Safris et al v. Vnue, Inc. et al

Filing 19

ORDER that defendants' motion to quash service of process ECF No. 11 is GRANTED. Plaintiffs shall have a period of thirty days from the date of this order within which to re-serve the defendants. It is further ordered that defendants&# 039; motion to transfer ECF No. 11 is GRANTED, and this action is hereby transferred to the United States District Court for the Southern District of New York. Defendant Carona's motion to dismiss for lack of personal jurisdiction ECF No. 11 is DENIED AS MOOT. Signed by Judge Howard D. McKibben on 08/31/2017. (Copies have been distributed pursuant to the NEF - KW)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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SEVA SAFRIS and ALEX YURYEV,

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Plaintiffs,
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vs.
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VNUE, INC., and MATTHEW CARONA, )
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Defendants.
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_________________________________ )

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3:17-cv-00309-HDM-WGC
ORDER

Before the court is defendants’ VNUE, Inc. (“VNUE”) and

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Matthew Carona (“Carona”) (collectively “defendants”) motion to

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quash, dismiss, and transfer venue (ECF No. 11).

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Safris (“Safris”) and Alex Yuryev (“Yuryev”) (collectively

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“plaintiffs”) have opposed (ECF No. 12), and defendants have

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replied (ECF No. 14).

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Plaintiffs Seva

VNUE is a “startup” company that has the intended business of

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recording live music performances for delivery to mobile devices.

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(ECF No. 11-1 (Carona Decl. ¶ 3); ECF No. 15 (Carona Supp. Decl. ¶

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4)).

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(ECF No. 11-1 (Carona Decl. ¶ 1)). Plaintiffs are former employees

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of VNUE who have sued defendants on several grounds, including

Carona is currently the chief operating officer of VNUE.

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breach of contract and fraud.

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employment contracts with VNUE have not been honored and that they

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have not been paid for work performed, despite repeated assurances

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from Carona that they would be paid.

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Plaintiffs assert that their

Carona incorporated VNUE in Washington state in 2013 and later

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merged VNUE with a company incorporated in Nevada.

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(Carona Decl. ¶ 2)).

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Nevada and took VNUE’s name going forward.

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merger, VNUE moved its operations to New York City, where it has an

(ECF No. 11-1

The surviving entity was incorporated in
(Id.)

After the

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office and where most of VNUE’s contacts, relationships, and

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business are located.

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operating officer and works out of the New York office one to two

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times a week.

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claims that two individuals, including its employee Peter Slavish,1

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also work out of the New York office.

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(Id. ¶ 4).

Carona is currently VNUE’s chief

(ECF No. 15 (Carona Supp. Decl. ¶¶ 1-2)).

VNUE

(Id. ¶ 3).

Plaintiffs dispute how much of VNUE’s work is actually

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performed in New York, arguing that while VNUE has an office in New

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York City, only Slavish works there, that all of VNUE’s officers

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reside outside of New York, and that ultimately VNUE does business

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wherever live music performances occur, which is all over the

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country. (See ECF No. 12-1 (Safris Decl. ¶¶ 7 & 16)).

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Plaintiff Yuryev is and at all relevant times has been a

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resident of Minnesota. (Id. at ¶ 2).

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a resident of California, though at the times relevant to the

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complaint he worked for VNUE from Bangkok, California, and for a

Plaintiff Safris is currently

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Defendants alternately refer to Slavish as a part-time independent
contractor (see ECF No. 11-1 (Carona Decl. ¶ 21)) and as an employee (id.
¶ 15)). For the purpose of the defendants’ motions, the court will assume
Slavish is VNUE’s employee.

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brief period of time, New York.2

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11-1 (Carona Decl. ¶ 10 & ¶ 15); ECF No. 12-1 (Safris Decl. ¶ 9)).

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Carona lives in New York and Massachusetts but considers himself

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domiciled in Massachusetts.

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(Carona Decl. ¶ 5)).

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corporation with an office in New York.

(ECF No. 1 (Compl. ¶ 1); ECF No.

