Mechanical Marketing, Inc v. Sixxon Precision Machinery Co, Ltd et al

Filing 42

ORDER Denying 7 Motion to Dismiss; Denying 16 Motion to Remand; Denying 19 Motion to Dismiss. IT IS HEREBY ORDERED that a Case Management Conference will be held in this matter before the Honorable Edward J. Davila on November 4, 2011 at 10:00 a.m. in Courtroom No. 1, 5th Floor, 280 S. First Street, San Jose, California. On or before October 28, 2011 the parties shall file a joint case management conference statement. Signed by Judge Edward J. Davila on October 6, 2011. (ejdlc4, COURT STAFF) (Filed on 10/6/2011) Modified text on 10/6/2011 (ecg, COURT STAFF).

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IN THE UNITED STATES DISTRICT Court

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION
CASE NO. 5:CV 11-01844 EJD

MECHANICAL MARKETING, INC.,

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ORDER DENYING: (1) DEFENDANT’S
MOTION TO DISMISS; AND (2)
PLAINTIFF’S MOTION TO REMAND

Plaintiff,
v.

For the Northern District of California

United States District Court

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SIXXON PRECISION MACHINERY CO.,
LTD.,

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Defendant.

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/

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[RE: Docket Item Nos. 7, 16, 19]

I. INTRODUCTION
Presently before the court are two motions: (1) Motion to Dismiss filed by Defendant Sixxon

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Precision Machinery Co., LTD. (“Defendant” or “Sixxon”); and (2) Motion to Remand filed by

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Plaintiff Mechanical Marketing, Inc. (“Plaintiff”). Defendant moves to dismiss this action under

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Federal Rule of Civil Procedure 12(b)(5), contending that service of process was not properly made.

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Plaintiff seeks to remand this action to state court on the grounds that Defendant’s Notice of

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Removal was untimely. After carefully considering the arguments set forth by all parties, both

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motions are DENIED.1

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II. BACKGROUND
On November 9, 2010, Plaintiff filed a complaint in the Superior Court of California for
Santa Cruz County, Case No. CV169403 (“State Court Action”), seeking damages for alleged

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This disposition is not designated for publication in the official reports.
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CASE NO. 5:CV 11-01844 EJD
ORDER DENYING: (1) DEFENDANT’S MOTION TO DISMISS; AND (2) PLAINTIFF’S MOTION TO REMAND

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breach of contract, breach of the covenant of good faith and fair dealing, and violation of the

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Independent Wholesale Sales Representative's Act (Civil Code § 1738.10 et seq.). See Docket Item

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No. 1.

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To serve the summons and complaint upon Defendant, Plaintiff utilized two methods: (1)

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direct service on Defendant’s offices in Taiwan; and (2) service by letters rogatory. See Docket

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Item No. 38. For the first method of service, Plaintiff hired a Taiwanese attorney, Shao Lun Chen,

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to personally serve the summons and complaint upon Defendant’s offices. See Docket Item No. 36.

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Mr. Chen states that when he arrived at Defendant’s office at 3 Yu 3 Road, he was met at the gate of

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the facility by a security service person. Id. At that time, Mr. Chen explained that he was
attempting to serve papers on Defendant. Id. The security guard refused to let Mr. Chen access the

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For the Northern District of California

United States District Court

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facility, so he allegedly left the summons and the complaint with the guard.2 Id. Thereafter, Mr.

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Chen filled out the affidavit for service of process, indicating that he had made service on December

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8, 2010. See Docket Item No. 19-2. Plaintiff filed the proof of service in the State Court Action,

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purporting to effect “personal” service upon “security service personnel” of Defendant. Id.

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Defendant did not learn of Plaintiff’s lawsuit until late February or early March, 2011, when

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eighteen deposition subpoenas were served on its existing customers. See Docket Item No. 1-1.

