Long v. McAfee ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 WAN TING LONG, et al., Case No. 1:19 -cv-00898-DAD-SAB 12 Plaintiffs, FINDINGS AND RECOMMENDATIONS RECOMMENDING DISMISSING ACTION 13 v. FOR PLAINTIFFS’ FAILURE TO COMPLETE SERVICE AND FAILURE TO 14 ERIC MCAFEE, et al., COMPLY WITH PREVIOUS COURT ORDERS 15 Defendants. (ECF Nos. 10, 11, 12, 13, 14, 15, 16, 17, 18, 16 20, 21, 22, 25) 17 OBJECTIONS DUE WITHIN TWENTY- ONE DAYS 18 19 I. 20 INTRODUCTION 21 The Court previously found the proofs of service filed by Plaintiffs in this action to be 22 facially contradictory and insufficient to prove service. The Court ordered Plaintiffs to provide 23 supplemental affidavits from the process server to explain how service was completed. Plaintiffs 24 have failed to comply with previous orders of this Court directing Plaintiffs to provide proper 25 affidavits from the process server demonstrating service, and have failed to complete service 26 through an alternative process server. For the reasons explained below, the undersigned 27 recommends dismissal of this action for failure to complete service in violation of Federal Rule of Civil Procedure Rule 4(m), and for failure to comply with the orders of this Court. 1 II. 2 BACKGROUND 3 A. Factual Allegations 4 On July 1, 2019, Wang Ting Long (“Long”) and Xuejun Makhsous (“Makhsous”) 5 (collectively “Plaintiffs”), proceeding pro se, filed this action alleging violations of the Federal 6 Securities and Exchange Act, fraud, breach of contract, and breach of fiduciary duties. (Compl., 7 ECF No. 1.) Plaintiffs claim the Defendants, individually and through the companies they 8 formed and control, took advantage of Plaintiff Long’s desire to immigrate to the United States. 9 (Id. at 1.) Long payed $500,000.00 in capital contribution, and $49,000.00 in administrative 10 fees, in connection with securities sold by Defendants relating to programs allowing for foreign 11 investors to apply for permanent residency in the United States through investing in companies. 12 (Id. at 1-5.) Plaintiff Makhsous received assignment of the $49,000.00 administrative fee for 13 translation and research work performed for Long. (Id. at 2.) Plaintiff Long claims to have been 14 taken advantage of in the purchase of the securities because Long did not have independent legal 15 representation, and Defendants materially misrepresented terms of the various agreements. (Id. 16 at 5-10.) Plaintiffs seek damages in excess of $549,000.00, in addition to punitive damages. (Id. 17 at 26.) 18 B. Procedural History and the Court’s Previous Orders Addressing Service 19 The Court issued summonses on July 2, 2019. (ECF Nos. 3, 4.) On July 2, 2019, the 20 Court also set an initial scheduling conference for September 10, 2019. (ECF No. 5.) On 21 August 28, 2019, because no service documents nor responsive pleading had been filed, the 22 Court reset the scheduling conference for December 17, 2019. (ECF No. 7.) 23 On September 24, 2019, because Plaintiffs failed to file proofs of service showing that 24 Defendants had been served in this action, the Court ordered Plaintiffs to file a notice of status of 25 service within fourteen (14) days of entry of the order. (ECF No. 10.) On October 7, 2019, 26 Plaintiffs filed proofs of service alleging service on some, but not all of the then named 27 Defendants. (ECF No. 11.) On October 7, 2019, Plaintiffs also filed a request for entry of 1 On October 25, 2019, the Court denied Plaintiffs’ request for entry of default. (ECF No. 2 13.) First, the Court noted that as for two named Defendants, U.S. Regional Center Services, 3 LLC, and Park Capital Management, LLC, Plaintiffs had not filed proofs of service for such 4 Defendants, nor sought entry of default against such Defendants. (Id. at 10.) Additionally, while 5 Plaintiffs did seek default against Defendants California Energy Investment Company, LLC, 6 Aemetis, Inc., and AE Advanced Fuels, Inc., Plaintiffs had not filed any proofs of service 7 pertaining to these Defendants. (Id. at 10-11.) The Court advised Plaintiffs that they must file 8 proofs of service for such Defendants or the Court would recommend dismissal of such 9 Defendants. (Id. at 10-11, 26.) 