LPD New York, LLC v. Adidas America, Inc. et al

Filing 245

MEMORANDUM AND ORDER denying 241 Motion to Dismiss. For the reasons discussed in the attached Memorandum and Order, the Court denies counterclaim-Defendant Benjamin Fainlight's motion to dismiss the counterclaims against him for improper service. Ordered by Chief Judge Margo K. Brodie on 11/4/2021. (Bacchi, Joseph)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
--------------------------------------------------------------LPD NEW YORK, LLC,
Plaintiff,

MEMORANDUM & ORDER
15-CV-6360 (MKB) (RLM)

v.
ADIDAS AMERICA, INC. and ADIDAS AG,
Defendants.
--------------------------------------------------------------MARGO K. BRODIE, United States District Judge:
Plaintiff LPD New York, LLC, commenced the above-captioned action against
Defendants Adidas America, Inc. and Adidas AG on November 5, 2015, and filed a Second
Amended Complaint (“SAC”) on May 4, 2018. (Compl., Docket Entry No. 1; SAC, Docket
Entry No. 77.) On April 22, 2019, Defendants filed an Answer to the SAC and, along with
counterclaim-Plaintiff adidas International Marketing B.V. (collectively “Adidas”), asserted
seven counterclaims against LPD and counterclaim-Defendant Benjamin Fainlight, LPD’s sole
owner, member, and employee.1 Approximately two years later, by letter-motion dated April 7,
2021, Fainlight moved to dismiss the counterclaims against him for insufficient service of
process, pursuant to Rule 12(b)(5) of the Federal Rules of Civil Procedure, and Adidas opposed
the motion. (See Letter Mot. to Dismiss (“Fainlight’s Mot.”), Docket Entry No. 211; Resp. in
Opp’n (“Adidas’s Opp’n”) 1–2, Docket Entry No. 213.)

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(See Answer, Docket Entry No. 148; Am. Answer ¶ 16, Docket Entry No. 144; see
also Dep. of Benjamin Fainlight dated Mar. 4, 2019 (“Fainlight Dep. I”) 64, 72, annexed to Decl.
of Robert N. Potter in Supp. of Adidas’s Mot. for Partial Summ. J. (“Potter Decl.”) as Ex. 3,
Docket Entry No. 217-3; Decl. of Benjamin Fainlight (“Fainlight Decl.”) ¶ 2, annexed to Notice
of Pl.’s Mot. for Partial Summ. J., Docket Entry No. 24-4.)

For the reasons that follow, the Court denies Fainlight’s motion to dismiss the
counterclaims.
I.

Background
The Court assumes the parties’ familiarity with the facts of the case and provides only the

procedural history pertinent to Fainlight’s motion to dismiss.
On May 4, 2018, Plaintiff filed the SAC, asserting various claims. (SAC ¶¶ 104–132.)
On April 22, 2019, Adidas filed an Answer to the SAC and asserted seven counterclaims against
LPD and Fainlight.2 Although Adidas served its Answer on LPD via ECF, it did not attempt to
personally serve Fainlight. On May 21, 2019, LPD filed an Answer to Adidas’s counterclaims.
(Answer.) Fainlight did not file an Answer to the counterclaims and no counsel has filed a
notice of appearance on his behalf.
On April 7, 2021, Fainlight requested a pre-motion conference in connection with his
anticipated motion to dismiss the counterclaims against him, for the first time raising the defense
of insufficiency of service. (See Fainlight’s Mot.) On April 8, 2021, Adidas opposed
Fainlight’s request. (Adidas’s Opp’n.) On April 27, 2021, the Court denied Fainlight’s motion
for a pre-motion conference and advised the parties that, “unless either party objects by May 4,
2021, the Court will deem their pre-motion conference submissions to be the motion.” (Order