(ECF No. 1 (Compl. ¶ 4); ECF No. 11-1

As already stated, VNUE is a Nevada

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Defendants have moved to quash service of process, to dismiss

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Carona for lack of personal jurisdiction, and to transfer venue to

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the Southern District of New York.

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I.

Plaintiffs oppose all motions.

Motion to Quash Service of Process

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If service of process has been insufficient, the court may

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either quash the service or dismiss the action. Fed. R. Civ. P.

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12(b)(5); S.J. v. Issaquah Sch. Dist. No. 411, 470 F.3d 1288, 1293

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(9th Cir. 2006).

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summons and complaint in this action on Peter Slavish.

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(Gaw Decl. Exs. 1 & 2)).

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represented that he was authorized to accept service on behalf of

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VNUE.

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summons and complaint via first class mail to defendant Carona at

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VNUE’s New York office.

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this did not constitute proper service of process on either Carona

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or VNUE and therefore service of process must be quashed.

On June 9, 2017, plaintiffs served copies of the

(Id. at Ex. 2).

(ECF No. 11

According to the process server, Slavish

Plaintiffs also mailed copies of the

(Id. at Ex. 1).

Defendants argue that

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A.

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Under Federal Rule of Civil Procedure 4(e), an individual may

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Carona

be served in accordance with the federal rules, the law of the

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Although it is not entirely clear, Safris appears to assert that while
he spent roughly three months in Thailand, he was not residing there but
instead was living in either in California or New York during his employment
with VNUE. (See ECF No. 12-1 (Safris Decl. ¶ 9)).

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state where the court is located, or the law of the state where

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service is made.

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New York – the state where service was made – in effecting service

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on Carona and that under New York law service was proper.

Plaintiffs contend that they followed the law of

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In relevant part, New York permits “[p]ersonal service upon a

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natural person . . . by delivering the summons within the state to

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a person of suitable age and discretion at the actual place of

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business . . . of the person to be served and by . . . mailing the

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summons by first class mail to the person to be served at his or

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her actual place of business . . . .”

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statute requires that delivery and mailing “be effected within

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twenty days of each other” and that proof of service “be filed with

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the clerk of the court designated in the summons within twenty days

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of either such delivery or mailing, whichever is effected later.”

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Id.

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after” the proof of service is filed with the clerk of the court.

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Id.

N.Y. C.P.L.R. § 308(2).

The

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The statute provides that “service shall be complete ten days

As apparently conceded by defendants, VNUE’s New York office

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is Carona’s “actual place of business,” as he works out of the

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office at least a couple times a week and is the co-founder of

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VNUE.

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Slavish, a person of suitable age and discretion, at VNUE’s New

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York office, and subsequent mailing of the summons and complaint to

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Carona at the VNUE New York office, satisfied the first two

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requirements of § 308(2).3

Thus, plaintiffs’ service of the summons and complaint on

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Although Carona disputes receiving a copy of the summons and
complaint by mail, he has not provided any evidence to counter the process
server’s return, which indicates a copy of the summons and complaint was
placed in first-class mail directed to Carona at VNUE’s New York address.

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However, the statute also requires the filing of the proof of

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service with this court within twenty days of delivery or mailing.

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No such filing was made by plaintiffs within the twenty-day period.

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Although courts in New York are split on whether this requirement

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is jurisdictional, the weight of authority is that it is –

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particularly for federal court jurisdiction.

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East Inc. v. Griffin, 2016 WL 8710479, at *2-3 (S.D.N.Y. Jan. 22,

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2016) (finding that, for purposes of removal, a defendant is not a

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party until service is “complete” – ten days after proof of service

See Creative Kids Far

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is filed with the court); Stop & Shop Supermarket Co. LLC v.

