Summary
permitting service of subpoena upon the Secretary of State as the designated agent of the corporation pursuant to New York procedural law
Summary of this case from Briarpatch Limited v. Geisler Roberdeau, Inc.Opinion
No. M8-85 (RPP)
September 24, 2002
Attorneys for Discus Dental, Inc.: Ostrolenk, Faber, Gerb Soffen, LLP; By: Marc A. Lieberstein from New York, New York. And Christie, Parker Hale; By: Leigh O. Linder from Pasadena, California.
Attorney for Strategic Dental Marketing, Inc.: Drinker, Biddle Reath; By: Michael O. Adelman from New York, New York.
OPINION AND ORDER
Discus Dental, Inc. ("Discus") moves to enforce a third party document subpoena and to compel production of documents from Strategic Dental Marketing, Inc. ("SDM") and requests sanctions pursuant to Fed.R.Civ.P. 37.
Background
Discus is a defendant in a patent infringement action against Ultradent Products, Inc. ("Ultradent") pending in the Central District of California, entitled Ultradent Products, Inc. v. Robert Hayman, et al. (Case No. CV-00-13402) (the "California Action"). In the underlying litigation, Ultradent alleged claims against Discus for infringement of several patents for dental bleaching compositions, methods, and materials. Discus' counterclaims against Ultradent alleged that Ultradent has distributed false and misleading advertising and promotional materials for its Opalescence products in violation of the Lanham Act ( 15 U.S.C. § 1125 (a)) and California's unfair competition laws (California Business Profession Code, § 17200, et seq.).
According to the Declaration of Leigh O. Linder, Esq. dated August 8, 2002 proffered on behalf of Discus, Discus submitted interrogatories to Ultradent on September 27, 2001, asking Ultradent to describe all information known to it which supported Ultradent's statements in the promotional materials, based on independent third party research, that "Opalescence is the 'most used brand in tooth whitening'" and that "Opalescence is the 'world's #1 whitening system.'" (Linder Decl. Ex. 2.) Ultradent responded on November 16, 2001 stating that "surveys performed by Strategic Dental Marketing, Inc. for the first and second halves of 1999 and the first and second halves of 2000 show that dentists use Ultradent's Opalescence brand more often than any of Discus's brands." (Id. ¶ 4.) On September 28, 2001 Discus submitted document requests to Ultradent, asking Ultradent to produce all documents that mention, evidence, reflect or constitute the independent third party market research that was referred to in the exhibits to the counterclaims. (Id. ¶ 5.) Ultradent's response produced four reports published by SDM entitled "Dental Products Trial, Awareness, and Penetration Study Report" for the first and second halves of 1999 and the first and second halves of 2000. (Id. ¶ 6.)
In early April 2002, California counsel for Discus issued a subpoena duces tecum to SDM and on April 18, 2002 and April 22, 2002, two unsuccessful attempts were made by an attorney service to serve SDM during office hours at the New City, New York address on their website. (Id. ¶ 7; Ex. 6.) The attorney service reported that the door was locked on both occasions and the server learned that the office was seldom open. (Id. Ex. 6.) On April 22, 2002, counsel for Discus issued a second subpoena duces tecum ("Subpoena") which is the subject of the present motion. (Id. ¶ 8.) On April 24, 2002, the Subpoena was personally served on SDM by the Division of Corporations of the New York Department of State together with a $40 witness fee for which a receipt was issued. (Id. Ex. 9.) The Subpoena set a return date of May 15, 2002 and designated a court reporter in New City, New York as the place for production of the requested records. (Id. ¶ 8.) On May 15, 2002, SDM did not produce documents at the designated time and place specified in the Subpoena. (Id. ¶ 10.) On May 15, 2002, counsel for Discus sent a letter by certified mail to SDM return receipt requested enclosing a copy of the Subpoena and asking that SDM make arrangements for the production of documents, and sent a copy of the letter to the law firm of Feder, Kaszovitz, Isaacson, Weber Skala, the firm which the Department of State receipt indicated would receive the service made on the Secretary of State. (Id. ¶ 11.) In the Declaration of Jacinta Francis executed on September 11, 2002, SDM states SDM was not aware that the law firm of Feder, et al. was still registered as SDM's counsel in the New York Secretary of State's records, nor was SDM aware that it needed to notify the Secretary of the change in counsel. (Francis Decl. ¶ 7.) SDM acknowledges however that it received the Subpoena by certified mail on May 20, 2002. (Id. ¶ 5.)