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Defendant immediately contacted counsel and specially appeared in the State Court Action, filing a

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Motion to Quash to contest the validity of Plaintiff’s service of process. Id. Once Defendant filed

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the Motion to Quash, Plaintiff began to characterize its December 8, 2010 attempt at personal

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service as “substitute service,” thereafter mailing the summons and complaint to Defendant’s

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offices. Id.; Opposition to MTR at 6. Plaintiff mailed the summons and complaint to Defendant

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using two different methods on two occasions: (1) by express mail (DHL) on March 3, 2011, and

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(2) by first class mail, postage prepaid, on March 23, 2011. MTR at 5.

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Defendant tells a different story. According to evidence presented by Defendant, no
person identifying himself or herself as a “process server” ever visited Sixxon’s office at 3 Yu 3
Road Youth Industrial Park, as indicated in the “proof of service.” See Docket Item No. 19-3, ¶ 7.
Rather, during December 2010, a gentleman on a motorcycle dropped some court documents on the
ground outside a different location -- at 6 Yu 3 Road -- after being informed by a security guard that
they were not authorized to accept delivery of the documents. Id., ¶ 8.
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CASE NO. 5:CV 11-01844 EJD
ORDER DENYING: (1) DEFENDANT’S MOTION TO DISMISS; AND (2) PLAINTIFF’S MOTION TO REMAND

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On April 5, 2011, Defendant filed a Notice of Removal to remove the State Court Action to

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this court. See Docket Item No. 1. In its removal papers, Defendant specially appeared and

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contested Plaintiff’s method of service, arguing that personal service upon security personnel was

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insufficient under California Code of Civil Procedure Section 416.10. Id.

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On April 22, 2011, Defendant once again specially appeared and filed a Motion to Dismiss

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(“MTD”), pursuant to Federal Rule of Civil Procedure 12(b)(5), on the ground that it had not been

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properly served with the summons and complaint. See Docket Item Nos. 7, 15. In response to the

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Motion to Dismiss, Plaintiff filed an Opposition (See Docket Item No. 21) and the Declaration of

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Michael G. Ackerman (“Ackerman Decl.”). See Docket Item No. 38. Attached to the Ackerman
Declaration was proof that Defendant was served by letters rogatory on May 18, 2011.

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For the Northern District of California

United States District Court

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On May 13, 2011, Plaintiff filed a Motion to Remand (“MTR”), contending that Defendant’s

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Notice of Removal was untimely filed more than thirty days after service was effectuated. See

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Docket Item No. 16.

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III. LEGAL STANDARD
A.

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Rule 12(b)(5)
Where the effectiveness of service is contested by a Rule 12 motion, the burden is on the

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plaintiff to establish validity. Emine Tech. Co. v. Aten Int'l Co., No. CV 08–3122 PJH, 2008 WL

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5000526, at *2 (N.D. Cal. Nov. 21, 2008). Plaintiff normally meets this burden by producing the

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process server's return of service. Id. That return is generally accepted as prima facie evidence that

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service was effected, and of the manner in which it was effected. Id.
Unless some defect in service is shown on the face of the return, a motion to dismiss under

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Rule 12(b)(5) requires defendant to produce affidavits, discovery materials, or other admissible

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evidence establishing the lack of proper service. Id. In response, the plaintiff must provide evidence

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showing that the service was proper, or creating an issue of fact requiring an evidentiary hearing to

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resolve. Id. If a Rule 12(b)(5) motion is granted, the court may either dismiss the action or retain

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the action and simply quash the service. Id.

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B.

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28 U.S.C. § 1446(b)
Title 28, section 1446(b) of the United States Code provides, in part, that a “notice of
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CASE NO. 5:CV 11-01844 EJD
ORDER DENYING: (1) DEFENDANT’S MOTION TO DISMISS; AND (2) PLAINTIFF’S MOTION TO REMAND

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removal of a civil action or proceeding shall be filed within thirty days after the receipt by the

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defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for

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relief upon which such action or proceeding is based.” The thirty-day removal period begins only

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when a defendant is formally served with a copy of the complaint. Murphy Bros., Inc. v. Michetti

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Pipe Stringing, Inc., 526 U.S. 344, 353-54 (1999). If the removal notice fails to meet the procedural

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requirements of section 1446(b), the court may remand the action pursuant to timely motion by the

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plaintiff. McAnally Enterprises, Inc. v. McAnally, 107 F. Supp. 2d 1223, 1226 (C.D. Cal. 2000).

