FINDINGS AND RECOMMENDATIONS REGARDING DEFENDANTS' MOTION TO VACATE ENTRY OF DEFAULT AND DISMISS OR QUASH SERVICE OF PROCESS

[ECF No. 34]

STANLEY A. BOONE, Magistrate Judge.

Plaintiff Jeffrey P. Perrotte is appearing pro se and in forma pauperis in this civil rights action pursuant to 42 U.S.C. § 1983.

I.

PROCEDURAL HISTORY

Plaintiff filed the instant action on January 7, 2015. On April 13, 2015, the Court screened the complaint and found that Plaintiff stated a cognizable claim for retaliation against Defendants Johnson, LeFlore, and Hebron, and a cognizable claim for cruel and unusual punishment against Defendants Johnson and LeFlore. The Court granted Plaintiff the opportunity to notify the Court of his intent to proceed on the claims found to be cognizable or to file an amended complaint. On April 20, 2015, Plaintiff filed a notice of intent to proceed only on the cognizable claims. Accordingly, on June 16, 2015, the Court directed the United States Marshal to serve the complaint on Defendants Cindy Hebron, Stacey Johnson, and Jean LeFlore. (ECF No. 10.)

On September 28, 2015, Defendant Hebron filed a motion to dismiss. The motion to dismiss was denied on April 27, 2016. (ECF No. 31.)

Defendant Hebron filed an answer to the complaint on May 4, 2016. (ECF No. 32.)

In the meantime, on February 11, 2016, the summons were returned and filed as executed as to Defendants Jean LeFlore and Stacey Johnson. (ECF Nos. 23 & 24.)

On February 16, 2016, the Court ordered Defendants LeFlore and Johnson to show cause as to why the cost for personal service should not be taxed against them. (ECF No. 25.) Then, on March 14, 2016, the Court issued an order to show cause as to why entry of default should not be entered as to Defendants LeFlore and Johnson. (ECF No. 27.) Entry of default was entered as to Defendants Stacey Johnson and Jean LeFlore on April 5, 2016. (ECF No. 30.)

On May 11, 2016, Defendants LeFlore and Johnson filed a motion to vacate the entry of default and to dismiss or quash the complaint based on insufficient service of process. (ECF No. 34.)

Although Plaintiff was granted an extension of time, he did not file an opposition, and the motion is therefore deemed submitted for review without oral argument. Local Rule 230(1).

II.

DISCUSSION

A. Legal Standards

A federal court lacks personal jurisdiction over a defendant if service of process is insufficient. Omni Capital Int'l v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987). A motion to dismiss may be brought under Federal Rule of Civil Procedure 12(b)(5) for insufficient service of process. Fed. R. Civ. P. 12(b)(5).

Service of an individual within a judicial district of the United States may be effected by "delivering a copy of [the summons and complaint] to an agent authorized by appointment of law to receive service of process." Fed. R. Civ. P. 4(e)(2)(C). The "agent" referred to in this rule is not just an employee or business agent of some kind, but instead must be an agent specifically designated to receive service of process. See Gerritsen v. Escobar Y Cordova, 721 F.Supp. 253, 256 (C.D. Cal. 1988).

If a defendant is not served within 90 days after the complaint is filed, the court must dismiss the action without prejudice against that defendant or order that service be made within a specified time. Fed. R. Civ. P. 4. If a plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period. Id. An incarcerated pro se plaintiff proceeding in forma pauperis is entitled to rely on the Marshal for service of the summons and complaint. Puett v. Blandford, 912 F.2d 270, 275 (9th Cir. 1990). If a plaintiff has provided the necessary information to help effectuate serve, he should not be penalized by having his or her action dismissed for failure to effective service where the Marshal or the court clerk has failed to perform the duties required under 28 U.S.C. § 1915(c) and Rule 4 of the Federal Rules of Civil Procedure. Id.

"Once service is challenged, plaintiffs bear the burden of establishing that service was valid under Rule 4." Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004). While "Rule 4 is a flexible rule that should be liberally construed so long as a party receives sufficient notice of the complaint," United Food & Commercial Workers Union v. Alpha Beta Co., 736 F.2d 1371, 1382 (9th Cir. 1984), there must still be "substantial compliance" with Rule 4; otherwise, "neither actual notice nor simply naming the defendant in the complaint will provide personal jurisdiction." Direct Mail Specialists, Inc. v. Eclat Computerized Technologies, Inc., 840 F.2d 685, 688 (9th Cir. 1988) (quoting Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986). If the plaintiff is unable to satisfy his burden, the Court has the discretion to either dismiss the action or retain the action and quash the service of process. Stevens v. Sec. Pac. Nat'l Bank, 538 F.2d 1387, 1389 (9th Cir. 1976).

Federal Rule of Civil Procedure 55(c) provides in relevant part "[f]or good cause shown the court may set aside an entry of default." Fed. R. Civ. P. 55(c). To determine "good cause" under Rule 55(c), a court must "consider[] three factors: (1) whether [the party seeking to set aside the default] engaged in culpable conduct that led to the default; (2) whether [it] had [no] meritorious defense; or (3) whether reopening the default judgment would "prejudice" the other party. United States v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010).

Defendants Stacey Johnson and Jean LeFlore, by way of special appearance move to dismiss the claims against them or, in the alternative quash the service of the summons and amended complaint on the ground that service was defective and personal jurisdiction is lacking. See Fed. R. Civ. P. 12(b)(5).