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Goldsmith, 2011 WL 1236121, at *3-6 (S.D.N.Y. Mar. 31, 2011)

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(recognizing split of authority and ultimately concluding that

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service is not proper for purposes of removal until plaintiff has

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timely filed proof of service with the court); Pope v. Rice, 2005

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WL 613085 (S.D.N.Y. Mar. 14, 2005); Roth v. Syracuse Hous. Auth.,

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2002 WL 31962630, at *12 (N.Y. Sup. Ct. July 17, 2002) (“[T]he

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Court finds that the specific language of CPLR 308(2) confers

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jurisdictional import upon the filing which is accomplished in

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connection with that section.”); Howard v. Klynveld Peat Marwick

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Goerdeler, 977 F. Supp. 654, 660 (S.D.N.Y. 1997) (“‘[L]eave and

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mail’ service under Section 308(2) is ineffective where a plaintiff

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does not file proof of service with the clerk within twenty days of

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the date on which the process server mailed the summons and

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complaint.”).

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The court concludes that filing is a necessary requirement to
complete service of process.

The plaintiffs’ failure to comply

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See S.E.C. v. Internet Sols. for Bus. Inc., 509 F.3d 1161, 1167 (9th Cir.
2007).

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with this requirement is jurisdictional.

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quash service of process on Carona is granted.

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granted leave to effect proper service on Carona within thirty days

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of the date of this order.

Therefore, the motion to
Plaintiffs are

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B. VNUE

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Federal Rule of Civil Procedure 4(h)(1) allows service on a

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corporate entity to be accomplished “by delivering a copy of the

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summons and of the complaint to an officer, a managing or general

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agent, or any other agent authorized by appointment or by law to

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receive service of process – if the agent is one authorized by

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statute and the statute so requires – by also mailing a copy of

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each to the defendant.”

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accomplished in accordance with the relevant state laws, here New

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York and Nevada.

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be made to “an officer, director, managing or general agent, or

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cashier or assistant cashier or to any other agent authorized by

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appointment or by law to receive service.”

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As with individuals, service may also be

New York law requires service on a corporation to

N.Y. C.L.P.R. § 311.

Plaintiffs argue that service on VNUE was proper under N.Y.

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C.L.P.R. § 308.

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individuals, not business entities.

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serve VNUE in accordance with either federal law, Nevada law, or

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N.Y. C.L.P.R. § 311, which provides the method for service of a

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corporation in New York.

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purported service was proper under any of these laws.

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served VNUE by delivering a copy of the summons and complaint to

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Slavish.

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plaintiffs, that Slavish is not an officer, director, managing or

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general agent, cashier or assistant cashier, that Slavish has never

However, § 308 pertains to the service of
Plaintiffs were required to

Plaintiffs have not explained how the
Plaintiffs

Defendants represent, without objection from the

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been VNUE’s registered agent for service of process, and that

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Slavish has never been authorized to accept service of process on

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VNUE’s behalf.

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the complaint and summons on Slavish was proper service of process

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under any pertinent law, and service must therefore be quashed.

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Plaintiffs shall have thirty days from the date of this order to

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effect proper service on VNUE.

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II.

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Accordingly, plaintiffs have not shown that serving

Motion to Transfer Venue
The court next addresses the defendants’ motion to transfer

venue pursuant to 28 U.S.C. § 1404(a).

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The court may transfer venue to any district “where it might

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have been brought” for “the convenience of parties and witnesses,

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in the interest of justice.”

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party bears the burden of showing that an adequate alternative

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forum exists.

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n.22 (9th Cir. 2000).

28 U.S.C. § 1404(a).

The moving

Jones v. GNC Franchising, Inc., 211 F.3d 495, 499

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A.

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Defendants asserts that the Southern District of New York is

Adequate Alternative Forum

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an adequate alternative forum.

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in:

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Under federal law, venue may lie

(1) a judicial district in which any defendant resides,
if all defendants are residents of the State in which the
district is located; (2) a judicial district in which a
substantial part of the events or omissions giving rise
to the claim occurred, or a substantial part of property
that is the subject of the action is situated; or (3) if
there is no district in which an action may otherwise be
brought as provided in this section, any judicial
district in which any defendant is subject to the court's
personal jurisdiction with respect to such action.