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Between Plaintiff’s filing of the SAC on May 4, 2018, and Adidas’s filing of the
Answer on April 22, 2019, the parties engaged in motion practice, including, among others, a
motion to dismiss new claims asserted in the SAC and several discovery motions. (See, e.g.,
Mem. and Order, Docket Entry No. 104 (discovery motions); Order dated Feb. 1, 2019, Docket
Entry No. 116 (motion to quash third party subpoenas and motion for protective order); Mem.
and Order, Docket Entry No. 138 (motion to dismiss); Mem. and Order, Docket Entry No. 128
(motion to compel).)
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dated Apr. 27, 2021.) In addition, the Court directed the parties “to submit any additional
briefing in letter form on or before May 11, 2021.” (Id.) Neither party objected to the Court’s
Order, and Fainlight supplemented his motion on May 7, 2021, (see Letter Mot. to Dismiss
Adidas’s Counterclaim (“Fainlight’s Suppl. Mot.”), Docket Entry No. 241), and Adidas
supplemented its response on May 11, 2021, (Adidas’s Suppl. Resp. to Mot., Docket Entry No.
244).
II. Discussion
Fainlight moves to dismiss the counterclaims against him on the basis that Adidas failed
to properly serve him with process. Indeed, it is undisputed that Fainlight was not properly
served.3 Nevertheless, Adidas argues that by waiting to raise the defense until this late stage of
the litigation, Fainlight has waived any objections to the failure to serve him. (See Adidas’s
Opp’n 3; Adidas’s Suppl. Resp. to Mot.)
“Before a federal court may exercise personal jurisdiction over a defendant, the
procedural requirement of service of summons must be satisfied.” Dynegy Midstream Servs.,
LP v. Trammochem, 451 F.3d 89, 94 (2d Cir. 2006) (quoting Omni Cap. Int’l, Ltd. v. Rudolf
Wolff & Co., 484 U.S. 97, 104 (1987)). “[W]hen a defendant moves to dismiss under Rule

