Hedeen International LLC v. Zing Toys Inc et al

Filing 44

ORDER signed by Chief Judge William C Griesbach on 2-3-15 granting 32 Motion to Dismiss for lack of jurisdiction. (cc: all counsel) (Griesbach, William)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
HEDEEN INTERNATIONAL, LLC,
Plaintiff,
v.

Case No. 14-C-304

OZWEST, INC., ZING TOYS, INC. And PETER CUMMINGS,
Defendants.

DECISION AND ORDER

Defendant Peter Cummings moves for dismissal due to improper service of process and lack
of personal jurisdiction. For the reasons given below, the motion will be granted.
I. Service Was Proper
Cummings is an Australian citizen who lives in Hong Kong. According to the amended
complaint, he is the “principal” of Ozwest, Inc., an Oregon company. (ECF No. 14 at 2.) This is
reflected in the fact that he was Ozwest’s signatory on the license agreement that is the foundation
of this case. (ECF No. 14-1.) On March 31, 2014, Plaintiff served Cummings by having a process
server leave a copy of the summons and complaint at Ozwest’s offices in Oregon. On June 4,
Plaintiff’s counsel mailed copies of the same documents to Cummings at the same office address.
Under Oregon law, which governs service of process issues, Fed.R.Civ.P. 4(e)(1), this is known as
“office service.” “If the person to be served maintains an office for the conduct of business, office
service may be made by leaving true copies of the summons and the complaint at such office during
normal working hours with the person who is apparently in charge.” Or. R. Civ. P. 7 D(2)(c). In

addition, a plaintiff “shall cause to be mailed, by first class mail, true copies of the summons and
the complaint to the defendant at defendant's dwelling house or usual place of abode or defendant's
place of business or such other place under the circumstances that is most reasonably calculated to
apprise the defendant of the existence and pendency of the action . . .” Id.
Cummings now argues that service was improper because he does not maintain a regular
presence in the Ozwest office in Oregon. Although he visits the office on occasion, he does not
have an office or permanent desk there. Nor is he listed on the building’s directory. In addition,
he maintains that the person served had no business duty to communicate the service to him.
Accordingly, he could not have been served at Ozwest’s Oregon office.
Oregon follows a two-step analysis when service of process is challenged. First, courts look
to see whether the plaintiff has followed one of the methods specified in the rules, which includes
the “office service” at issue here. Boyd v. Boyd, 884 P.2d 556, 558 (Or. Ct. App. 1994). If the
answer is “yes,” then service is presumptively proper. If the answer is “no,” then courts look to see
whether the service satisfied the more general notice requirements of Or. R. Civ. P. 7 D(1), which
requires that “Summons shall be served . . . in any manner reasonably calculated, under all the
circumstances, to apprise the defendant of the existence and pendency of the action and to afford
a reasonable opportunity to appear and defend.”
I conclude that Plaintiff properly served Cummings under Oregon’s “office service”
provision.

The nature of modern business practice lends itself to flexibility in matters like this.

Presumably there are countless executives, investors and corporate employees who do not maintain
a standard “office” in the traditional nine-to-five sense.

Instead, they “maintain” an office (the

Oregon rule’s term), but the office is merely a locus that they might occasionally use, in a physical
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sense, to conduct business. They work remotely, at home, in hotels, in airports, and they maintain
contact with the office through email, texts, and phone. Cummings falls into that pattern.
Importantly, the circumstances of service here strongly suggest that Cummings was in
charge of Ozwest’s business. When the process server left the summons and complaint with Cindy
Baker, the Ozwest office manager, she accepted it on Cummings’ behalf without protesting that he
did not frequently make in-person visits to the office.

This is particularly notable because she

rejected the attempt to serve Defendant Zing Toys, Inc. at the same location. Cummings leaves the
matter of his relationship with Ozwest as vague as could be imagined, describing himself as “an
investor” in Ozwest and as having “connections” with the company, which could mean he owns a
fraction of the company or the entire thing. The complaint describes him as the “principal” of the
company, and, as noted, he signed the license agreement on behalf of Ozwest.

