Facts
- A professional association entered a 1992 agreement with a credit-card program administrator and a bank to market a Visa card to its members and share card-related fees.
- The association sued the administrator in federal court under diversity jurisdiction for breach of contract, alleging improper withholding of fee information and failure to remit payments.
- The administrator’s principal office was a suite shared by four related companies; the administrator and one suite-mate had common ownership and leadership.
- A process server went to the shared suite and left the summons and complaint with an individual who worked there and was an assistant vice president of a different company in the suite, not of the administrator.
- The process server’s affidavit described the recipient as an assistant vice president of the administrator; the parties disputed whether the recipient represented he could accept service for the administrator and whether the papers were presented as legal process.
- The administrator’s president received the summons and complaint the same day, but the administrator did not timely respond.
- The clerk entered default and the court entered a default judgment.
- The administrator moved to vacate the default judgment under Rules 55(c) and 60(b)(4), arguing the judgment was void for lack of personal jurisdiction due to ineffective service.
Issues
- Whether leaving process with an employee of an affiliated company in a shared office suite constituted valid service on a corporation under Fed. R. Civ. P. 4(h) and New York CPLR 311(a)(1).
- Whether the defendant’s actual receipt of the summons and complaint cured any defects in service sufficient to support personal jurisdiction.
- Whether the defendant waived any objection to personal jurisdiction by its conduct after receiving notice.
- Whether a default judgment entered without personal jurisdiction is void and must be vacated under Fed. R. Civ. P. 60(b)(4).
Decision
- The court granted the motion to vacate.
- The default judgment was vacated under Rule 60(b)(4) as void for lack of personal jurisdiction.
- Service was held ineffective because the recipient was not an officer, managing or general agent, or authorized agent of the defendant corporation under Rule 4(h) or CPLR 311(a)(1).
- The court held that actual notice did not validate defective service.
- The court found no waiver because the defendant raised the jurisdictional defect at its first opportunity in responding to the default judgment.
Legal Principles
- A corporation must be served by delivery of the summons and complaint to an officer, a managing or general agent, or another agent authorized by appointment or by law, or by a method permitted by the service law of the relevant state.
- Agency for service requires a relationship or corporate role that justifies presuming authority to receive process; employment by an affiliated entity sharing office space, without more, does not establish such authority.
- Apparent authority to accept service must rest on the corporation’s manifestations; ambiguous statements by a non-employee are insufficient absent conduct by the defendant holding the person out as its service agent.
- Actual notice of a lawsuit does not cure noncompliance with formal service requirements when personal jurisdiction is lacking.
- A default judgment entered without personal jurisdiction due to defective service is void within Rule 60(b)(4) and must be vacated; discretionary factors such as prejudice do not control.
- A personal-jurisdiction objection is not waived when asserted at the first appearance in the case and the defendant has not litigated the merits.
Conclusion
The court vacated a default judgment because the plaintiff failed to effect valid service on the corporate defendant under Rule 4(h) and New York law, and the defendant’s same-day receipt of the papers did not supply personal jurisdiction or waive the service defect.