10 As for the remaining Defendants, Advanced BioEnergy GP, LLC, Advanced BioEnergy, 11 LP, Eric McAfee, Adam McAfee, Joseph Penbera, and Michael Penbera, the Court found the 12 proofs of service submitted were facially inconsistent in that the boxes meant to indicate whether 13 personal service or substitute service was completed were both checked on the forms, and the 14 manner in which they were filled out presented questions of reliability. (Id. at 11-22.) 15 Additionally, even if the Court were to proceed on the assumption that the process server 16 intended only to indicate substitute service, given the totality of the circumstances presented, the 17 Court also questioned whether substitute service could have been effectuated in compliance with 18 Federal Rule of Civil Procedure 4 and California law. (Id.) The Court advised Plaintiffs they 19 were required to file amended proofs of service or supplemental affidavits demonstrating proper 20 service had been completed on these Defendants. (Id.) The Court also advised Plaintiffs they 21 may wish to re-serve Defendants entirely given the Court’s explanation of the applicable law 22 governing substitute service. (Id. at 18, 22.) Given the pro se status of Plaintiffs, the Court 23 provided additional “Concluding Remarks to the Pro Se Plaintiffs” explaining the requirements 24 of service under Federal Rule of Civil Procedure 4, why the Court could not accept the proofs of 25 service as filed, and found that in the interests of justice the Court would provide Plaintiffs 26 additional time to prove service. (ECF No. 13 at 22-25.) The Court specifically stated: “To this 27 end, the Court has extensively set forth above the applicable legal standards governing service of 1 standards when they address the facial inconsistencies in the proofs of service, and so that the 2 pro se Plaintiffs may make an informed decision on whether to proceed by filing amended proofs 3 of service or affidavits explaining how service was proper, or whether to proceed by attempting 4 service in another manner on one or more of the defendants.” (ECF No. 13 at 25.) 5 On November 12, 2019, Plaintiffs filed a motion for default judgment. (ECF No. 14.) 6 On November 15, 2019, the Court denied Plaintiffs’ motion for default judgment as premature 7 given that no entry of default had entered pursuant to the Court’s October 25, 2019 order 8 denying entry of default. (ECF No. 15.) The Court also reminded Plaintiffs the thirty-day 9 deadline to comply with the Court’s October 25, 2019 order was approaching. (Id. at 3.) 10 On November 21, 2019, Plaintiffs filed three separate documents: (1) a filing entitled 11 “motion to reconsider,” which the Court construed as a motion to reconsider the Court’s order 12 entered on October 25, 2019, denying Plaintiffs’ request for entry of default (ECF No. 16); (2) a 13 document entitled “updated request for entry of default,” with an attached proposed order that 14 was entitled “proposed default judgment order” (ECF No. 17); and (3) a supplemental affidavit 15 by Plaintiff Makhsous, describing certain efforts to contact and serve the Defendants in this 16 action (ECF No. 18). 17 On December 16, 2019, the Court denied Plaintiffs’ motion for reconsideration and 18 updated request for entry of default. (ECF No. 20.)1 In the order, the Court expressed its 19 concern with the modified proofs of service that were submitted by Plaintiffs. Specifically, the 20 Court could not accept the modified proofs of service as presented because: (1) the modified 21 proofs of service did not contain a signature and date from the process server Queenie Orteza 22 (“Orteza”), or the individual who modified the proofs of service attesting to the truth and 23 knowledge of the modifications and information conveyed in the proofs of service; and (2) 24 aspects of the modified proofs of service appeared to demonstrate that the documents were 25 altered using a computer program, a copier, or otherwise, by utilizing signatures and aspects 26 from the other proofs of service to make it appear as if the