Signing an

agreement on behalf of a company means one is more than a mere “investor”—it suggests he is the
principal, or at a minimum he is one of the officers of the company granted authority to bind it.
Finally, he is listed in Oregon state records as the registered agent for Ozwest, which again points
to something other than a passive investor. (ECF No. 24, Ex. L.) Given the fact that Cummings
has responded to the allegations of the complaint with only vague non-denials, I conclude
Cummings has, at a minimum, a substantial ownership and controlling relationship with Ozwest.
The importance of Cummings’ relationship with Ozwest relates to the expectations placed
on the office manager. If Cummings were simply an investor with little connection to the company,
it would not have been reasonable to attempt to serve him at Ozwest’s offices. But if Cummings
is in charge, then it would be reasonable to assume the office manager would be under an obligation
to communicate to him important matters like the receipt of a summons and complaint. Although
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Baker, the office manager, filed a declaration stating that she had never received service of process
on Cummings’ behalf, that is not surprising given the infrequency of civil litigation: Cummings very
likely had never been served process in Oregon, or anywhere for that matter. A more convincing
statement would have been a declaration stating that she had never communicated business
documents of any kind to Cummings, but that is not what she said. Instead, given the parties’
relationship, it seems clear that Baker would have routinely communicated with Cummings about
business matters, and the existence of a civil lawsuit against both Ozwest and himself would have
been among them.
Cummings also argues that Plaintiff never mailed a copy of the summons and complaint to
his home, and that because he does not maintain a home in Oregon it would have been impossible
to do so. But Plaintiff’s counsel mailed copies of the document to the same office location Plaintiff
had used for service, which was the “place of business or such other place under the circumstances
that is most reasonably calculated to apprise the defendant of the existence and pendency of the
action.” Or. R. Civ. P. 7D(2)(c). The fact that Cummings did not maintain a home in Oregon is
irrelevant. Thus, office service was proper.
Even if service failed to meet the requirements under that section, however, I conclude that
service would comply with the more general notice requirements of Oregon law, which requires that
the service be “reasonably calculated” to apprise the defendant of the existence and pendency of the
action and to afford a reasonable opportunity to appear and defend. “Under this rule, the court
examines the totality of the circumstances to determine if the service of summons was reasonably
calculated to provide a defendant with notice of the action and a reasonable opportunity to appear
and defend.” Williams v. Jett, 54 P.3d 624, 627 (Or. Ct. App. 2002).
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The Oregon case of Boyd v. Boyd is instructive. There, the defendant worked in construction
jobs all around the western United States and maintained no permanent address. The defendant
hired a bookkeeper to maintain his checkbook, collect his mail and pay bills. When his ex-wife
attempted to serve him through the bookkeeper, the court concluded that although the bookkeeper
had a business duty to communicate the service to the defendant, the bookkeeper could not be
considered the defendant’s “office” because his business was conducted elsewhere, i.e., on
construction sites in various western states. 884 P.2d 556 (Or. Ct. App. 1994). Here, by contrast,
the Defendant’s business is conducted in the office at which service was attempted. When he uses
the office, it is for business purposes, and the individuals in the office are engaged in Ozwest’s
business. Thus, as I found above, office service was effected.
The Boyd court found no proper office service, but it concluded that the service satisfied the
second prong of the analysis. The bookkeeper had been designated by the defendant as the means
by which he paid his child support and thus, implicitly, the bookkeeper was also how he
communicated with the world. Id. at 559-60. “The arrangement implies that father maintained
regular, frequent and predictable contacts with the bookkeeper.” Id. at 559. That is what has
occurred here. Even if Cummings’ physical presence at Ozwest’s US offices is not frequent, it
stretches the imagination to believe he would not have frequent and predictable contacts with the
office, and he does not deny that is the case. And, having established an office of his company in
Oregon, he cannot be surprised that, when sued, he would receive service of process at that location.
This is especially true given that he apparently designated himself as the company’s registered agent
in state corporate filings.