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IV. DISCUSSION
A.

Defendant argues that this action should be dismissed due to Plaintiff’s unsuccessful attempt

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For the Northern District of California

United States District Court

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Motion to Dismiss

at personal service on December 8, 2010, and after-the-fact mailing to effect substituted service.

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MTD at 3-10. Plaintiff counters that service of process was effected by letters rogatory on May 18,

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2011, rendering Defendant’s motion “moot” at this time. Ackerman Decl., ¶ 6.

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When a Defendant contests the validity of service by a Rule 12 motion, the plaintiff bears the

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burden of establishing that service was valid. Emine Tech. Co., No. CV 08–3122 PJH, 2008 WL

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5000526, at *2. The Court finds that Plaintiff has met its burden of establishing validity of service

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on May 18, 2011. The documents attached to the Ackerman Declaration (Docket Item No. 38),

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along with the letter filed by the Superior Court of California for Santa Cruz County (Docket Item

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No. 40), are prima facie evidence that service was effected by letters rogatory. See id. Because

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Defendant now has been properly served, the Court is not concerned with any prior deficiencies in

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service. Accordingly, Defendant’s Motion to Dismiss is DENIED AS MOOT.

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B.

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Motion to Remand
Plaintiff seeks to remand this action to state court on the grounds that Defendant’s Notice of

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Removal was untimely. See Plaintiff’s Reply to Opp’n to Motion to Remand (“Reply”) (Docket

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Item No. 37), at 5. Defendant contends that removal was timely, as formal service of process was

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not effected before the matter was removed to this Court. See Response to Ackerman Decl

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(“Response”) (Docket Item No. 39), at 2-3.

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A court may remand an action to state court if a removal notice fails to meet the procedural
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CASE NO. 5:CV 11-01844 EJD
ORDER DENYING: (1) DEFENDANT’S MOTION TO DISMISS; AND (2) PLAINTIFF’S MOTION TO REMAND

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requirements of 28 U.S.C. § 1446(b). McAnally Enterprises, Inc., 107 F. Supp. 2d at 1226. Title 28

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section 1446(b) provides that: “notice of removal of a civil action or proceeding shall be filed within

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thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial

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pleading setting forth the claim for relief upon which such action or proceeding is based.” It is well-

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established that the thirty-day removal period begins only when a defendant is formally served with

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a copy of the complaint. Murphy Bros., Inc., 526 U.S. at 353-54. Thus, the court must analyze

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whether service was effected more than thirty days before the April 5, 2011 removal.

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The laws of the state in which service was effected prior to removal govern challenges to the

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sufficiency of service of process. Fed. R. Civ. P. 81(c)(1) (Federal Rules of Civil Procedure “apply
to a civil action after it is removed from a state court”); Lee v. City of Beaumont, 12 F.3d 933,

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For the Northern District of California

United States District Court

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936-37 (9th Cir. 1993) (“The issues of the sufficiency of service of process prior to removal is

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strictly a state law issue. . . .”), overruled on other grounds, California Dept. of Water Resources v.

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Powerex Corp., 533 F.3d 1087, 1091 (9th Cir. 2008). The crux of Plaintiff’s Motion to Remand is

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that service of process was effectuated more than thirty days prior to removal. Thus, the court will

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apply California law to determine whether that service of process was valid.3

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In its Motion to Remand, Plaintiff makes no argument that personal service was effected by

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Mr. Chen. However, in the State Court Action, Plaintiff’s counsel filed a Proof of Service,

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purporting to have effected “personal service” on Defendant on December 8, 2010. See Docket Item

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No. 19-2. Furthermore, Mr. Chen’s Affidavit regarding service of process states that “[s]ervice

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upon Sixxon Precision Machinery Co., Ltd. Taiwan, was accomplished by delivering the [summons

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and complaint] personally and in person.” Id. at 4, Affidavit dated December 14, 2010. Given this

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language and Plaintiff’s prior characterization of the service as “personal,” the court will analyze the

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validity of both personal service and substituted service.