process server had made the 27 1 In the December 16, 2019 order, the Court terminated Defendants U.S. Regional Center Services, LLC, and Park Capital Management, LLC, pursuant to the Plaintiffs’ request to voluntarily dismiss such Defendants. (ECF No. 20 1 modifications. (Id. at 16-17.) Based on these facts and other reasons explained in the order, the 2 Court denied Plaintiffs’ motion for reconsideration and updated request for entry of default. (Id. 3 at 14-20.) The Court ordered Plaintiffs to provide, within thirty (30) days of service of the order, 4 an affidavit from the process server explaining how the modifications were made to the proofs of 5 service and explaining how service was effectuated. (Id. at 20.) The Court warned Plaintiffs that 6 the failure to comply with the order would result in the recommendation of dismissal of this 7 action because Plaintiffs had failed to demonstrate that any Defendant had been properly served 8 in accordance with Rule 4 and California law. (Id.) The Plaintiffs were also advised that upon 9 receipt of the affidavit from the process server, the Court would then consider holding a live 10 evidentiary hearing whereby the process server would be required to appear in person to testify 11 as to the modifications made to the originally submitted proofs of service. (Id. at 19.) 12 On January 17, 2020, Plaintiffs filed a motion for an extension and reconsideration. 13 (ECF No. 21.) On January 24, 2020, the Court granted Plaintiffs an extension of time to comply 14 with the Court’s previous order, and denied the motion for reconsideration. (ECF No. 22.) 15 Plaintiffs’ filing indicated that when Plaintiffs had requested the process server Orteza to update 16 the proofs of service, Orteza instructed Plaintiff Makhsous to make the corrections on the proofs 17 of service as Orteza was out of town and had no access to a computer. (ECF No. 21 at 4, Ex. 2.) 18 The Court found this to be an implicit confirmation of the Court’s concern that the modified 19 proofs of service were not in fact modified by Orteza but had been altered to look as if the 20 process server had modified them, and the Court notified Plaintiffs that this was unacceptable. 21 (ECF No. 22 at 3-4.) Nonetheless, given the fact the modifications were apparently made at the 22 direction and with the consent of the process server, the Court declined to find Plaintiffs were 23 intending to perpetuate a fraud on the Court. (Id. at 4.) The Court noted that it was “concerned 24 that it appears Orteza is reluctant or unhurried to provide her clients, Plaintiffs in this action, with 25 sufficient proofs of service attesting to the fact that she completed service.” (Id. at 5.) Given 26 this concern with the process server’s communications with Plaintiffs, the Court sought to avoid 27 locking Plaintiffs into an untenable situation where Plaintiffs could only continue in this 1 additional thirty days to provide either: (1) an affidavit from Orteza attesting to how the 2 modifications to the proofs of service, whether she authorized Plaintiffs to modify them, and how 3 service was effectuated, in addition to an affidavit from either Plaintiff attesting to who modified 4 the proofs of service and whether they were authorized to do so; or alternatively (2) an affidavit 5 from a Plaintiff attesting to how the proofs of service were modified and describing the diligence 6 made to obtain an affidavit from Orteza, in addition to obtaining the services of an alternate 7 process server to serve Defendants and filing such proofs of service. (ECF No. 22 at 6.) The 8 Court also clearly advised Plaintiffs that the failure to comply with the order would result in the 9 recommendation of dismissal of this action because Plaintiffs had failed to demonstrate that any 10 defendant had been properly served with the complaint and summonses in accordance with the 11 requirements of Federal Rule of Civil Procedure 4 and the California Code of Civil Procedure. 12 (ECF No. 22 at 7.) 13 In response to the Court’s order, on February 24, 2020, Plaintiff Makhsous filed an 14 affidavit and exhibits that are currently before the Court for consideration. (ECF No. 25.) 