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Adidas apparently believed that electronic service of the counterclaims on counsel for
LPD would constitute proper service on Fainlight. (See Adidas’s Opp’n 1–2.) However, even
assuming that counsel for LPD represented Fainlight in his individual capacity at the time of
service, electronic service on counsel does not comply with Rule 4 of the Federal Rules of Civil
Procedure. See Dover Ltd. v. Assemi, No. 08-CV-1337, 2009 WL 2870645, at *4 n.8 (S.D.N.Y.
Aug. 5, 2009) (“The [c]ourt reminds [the defendant] that all counterclaim or third-party
defendants other than [the] [p]laintiff must be served in conformity with Rule 4 of the Federal
Rules of Civil Procedure . . . .”); Advanced Portfolio Techs., Inc. v. Advanced Portfolio Techs.
Ltd., No. 94-CV-5620, 1999 WL 64283, at *8 (S.D.N.Y. Feb. 8, 1999) (dismissing counterclaims
based on failure to effect service in accordance with Rule 4).
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12(b)(5), the plaintiff bears the burden of proving adequate service.” Dickerson v. Napolitano,
604 F.3d 732, 752 (2d Cir. 2010) (alteration in original) (quoting Burda Media, Inc. v. Viertel,
417 F.3d 292, 298 (2d Cir. 2005)); see Khan v. Khan, 360 F. App’x 202, 203 (2d Cir. 2010)
(same). “Although no specific time limit is specified for raising a defense of improper service
of process, such a motion must be raised in a ‘reasonably timely fashion.’” Howard v. Klynveld
Peat Marwick Goerdeler, 977 F. Supp. 654, 659 (S.D.N.Y. 1997) (quoting Fed. Home Loan
Mortg. Corp. v. Dutch Lane Assocs., 775 F. Supp. 133, 136 (S.D.N.Y. 1991)), aff’d, 173 F.3d
844 (2d Cir. 1999). “However, it is well settled that an objection to defective service, like any
personal jurisdiction defense, ‘is a privileged defense that can be waived “by failure to assert it
seasonably, by formal submission in a cause, or by submission through conduct.”’” Moss v.
Wyeth, Inc., 872 F. Supp. 2d 154, 160 (D. Conn. 2012) (quoting Subway Int’l B.V. v. Cere, No.
10-CV-1713, 2011 WL 3511462, at *3 (D. Conn. Aug. 11, 2011)); Burton v. N. Dutchess Hosp.,
106 F.R.D. 477, 480 (S.D.N.Y. 1985) (quoting Neirbo Co. v. Bethlehem Shipbuilding Corp., 308
U.S. 165, 168 (1939)) (same); see also United States v. Brow, No. 01-CV-4797, 2011 WL
7562706, at *5 (E.D.N.Y. Dec. 28, 2011) (“When a defendant participates in the litigation,
delays in making an objection to personal jurisdiction, and then makes an objection that could
have been easily cured through amending service or proof of service in the first place, the
defendant has waived the personal jurisdiction objection.” (footnote omitted)), report and
recommendation adopted, 2012 WL 947589 (E.D.N.Y. Mar. 20, 2012); Subway Int’l B.V., 2011
WL 3511462, at *3 (“The Second Circuit has advised that a defendant can forfeit the personal
jurisdiction defense arising from improper service of process even when formally raised in an
answer or motion to dismiss.”).
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“When determining whether a party’s conduct waived the defense, courts examine ‘the
nature and extent of defendants’ contacts with the court.’” Gore v. RBA Grp., Inc., No. 03-CV9442, 2009 U.S. Dist. LEXIS 130673, at *11 (S.D.N.Y. Mar. 10, 2009) (quoting Arthur
Williams, Inc. v. Helbig, No. 00-CV-2169, 2001 WL 536946, at *2 (S.D.N.Y. May 21, 2001)),
report and recommendation adopted, 2009 WL 884565 (S.D.N.Y. Mar. 27, 2009). “Courts
typically find that ‘actual knowledge of a suit coupled with extensive participation in pretrial
proceedings’ is sufficient to constitute a waiver of the insufficient service defense.” Id. at *11–
12 (quoting Arthur Williams, Inc., 2001 WL 536946, at *2); see Advanced Access Content Sys.
Licensing Adm’r, LLC v. Shen, No. 14-CV-1112, 2018 WL 4757939, at *3 n.4 (S.D.N.Y. Sept.
30, 2018) (same); see also Hamilton v. Atlas Turner, Inc., 197 F.3d 58, 61–62 (2d Cir. 1999)
(reversing dismissal and finding personal jurisdiction defense forfeited after the defendant
participated in extensive pretrial proceedings but never moved to dismiss); Lee v. City of New
York, No. 00-CV-3181, 2002 WL 1732810, at *3 (E.D.N.Y. July 22, 2002) (“[A] party may
waive the defense of insufficiency of service of process through ‘defense of the action on the
merits or other conduct inconsistent with the defense.’” (quoting Arthur Williams, Inc., 2001 WL
536946, at *2)); accord Broadcast Music, Inc. v. M.T.S. Enters. Inc., 811 F.2d 278, 281 (5th Cir.
1987) (holding that the defendants, “through the actions of their counsel, voluntarily appeared in
this case and waived the defense of insufficiency or failure of service”).
“Once a defendant attends court conferences and engages in discovery, it has waived the
issue of service.” Perez v. Sandals Resorts Int’l, Ltd., No. 11-CV-914, 2015 WL 94223, at *4
(E.D.N.Y. Jan. 7, 2015); see Subway Int’l B.V. v. Bletas, 512 F. App’x 82, 83 (2d Cir. 2013)
(holding that district court did not abuse its discretion in concluding that the defendant “forfeited
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her improper service defense by participating in a settlement conference and filing multiple
motions without mentioning the defense”); Datskow v. Teledyne, Inc., 899 F.2d 1298, 1302–03
(2d Cir. 1990) (reversing dismissal of complaint for lack of service where the defendant
“attended [a] conference with the magistrate and participated in scheduling discovery and motion