Cummings undoubtedly knows about the lawsuit, having filed a

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declaration of his own in this very case, and he learned about it not through happenstance but
through the fact that he and his company were served at Ozwest’s office in Oregon.
The analysis is viewed through the eyes of the party attempting service: was the service of
summons “reasonably calculated to provide a defendant with notice?” Here, especially given the
absence of other viable addresses, the attempt to serve Cummings at Ozwest’s office was perfectly
reasonable. Any doubt about that question was removed when Cindy Baker accepted service for
Cummings and Ozwest but declined to accept service for Zing Toys. This demonstrates her
reasoned judgment that Cummings had a substantial enough connection with the office that she
could communicate the summons to him. That reasoned judgment was projected to the process
server, who would reasonably conclude that service had been proper.
II. Personal Jurisdiction is Lacking
Defendant Cummings also argues that Wisconsin courts have no jurisdiction over him. As
an Australian who resides in Hong Kong, and who has never even visited Wisconsin, he argues that
he lacks the kind of connections with the state that would require him to answer a civil action in
Wisconsin’s courts.
Plaintiff responds by arguing that Cummings has waived any objection based on personal
jurisdiction because he did not raise the objection within 21 days of being served. But waiver
requires an unequivocal expression that jurisdiction is proper, not merely a lapse of a few months
between service and a motion to dismiss. “[T]o waive or forfeit a personal jurisdiction defense, a
defendant must give a plaintiff a reasonable expectation that it will defend the suit on the merits or
must cause the court to go to some effort that would be wasted if personal jurisdiction is later found
lacking.” Mobile Anesthesiologists Chicago, LLC v. Anesthesia Associates of Houston Metroplex,
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P.A., 623 F.3d 440, 443 (7th Cir. 2010) (citing American Patriot Ins. Agency, Inc. v. Mutual Risk
Management, Ltd., 364 F.3d 884, 887–88 (7th Cir. 2004)). Here, after filing their notices of
appearance, the very first act Cummings’ attorneys performed was to file a motion to dismiss based
in part on personal jurisdiction. H-D Michigan, LLC v. Hellenic Duty Free Shops S.A., 694 F.3d
827, 848 (7th Cir. 2012) (“Whatever might be said about the merits of DFS's personal jurisdiction
objection, there has never been any doubt up to this point that it contests the issue.”) Neither the
Plaintiff nor the Court ever labored under the misperception that Cummings was conceding that a
Wisconsin federal court had personal jurisdiction over him. Accordingly, I conclude the defense
is not waived.
Waiver was the only argument put forward against Cummings’ personal jurisdiction defense,
and as such it might be said that any other arguments in favor of jurisdiction would themselves be
waived. In any event, it seems clear that Cummings has almost no conceivable personal connection
with Wisconsin, and thus the Due Process Clause would not tolerate the exercise of jurisdiction over
him. Felland v. Clifton, 682 F.3d 665, 678 (7th Cir. 2012) (“Once the requirements of due process
are satisfied, then there is little need to conduct an independent analysis under the specific terms of
the Wisconsin long- arm statute itself because the statute has been interpreted to go to the lengths
of due process.”)
Here, the complaint merely alleges that Cummings is the principal of a corporation that does
some business in Wisconsin. But the law treats corporations as entities separate and distinct from
their owners, and thus the mere fact that a company might do business here does not warrant
exercising jurisdiction over the company’s investors. Hart–Hanks Direct Marketing/Baltimore, Inc.
v. Varilease Tech. Fin. Group, Inc., 299 F.Supp.2d 505, 513 (D. Md.2004) (“Personal jurisdiction
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over an individual officer, director, employee and owner of a corporation does not automatically
follow from personal jurisdiction over the corporation.”) Without any argument to the contrary, it
is impossible to conclude that a Wisconsin court would have personal jurisdiction over Cummings.
Accordingly the motion to dismiss under Fed. R. Civ. P. 12(b)(2) will be granted.
III. Conclusion
For the reasons given above, I conclude service of process was accomplished on Defendant
Cummings.

However, this Court lacks personal jurisdiction over Cummings.

The motion to

dismiss, pursuant to Rule 12(b)(2), will therefore be GRANTED.
SO ORDERED this 3rd day of February, 2015.

/s William C. Griesbach
William C. Griesbach, Chief Judge
United States District Court

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