15 III. 16 LEGAL STANDARD 17 The legal standards and case law regarding service under Federal Rule of Civil Procedure 18 4 and the California Code of Civil Procedure were previously set out in the Court’s orders in an 19 extensive and informational manner for the pro se Plaintiffs, and such information is 20 incorporated herein by way of reference. (ECF Nos. 13, 20.) 21 Rule 4(m) of the Federal Rules of Civil Procedure addresses the time requirements for 22 service of the complaint in civil cases, and provides: 23 If a defendant is not served within 90 days after the complaint is filed, the court-- on motion or on its own after notice to the plaintiff--must dismiss the action 24 without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the failure, the court must 25 extend the time for service for an appropriate period. 26 Fed. R. Civ. P. 4(m). Unless service is waived, proof of service must be made to the Court, and 27 unless the U.S. Marshal serves, proving service must be accomplished by an affidavit of the 1 “A federal court does not have jurisdiction over a defendant unless the defendant has 2 been served properly under” Federal Rule of Civil Procedure 4. Direct Mail Specialists, Inc. v. 3 Eclat Computerized Techs., Inc., 840 F.2d 685, 688 (9th Cir. 1988) (citing Jackson v. Hayakawa, 4 682 F.2d 1344, 1347 (9th Cir.1982)). “Rule 4 is a flexible rule that should be liberally construed 5 so long as a party receives sufficient notice of the complaint.” Direct Mail, 840 F.2d at 688 6 (quoting United Food & Commercial Workers Union v. Alpha Beta Co., 736 F.2d 1371, 1382 7 (9th Cir. 1984)). However, “without substantial compliance with Rule 4, ‘neither actual notice 8 nor simply naming the defendant in the complaint will provide personal jurisdiction.’ ” Direct 9 Mail, 840 F.2d at 688 (quoting Benny v. Pipes, 799 F.2d 489, 492 (9th Cir.1986)). “Once 10 service is challenged, plaintiffs bear the burden of establishing that service was valid under Rule 11 4.” Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004) (citations omitted). “[A] signed 12 return of service constitutes prima facie evidence of valid service which can be overcome only 13 by strong and convincing evidence.” SEC v. Internet Solutions for Bus., Inc., 509 F.3d 1161, 14 1163 (9th Cir. 2007). 15 Local Rule 110 provides that the “[f]ailure of counsel or of a party to comply with these 16 Rules or with any order of the Court may be grounds for imposition by the Court of any and all 17 sanctions . . . within the inherent power of the Court.” L.R. 110. The Court has the inherent 18 power to control its docket and may, in the exercise of that power, impose sanctions where 19 appropriate, including dismissal of the action. Bautista v. Los Angeles County, 216 F.3d 837, 20 841 (9th Cir. 2000); Ready Transp., Inc. v. AAR Mfg., Inc., 627 F.3d 402, 404 (9th Cir. 2010). 21 IV. 22 DISCUSSION 23 A. Plaintiff Makhsous’ Affidavit and Exhibits 24 In response to the Court’s most recent order, Plaintiff Makhsous filed an affidavit 25 describing actions the Plaintiffs took to complete service, some of which have previously been 26 presented and considered by the Court, in addition to additional arguments, facts, and exhibits. 27 (Pl. Xuejun Makhsous Aff. (“Makhsous Aff.”), ECF No. 25.) The Court shall now summarize 1 On July 8, 2019, Makhsous sent an email to Defendants Eric McAfee, Joseph Penbera, 2 and Michael Penbera requesting a waiver of service, but none of these Defendants replied to the 3 request. (Makhsous Aff. ¶ 2, Ex. 1, ECF No. 25 at 5.)2 On July 23, 2019, Makhsous hired a 4 private server, Eddings Attorney Service, to “deliver summons and the summons returned 5 unserved.” (Makhsous Aff. ¶ 3.)3 Plaintiff declares that on July 29, 2019, Defendant Joseph 6 Penbera sent an email to Plaintiffs and other Defendants, stating that all mail should be sent to 7 c/o Aemetis, at the Cupertino Address, and that Defendant Michael Penbera and California 8 Energy Investment Center, LLC, “also list their address” as 20400 Stevens Creek Blvd., Suite 9 700, Cupertino, CA 95014 (the “Cupertino Address”). (Makhsous