The subpoena called only for those records and documents relating to tooth bleaching and whitening. (Linder Decl. Ex. 7.) The records were to be produced to the court reporter. (Id.)
In early June 2002, counsel for Discus was contacted by Boston counsel for SDM. (Linder Decl. ¶ 12.) Upon request, Discus' counsel forwarded copies of the counterclaims and the protective order governing the California Action to counsel for SDM. (Id.) On June 25, 2002, counsel for Discus was contacted by a different attorney at the Boston law firm representing SDM who indicated that he was still considering whether or not to comply with the Subpoena. (Id.) Upon request, Discuss counsel provided yet another copy of the Subpoena to the Boston law firm representing SDM. (Id.) On July 3, 2002, Boston counsel for SDM told Discus' counsel that SDM would not produce any documents responsive to the Subpoena without a court order requiring it to do so and made oral objections to the document request based on lack of relevancy, as well as concern about proprietary information. (Id. ¶ 13.) On August 8, 2002, Ms. Linder, California counsel for Discus, executed her declaration supporting the motion to compel filed by New York counsel for Discus on August 26, 2002. The Declaration of Michael O. Adelman, executed on September 11, 2002 states that New York counsel for SDM, drafted Rule 45 objections to the Subpoena on August 23, 2002 and sent them via Federal Express to California counsel for Discus. (Adelman Decl. ¶ 6.) On September 13, 2002, SDM filed opposition papers and two supporting declarations, executed on September 11, 2002.
According to SDM's Memorandum of Law in Opposition to Discus' Motion to Compel, Boston counsel for SDM also refused to accept service of a deposition subpoena for SDM returnable August 8, 2002. (Opp. Mem. Ex. B.)
Discussion
A. Personal Service on the Secretary of the State of New York on April 24, 2002
Service of a subpoena on the Secretary of State as an agent of a corporation constitutes sufficient service, regardless of the fact that the Secretary of State does not have control of the books and records of a corporation. See In re Grand Jury Subpoena Duces Tecum, 72 F. Supp. 1013, 1021 (S.D.N.Y. 1947). Wright and Miller state that service of a subpoena on an agent of a corporation as a non-party witness is sufficient under Fed.R.Civ.P. 45. See 9A Charles Allan Wright Arthur R. Miller,Federal Practice and Procedure Civil 2d, § 2454 (2d ed. 1995). Wright and Miller's conclusion is consistent with the text of Rule 45(b)(1) of the Federal Rules of Civil Procedure. Rule 45(b)(1) provides in pertinent part that "[s]ervice of a subpoena upon a person named therein shall be made by delivering a copy thereof to such person" F. R. Civ. P. 45(b)(1). Although there appears to be no Second Circuit opinion on point, one court in this Circuit has concluded that any means of service in accordance with New York procedural law should be sufficient to satisfy Rule 45 requirements. King v. Crown Plastering Corp., 170 F.R.D. 355, 356 n. 1 (E.D.N.Y. 1997) (subpoena duces tecum delivered both by hand and by mail to the residence of a married couple was sufficient to obtain service of process in connection with the action in which they were called as witnesses, even though they were not personally served). The King court noted:
Although the court hesitates to hold that service in accordance with New York procedural law would suffice in all instances to satisfy Rule 45 requirements, the court notes that Rule 4(e) of the Federal Rules of Civil Procedure specifically incorporates the forum state's procedural law for service of a summons and complaint. There appears to be no reason why the forum state's procedural law should not be sufficient for accomplishing service under Rule 45.King, 170 F.R.D. at 356, n. 1.
