Joe Hand Promotions, Inc. v. Talayarathe et al

Filing 27

Order by Hon. Samuel Conti denying 21 Motion for Entry of Default and Ordering Plaintiff to Show Cause re Dismissal and Ordering Plaintiff's Counsel to Show Cause re Sanctions. (sclc2, COURT STAFF) (Filed on 5/17/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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JOE HAND PROMOTIONS, INC.,
Plaintiff,

United States District Court

For the Northern District of California

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v.

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VIDURA TALAYARATHE a/k/a Vidura
S. Talayaratne, individually and
d/b/a ME-N-ED'S PIZZA a/k/a ME N
EDS PIZZA PARLOR; and ITALIANO
RESTAURANTS, INC., an unknown
business entity d/b/a ME-N-ED'S
PIZZA a/k/a ME N EDS PIZZA
PARLOR,

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Defendants.

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I.

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Case No. 11-2554-SC
ORDER DENYING MOTION FOR
ENTRY OF DEFAULT; ORDER TO
SHOW CAUSE RE DISMISSAL;
ORDER TO SHOW CAUSE RE
SANCTIONS

INTRODUCTION
Now before the Court is a Motion for Entry of Default brought

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by Plaintiff Joe Hand Promotions, Inc. ("Plaintiff") against

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Defendants Vidura Talayarathe and Italiano Restaurants, Inc.

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(collectively, "Defendants").

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set forth below, the Court DENIES the motion.

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to Federal Rule of Civil Procedure 4(m), the Court ORDERS Plaintiff

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to show cause why this case should not be dismissed for a failure

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to timely serve Defendants.

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Plaintiff's counsel, Thomas P. Riley ("Riley"), to show cause why

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he should not be sanctioned pursuant to Rule 11(b) for making a

ECF No. 21 ("MED").

For the reasons

Moreover, pursuant

As a separate matter, the Court ORDERS

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false representation to the Court in his affidavit of May 2, 2012,

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as detailed below.

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II.

BACKGROUND
Plaintiff filed the instant lawsuit on May 26, 2011.

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A summons issued the same day.

ECF No. 3.

ECF No.

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1 ("Compl.").

The

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Complaint alleges that Plaintiff owns the exclusive commercial

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distribution rights for a televised, pay-per-view mixed-martial-

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arts bout and that Defendants infringed on those rights by

United States District Court

For the Northern District of California

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unlawfully showing the bout in their pizza parlor located at 3800

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Klose Way in Richmond, California ("3800 Klose").

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13.

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relief.1

Compl. ¶¶ 10,

Plaintiff seeks statutory damages of $170,000, plus other
Id. at 9-10.

Federal Rule of Civil Procedure 4 provides 120 days for

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service of a summons and complaint, unless the district court

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extends the time for good cause shown.

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4(m).

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service on Defendants.

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2011, Plaintiff moved for a sixty-day extension.

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to Extend").

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2.

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serve Defendants and cited to declarations of due diligence

Fed. R. Civ. P. 4(c)(1),

Plaintiff therefore had until September 26, 2011 to perfect
See Fed. R. Civ. P. 6.

On September 13,
ECF No. 10 ("Mot.

The motion bore Riley's electronic signature.

Id. at

Riley described Plaintiff as having made "diligent" efforts to

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The general contours of this lawsuit will be familiar to district
courts throughout California and, indeed, the United States.
Through its lead and, as far as this Court can tell, only attorney,
Riley, Plaintiff is a frequent litigant in district court. Other
courts have remarked on Plaintiff's penchant for seeking excessive
damages. E.g., Joe Hand Promotions, Inc. v. Streshly, 655 F. Supp.
2d 1136, 1136 (S.D. Cal. 2009) ("Plaintiff asks for a default
judgment to be entered in its favor for $100,875. That amount is
manifestly excessive under existing law -- and Plaintiff probably
knows it.")
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supplied by his process server.

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declarations of due diligence recount a total of two unsuccessful

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attempts, both made at 3800 Klose.

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2011, the process server made the notation "Business Closed. Sign

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Says 'Flavor of Italia'."

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2011, the process server noted "Bad Address (Business)," followed

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by the address, and the notation "Subject Sold the Business, No

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Longer Involved."

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returned the job to the client, i.e., to Riley.

United States District Court

For the Northern District of California

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Id.

Id. (citing id. Ex. 1).

The

At 10:00 a.m. on August 6,

Id. Ex. 1.

At 5:19 p.m. on August 8,

On August 11, 2011, the process server
Id.

On September 15, 2011, the Court granted Plaintiff's motion

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for a sixty-day extension of time and moved the deadline for

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service to November 15, 2011.

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went without Plaintiff serving either Defendant or asking the Court

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for more time.