practice” but said nothing about defective service of process, though “the limitations period . . .
had not yet run . . . and it would have been simple for [the] plaintiffs to have made personal
service on the defendant if the point had been mentioned”); Tobin v. Gluck, 11 F. Supp. 3d 280,
304–05 (E.D.N.Y. 2014) (finding waiver where the plaintiff attended several court conferences).
In determining whether a party has waived its jurisdictional objections, “the time period provides
the context in which to assess the significance of the defendant’s conduct, both the litigation
activity that occurred and the opportunities to litigate the jurisdictional issue that were forgone.”
Hamilton, 197 F.3d at 61.
Where a defendant has notice of the action and implicitly leads a plaintiff to believe that
no such defense will be interposed, courts have not hesitated to conclude that the defense has
been forfeited. See, e.g., White v. Huntington, No. 14-CV-7370, 2021 WL 826221, at *3, *5
(E.D.N.Y. Mar. 4, 2021) (finding that the defendants forfeited improper service defense “by
failing to seasonably assert it” despite having earlier raised it in motion to vacate default and in
answer to complaint where they “were deposed” and thus “participated in discovery about two
and a half years before seeking dismissal”); Torcivia v. Suffolk County, 409 F. Supp. 3d 19, 25
n.1 (E.D.N.Y. 2019) (finding that officer defendants who were deposed and were represented by
the same attorneys as the county were precluded from asserting, for the first time on summary
judgment, failure to serve them); Lee, 2002 WL 1732810, at *4 (finding defense barred where
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“the [defendant] officers participated extensively in the lawsuit and failed to raise the
insufficiency of service of process defense until this late stage in the litigation”); accord
Broadcast Music, 811 F.2d at 281 (finding that counsel’s participation waived allegation of
insufficient service of process). “[A] defendant may [not] halfway appear in a case, giving
plaintiff and the court the impression that he has been served, and, at the appropriate time, pull
failure of service out of the hat like a rabbit.” Broadcast Music, 811 F.2d at 281; Adidas
Sportschuhfabriken Adi Dassler Stiftung & Co., K.G. v. Cheung, No. 87-CV-8989, 1990 WL
48063, at *5–6 (S.D.N.Y. Apr. 10, 1990) (stating same and finding that the defendants “had
actual notice of this litigation and they are estopped from arguing form over substance”); cf.
Santos v. State Farm Fire & Cas. Co., 902 F.2d 1092, 1096 (2d Cir. 1990) (“A defendant cannot
justly be allowed to lie in wait, masking by misnomer its contention that service of process has
been insufficient, and then obtain a dismissal on that ground only after the statute of limitations
has run, thereby depriving the plaintiff of the opportunity to cure the service defect.”).
Fainlight forfeited the defense of insufficient service because he had notice of the
counterclaims against him, led Adidas and the Court to believe that no such defense would be
interposed, and then waited nearly two years to move for dismissal on this ground. Fainlight is
“the founder and sole member” of LPD, (Fainlight Decl. ¶ 2), as well as its only employee, (see
Fainlight Dep. I, at 64, 72). Thus, Fainlight has been on notice of the counterclaims asserted
against him because he has been directly involved in this action from its commencement, having
made the decision to initiate litigation. (See Dep. of Benjamin Fainlight dated Mar. 5, 2019
(“Fainlight Dep. II”) 481, annexed to Potter Decl. as Ex. 4, Docket Entry No. 217-4.) While
Counsel was careful to respond to Adidas’s counterclaims only on behalf of LPD, the ploy to
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maintain that distinction faltered at times. During the course of discovery following Adidas’s
assertion of its counterclaims, counsel for LPD served Adidas with three deposition notices on
behalf of “Counterclaim-Defendants, LPD New York, LLC and Benjamin Fainlight.”4 (See
Letter Mot. for Protective Order (“Adidas’s Discovery Mot.”) 1, Docket Entry No. 162
(emphasis added); Dep. Notices 2, 4, 6, annexed to Adidas’s Discovery Mot. as Ex. A, Docket
Entry No. 162-1.) Of course, only a party may serve a notice for deposition. See Fed. R. Civ.
P. 30(b)(1) (“A party who wants to depose a person by oral questions must give reasonable
written notice to every other party.”). In response to LPD’s and Fainlight’s notices, Adidas
moved for a protective order to quash the “three untimely and grossly overbroad 30(b)(6)
deposition notices . . . served by Counterclaim-Defendants LPD New York, LLC and Benjamin
Fainlight (‘LPD’) on the three [A]didas entities.” (Adidas’s Discovery Mot. 1.) At that time,
LPD could (and should) have corrected any error as to the parties on whose behalf the
depositions were noticed, but it did not. Thereafter, at a discovery hearing held before
Magistrate Judge Roanne Mann on September 13, 2019, in connection with, inter alia, the
motion for a protective order, counsel for LPD argued on Fainlight’s behalf that his “client” was
entitled to documents that would provide “an absolute defense to these counterclaims which seek
not only his personal liability but the liability of a company.” (Tr. of Proceedings held on Sept.
13, 2019, at 46, Docket Entry No. 175.)5 Indeed, Judge Mann ordered Adidas to produce

