Vanek v. Samsung EMS Co. Ltd. et al

Filing 64

MEMORANDUM OPINION AND ORDER: Therefore, for the reasons stated in the Report and Recommendation with respect to the lack of adequate service, the Complaint is dismissed without prejudice. The Clerk is directed to enter judgment dismissing this case without prejudice. The Clerk is also respectfully directed to close this case and to close all pending motions. SO ORDERED. (Signed by Judge John G. Koeltl on 11/26/2024) (ks) Transmission to Orders and Judgments Clerk for processing.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
????????????????????????????????????
YAAKOV G. VANEK,
Plaintiff,

23-cv-3127 (JGK)

- against -

MEMORANDUM OPINION AND
ORDER

SAMSUNG EMS CO. LTD., ET AL.,
Defendants.
????????????????????????????????????
JOHN G. KOELTL, District Judge:

The Court has received the Report and Recommendation by
Magistrate Judge Robyn F. Tarnofsky, dated October 15, 2024,
which recommends that: (1) the Court’s February 13, 2024 order
entering default judgment (ECF No. 46) be vacated; (2) the
Certificate of Default (ECF No. 34) be stricken; and (3) the
case be dismissed with prejudice.
The Court found that the defendants had failed to respond
to the complaint in this action and the Clerk entered
certificates of default against the defendants. The Court then
referred the case to the Magistrate Judge for an inquest on
damages. In the course of conducting an inquest on damages, the
Magistrate Judge asked for further submissions by the plaintiff.
Ultimately, the Magistrate Judge concluded that the
plaintiff had failed to show that the defendants were adequately
served in this case and therefore, the complaint should be
dismissed for want of personal jurisdiction over the defendants.
1

The Magistrate Judge proceeded to determine that, at least with
respect to some of the defendants, the exercise of personal
jurisdiction would not comport with constitutional due process
principles. The Magistrate Judge further concluded that the
complaint failed to allege a basis for subject matter
jurisdiction because the complaint failed to state a cause of
action under the Racketeer Influenced and Corrupt Organizations
Act (“RICO”), the only federal statute that was asserted, and
that any attempt to plead an amended complaint under RICO would
be futile. The Magistrate Judge also determined that the Court
should decline to exercise supplemental jurisdiction over the
state-law claims. Finally, the Magistrate Judge recommended that
the complaint be dismissed with prejudice.
The plaintiff objects to the Report and Recommendation of
the Magistrate Judge. In particular, the plaintiff alleges that
the Report and Recommendation goes far beyond this Court’s
reference to the Magistrate Judge for an inquest on damages.
However, in an inquest on damages following the entry of a
default judgment, while the Magistrate Judge is required to
accept the well-pleaded allegations of the complaint for
purposes of liability, the Magistrate Judge is not required to
accept that there is personal jurisdiction over the defendants
or that the well-pleaded allegations of the complaint state a
cause of action. See, e.g., Sinoying Logistics Pte Ltd. v. Yi Da
2

Xin Trading Corp., 619 F.3d 207, 214 (2d Cir. 2010) (concluding
that a court may sua sponte dismiss an action for lack of
personal jurisdiction when considering whether to enter a
default judgment); Hood v. Ascent Med. Corp., No. 13-cv-628,
2016 WL 3453656, at *1 (S.D.N.Y. June 20, 2016) (concluding
that, where the district court had referred the action to the
Magistrate Judge for a damages inquest after granting a default
judgment, the Magistrate Judge “did have the authority to
consider personal jurisdiction sua sponte”), aff’d, 691 F. App’x
8 (2d Cir. 2017); Chen v. Best Miyako Sushi Corp., No. 16-cv2012, 2021 WL 707273, at *8–12 (S.D.N.Y. Feb. 1, 2021)
(recommending, on an inquest into damages, that no default
judgment be entered against the defendants because the Court
lacked personal jurisdiction over the unserved defendants and
the plaintiffs’ allegations as to the remaining defendant failed
to state a claim), report & recommendation adopted, 2021 WL
706412 (S.D.N.Y. Feb. 19, 2021).
In this case, the Magistrate Judge shows persuasively that
the plaintiff never established personal jurisdiction over the
defendants based on valid service of process. That is sufficient
to dismiss the complaint for lack of proper service. See, e.g.,
Kwan v. Schlein, 441 F. Supp. 2d 491, 496–97 (S.D.N.Y. 2006)
(dismissing claims for insufficient service of process); Fed. R.
Civ. P. 12(b)(5) & 12(b)(2). And because the requirements of
3

service were not satisfied, personal jurisdiction over the
defendants was never established. See Omni Cap. Int’l, Ltd. v.
Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987) (“Before a
federal court may exercise personal jurisdiction over a
defendant, the procedural requirement of service of summons must
be satisfied.”).
However, a dismissal based on lack of proper service or
lack of personal jurisdiction is a dismissal without prejudice.
It would be wrong to dismiss the case with prejudice when the
Court never acquired personal jurisdiction over the defendants,
and the plaintiff could attempt to serve the defendants properly
and to acquire personal jurisdiction over them. See, e.g., In re
South African Apartheid Litig., 643 F. Supp. 2d 423, 431–32
(S.D.N.Y. 2009) (“Absent perfected service, a court lacks
jurisdiction to dismiss an action with prejudice; therefore
dismissal pursuant to Rule 12(b)(5) must be without
prejudice.”). Similarly, although the Report and Recommendation
concludes that the plaintiff has failed to allege a sufficient
claim under RICO and that the plaintiff cannot do so, the Second
Circuit Court of Appeals has often stated that generally the
dismissal of a complaint for failure to plead a cause of action
should be without prejudice to the ability of the plaintiff to
attempt to cure any defects with an amended complaint. See,
e.g., Ronzani v. Sanofi S.A., 899 F.2d 195, 198 (2d Cir. 1990)
4