER

Now before the Court are Defendants FCA US, LLC's; Chrysler Group , LLC 's;
and DaimlerChrysler AG's (collectively, "Chrysler") Motion to Dismiss (Doc. 7) and Brief
in Support (Doc. 8) ; Plaintiff George Graen's Response (Doc. 10) and Brief in Support
(Doc. 11 ); and Chrysler's Reply (Doc. 17). Chrysler's Motion argues that Graen's
attempt at service was improper, and so his Complaint (Doc. 1) should be dismissed .
Yesterday, the Court took argument on the Motion at the Case Management Hearing,
and issued a ruling from the bench agreeing that Graen failed to effect service, but
disagreeing that dismissal was the appropriate remedy . Instead, the Court ordered
Graen to properly serve Chrysler within twenty (20) days. On that reasoning , Chrysler's
Motion to Dismiss (Doc. 7) is DENIED . To the extent that any statement in this Order
conflicts with the Court's pronouncement from the bench , this Order controls.

I.

DISCUSSION

According to the Complaint, Graen was driving his Dodge Viper on December 2,
2012 , when a defect in the vehicle's right rear tire apparatus caused him to crash . He
filed this diversity action exactly three years later, on December 2, 2015, alleging

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product liability, negligence, and breach of warranty against Chrysler. Chrysler filed the
instant Motion to Dismiss on April 20 , 2016.
Chrysler argues that Graen's attempt at service was insufficient for two reasons .
First, it asserts that service was untimely. Graen waited until March 30, 2016, 119 days
after filing his Complaint, to serve Chrysler. See Doc. 6. On December 1, 2015-the day
before Graen initiated this suit-several substantive changes to the Federal Rules of
Civil Procedure went into effect. One such change was a reduction in the time allotted to
serve a defendant, from 120 days to 90 days. See Fed. R. Civ. P. 4(m) . In addition to
this timeliness issue , Chrysler argues that Graen's attempt at service was improper
because Graen served its authorized Texas agent, rather than its Arkansas agent. See
Doc. 10-3, pp . 1-6.
Despite the aforementioned change to the Federal Rules of Civil Procedure ,
Graen maintains that he timely effected service . First, he contends that Rule
4(h)(1)(A)-which adopts state requirements for service-affords him 120 days because
that is the time limit imposed by Arkansas' Rules of Civil Procedure . See Fed . R. Civ. P.
4(h)(1)(A) , 4(e)(1) ; Ark. R. Civ. P. 4(i) . Second , Graen believes his delay was justified
based on representations Chrysler's counsel made about waiving service . Third, he
notes that the Clerk's Office (errantly) referenced a 120-day time frame when it filed its
First Notice of No Service of Process on January 11, 2016 .
The Court disagrees with all three arguments. First, Rules 4(h)(1 )(A) and 4(e)(1 ),
read in conjunction , permit plaintiffs to serve corporate defendants 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 ." Fed . R. Evid . 4(e)(1 ).

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Contrary to Graen's contention, this rule does not allow plaintiffs to avail themselves of
the pertinent states' time limits for service. Such an interpretation would render the
Federal Rules' 90-day limit completely ineffectual. Rather, Rule 4(e)(1) allows plaintiffs
to utilize the methods of service authorized by state law. Second, Graen's counsel 's
email correspondence with Chrysler's counsel pertaining to waiver of service does not
excuse Graen's failure to timely serve Chrysler. Graen did not even send Chrysler a
request for waiver of service until February 25, 2016 , (Doc. 5), a full 85 days after filing
his Complaint and only five days before Rule 4(m)'s 90-day time limit. Third , the Clerk's
errant Notice re No Service of Process referencing the outdated 120-day time frame
may provide good cause for excusing Graen's failure to timely attempt service, but it

