Universal Surface Tech. Inc v. Sae-a Trading Am. Corp.

UNIVERSAL SURFACE TECHNOLOGY, INC., DBA TRENDY EMBELLISHMENT

v.SAE-A TRADING AMERICA CORPORATION; ET AL.

Case No. CV 10-6972 CAS (PJWx)

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Date: January 26, 2011

Present: The Honorable CHRISTINA A. SNYDER

Catherine M. Jeang

Deputy Clerk

Attorneys Present for Plaintiffs:

Not Present

Not Present

Court Reporter / Recorder

Attorneys Present for Defendants:

Not Present

Proceedings: (IN CHAMBERS): DEFENDANT SAE-A TRADING CO., LTD'S MOTION TO QUASH SERVICE AND DISMISS (filed 11/18/10)

DEFENDANTS SAE-A TRADING AMERICA CORPORATION'S AND OCEN, INC.'S MOTION TO DISMISS (filed 11/19/10)

I. INTRODUCTION & BACKGROUND

On September 20, 2010, plaintiff Universal Surface Technology, Inc., doing business as Trendy Embellishment filed the instant action against defendants Sae-A Trading America Corporation ("Sae-A America"); Ocen, Inc. ("Ocen"); Sae-A doing business as Glovia ("Sae-A"); and Does 1 through 10. Plaintiff's complaint alleges claims for (1) copyright infringement, 17 U.S.C. §§ 101 et seq.; (2) declaratory relief, 28 U.S.C. § 2201(a); (3) unlawful competition, Cal. Bus. & Prof. Code §§ 17200 et seq.; (4) interference with prospective economic advantage; (5) unjust enrichment; and (6) accounting.

Plaintiff alleges that Kwan Lee owns the registered copyright of "Trendy Designs." Complaint ¶ 10. At different times, the complaint refers to plaintiff as an assignee of the rights to Trendy Designs and as an exclusive licensee. Complaint ¶¶ 10, 16. Plaintiff alleges that defendants have reproduced plaintiff's copyright, distributed or sold plaintiff's copyright, prepared derivative works based upon plaintiff's copyrights, and publicly displayed products which infringe on plaintiff's copyright. Complaint ¶ 11.

Plaintiff further alleges that defendants have infringed plaintiff's copyright with the intent of palming off their goods as plaintiff's. Complaint ¶ 27.

On November 18, 2010, specially-appearing defendant Sae-A filed a motion to quash service and dismiss. On November 19, 2010, defendants Sae-A America and Ocen filed a motion to dismiss. On December 4, 2010, plaintiff filed oppositions to both motions. On December 6, 2010, Sae-A, Sae-A America, and Ocen replied. After carefully considering the arguments set forth by the parties, the Court finds and concludes as follows.

II. SAE-A'S MOTION TO QUASH SERVICE

A. Legal Standard

Rule 12(b)(5) of the Federal Rules of Civil Procedure authorizes a defendant to move for dismissal due to insufficient service of process. See Fed. R. Civ. P. 12(b)(5). "A federal court does not have jurisdiction over a defendant unless the defendant has been served properly [with the summons and complaint] under Fed. R. Civ. P. 4.... [W]ithout substantial compliance with Rule 4 neither actual notice nor simply naming the defendant in the complaint will provide personal jurisdiction.'" Direct Mail Specialists, Inc. v. Eclat Computerized Technologies, 840 F.2d 685, 688 (9th Cir. 1988) (citations omitted); Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986), amended by, 807 F.2d 1514 (9th Cir. 1987); see also Miss. Publ'g Corp. v. Murphree, 326 U.S. 439, 444-45 (1946) ("[S]ervice of summons is the procedure by which a court having venue and jurisdiction of the subject matter of the suit asserts jurisdiction over the person of the party served."). Once service of process is challenged, the "plaintiff[ ] bear[s] the burden of establishing that service was valid." Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004). If the plaintiff is unable to satisfy its burden of demonstrating effective service, the court has discretion to either dismiss or retain the action. See Stevens v. Sec. Pac. Nat'l Bank, 538 F.2d 1387, 1389 (9th Cir. 1976).

B. Discussion

In this case, it appears that plaintiff attempted to effectuate service on Sae-A bydelivering and mailing copies of the summons and complaint to Catherine Strauss, identified on the proof of service as the "person authorized to accept service of process, " at 2207 W. 190th Street, Torrance, CA 90504. Declaration of David W. Quinto ("Quinto Decl.") ¶ 4; Quinto Decl., Ex. B.

