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Federal Trade Commission v. EMP Media, Inc.

United States District Court, D. Nevada

February 1, 2018

EMP MEDIA, INC., et al., Defendants.

          ORDER (DOCKET NOS. 12, 14)

          NANCY J. KOPPE, United States Magistrate Judge

         Pending before the Court is Plaintiffs' motion for alternative service on Defendant Shad Applegate, also known as Shad Cottelli. Docket No. 12; see also Docket No. 14 (motion filed under seal). Plaintiffs request a court order for service by email based on their investigations into Defendant Cottelli's whereabouts, which have proven unsuccessful. See generally Docket Nos. 12, 14. For the reasons discussed below, the Court GRANTS Plaintiffs' motion. Id.

         I. STANDARDS

         Fed.R.Civ.P. 4(f) permits alternative service on an individual within a foreign country. Although service may be attempted in accordance with international agreements or the foreign country's service laws, the Court has discretion to order service by “means not prohibited by international agreement.” Fed.R.Civ.P. 4(f)(3). This discretion is not a last resort nor must service have previously been attempted using the methods proscribed by Fed.R.Civ.P. 4(f)(1) and 4(f)(2). Rio Props., Inc. v. Rio Int'l Interlink, 294 F.3d 1007, 1015 (9th Cir. 2002).

         In exercising its discretion, the Court determines if the proposed method is prohibited by any international agreements and ensures that the method satisfies due process. See SEC v. Banc De Binary, 2014 U.S. Dist. LEXIS 26730, at *3-4 (D. Nev. Mar. 3, 2014). Due process requires that the method of service be (1) reasonably calculated to apprise the defendant of the action and (2) afford the defendant an opportunity to present his objections. Mullane v. Vent. Hanover Bank & Trust Co., 339 U.S. 306, 314-315 (1950); see also Rio Props., Inc., 294 F.3d at 1016-1017; see e.g., Facebook, Inc. v. Banana Ads, LLC, 2012 U.S. Dist. LEXIS 42160, at *4-5 (D. Nev. Mar. 27, 2012).

         The Court then determines if service by email is proper by looking to the circumstances of the attempts of service and balancing any limitations of service by email with the benefits. See Liberty Media Holdings, LLC v. Letyagin, 2012 U.S. Dist. LEXIS 80326, at *4 (D. Nev. June 11, 2012). Service by email is proper when the defendant is unreachable by other means or does not have a known physical address. See Rio Props., Inc., 294 F.3d at 1017. In such a situation, email is usually considered “the method most likely to reach the defendant.” Neumont Univ., LLC v. Nickles, 304 F.R.D. 594 (D. Nev. 2015) (quoting Rio Props., Inc., 294 F.3d at 1017)). Relevant circumstances include: (1) whether the claims at issue arise from the defendant's engagement in an Internet-business; (2) the degree of the defendant's reliance on emails as a means of communicating and conducting business, and (3) prior attempts of service made by mail, telephone, or other methods. See Facebook, Inc., 2012 U.S. Dist. LEXIS 42160, at *4-9.

         II. ANALYSIS

         Although this case was initiated on January 9, 2018, Plaintiff Federal Trade Commission (“FTC”) has been attempting to locate Defendant Cottelli's whereabouts since as early as August 2016. See Docket Nos. 1, 12-2 at 4, 14-2 at 4. In these two and one-half years, Plaintiff FTC's investigators have traced Defendant Cottelli from Las Vegas and Henderson, Nevada, to Cape Town, South Africa and the United Kingdom. See generally, Docket Nos. 12, 14. The earliest attempt was on August 17, 2016, when Plaintiff FTC served a civil investigative demand on Defendant Cottelli at his only known physical address at 6130 W. Flamingo Rd. #732, Las Vegas. Docket Nos. 12-2 at 4, 14-2 at 4. This location, however, was merely a commercial mail receiving agency, and Defendant Cottelli never responded to the demand. Docket Nos. 12 at 6, 14 at 6.

         A. Prohibition by International Agreements

         Plaintiffs submit that, because Defendant Cottelli's physical location is unknown, it cannot be determined if an international agreement applies. Id. at n.4. The Court may nonetheless order service by email when a defendant's country of location is unknown as a result of the defendant evading service. See Neumont Univ., LLC, 304 F.R.D. at 600 (ordering service by email where the defendant appeared to have been “actively concealing his location to evade service of process, ” which made it “impossible” for the court “to determine whether email service would be inconsistent with an international agreement.”).

         In the instant case, Plaintiffs submit that Defendant Cottelli is likely evading service of process. Docket Nos. 12 at 8-9, 14 at 9-10. For example, Plaintiffs submit that they have emailed Defendant Cottelli using two email addresses known to be used by him for business communications; although no response was received, the emails did not bounce back as undeliverable. See e.g., Toyo Tire & Rubber Co., Ltd. v. CIA Whell Grp., 2016 U.S. Dist. LEXIS 43128, at *8-9 (C.D. Cal. Mar. 25, 2016) (finding that an email is presumed delivered when it is not returned as undeliverable). Plaintiffs further submit examples of Defendant Cottelli's past elusive behavior in supplying false contact information and addresses, as well as his change of name. Docket Nos. 12 at 9, 14 at 9-10. The Court finds that Defendant Cottelli's current and relevant past behavior, in conjunction with the numerous attempts to locate him (see infra Section II(B)(iv)), are indicative of a defendant who is actively evading process. Therefore, Defendant's actions have made it impossible for the Court to determine whether an international agreement prohibits service by email.[1]

         B. Due Process and Proper Service

         As a threshold matter, service by email is permitted as an alternative method of service under Fed.R.Civ.P. 4(f) that satisfies the due process requirements. See Rio Props., Inc., 294 F.3d at 1017-18. Accordingly, the Court discusses only whether service by email is proper in the instant case.

         i. Unknown ...

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