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28 U.S.C. § 1391(b).

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record reflects that it conducts business in New York City.

While VNUE is incorporated in Nevada, the

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(See

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ECF No. 15 (Carona Supp. Decl. ¶ 4)).

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time in New York City and performs VNUE-related work in New York

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City.

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the Southern District of New York.

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dispute that the court in the Southern District of New York would

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have personal jurisdiction over both the defendants.

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the Southern District of New York is an adequate alternative forum.

Carona lives at least part-

(ECF No. 11-1 (Carona Decl. ¶ 5)).

Thus, venue is proper in

Moreover, the parties do not

Accordingly,

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B.

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The court must weigh several factors in determining whether

Convenience and Interests of Justice

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transfer is appropriate: (1) the location where the relevant

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agreements were negotiated and executed; (2) the state that is most

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familiar with the governing law; (3) the plaintiff’s choice of

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forum; (4) the respective parties’ contacts with the forum; (5) the

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contacts relating to plaintiff’s cause of action in the chosen

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forum; (6) the differences in the cost of litigation in the two

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forums; (7) the availability of compulsory process to compel

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witnesses; and (8) the ease of access to sources of proof.

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211 F.3d at 498-99.

Jones,

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1. Where Relevant Agreements were Negotiated and Executed

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The contracts which form the basis of a portion of plaintiffs’

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claims were negotiated and executed by Carona and VNUE in New York.

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(ECF No. 11-1 (Carona Decl. ¶¶ 8-9)).

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contracts were executed, Yuryev resided in Minnesota and Safris

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resided in California.

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8)).

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when their respective contracts were negotiated.

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At the time their respective

(Id. at ¶ 8; ECF No. 12-1 (Safris Decl. ¶

There is no indication that either plaintiff was in Nevada

As New York was where the defendants negotiated and executed
the relevant contracts and there is no indication any negotiations
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or execution took place in Nevada, this factor favors transfer.

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2. State Most Familiar with Governing Law

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The relevant contracts invoke Nevada law, but the complaint

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asserts several claims in addition to the contractual claims,

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including fraud, negligent misrepresentation, and violation of two

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California statutes.

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is unlikely Nevada law would apply to these claims.

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this factor is neutral.

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Based on the allegations of the complaint, it
Accordingly,

3. Plaintiff’s Choice of Forum
While a plaintiff’s selection of a forum is generally due

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heavy deference, deference is reduced for foreign plaintiffs.

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Lueck v. Sundstrand Corp., 236 F.3d 1137, 1145 (9th Cir. 2001);

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Gemini Capital Grp., Inc. v. Yap Fishing Corp., 150 F.3d 1088, 1091

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(9th Cir. 1998); Mujica v. Occidental Petroleum Corp., 381 F. Supp.

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2d 1134, 1141 (C.D. Cal. 2005); see also Boston Telecomms. Grp. v.

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Wood, 588 F.3d 1201, 1207 (9th Cir. 2009).

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not the same thing as no deference.”

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Neither plaintiff is a resident of Nevada, although Safris has

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established a Nevada corporation through which he was supposed to

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be paid for his work with VNUE.

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slightly against transfer.

But “less deference is

Lueck, 236 F.3d at 1143.

Accordingly, this factor weighs

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4. Parties’ Contacts with Nevada

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There is no evidence on the record that plaintiff Yuryev has

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any contacts with Nevada.

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with Nevada is the fact he incorporated an entity – Senture LLC –

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under Nevada law and his contract with VNUE identifies him as Seva

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Safris of Senture LLC.

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Defendant VNUE is incorporated in Nevada.

The only contact plaintiff Safris has

(ECF No. 11-1 (Carona Decl. Ex. B)).

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Defendant Carona’s only

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contacts with Nevada relate to maintaining VNUE in good standing as

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a Nevada corporation.

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have a Nevada choice of law provision.

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The employment contracts of both plaintiffs

On the other hand, Safris moved to New York to work for VNUE

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there and resided there for a period of time, VNUE’s office and

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business operations are there, and Carona lives part-time there and

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works from VNUE’s New York office.