Sae-A moves to quash service on the grounds that service did not comply with Fed. R. Civ. P. 4. Sae-A Mot. at 5-6. Sae-A argues that Strauss is the vice president of Ocen, and is not employed by Sae-A. Id. at 4-5 (citing Declaration of Catherine Strauss ("Strauss Decl.") ¶¶ 1-2). Accordingly, Sae-A contends that Strauss is not authorized to accept service of process on behalf of Sae-A. Id. (citing Strauss Decl. ¶ 6; Declaration of Sue Park ¶ 6). Sae-A asserts that as a corporation domiciled in Seoul, South Korea, service should have been made pursuant to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents ("Hague Service Convention").¹ Id at 5-6 (citing Fed. R. Civ. P. 4(f)(1) (service at a place not within any judicial district of the United States may be made "by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents")). Sae-A contends that because plaintiff did not attempt to comply with the Hague Service Convention, any attempted service on Sae-A is void. Id at 6 (citing Volkswagenwerk, 486 U.S. at 699 ("By virtue of the Supremacy Clause, U.S. Const., Art. VI, the Convention pre-empts inconsistent methods of service prescribed by state law in all cases to which it applies.")).

Plaintiff responds that service upon Strauss was proper under Fed. R. Civ. P. 4(h)(1)(B) because Strauss is Sae-A's "managing or general agent."² Opp'n to Sae-A at 7 (citing Bridgeport Music, Inc. v. Rhyme Syndicate Music, 376 F.3d 615, 624 (6th Cir. 2004); Montclair Elecs., Inc. v. Electra/Midland Corp., 326 F. Supp. 839, 842 (S.D.N.Y 1971); Direct Mail Specialists, Inc. v. Eclat Computerized Technologies, 840 F.2d 685, 688 (9th Cir. 1988)). Plaintiff posits that Strauss is Sae-A's managing or general agent because Strauss's business card indicates that she retains a Sae-A e-mail address and the "head office" address listed on her business card matches the physical address for Sae-A's corporate headquarters in South Korea. Id. at 2, 8 (citing Declaration of Kwan B. Lee ("Lee Decl."), Exs. A and B). Also in support of its contention that Strauss is a Sae-A managing or general agent, plaintiff offers a printout of Strauss's LinkedIn profile, which lists her position as "Vice President West Coast at Ocen, Inc./Sae-A Trading Company." Id (citing Lee Decl., Ex. C). Plaintiff also argues that Strauss provided it with a Sae-A brochure that lists the Torrance address where plaintiff purportedly served Sae-A. Id. at 3-8 (citing Lee Decl., Exs. E and F). Plaintiffs further assert that the fact that Sae-A appeared in this action is evidence that service upon Strauss was effective. Id at 8. Finally, plaintiff argues that service was proper because when a parent and subsidiary operate as a single entity, they may be considered de facto agents for service for each other. Id at 7 (citing Adams v. AlliedSignal General Aviation Avionics, 74 F.3d 882, 885 (8th Cir. 1996)).

Sae-A replies that the facts offered by plaintiff are insufficient to demonstrate that Strauss was an agent for service of process on Sae-A. Sae-A Reply at 1. Sae-A asserts that Strauss's business card reflects that she is an employee of Ocen, and that her LinkedIn profile does not establish that she is a managing or general agent of Sae-A. Id. Sae-A further replies that plaintiff's argument that service was effective because Sae-A appeared in the action proves too much because under plaintiff's logic, a defendant could seek dismissal only if it had never learned of the complaint. Id Finally, Sae-A replies that Strauss is not a de facto agent for service on Sae-A because Sae-A and Ocen do not have a parent-subsidiary relationship. Id at 3 (citing Declaration of Sue Park ¶ 5).³

The Court finds that Sae-A is entitled to quash on the grounds that Sae-A was not served in accordance with Fed. R. Civ. P. 4. After reviewing the record, the Court concludes that plaintiff has failed to demonstrate that Strauss is Sae-A's managing or general agent, and therefore service was not proper under Rule 4(h)(1)(B). The evidence plaintiff offers hardly establishes that Strauss is employed by Sae-A, much less that she has sufficient managerial responsibilities such that she is a proper agent for service on Sae-A. Moreover, plaintiff has put forward no evidence that Ocen is Sae-A's subsidiary and that the companies operate as a single entity. Accordingly, Ocen and Sae-A may not be considered de facto agents for service on one another. Finally, Sae-A's actual notice of the suit is irrelevant to whether plaintiff properly effected service on Sae-A. See Baade v. Price, 175 F.R.D. 403, 405 (D.D.C. 1997) ("The law is clear and mandates that there be strict compliance to Rule 4(h) and it is irrelevant whether or not defendant... had actual notice of the lawsuit."). Because there is reason to believe that plaintiff could serve Sae-A pursuant to Rule 4(h), the Court finds it appropriate to quash service rather than dismiss the claims against Sae-A. Stevens, 538 F.2d at 1389. Accordingly, the Court QUASHES service on Sae-A.⁴

III. SAE-A AMERICA AND OCEN'S MOTION TO DISMISS

A. Legal Standard

A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in a complaint. "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level." Id. Stated differently, only a...