Aff. ¶ 4, Ex. 2.)4 10 On July 31, 2019, process server Orteza of Bay Area Servers, hired by Makhsous, went 11 to the office of Aemetis at the Cupertino Address and “delivered [the] summons and complaints 12 to an individual sitting in the reception area,” however, “[s]he didn’t get the name of the 13 individual since he was on the phone at the time,” and Orteza took a photo of the office at 14 Aemetis. (Makhsous Aff. ¶ 5; Ex. 3.)5 15 On August 21, 2019, Plaintiff Makhsous mailed copies of the summons and complaint to 16 Defendant Eric McAfee at the Cupertino Address. (Makhsous Aff. ¶ 6; Ex. 4.) Makhsous 17 contends that on or about August 23, 2019, “after Defendant Eric McAfee received copies of 18 [the] summons and complaint from Plaintiff Makhsous, he called Plaintiff Makhsous and 19 Wanting Long for a meet and confer on September 10 in compliance to orders issued by this 20 Court,” and that “[i]n September 2019, Defendant Eric McAfee pretended to offer a settlement 21 2 The Court previously reviewed this email before finding the totality of the facts presented did not demonstrate 22 sufficient proof of service on Defendants, particularly in light of the doctoring of the modified proofs of service. (ECF Nos. 16 at 10; 20 at 12, 14-20.) 23 3 Plaintiffs previously attached documentation of the service attempts completed by Eddings Attorney Service that 24 was reviewed by the Court before finding the totality of the facts presented did not demonstrate sufficient proof of service on Defendants. (ECF Nos. 16 at 11; 20 at 12, 14-20.) 25 4 The Court previously reviewed and considered this email prior to finding the totality of the facts presented did not demonstrate sufficient proof of service on Defendants. (ECF Nos. 16 at 12; 20 at 12, 14-20.) 26 5 The Court previously reviewed and considered this fact and the photograph of the office prior to finding the 27 totality of the facts presented did not demonstrate sufficient proof of service on Defendants. (ECF Nos. 16 at 7-8, 14; 20 at 14-20.) 1 agreement in exchange of Plaintiffs withdrawing this instant legal action against all Defendants 2 without definite assurance of returning investment to Plaintiffs.” (Makhsous Aff. ¶ 7.)6 3 On or about September 10, 2019, Orteza hand delivered the proofs of service to Plaintiff 4 Wanting Long. (Makhsous Aff. ¶ 8.) 5 On November 16, 2019, Makhsous states that Orteza “finally responded to the repeated 6 requests made by Plaintiff Makhsous and instructed her to make corrections to [the proofs of 7 service] because Queenie Orteza didn’t have access to [a] computer to make correction[s] at that 8 time,” and “[u]nder the authorization given by Queenie Orteza, on or about November 17, 2019, 9 Plaintiff Makhsous made corrections to the [proofs of service] provided by Queenie Orteza based 10 on her description of service [of] process in that she didn’t personally serve Defendant Eric 11 McAfee but left summons and complaints with a man sitting by the reception desk.” (Makhsous 12 Aff. ¶¶ 10-11, Ex. 5.)7 13 On January 7, 2020, Plaintiff Makhsous sent Orteza a request for an affidavit and copies 14 of the modified proofs of service. (Makhsous Aff. ¶ 12, Ex. 6, ECF No. 25 at 12.) Specifically, 15 the email is very short and states in relevant part: “Please review the attached affidavit and sign 16 and notarize it. I need it to send to court to seek default judgement [sic]. Thank you for your 17 help.” (Ex. 6.) Plaintiff cites no other communications until February 2, 2020, when Plaintiff 18 emailed Orteza stating: “The Court has ordered us to hire [a] new Processor to serve summons to 19 Defendants as your proofs of service are defective and can’t be used at Court. You have 20 repeatedly refused to file affidavits to validate your proofs of service. Please refund our fees so 21 we can find a new processor to serve summons to defendants. See court order attached.” (Ex. 7, 22 ECF No. 25 at 13.) 23 /// 24 /// 25 6 The Court previously reviewed and considered the August 21, 2019 mailing, and the communications regarding settlement that occurred between Plaintiff Makhsous and Eric McAfee in September of 2019. (ECF Nos. 16 at 5-7, 26 26-27; 20 at 13-20; 21 at 2-4.) 