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1.

Personal Service

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California Code of Civil Procedure (“C.C.P.”) Section 416.10, authorizes personal service

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Since Taiwan is not a signatory to the Hague Convention, the provisions of the
Convention do not apply here. See Emine Tech. Co., No. CV 08–3122 PJH, 2008 WL 5000526, at
*3; In re Air Crash at Taipei, Taiwan on October 31, 2000, 211 F.R.D. 374, 380 (C.D. Cal. 2002).
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CASE NO. 5:CV 11-01844 EJD
ORDER DENYING: (1) DEFENDANT’S MOTION TO DISMISS; AND (2) PLAINTIFF’S MOTION TO REMAND

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upon a corporation only by serving a copy of the summons and complaint “[t]o the president, chief

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executive officer, or other head of the corporation, a vice president, a secretary or assistant secretary,

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a treasurer or assistant treasurer, a controller or chief financial officer, a general manager, or a

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person authorized by the corporation to receive service of process.” C.C.P. § 416.10(b).

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In this case, Mr. Chen left a copy of the summons and complaint with “security service

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personnel” at the entrance of a multi-office facility. The Code does not permit personal service of a

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corporate defendant by leaving a copy of the summons and complaint with a “security guard” or

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“security service personnel.” Moreover, Plaintiff does not dispute that service upon “security

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service personnel” is not an enumerated method to effectuate personal service. Opposition to
Motion to Dismiss, Docket Item No. 21, at 6. Because Mr. Chen did not comply with the

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For the Northern District of California

United States District Court

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requirements of Section 416.10, the Court finds that Plaintiff did not properly effectuate personal

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service upon Defendant.

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2.

Substituted Service

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Plaintiff contends that Defendant was served by substituted service on March 13, 2011. It is

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Plaintiff’s position that once the summons and complaint was delivered to the security guard at

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Defendant’s Taiwan office, substituted service could be effectuated by thereafter mailing a copy of

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the summons and complaint to Defendant. Plaintiff relies on California Code of Civil Procedure

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Section 415.20(a), which requires, in part, that the summons and complaint be left “with the person

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who is apparently in charge” of the “office” of “the person to be served as specified in Section

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416.10.” In other words, the summons and complaint must be left with the person apparently in

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charge of the office of an individual listed in Section 416.10.

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There is no dispute that Mr. Chen was not at or in Sixxon’s office, but rather “at the gate” of

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a facility, where he was met “by a woman acting as a security service person.” See Docket Item No.

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36-1. There is no evidence that this alleged “security service personnel” was also “the person . . .

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apparently in charge of the office of [Defendant]”; nor is there evidence that the process server took

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any steps to determine the same. In fact, the security guard at 6 Yu 3 Road4 is not an employee,

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See footnote 2, above, regarding the discrepancy between Defendant’ address and the
location where Mr. Chen attempted personal service.
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CASE NO. 5:CV 11-01844 EJD
ORDER DENYING: (1) DEFENDANT’S MOTION TO DISMISS; AND (2) PLAINTIFF’S MOTION TO REMAND

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representative or agent of Defendant, but is employed by an outside service. See MTD at 2.

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Nevertheless, Plaintiff contends that service on a security/gate guard for a multi-office

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building is valid “substitute service” under Section 415.20, as interpreted in Bein v. Brechtel-Jochim

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Group, Inc., 6 Cal. App. 4th 1387 (1992). Reply at 4-5. In Bein, the California Court of Appeal

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held that service of a summons and complaint on a gate guard at a gated community met the

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requirements of Section 415.20(b), when plaintiff mailed copies of the summons and complaint to

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defendants' residence after being denied access to the area by the gate guard on three separate

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occasions. Id. at 1390-94.

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The court finds Bein inapposite for several reasons. First, substitute service under Section
415.20 is only permitted after reasonably diligent efforts at personal service have been made.