4

Counsel served the notices on July 22, 2019 — “four days after [A]didas’s deadline to
serve Fainlight expired.” (Fainlight’s Suppl. Mot. 1.)
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Fainlight argues that counsel’s conduct should be disregarded because it was
undertaken without actual or apparent authority from him. (See Fainlight’s Suppl. Mot. 1–3.)
However, the critical factor here is Fainlight’s failure to challenge service while Adidas had an
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documents as well as further Rule 30(b)(6) deponents. (See Min. Entry and Order, Docket
Entry No. 174.)
Courts have found similar defenses forfeited based on far shorter delays than the almost
two years Fainlight waited before moving to dismiss for insufficient service. See Datskow, 899
F.2d at 1303 (finding waiver where defendant delayed moving to dismiss for four months);
Broadcast Music, 811 F.2d at 280 (counsel for the corporate defendant may have “deliberately
‘lay behind the log’ for over eight months while failing to inform plaintiff or the court that
service may not have been properly effected” on individual shareholders); Tobin, 11 F. Supp. 3d
at 305 (“[A]lmost [ten] months after the first [court conference], [the] [p]laintiff answered the
Complaint, asserting improper service . . . .”); Bak v. Berman Enters., Inc., No. 91-CV-206, 1992
WL 373762, at *3 (E.D.N.Y. Dec. 7, 1992) (finding that the defendants “waived the objection to
service of process through their delay in raising the objection by motion” over a twenty-onemonth period); Krank v. Exp. Funding Corp., 133 F.R.D. 14, 17 (S.D.N.Y. 1990) (finding waiver
where the defendant “waited seven months before” filing motion to dismiss); see also White,

opportunity to cure the defect. See Broadcast Music, Inc. v. M.T.S. Enters. Inc., 811 F.2d 278,
281 (5th Cir. 1987) (“To hold that [counsel’s conduct] was unable to [operate as a waiver] unless
explicitly authorized would substantially eviscerate Rule 12(h)(1).”). Moreover, counsel’s
representations to Adidas are relevant to whether Adidas was on notice that Fainlight disputed
service and whether Fainlight was obligated to raise the issue earlier. In other words, regardless
of counsel’s actual or apparent authority to make those representations, they placed an even
greater responsibility on Fainlight to raise the defense in a timely fashion.
The Court is also not persuaded by Fainlight’s characterization of counsel’s
representation of the notices being issued on behalf of LPD and Fainlight as “one typographical
error.” (Fainlight’s Mot. 3; see Fainlight’s Suppl. Mot. 1.) The error was neither
typographical, nor did it occur only once, and the alleged “error” carried over into counsel’s oral
presentation to Judge Mann. Notably, this is not the first time that counsel for LPD has engaged
in sharp practices. See, e.g., Order dated Oct. 16, 2019; Mem. and Order, Docket Entry No.
189; Order 10 & n.5, Docket Entry No. 190.)
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2021 WL 826221, at *5 (although deposed in May and June of 2017, individual defendants “did
not identify the issue of [failure to serve] until their Motion to Vacate [Default] in April [of]
2018”). Adidas could easily have served Fainlight had Fainlight raised the defect in service
earlier. Moreover, Fainlight was deposed in this action in his individual capacity and was then,
and is now, represented by the same counsel as LPD. However, Fainlight did not raise the lack
of service issue until Adidas moved for summary judgment on its counterclaims. The Court
acknowledges that Adidas should not have presumed that counsel for LPD represented Fainlight
as a counterclaim-defendant in his individual capacity or that LPD’s counsel would accept
service on Fainlight’s behalf. Nevertheless, particularly where, as here, Fainlight does not
contend that the Court lacks personal jurisdiction over him pursuant to the long-arm statute, his
significant delay in raising Adidas’s failure to serve forfeits that defense. See Torcivia, 409 F.
Supp. 3d at 25 n.1; Tobin, 11 F. Supp. 3d at 304–05.
The case on which Fainlight principally relies is inapposite. In Russo v. Estee Lauder
Corp., No. 08-CV-3965, 2010 WL 11629552 (E.D.N.Y July 27, 2010), the individual defendant
was a former employee of the corporate defendant, who had been terminated by the company
more than three years before the plaintiff attempted service upon him through the corporation.
See id. at *1. The individual defendant did not have actual notice of the suit since he was no
longer employed by the company when service was attempted, and he was not advised by the
company or its attorneys that he had been named in the complaint. See id. at *2. By contrast,
Fainlight — the moving force behind this lawsuit — was obviously aware of the counterclaims
Adidas interposed against him. Indeed, he does not claim otherwise.

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Based on the foregoing, the Court concludes that under the circumstances, Fainlight has
forfeited his defense of insufficient service of process.
III. Conclusion
For the reasons discussed above, the Court denies counterclaim-Defendant Benjamin
Fainlight’s motion to dismiss.
Dated: November 4, 2020
Brooklyn, New York
SO ORDERED:
s/ MKB
MARGO K. BRODIE
United States District Judge

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