does not make his attempt at service timely.
Turning to Chrysler's second argument, the Court finds that Graen 's attempt to
serve Chrysler by serving its Texas agent was improper. At first glance, Rule 4(h)(1)
would seem to permit Graen's course of action . That rule allows a plaintiff to serve a
corporate defendant "in a judicial district of the United States . .. (B) by delivering a
copy of the summons and of the complaint to an officer, a managing agent, or any other
agent authorized by appointment or by law to receive service of process . . . . "
(emphasis added) . Graen relies heavily on the opening clause's use of the phrase "a
judicial district," which it takes to mean "any judicial district. " In other words, Graen
contends that it did deliver a copy of the summons and complaint to Chrysler's agent in
a judicial district of the United States-namely, the Northern District of Texas. A closer

look at the Rule, however, reveals why Graen's attempt at service misses the mark.

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Rule 4(h)(1 )(B) permits service by delivery to an "agent authorized by
appointment . . . to receive service of process." Whether an agent is authorized to
receive service of process on behalf of a corporation , then , depends upon the scope of
the agency relationship . As Wright & Miller explains :
[T]he provision in Rule 4(h)(1) for serving agents authorized by
appointment contemplates service on agents either expressly or impliedly
appointed by the defendant organization as agents to receive process.
Thus, service under this portion of Rule 4(h)(1 )(B) requires an inquiry into
the scope of the agency by appointment relationship ....
4A Wright & Miller, Fed . Prac. & Proc. Civ. § 1101 (4th ed .).
This approach is similar to the one taken by the Eighth Circuit in Printed Media

Services, Inc. v. Solna Web Inc., 11 F.3d 838 (8th Cir. 1993). The plaintiff brought suit
against two related companies , one a Missouri corporation and the other a Delaware
corporation. Id. at 839 . Rather than serving both corporations separately, however, the
plaintiff served only the Missouri corporation's registered agent in Missouri . Id. at 841 .
After the plaintiff obtained a default judgment against the Delaware corporation , that
corporation filed a Rule 60(b) motion to vacate based on improper service . The district
court denied the motion, and the Delaware corporation appealed .
On appeal , the plaintiff argued that the Missouri corporation 's registered agent in
Missouri was the implied agent of the related Delaware corporation . The Eighth Circuit
disagreed . It found that "no agency relationship" could be implied by the facts of the
case, and there was no indication that the Missouri corporation 's agent "had actual
authority to receive service" on the Delaware corporation 's behalf, or that it "manifested
consent" for the agent "to have that authority." Id. at 842.

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Evaluating the scope of the agency relationship in the instant case leads to an
obvious result: The relationship between Chrysler and its authorized agent for the state
of Texas gives that agent the authority to receive service for lawsuits brought against
Chrysler in Texas , but not in Arkansas or any other state. Why else would Chrysler also
maintain an agent authorized to receive service in Arkansas, and presumably in nearly
every other state in which it does business? 1 For this reason , Graen's attempt to serve
Chrysler was insufficient.
When a plaintiff fails to serve a defendant, courts "must dismiss the action
without prejudice . . . or order that service be made within a specified time ." Fed . R. Civ.
P. 4(m) (emphasis added). If the plaintiff shows good cause, the Court "must extend the
time for service for an appropriate period. " Id. (emphasis added) . Regardless of whether
Graen has shown good cause fo r his failure to properly serve Chrysler, the Court
finds-with in its discretion as granted by the first sentence of Rule 4(m)-that ordering
service to be made within a specified time is the appropriate remedy in th is case .

II.

CONCLUSION

For the reasons stated herein, Chrysler's Motion to Dismiss (Doc. 7) is DENIED.
Graen shall have until July 13, 2016 to effect proper service upon Chrysler---after which
he must promptly file an affidavit of service . Chrysler may also waive service pursuant
to Rule 4(d) during this time period .

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The Court has no occasion to consider what the outcome of Chrysler's Motion would
be if Texas were its state of incorporation or headquarters, or had some other relation to
this case. Chrysler is a Delaware corporation headquartered in Michigan, and Graen 's
Complaint makes no reference to Texas whatsoever.

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IT IS SO ORDERED on this ;...

i~

day of June, 20 6.

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