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See ECF No. 11.

This date came and

On March 2, 2012 -- more than three months after the deadline

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for service -- Plaintiff, through Riley, filed proofs of service

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for both Defendants.

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are identical in every material respect.

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unsuccessful service attempts at a purported residential address,

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followed by three more unsuccessful service attempts at 3800 Klose.

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On February 24, 2012, Plaintiff's process server left the papers

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with an adult female who refused to give her name, and made the

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notation: "Substituted Service.

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Documents to Defendant as Named."

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February 27, 2012, the process server mailed the documents to 3800

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Klose.

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ECF Nos. 15, 16 (together, "POS").

The POS

Both recount three

Recipient Instructed to Deliver
POS at 3.

Three days later, on

Id. at 4.

On March 8, 2012, Plaintiff submitted an Ex Parte Application
to continue a status conference that had been scheduled for March

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16, 2012.

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(Court twice continuing conference sua sponte).

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Parte Application bore Riley's digital signature.

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Riley, citing the POS, represented to the Court that Defendants had

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received "service of suit papers."

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the March 8 Ex Parte Application and continued the status

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conference to April 20, 2012.

Id. at 1.

The March 8 Ex
Mar. 8 EPA at 2.

The Court approved

ECF No. 18.

At the April 20, 2012 status conference, Riley did not appear.

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ECF No. 17 ("Mar. 8 EPA"); see also ECF Nos. 13, 14

Instead, he sent an attorney who had not, and has not, entered an

United States District Court

For the Northern District of California

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appearance in this case and who is not Plaintiff's attorney of

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record.

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again to May 4, 2012, and specifically instructed the attorney to

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communicate to Riley that Riley, as the attorney of record, was to

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appear personally at the next status conference.

ECF No. 20.

The Court continued the status conference

Id.

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On May 2, 2012 -- two days before the scheduled status

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conference -- Riley filed with the Court three documents bearing

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his electronic signature.

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Default.

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supporting the instant Motion.

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the Affidavit, Riley represented to the Court that "[o]n February

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24, 2012, Defendants were duly served with the Summons, Complaints

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[sic], and supplemental suit papers filed in this action."

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2.

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4, 2012 status conference at which the Court had specifically

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ordered him to appear.

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Parte Application argued that the conference would be "futile"

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because Defendants were "facing default" and Riley planned to move

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for default judgment shortly after default was entered.

MED at 2.

One was the instant Motion for Entry of

The second was an Affidavit by Riley
ECF No. 21-1 ("Riley Aff.").

In

Id. ¶

Lastly, Riley filed an Ex Parte Application to vacate the May

ECF No. 22 ("May 2 EPA").

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The May 2 Ex

Id. at 3.

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On May 3, 2012, the Clerk of the Court rescheduled the conference

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for July 27, 2012.

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On May 4, 2012, the Court received a document styled as a

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"Request Not to Enter Default" filed by non-party Flavour of Italia

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LLC ("Flavour of Italia"), who purports to be the proprietor of the

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Me-An-Eds pizza establishment at 3800 Klose.

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("Request").

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Italia's request.

ECF No. 24

On May 14, 2012, Plaintiff objected to Flavour of
ECF No. 26 ("Obj.").

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United States District Court

For the Northern District of California

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III. DISCUSSION

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A.

Motion for Entry of Default

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"When a party against whom a judgment for affirmative relief

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is sought has failed to plead or otherwise defend, and that failure

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is shown by affidavit or otherwise, the clerk must enter the

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party's default."

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duty to plead until properly served, sufficient service of process

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is a prerequisite to entry of default."

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Supp. 2d 1253, 1269 n.12 (D. Kan. 2008).

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a plaintiff must perfect service "within 120 days after the

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complaint is filed," unless the district court extends the time for

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good cause shown.

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Fed. R. Civ. P. 55(a).

" Because a party has no

Fisher v. Lynch, 531 F.
Under the Federal Rules,

Fed. R. Civ. P. 4(m).

Here, Plaintiff moves for entry of default on the ground that

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Defendants have not pled or otherwise defended.

What Plaintiff

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fails to acknowledge is that Defendants are not required to do so

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because Plaintiff did not serve Defendants within the time limits

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prescribed by the Federal Rules.

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service pursuant to Rule 4 by delivering the summons, complaint,

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and related court papers to Defendants at 3800 Klose on February

Plaintiff claims to have effected

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24, 2012, and mailing copies of the same papers three days later.2

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Plaintiff entirely fails to address that service was nowhere near

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timely.

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but it did not do so until March 2012.3

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evidence that Plaintiff even attempted service between August 8,

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2011 and February 1, 2012.

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with POS at 2.

