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Safris v. Vnue, Inc.

United States District Court, D. Nevada

August 31, 2017

VNUE, INC., and MATTHEW CARONA, Defendants.


         Before the court is defendants' VNUE, Inc. (“VNUE”) and Matthew Carona (“Carona”) (collectively “defendants”) motion to quash, dismiss, and transfer venue (ECF No. 11). Plaintiffs Seva Safris (“Safris”) and Alex Yuryev (“Yuryev”) (collectively “plaintiffs”) have opposed (ECF No. 12), and defendants have replied (ECF No. 14).

         VNUE is a “startup” company that has the intended business of recording live music performances for delivery to mobile devices. (ECF No. 11-1 (Carona Decl. ¶ 3); ECF No. 15 (Carona Supp. Decl. ¶ 4)). Carona is currently the chief operating officer of VNUE. (ECF No. 11-1 (Carona Decl. ¶ 1)). Plaintiffs are former employees of VNUE who have sued defendants on several grounds, including breach of contract and fraud. Plaintiffs assert that their employment contracts with VNUE have not been honored and that they have not been paid for work performed, despite repeated assurances from Carona that they would be paid.

         Carona incorporated VNUE in Washington state in 2013 and later merged VNUE with a company incorporated in Nevada. (ECF No. 11-1 (Carona Decl. ¶ 2)). The surviving entity was incorporated in Nevada and took VNUE's name going forward. (Id.) After the merger, VNUE moved its operations to New York City, where it has an office and where most of VNUE's contacts, relationships, and business are located. (Id. ¶ 4). Carona is currently VNUE's chief operating officer and works out of the New York office one to two times a week. (ECF No. 15 (Carona Supp. Decl. ¶¶ 1-2)). VNUE claims that two individuals, including its employee Peter Slavish, [1]also work out of the New York office. (Id. ¶ 3).

         Plaintiffs dispute how much of VNUE's work is actually performed in New York, arguing that while VNUE has an office in New York City, only Slavish works there, that all of VNUE's officers reside outside of New York, and that ultimately VNUE does business wherever live music performances occur, which is all over the country. (See ECF No. 12-1 (Safris Decl. ¶¶ 7 & 16)).

         Plaintiff Yuryev is and at all relevant times has been a resident of Minnesota. (Id. at ¶ 2). Plaintiff Safris is currently a resident of California, though at the times relevant to the complaint he worked for VNUE from Bangkok, California, and for a brief period of time, New York.[2] (ECF No. 1 (Compl. ¶ 1); ECF No. 11-1 (Carona Decl. ¶ 10 & ¶ 15); ECF No. 12-1 (Safris Decl. ¶ 9)). Carona lives in New York and Massachusetts but considers himself domiciled in Massachusetts. (ECF No. 1 (Compl. ¶ 4); ECF No. 11-1 (Carona Decl. ¶ 5)). As already stated, VNUE is a Nevada corporation with an office in New York.

         Defendants have moved to quash service of process, to dismiss Carona for lack of personal jurisdiction, and to transfer venue to the Southern District of New York. Plaintiffs oppose all motions.

         I. Motion to Quash Service of Process

         If service of process has been insufficient, the court may either quash the service or dismiss the action. Fed.R.Civ.P. 12(b)(5); S.J. v. Issaquah Sch. Dist. No. 411, 470 F.3d 1288, 1293 (9th Cir. 2006). On June 9, 2017, plaintiffs served copies of the summons and complaint in this action on Peter Slavish. (ECF No. 11 (Gaw Decl. Exs. 1 & 2)). According to the process server, Slavish represented that he was authorized to accept service on behalf of VNUE. (Id. at Ex. 2). Plaintiffs also mailed copies of the summons and complaint via first class mail to defendant Carona at VNUE's New York office. (Id. at Ex. 1). Defendants argue that this did not constitute proper service of process on either Carona or VNUE and therefore service of process must be quashed.

         A. Carona

         Under Federal Rule of Civil Procedure 4(e), an individual may be served in accordance with the federal rules, the law of the state where the court is located, or the law of the state where service is made. Plaintiffs contend that they followed the law of New York - the state where service was made - in effecting service on Carona and that under New York law service was proper.

         In relevant part, New York permits “[p]ersonal service upon a natural person . . . by delivering the summons within the state to a person of suitable age and discretion at the actual place of business . . . of the person to be served and by . . . mailing the summons by first class mail to the person to be served at his or her actual place of business . . . .” N.Y. C.P.L.R. § 308(2). The statute requires that delivery and mailing “be effected within twenty days of each other” and that proof of service “be filed with the clerk of the court designated in the summons within twenty days of either such delivery or mailing, whichever is effected later.” Id. The statute provides that “service shall be complete ten days after” the proof of service is filed with the clerk of the court. Id.

         As apparently conceded by defendants, VNUE's New York office is Carona's “actual place of business, ” as he works out of the office at least a couple times a week and is the co-founder of VNUE. Thus, plaintiffs' service of the summons and complaint on Slavish, a person of suitable age and discretion, at VNUE's New York office, and subsequent mailing of the summons and complaint to Carona at the VNUE New York office, satisfied the first two requirements of § 308(2).[3]

         However, the statute also requires the filing of the proof of service with this court within twenty days of delivery or mailing. No such filing was made by plaintiffs within the twenty-day period. Although courts in New York are split on whether this requirement is jurisdictional, the weight of authority is that it is - particularly for federal court jurisdiction. See Creative Kids Far East Inc. v. Griffin, 2016 WL 8710479, at *2-3 (S.D.N.Y. Jan. 22, 2016) (finding that, for purposes of removal, a defendant is not a party until service is “complete” - ten days after proof of service is filed with the court); Stop & Shop Supermarket Co. LLC v. Goldsmith, 2011 WL 1236121, at *3-6 (S.D.N.Y. Mar. 31, 2011) (recognizing split of authority and ultimately concluding that service is not proper for purposes of removal until plaintiff has timely filed proof of service with the court); Pope v. Rice, 2005 WL 613085 (S.D.N.Y. Mar. 14, 2005); Roth v. Syracuse Hous. Auth., 2002 WL 31962630, at *12 (N.Y. Sup. Ct. July 17, 2002) (“[T]he Court finds that the specific language of CPLR 308(2) confers jurisdictional import upon the filing which is accomplished in connection with that section.”); Howard v. Klynveld Peat Marwick Goerdeler, 977 F.Supp. 654, 660 (S.D.N.Y. 1997) (“‘[L]eave and mail' service under Section 308(2) is ineffective where a plaintiff does not file proof of service with the clerk within twenty days of the date on which the process server mailed the summons and complaint.”).

         The court concludes that filing is a necessary requirement to complete service of process. The plaintiffs' failure to comply See S.E.C. v. Internet Sols. for Bus. Inc., 509 F.3d 1161, 1167 (9th Cir. 2007). with this requirement is jurisdictional. Therefore, the motion to quash service of process on Carona is granted. Plaintiffs are granted leave to effect proper service on Carona within thirty days of the date of this order.

         B. VNUE

         Federal Rule of Civil Procedure 4(h)(1) allows service on a corporate entity to be accomplished “by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process - if the agent is one authorized by statute and the statute so requires - by also mailing a copy of each to the defendant.” As with individuals, service may also be accomplished in accordance with the relevant state laws, here New York and Nevada. New York law requires service on a corporation to be made to “an officer, director, ...

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