27 7 The Court previously reviewed and considered Plaintiff’s proffered explanation for submitting the modified proofs of service in such a manner as to indicate they had been modified by the process server directly. (ECF Nos. 21 at 4- 1 Orteza “refused to provide the affidavit and sent Plaintiff Makhsous a cease and desist 2 letter” on February 11, 2020. (Makhsous Aff. ¶ 13, Ex. 7.) Specifically, Orteza wrote: 3 We already fulfilled our original agreement to process serve and provided you with evidence. We only contracted to deliver the documents. You never 4 provided the exhibits what was modified. You and I do not have a new contract to produce an affidavit. And we decline any offers to contract with you. 5 This is a cease and desist notice. 6 Fee schedule: You agree to pay $100,000 per each attempt to contact me, any use 7 of my business names or trademarks, defamation, slander. In addition, you agree to pay $10,000 per hour of my time to deal with any of your communications or 8 communications done on your behalf. 9 This is a legal notice to principal is notice to agent, notice to agent to principal. 10 If you do not want to pay my fees listed, cease and desist from all contacts with me and my business. 11 12 (Ex. 7.) 13 Makhsous contends Plaintiffs did not hire a new process server because: “Given the 14 expenses of hiring previous two private servers and travel from Chicago and China for a hearing 15 scheduled by this Court on September 10[,] 2019, Plaintiffs are not able to afford new private 16 servers without any assurance of successful service of summons.” (Makhsous Aff. ¶ 14.) 17 Additionally, Makhsous states that: “Per Rule 7004(b)(1) and (3), Plaintiff Makhsous mailed 18 copies of summons and complaints to Defendants who conduct business or profession at [the 19 Cupertino Address] on February 19, 2020.” (Makhsous Aff. ¶ 15, Ex. 8.) 20 B. The Most Recently Filed Proof of Service is Invalid and Plaintiff’s Affidavit Fails to Comply with the Court’s Prior Orders 21 22 In the Court’s most recent order issued January 24, 2020, the Court granted Plaintiffs an 23 extension of time to comply with the Court’s prior order, and ordered Plaintiffs to provide, 24 within thirty days of service of the order, either (1) affidavits from Orteza, and a Plaintiff, 25 describing the completion of service and explaining the modification of the previous proofs of 26 service; or (2) an affidavit from a Plaintiff describing efforts to obtain an affidavit from Orteza, 27 and proofs of service from an alternative process server demonstrating service has been 1 By providing the ability to utilize a different process server, the Court wanted to ensure 2 Plaintiffs were not locked into an untenable position where they could only rely on process 3 server Orteza to complete service in this action. The Court also clearly advised Plaintiffs that the 4 failure to comply with the order would result in the recommendation of dismissal of this action 5 because Plaintiffs had failed to demonstrate that any Defendant had been properly served with 6 the complaint and summonses in accordance with the requirements of Federal Rule of Civil 7 Procedure 4 and the California Code of Civil Procedure. (ECF No. 22 at 7.) 8 The Court notes that Plaintiffs have submitted no evidence of communications with 9 Orteza following the Court’s order issued on January 24, 2020, aside from the February 2, 2020 10 email through which Plaintiffs requested a refund from Orteza in order to pay for a new process 11 server but did not make any further request for an affidavit. (Ex. 7, ECF No. 25 at 13.) 12 Nonetheless, the Court finds Plaintiffs have adequately demonstrated through the attached “cease 13 and desist” letter from Orteza, that Plaintiffs will be unable to obtain a sufficient affidavit from 14 process server Orteza. (Id.) The Court recognizes the extremely unprofessional nature exhibited 15 by Orteza in her most recent communication. (Id.) The Court also finds that the most recent 16 communication from Orteza and the unprofessional nature exhibited further reinforces the 17 appropriateness of the Court’s previous decisions rejecting the proofs of service previously filed. 