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ignorance of the November 15, 2011 deadline for service because it

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specifically moved for an extension of time to that date.

Plaintiff had until November 15, 2011 to complete service,
In fact, the Court sees no

Compare Mot. to Extend Ex. 1 at 1, 2

In any event, Plaintiff cannot credibly claim

See Mot.

United States District Court

For the Northern District of California

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Rule 4(e) permits service of an individual by any means
authorized by the law of the state in which the district court
sits, and service of most businesses by the same means. See Fed.
R. Civ. P. 4(e)(1), 4(h)(1)(A). This Court sits in California, and
California law permits a party who has already made reasonably
diligent attempts at personal service to effect substituted
service. See Cal. Civ. Proc. Code § 415.20(b). The relevant code
section provides, in pertinent part, that substitute service is
accomplished

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by leaving a copy of the summons and complaint at the
person's . . . usual place of business . . . in the
presence of . . . a person apparently in charge of . . .
[the] place of business, at least 18 years of age, who
shall be informed of the contents thereof, and by
thereafter mailing a copy of the summons and of the
complaint by first-class mail, postage prepaid to the
person to be served at the place where a copy of the
summons and complaint were left. Service of a summons in
this manner is deemed complete on the 10th day after the
mailing.

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Id. The Court has concerns about whether service would have been
proper even if timely, given the suggestion in the record that 3800
Klose is no longer the "usual place of business" of either
Defendant. The Court, however, need not and does not decide that
issue here, because the timeliness issue is dispositive.

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Riley affirms that service was completed on February 24, 2012,
the day the process server left the papers at 3800 Klose. Riley
Aff. ¶ 2. But under California law, substitute service is not
complete when the process server leaves the papers. It is complete
ten days after the papers are mailed. Cal. Civ. Proc. Code §
415.20(b). Here, the papers were mailed on February 27, 2012, so
substituted service would have been complete, if at all, on March
8, 2012.
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to Extend.
In short, Plaintiff's failure to serve Defendants within the

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allotted time may be excusable, but it is inexcusable for

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Plaintiff, and Plaintiff's counsel Riley, to bring a motion for

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entry of default when they had every reason to know that service

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was untimely and therefore inadequate under Rule 4.

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the Court ORDERS the Clerk not to enter default against Defendants

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until further order of this Court.
B.

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United States District Court

Order to Show Cause Re Dismissal of Action

Rule 4(m) provides that if service is not completed within the

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For the Northern District of California

Accordingly,

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prescribed time limits, a district court "must dismiss the action

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without prejudice against that defendant or order that service be

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made within a specified time."

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added).

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to plaintiff.

Fed. R. Civ. P. 4(m) (emphasis

The district court may do so sua sponte following notice
Id.

The Court is not inclined to grant Plaintiff more time to

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effect service in the instant action.

Plaintiff has already

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received one extension of time and then, after failing to effect

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service within the extended period, represented to the Court that

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service was complete regardless.

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show cause why this action should not be dismissed without

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prejudice for failure to timely serve Defendants.4

Plaintiff is hereby ORDERED to

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C.

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A federal court may impose an appropriate sanction against an

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Order to Show Cause Re Sanctions

attorney for violating Rule 11(b) after giving the attorney "notice

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In reaching this conclusion, the Court does not rely on or
consider the Request filed by purported "interested party" Flavour
of Italia. If Flavour of Italia wishes to intervene in this case,
it must file a proper motion. Plaintiff's Objection to the Request
is SUSTAINED.
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and a reasonable opportunity to respond."

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11(c)(1).

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Fed. R. Civ. P.

Rule 11(b) provides, in pertinent part:

By presenting to the court a pleading, written motion, or
other paper -- whether by signing, filing, submitting, or
later advocating it -- an attorney . . . certifies that
to the best of the person's knowledge, information, and
belief, formed after an inquiry reasonable under the
circumstances . . . the claims, defenses, and other legal
contentions are warranted by existing law or by a
nonfrivolous argument for extending, modifying, or
reversing existing law or for establishing new law[.]

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Fed. R. Civ. P. 11(b)(2).

"Rule 11 imposes a duty on attorneys to

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certify by their signature that (1) they have read the pleadings or

United States District Court

For the Northern District of California

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motions they file and (2) the pleading or motion is well-grounded

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in fact, has a colorable basis in law, and is not filed for an

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improper purpose."

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1994) (internal quotation marks omitted).

Smith v. Ricks, 31 F.3d 1478, 1488 (9th Cir.

Concurrent with the instant Motion, Riley filed an affidavit

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in which he represented to the Court that Defendants had been "duly

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served" with process in this action.

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"duly" means "properly."5

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judgment about the legal sufficiency of service of process.