The Consolidated Laws of New York provide that proper service of process upon a corporation may be made by serving such upon a designated agent for that corporation. The Consolidated Laws of New York provide that "[t]he secretary of state shall be the agent of every domestic corporation . . . upon whom process against the corporation may be served." N.Y. Bus. Corp. Law § 304(a) (McKinney 2001). SDM is a New York corporation. (Francis Decl. ¶ 3.) New York law further provides that, "[s]ervice of process on a registered agent may be made in the manner provided by law for the service of a summons, as if the registered agent was a defendant." Id. § 306(a). According to subdivision (b) of § 306, service of process on the secretary of state is accomplished by "personally delivering to and leaving with the secretary of state or a deputy, or with any person [so] authorized . . . duplicate copies of such process together with the statutory fee." Id. § 306(b). SDM does not deny that Discus has complied with these statutory requirements.
As recognized in the Advisory Committee's note to the 1993 Amendments of the Federal Rules of Civil Procedure, the term "service of process" is not limited to service of the summons and complaint but covers other process as well. Fed.R.Civ.P. 4, advisory committee's note at 1993 Amendment.
Service of a subpoena upon the Secretary of State as the designated agent to a corporation is reasonably measured to insure the actual receipt of the subpoena by the corporation. Fed.R.Civ.P. 4(h)(1) proscribes the proper manner of service of summons on a corporation as "delivering a copy of the summons and of the complaint . . . to any . . . agent authorized by appointment or by law to receive process." Fed.R.Civ.P. 4(h)(1). It follows that sufficient notice is given a corporate non-party when the same method of service of process is used to obtain the court's jurisdiction over it. Furthermore, it was the negligence of SDM and not the fault of Discus that SDM's former attorney was on record as the entity to whom the Secretary of State should forward process served on it. In any event, Discus' follow up service of the Subpoena by certified mail which SDM admits receiving on May 20, 2002 gave SDM prompt notice of the contents of the Subpoena and that it had been served on the Secretary of State. (Linder Decl. Ex. 10.) In short, Discus' service of the Subpoena on April 24, 2002 upon the Secretary of State as the authorized agent for SDM was sufficient service under Rule 45.
B. Service by Certified Mail on SDM on May 15, 2002
Additionally, Discus' service by certified mail was sufficient. Although scholars of civil procedure have stated that personal service is necessary under Rule 45, see e.g., Wright Miller at § 2454, there is no such specific requirement within the language of Rule 45. Rule 45 merely calls for "deliver[y]" to the person. Fed.R.Civ.P. 45 (b)(1). There is no Second Circuit case law interpreting the Rule 45 requirement of "deliver[y]" as requiring personal service. There is relevant recent case law in this Circuit permitting service by means other than personal service under Rule 45. See, e.g., King, 170 F.R.D. 355; Cordius Trust v. Kummerfeld, 1999 U.S. Dist. Lexis 19980, *5-*6 (S.D.N.Y. 1999) (service of subpoena duces tecum served upon the third party witness by certified mail was sufficient to satisfy Rule 45).
Wright Miller rely on dicta in 1980 case law, citing FTC v. Compagnie de Saint-Gobain-Pont-A-Mousson, 636 F.2d 1300, 1312-13 (D.C. Cir. 1980) (held that service of an FTC investigatory subpoena on a French corporation in France by registered mail by the FTC was invalid). We find that the D.C. Circuit's explanatory distinction between the underlying rationales of Rule 4 and Rule 45 as that of notice and compulsion, respectively, is unpersuasive. The D.C. Circuit's suggestion that Rule 4 exclusively advances the objective of providing notice to a party, while Rule 45 exclusively aims to compel a third party to comply with the subpoena is a distinction without substance. Service of a summons and complaint on a party, governed by Rule 4, both notifies the party of a pending action and compels that party to comply by filing responsive papers or suffering a default judgment to be entered against it. Similarly, service of a subpoena on a third party witness to a litigation notifies the witness that his appearance is required, and compels compliance with the order therein. The elements of notice and compulsion exist under both Rules.