18 However, instead of obtaining the services of a reputable process server to complete 19 service on the Defendants as the Court afforded the Plaintiffs the opportunity to do, Plaintiffs 20 rather contend that given the expenses incurred in hiring two process servers and in travelling 21 from Chicago and China for a hearing scheduled by this Court on September 10, 2019, Plaintiffs 22 are “not able to afford new private servers without any assurance of successful service of 23 summons.” (Makhsous Aff. ¶ 14.) While the Court is sympathetic to any lost costs associated 24 with the hiring of process server Orteza, the Court does not find this to be a valid reason nor 25 good cause for non-compliance with the Court’s previous orders and the requirements of service 26 under the Federal Rules of Civil Procedure. Further, Plaintiff’s most recently filed proof of 27 service fails to satisfy the requirements for service because service must be completed by a non- 1 inapplicable to this action. 2 The Court first turns to the most recent proof of service filed. 3 1. Plaintiffs’ Most Recently Filed Proof of Service 4 Attached to Plaintiff Makhsous’ most recent affidavit is a proof of service form. (ECF 5 No. 25 at 4.) The proof of service purports to demonstrate that service was completed by first 6 class mail on February 19, 2020, by Plaintiff Xuejun Makhsous as server, and provides that “Per 7 Rule 7004 copies of summons and complain[t] [were] mailed by first class mail postage prepaid 8 to the place where the individual regularly conducts a business or profession, to an officer/agent 9 of a domestic LLC, partnership.” (Id.) Plaintiff also attaches a printout of Rule 7004 of the 10 Federal Rules of Bankruptcy Procedure. (ECF No. 25 at 11.) 11 First, service must be completed by a non-party and thus any service attempted to be 12 completed by a party in this action is invalid. See Fed. R. Civ. P. 4(c)(2) (stating service must be 13 completed “[a]ny person who is at least 18 years old and not a party.”). Therefore, even if the 14 manner of service complied with other applicable rules for service, which it does not, service is 15 facially invalid because it was completed by Plaintiff Makhsous, a party in this action. Further, 16 even if a party could serve process, the proof of service does not specify which Defendant or 17 Defendants were purportedly served through this manner. (Id.) 18 Additionally, while Plaintiff cites to Rule 7004 in the proof of service and affidavit, Rule 19 7004 is a Federal Rule of Bankruptcy Procedure which governs service in bankruptcy 20 proceedings, whereas the Federal Rules of Civil Procedure apply to general civil litigation 21 actions, such as this case. See Fed. R. Civ. P. 1 (“These rules govern the procedure in all civil 22 actions and proceedings in the United States district courts, except as stated in Rule 81.”); Fed. 23 R. Civ. P. 4(c) (providing rules for service in civil actions); Fed. R. Civ. P. 81(a)(2) (“These rules 24 apply to bankruptcy proceedings to the extent provided by the Federal Rules of Bankruptcy 25 Procedure.”); Fed. R. Bankr. P. 1001 (“The Bankruptcy Rules and Forms govern procedure in 26 cases under title 11 of the United States Code.”); Fed. R. Bankr. P. 7001 (describing the scope 27 and application of the bankruptcy rules to adversarial bankruptcy proceedings); Fed. R. Bankr. P. 1 For all of these reasons, Plaintiffs’ most recent proof of service and affidavit fails to 2 prove service on any Defendants in this action, and fails to comply with the previous orders of 3 the Court. 