B. Good Cause to Vacate the Entry of Default

In this instance, Plaintiff was afforded the benefit of service of process by the United States marshal because he was granted in forma pauperis status. According to the USM-285 process receipt and return forms, the United States marshal mailed a copy of the summons and complaint on July 28, 2015. (ECF Nos. 23 & 24.) Then, on February 4, 2016, the United States marshal attempted to serve both Defendants by leaving a copy of the summons and complaint with Timothy O'Neill at the headquarters of Defendants' employer, HealthRIGHT 360, 1735 Mission Street, San Francisco, California 94103. Assuming such service was proper, a responsive pleading was due on or by February 25, 2016. (Id.)

Defendants submit the declaration of Denise Williams who declares that she is the Vice President of Corporate Compliance at HealthRIGHT 360, which is headquartered at 1735 Mission Street, San Francisco, CA 94103. (ECF No. 38, Decl. of Denise Williams ¶ 1.) Denise Williams never received the copy of the summons and complaint that was delivered to Mr. O'Neill on February 4, 2016, and neither she nor Mr. O'Neill forwarded a copy of the same to the Defendants. (Id. ¶ 2.) After delivery of the summons and complaint on February 4, 2016, no copy of the same was ever mail served to Ms. Johnson or Mr. LeFlore at HealthRIGHT 360. (Id. ¶ 3.)

Federal Rule of Civil Procedure 4(e) states in relevant part that process may be served by:

Fed. R. Civ. P. 4(e).

In this instance, Plaintiff did not serve the Defendants personally, leave a copy of the summons and complaint at their homes, or deliver a copy to an agent authorized to receive service of process.1 (Decl. of Johnson ¶ 4; Decl. of LeFlore ¶ 4, ECF Nos. 36 & 37.) Furthermore, where a defendant, as here, is sued in his or her individual capacity, service on the defendant's employer or other employees at the defendant's place of employment is inadequate unless those persons were authorized to accept service for defendant individually. Taylor v. Gearan, 979 F.Supp. 1, 5 (D. DC 1997); Elkins v. Broome, 213 FRD 273, 276 (M.D.N.C. 2003).

Furthermore, Plaintiff did not serve Defendants Johnson and LeFlore in accordance with California law under Rule 4(e)(1). California Code of Civil Procedure section 415.20(a) states:

Cal. Civ. Proc. Code § 415.20(a). Plaintiff did not mail, and the Defendants did not receive, a copy of the summons and complaint delivered to HealthRIGHT 360 on February 4, 2016. (Williams Decl. ¶ 2; Johnson Decl. ¶ 3; LeFlore Decl. ¶ 3.) The Process Receipts and Returns do not indicate that Plaintiff subsequently mailed a copy of the summons and complaint by first-class mail, postage prepaid to the Defendants at the HealthRIGHT 360 headquarters pursuant to Code of Civil Procedure section 415.20. (ECF Nos. 23 & 24.) Defendants further declare that neither they nor HealthRIGHT 360 ever received a summons and complaint by mail at any time. (Williams Decl. ¶ 3; Johnson Decl. ¶ 4; LeFlore Decl. ¶ 4.) Defendants submit that they only learned about the lawsuit on March 14-15, 2016 when they were included on an email chain originating from the California Department of Justice apprising HealthRIGHT 360 of the existence of the complaint.2 (Johnson Decl. ¶ 5; LeFlore Decl. ¶ 5.)

The fact that Defendants did not receive the summons and complaint served upon HealthRIGHT 360, and did not know about the lawsuit until recently, supports the finding there was no "devious, deliberate, willful, or bad faith failure to respond." United States v. Assorted Firearms, 605 F.App'x 603, 605 (9th Cir. 2015). Accordingly, because Defendants were not properly served in accordance with Rule 4(e)(1) and California Code of Civil Procedure section 415.20, the entry of default should be vacated.

C. Dismissal or Quash of Complaint for Insufficient Service of Process

As previously stated, a motion to dismiss or quash service pursuant to Federal Rules of Civil Procedure 12(b)(5) challenges the sufficiency of the manner of attempted service. Strict compliance with Federal Rules of Civil Procedure 4 governing service of process on a defendant is required in order to ensure due process. Mid-Continent Wood Products, Inc. v. Harris, 936 F.2d 297, 300 (7th Cir. 1991). If service is insufficient, the Court may either dismiss the case or retain jurisdiction but quash service. So long as there is a chance that the plaintiff still could accomplish service, the latter remedy is preferred. Umbenhauer v. Woog, 969 F.2d 25, 30 (3d Cir. 1992). A party's failure to strictly comply with Rule 4's personal service requirement "does not require dismissal of the complaint if (a) the party that had to be served personally received actual notice, (b) the defendant would suffer no prejudice from the defect in service, (c) there is a justifiable excuse for the failure to serve properly, and (d) the plaintiff would be severely prejudiced if his complaint were dismissed." Borzeka v. Heckler, 739 F.2d 444, 447 (9th Cir. 1984) (footnote omitted).

As set forth above, Plaintiff failed to substantially comply with the federal and state service requirements, and substitute service was never effectuated. Accordingly, the issue becomes whether to dismiss or quash the complaint for insufficient service of process. In this instance, Defendants have actual notice (albeit not proper service of process) of the instant action, Plaintiff would be prejudiced by dismissal of this action, and Defendants would not be prejudiced by providing Plaintiff additional time to complete proper service of process. Thus, the Court exercises its discretion and finds that dismissal is not warranted, but service of the summons and complaint should be quashed. Plaintiff should be provided an extension of time to properly serve the summons, by and through the United States marshal, if he wishes to continue this action against Defendants Johnson and LeFlore.

III.

RECOMMENDATIONS

Based on the foregoing, it is HEREBY RECOMMENDED that:

These Findings and Recommendations will be submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within thirty (30) days after being served with these Findings and Recommendations, the parties may file written objections with the Court. The document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." The parties are advised that failure to file objections within the specified time may result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 838-39 (9th Cir. 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)).

IT IS SO ORDERED.