With respect to service by certified mail, the Cordius court held:
This Court thus joins those holding that effective service under Rule 45 is not limited to personal service. In accordance with the interpretative principle that the rules be construed and administered to secure the just, speedy, and inexpensive determination of every action, and given the textual ambiguity of Rule 45 combined with repeated attempts of the plaintiff to effectuate personal service, and the cost and delay that would result by requiring further attempts at such service, plaintiff is permitted to serve Kummerfeld by certified mail.Id., (internal quotations and citations omitted). Cordius may be distinguished from the present case insofar as the party in Cordius who sought to serve the non-party witness under Rule 45 moved for an order in advance of the service. Nonetheless, Cordius held that service by certified mail was sufficient compliance under Rule 45. As the Cordius court asserted in ordering such service, "certified mail reasonably insures actual receipt of the subpoena by the witness," such that "the 'delivery' requirement of Rule 45 will be met" and it "comports with due process . . . provid[ing] both notice and an opportunity to present objections."
Here, there is no issue that the Subpoena delivered by certified mail return receipt requested on May 15, 2002 was ultimately received by SDM on May 22, 2002. In April 2002, Discus had attempted on two separate occasions to serve a subpoena duces tecum on SDM personally before properly serving the Subpoena on the Secretary of State of New York. Given that certified mail return receipt requested requires delivery to the addressee and proof of delivery, that the text of Rule 45 only requires delivery and not personal service, the precedent of Cordius, the verified actual receipt of the Subpoena by SDM, and the practical circumstances supporting Discus' counsel's actions in this case, Discus' May 15, 2002 service of the Subpoena by certified mail on SDM was valid. SDM is ordered to produce the required documents to a court reporter in New City, New York or such other agent or place which the parties may agree upon by October 1, 2002.
C. Breadth of the Subpoena
SDM voices its opposition to the breadth of the Subpoena too late. Written objections or motions to quash are required to be served within 14 days of service of the Subpoena. Fed.R.Civ.P. 45(c)(2)(B) and 45 (c)(3)(A). Even were the court to overlook the untimely objection, Discus' requests are restricted to documents relating to tooth bleaching and whitening, delimiting a reasonably sized universe of materials for SDM to produce to Discus and SDM's objections are pro forma and overly broad. Based on the submitted declarations, the underlying data requested appears to be reasonably calculated to lead to the discovery of relevant evidence supporting Discus' counterclaims. Furthermore, the confidentiality order signed by the District Court in California is sufficient protection against SDM's concern of any potential harm to the confidentiality of the names of the survey participants. In the event that Discus may seek relief from the terms of the confidentiality order to divulge the names, Discus is ordered to give adequate notice to SDM so that SDM may move in the California court to prevent any injury to SDM by such disclosure of the names of the survey participants.
D. Expenses Pursuant to Fed.R.Civ.P. 37
The evidence has established that SDM received the Subpoena over three months before Discus filed its motion to compel, and refused to comply thereafter unless Discus filed such a motion. (Linder ¶ 14.) California counsel was forced to travel to New York to pursue the motion and payment of California counsel's reasonable costs is warranted. SDM is ordered to reimburse Discus for the costs of travel and hotel accommodations incurred by Discus' counsel to argue the present motion, as well as for the court fee paid by Discus in order to admit Discus' counsel to this court pro hac vice. Attorneys' fees are not awarded. SDM asserts that it did not receive notice of the service on the Secretary of State which prevented it from filing objections in a timely manner and the court believes that SDM's challenge to the release of the names of the surveyed participants may have some validity. Based on these circumstances, an award of attorneys' fees would be unjust. Fed.R.Civ.P. 37(4)(B).
Conclusion
For the foregoing reasons, Discus' motion to compel production of documents from SDM is granted. SDM's compliance by October 1, 2002 with the Subpoena is ordered and SDM is ordered to reimburse California counsel for Discus for the above designated expenses.
IT IS SO ORDERED.