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judicial determination that process has been "duly served" can have

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serious consequences for a defendant.

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Riley has already attested in papers filed with this Court that he

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plans to seek default judgment against Defendants on the basis of

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their failure to defend despite purportedly having been "duly

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served."

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them, in addition to other relief, including an award of Riley's

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fees and costs.

Riley Aff. ¶ 2.

The word

In this context, it represents a
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This case is exemplary.

Riley's client seeks damages of at least $170,000 against

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E.g., Black's Law Dictionary (9th ed. 2009) ("In a proper manner;
in accordance with legal requirements.").
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However, for the reasons explained above, it appears that

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Riley could not have thought "after an inquiry reasonable under the

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circumstances" that Defendants had been "duly served."

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applicable existing law, Rule 4(m), clearly bars service outside of

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its time limits.

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could have left Riley ignorant of the November 15, 2011 deadline

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for service in this case.

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mysterious, and this was not a close call; the purported substitute

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service occurred more than three months after the deadline.

The

The Court doubts that any reasonable inquiry

The operation of Rule 4 is not

United States District Court

For the Northern District of California

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Moreover, Riley himself requested this deadline when he moved for

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an extension of time in papers bearing his electronic signature.

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If the time limits afforded under Rule 4 and this Court's

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order extending time proved too constraining, Riley could have

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asked for more time.

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Rule 11, argued for extension, modification, or reversal of

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existing law.

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for more time in advance of the November 15, 2011 deadline.

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did he argue afterward that he should have been entitled to more

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time.

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acknowledged that service was untimely under existing law.

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v. Acadia State Bank, 937 F.2d 1566, 1570 (11th Cir. 1991)

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(plaintiffs did not make good faith argument to modify or reverse

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binding appellate opinion because "they did not refer to it at

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all").

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had been "duly served," and argued for entry of default on that

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basis.

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Defendants' purported failure to defend -- a failure which, again,

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is predicated on their having first been properly served.

Alternatively, he could have, consistent with

Riley did neither.

He did not come to Court asking
Nor

Indeed, he could not have done so, because he never
Cf. Fox

On the contrary, Riley affirmed under oath that Defendants

Riley also signed two Ex Parte Applications relying on

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See Mar.

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8 EPA at 1 n.1 (citing POS); May 2 EPA at 3-4.
The Court is troubled by this course of misrepresentation.6

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Riley's representations to the Court in this case have been

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consistent with either bad faith or, more charitably, reckless

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disregard of both their truth and their potential consequences for

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Defendants.

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Rule 11 embodies this principle in literal fashion, by attaching

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consequences to an attorney's signature.

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documents in this case, and in doing so he certified their

United States District Court

For the Northern District of California

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contents.

But in our legal system, words have consequences.

Riley signed the

Now he must stand by his words.

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IV.

CONCLUSION

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For the foregoing reasons, the Court DENIES Plaintiff's Motion

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for Entry of Default against Defendants and ORDERS the Clerk not to

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enter default against them until further order of this Court.

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The Court ORDERS Plaintiff to show cause why this action

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should not be dismissed without prejudice for failure to timely

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serve Defendants.
The Court ORDERS Thomas P. Riley, counsel for Plaintiff Joe

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Hand Productions, Inc., to show cause why he should not be

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sanctioned for representing to the Court in his May 2, 2012

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affidavit that Defendants had been "duly served."
The Court shall hold a hearing on the two Orders to Show Cause

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at 10:00 a.m. on Friday, June 8, 2012, in Courtroom 1, United

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The Court notes that the timing and contents of Riley's filings
appear to be motivated at least in part by Riley's determination to
avoid appearing personally before this Court, as was ordered on
April 20, 2012. To the extent filings were made out of such
motivation, they would run afoul of Rule 11's ban on presenting
papers to a federal court for "any improper purpose." Fed. R. Civ.
P. 11(b)(1).
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States Courthouse, 450 Golden Gate, San Francisco, California.

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Riley shall appear at the hearing in person.

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to voluntarily dismiss this action, Riley still must appear for the

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hearing on sanctions.

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If Plaintiff elects

Riley may submit a brief addressing either or both Orders to

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Show Cause, though he is not required to do so.

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shall not exceed eight (8) pages in length and shall be filed

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electronically no later than 3:00 p.m. on Tuesday, June 5, 2012.

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Any such brief

Plaintiff shall cause a copy of this Order to be served on

United States District Court

For the Northern District of California

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Defendants and on Flavour of Italia within three (3) days of the

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date of this Order.

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service with the Court.

Plaintiff then shall file a certificate of

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IT IS SO ORDERED.

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Dated: May 17, 2012
UNITED STATES DISTRICT JUDGE

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