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For the Northern District of California

United States District Court

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Burchett v. City of Newport Beach, 33 Cal. App. 4th 1472, 1477 (1995). Ordinarily, that

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requirement is met by “two or three attempts at personal service at a proper place.” Espindola v.

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Nunez, 199 Cal. App. 3d 1389, 1392 (1998) (citation omitted); Stafford v. Mach, 64 Cal. App. 4th

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1174, 1182 (1998). In Bein, as well as other cases, the process server made at least three attempts at

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personal service before resorting to substitute service. See Bein, 6 Cal. App. 4th at 1390 (three

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attempts); Espindola v. Nunez, 199 Cal. App. 3d at 1390 (four attempts); Stafford v. Mach, 64 Cal.

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App. 4th at 1182 (six attempts). Here, when Mr. Chen was met at the gate of the facility and refused

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access by the security guard, he simply informed the guard of the contents of the documents and left

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them with her. Neither Mr. Chen, nor any other process server of Plaintiff, made further attempts to

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serve Defendant or gain access to Defendant’s office, most likely because Mr. Chen believed he had

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effectuated personal service by leaving the documents with the guard. See Docket Item No. 19-2

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(indicating completion of personal service). The court finds that Mr. Chen’s single attempt at

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personal service, without any further efforts, falls short of the “reasonable diligence” required for

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substituted service under Section 415.20.

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Second, Plaintiff’s mailing of the summons and complaint in this case is quite different from

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the mailing in Bein. There, the plaintiff’s agent mailed copies of the summons and complaint to the

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defendants’ residence within a few days, and the declaration of attempted service was timely filed,

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along with the proof of service of summons and complaint. Bein, 6 Cal. App. 4th at 1391. In this
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CASE NO. 5:CV 11-01844 EJD
ORDER DENYING: (1) DEFENDANT’S MOTION TO DISMISS; AND (2) PLAINTIFF’S MOTION TO REMAND

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case, however, Plaintiff did not mail the summons and complaint to Defendant’s office until nearly

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three months after the unsuccessful attempt at personal service was made.5 Interestingly enough,

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Plaintiff took no action to “complete” its substitute service until it received Defendant’s Motion to

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Quash in the State Court Action, attacking the defective claim of personal service. Opposition to

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MTR at 6. Although Section 415.20 does not specify a time limit for subsequent mailing to

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complete substituted service, the court finds the three-month delay to be unreasonable here.

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Third, unlike in Bein, the Defendant here did not receive actual notice of Plaintiff’s

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attempted service for several months. See Docket Item No. 1-1. Indeed, Defendant did not learn of

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the lawsuit until late February or early March 2011, when eighteen deposition subpoenas were
served on its existing customers. Id. Defendant immediately contacted counsel and served a Motion

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For the Northern District of California

United States District Court

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to Quash upon Plaintiff. Id. As mentioned above, it was not until Defendant filed the Motion to

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Quash that Plaintiff mailed the summons and complaint to Defendant’s offices and began to

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characterize its service as “substitute.” Id.; Opposition to MTR at 6.

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Finally, Plaintiff admittedly did not know whether Sixxon’s company president, Eddy Lin,

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maintained his office in the building where Lin attempted personal service. According to Plaintiff,

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Defendant maintains two addresses for its offices in Taiwan: “3 Yu 3 Road” and “6 Yu.” See

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Transcript of Proceedings Held on September 8, 2011 (“Hearing Transcript”) at 12:9-17; 14:11-20.

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At oral argument, Plaintiff said that it is “not absolutely certain which [of Defendant’s buildings] has

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the offices and which . . . has the facilities. . . . Because there’s two buildings . . . and there’s no

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indication where [Eddy Lin] is.” Hearing Transcript at 12:11-13; 14:14-17. This concession

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undermines Plaintiff’s argument that the security guard at “3 Yu 3 Road” was the person apparently

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in charge of Eddy Lin’s office.