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relatively insubstantial.

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transfer.

The contacts with Nevada are

This factor therefore weighs in favor of

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5. Parties’ Contacts Relating to Plaintiffs’ Claims

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The parties’ contacts with Nevada are tangential and not

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directly related to plaintiffs’ claims.

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weighs in favor of transfer.

Accordingly, this factor

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6. Cost of Litigation

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While none of the parties reside in Nevada, plaintiff Safris

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resides in San Francisco, California.

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anytime they would be required to be in court in Nevada, plaintiff

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Yuryev, who lives in Minnesota, would stay with Safris in San

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Francisco.

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and some of VNUE’s witnesses may also be located in New York.

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While it might cost slightly more to try this case in New York than

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in Nevada, the difference in cost appears to be minimal.

Plaintiffs represent that

Defendant Carona resides in Massachusetts and New York

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7. Availability of Compulsory Process to Compel Witnesses

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The parties do not identify any witness that would need to be

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compelled to testify.

This factor is therefore neutral.

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8. Access to Sources of Proof

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Defendants assert that sources of proof – witnesses and

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documentary – are located in New York or near New York.
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(ECF No.

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11-1 (Carona Decl. ¶ 19)).

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witnesses or documents in Nevada, or even, with the exception of

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Safris himself, near Nevada.4

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who would be expected to testify are not in New York and that the

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documentary evidence defendants refer to can be accessed digitally.

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Therefore, the court finds this factor to slightly favor transfer.

Plaintiffs do not identify any

They do assert that the witnesses

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9. Additional Factor – Personal Jurisdiction

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Carona argues with substantial force that this court lacks

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personal jurisdiction over him.

Without deciding Carona’s motion

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to dismiss for lack of personal jurisdiction, the court concludes

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that the strong likelihood that this court lacks personal

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jurisdiction over Carona strongly favors transfer to New York.

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The argument that the court might have general jurisdiction

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over Carona is plainly without merit.

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maintaining a Nevada corporation do not make him at home in Nevada.

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Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014).

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general jurisdiction over Carona might be under an alter ego

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theory, and plaintiffs make no alter ego allegations.

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claims of specific jurisdiction also appear unavailing.

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for the court to have specific jurisdiction over Carona,

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plaintiffs’ claims must arise out of his contacts with Nevada.

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Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th

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Cir. 2004) (specific personal jurisdiction requires that the

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plaintiff’s claim arise out of or relates to the defendant’s forum-

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related activities).

Carona’s actions in

The only path to

Plaintiffs’
In order

Plaintiffs have not shown how any of Carona’s

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Although plaintiffs assert that Anthony Cardenas, VNUE’s chief
creative officer, lives in California, defendants dispute that he would have
any information relevant to plaintiffs’ claims and plaintiffs do not
otherwise explain why Cardenas would be a relevant witness.

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very limited ties to Nevada form the basis for their claims against

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Carona individually.

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arise out of or relate to Carona’s transactions in maintaining VNUE

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as a corporate entity.

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favors transfer to a court that has jurisdiction over both

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defendants.

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It does not appear that plaintiffs’ claims

Accordingly, judicial economy strongly

After considering and weighing all the relevant factors in

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this case, the court concludes that on balance transfer to the

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Southern District of New York is appropriate.

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III. Conclusion

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In accordance with the foregoing, defendants’ motion to quash

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service of process (ECF No. 11) is GRANTED.

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a period of thirty days from the date of this order within which to

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re-serve the defendants.

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motion to transfer (ECF No. 11) is GRANTED, and this action is

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hereby transferred to the United States District Court for the

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Southern District of New York.

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dismiss for lack of personal jurisdiction (ECF No. 11) is DENIED AS

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MOOT.

Plaintiffs shall have

It is further ordered that defendants’

Defendant Carona’s motion to

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IT IS SO ORDERED.

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DATED: This 31st day of August, 2017.

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____________________________
UNITED STATES DISTRICT JUDGE

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