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For all of these reasons, the court finds that Plaintiff did not effect substituted service on
Defendant. Because Plaintiff failed to properly serve Defendant in the underlying State Court

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The “mailings” were made on March 3, 2011 and March 23, 2011; two months after the
proof of service was filed in the State Court Action, and three months after the defective personal
service.
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CASE NO. 5:CV 11-01844 EJD
ORDER DENYING: (1) DEFENDANT’S MOTION TO DISMISS; AND (2) PLAINTIFF’S MOTION TO REMAND

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action,6 the 30 day period under 18 U.S.C. § 1446(c) was not triggered to preclude Defendant’s

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removal of this action. Accordingly, Plaintiff’s Motion to Remand is DENIED.

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C.

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Entry of Default
It appears that the Ackerman Declaration seeks an entry of default against Defendant on the

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basis that Defendant did not answer the complaint within twenty-one days of service by letters

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rogatory. Ackerman Decl., ¶ 6. Plaintiff’s request is both procedurally and substantively improper.

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The request was not raised by noticed motion, and case law makes clear that no default may be

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entered while a motion to dismiss is pending. See Fed. R. Civ. P. 55 (providing that a default can be

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entered against a party only where that party “has failed to plead or otherwise defend”); see also
Direct Mail Specialists, Inc. v. Eclat Computerized Technologies, Inc., 840 F.2d 685, 689 (9th Cir.

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For the Northern District of California

United States District Court

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1988); Ashby v. McKenna, 331 F.3d 1148, 1152 (10th Cir. 2003) (no default may be entered while

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motion to dismiss pending); Pangelinan v. Wiseman, 370 Fed. Appx. 818, 820 (9th Cir. 2010)

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(default properly denied where motion to dismiss was filed); Pathak v. Omaha Steaks Intern., Inc.,

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No. CV 10–7054 RSWL, 2011 WL 2939705 at *3 (C.D. Cal. July 21, 2011 ) (“As motions to

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dismiss constitute an effort to defend an Action, the Court finds that default judgment cannot be

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entered here against Defendant.”). Accordingly, the Court will not entertain Plaintiff’s request for

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entry of default.

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D.

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Sanctions
To the extent the Ackerman Declaration is construed as a request for sanctions under Rule

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11, it is both procedurally and substantively improper. Indeed, “Rule 11 is an extraordinary remedy,

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one to be exercised with extreme caution. Such sanctions can have an unintended detrimental

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impact on an attorney's career and personal well-being.” Conn v. Borjorquez, 967 F.2d 1418, 1421

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(9th Cir. 1992) (citation omitted). Plaintiff makes its request within a paragraph of a declaration

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rather than a legally-supported motion, which runs directly afoul of Rule 11's mandate. Fed. R. Civ.

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P. 11(c)(2) (a Rule 11 motion “must be made separately from any other motion and must describe

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the specific conduct that allegedly violates Rule 11(b)”). Moreover, Plaintiff’s request was made

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Service of process by letters rogatory was effected after removal, but is not relevant for
purposes of the Motion to Remand.
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CASE NO. 5:CV 11-01844 EJD
ORDER DENYING: (1) DEFENDANT’S MOTION TO DISMISS; AND (2) PLAINTIFF’S MOTION TO REMAND

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after the pending motions had been fully briefed, in disregard of Rule 11's due process notice

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requirements. For these reasons, the Court will not consider Plaintiff’s apparent request to impose

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Rule 11 sanctions.

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V. CONCLUSION

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For the foregoing reasons, the court: 1) DENIES Defendant’s Motion to Dismiss; and

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2) DENIES Plaintiff’s Motion to Remand.
IT IS HEREBY ORDERED that a Case Management Conference will be held in this matter

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before the Honorable Edward J. Davila on November 4, 2011 at 10:00 a.m. in Courtroom No. 1,

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5th Floor, 280 S. First Street, San Jose, California. On or before October 28, 2011 the parties shall
file a joint case management conference statement.

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For the Northern District of California

United States District Court

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IT IS SO ORDERED.

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Dated: October 6, 2011
EDWARD J. DAVILA
United States District Judge

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CASE NO. 5:CV 11-01844 EJD
ORDER DENYING: (1) DEFENDANT’S MOTION TO DISMISS; AND (2) PLAINTIFF’S MOTION TO REMAND