4 2. Plaintiffs’ Travel Costs 5 As for the claimed travel costs, the Court first notes that Plaintiffs have provided no 6 evidence or documentation demonstrating the amount expended for travel, if any. Plaintiffs have 7 also not indicated whether or when they received the August 28, 2019 order continuing the 8 scheduling conference. (ECF No. 7.) The Court recognizes that given Plaintiffs reside in China 9 and in Illinois, there may have been some delay in receiving the notice through postal mail. 10 Plaintiffs do not provide any information on whether they received such notice prior to or after 11 traveling, or whether they attempted to cancel or modify their travel arrangements after receiving 12 such notice. Even if Plaintiffs had done so, such costs would not relieve Plaintiffs of their duty 13 to serve the Defendants in this action. While Plaintiffs are proceeding pro se, they are not 14 proceeding in forma pauperis, which would entitle the Plaintiffs to a mechanism for service 15 without cost to the Plaintiffs. See 28 U.S.C. § 1915(d) (“The officers of the court shall issue and 16 serve all process, and perform all duties in [in forma pauperis] cases.”); Fed. R. Civ. P. 4(c)(3) 17 (“At the plaintiff’s request, the court may order that service be made by a United States marshal 18 or deputy marshal or by a person specially appointed by the court. The court must so order if the 19 plaintiff is authorized to proceed in forma pauperis under 28 U.S.C. § 1915.”); Uribe v. 20 McKesson, No. CIVIL 08-1285 DMSNLS, 2009 WL 63003, at *1 (E.D. Cal. Jan. 9, 2009). 21 Further, Plaintiffs never sought relief from travel expenses prior to incurring them by 22 requesting a telephonic appearance. Again, the Court recognizes that given the date of mailing, 23 the Plaintiffs had less than two weeks’ notice of the change to the scheduling conference date. 24 However, in addition to no record of expenses actually incurred for travel, there is also no record 25 or indication that Plaintiffs contacted the Court to inquire about making a telephonic appearance 26 at the scheduling conference prior to making travel arrangements.8 27 8 The Court notes that Plaintiffs did not hesitate to file a motion for an exception to Local Rule 133 in seeking permission to e-file on July 1, 2019, the day the complaint was filed in this action, and again on September 12, 2019. 1 The information contained in the order setting the scheduling conference further confirms 2 that Plaintiffs were provided with adequate notice of the requirements of service prior to holding 3 the scheduling conference, and of the possibility for telephonic appearances. On July 2, 2019, 4 the Court set an initial scheduling conference to occur on September 10, 2019. (ECF No. 5.) 5 The July 2, 2019 order setting the mandatory scheduling conference provided the following 6 guidance and requirements for filing service documents prior to proceeding with the scheduling 7 conference and the litigation generally: 8 The Court is unable to conduct a Scheduling Conference until the defendant has been served with the summons and complaint. Accordingly, the plaintiff shall 9 diligently pursue service of the summons and complaint and dismiss those defendants against whom plaintiff will not pursue claims. The plaintiff shall 10 promptly file proofs of service of the summons and complaint so the Court has a record of service. Counsel are referred to Fed. R. Civ. P. 4, regarding the 11 requirement of timely service of the complaint. Failure to timely serve the summons and complaint may result in the imposition of sanctions, including 12 dismissal of unserved defendants. 13 (ECF No. 5 at 1.) Thus, Plaintiffs were notified by the Court’s very first filing in this action that 14 it was their duty to promptly file proofs of service of the summons and complaint and were 15 referred to Federal Rule of Civil Procedure 4. On August 28, 2019, due to no certificates of 16 service nor responsive pleadings filed in the action, the Court reset the scheduling conference for 17 December 17, 2019. (ECF No. 7.) 18 As for the fact that Plaintiffs did not request a telephonic appearance, the Court 19 recognizes that the July 2, 2019 order provided that “[a]ttendance at the Scheduling Conference 20 is mandatory for all parties,” specified that “[p]arties may appear by their counsel, if 21 represented,” and that “[i]f a party is not represented by counsel, they must appear personally at 22 the Scheduling Conference.” (ECF No. 5 at 2.) The scheduling order further provides that: 23 “Counsel may request that their attendance be by telephonic conference,” and “[i]f one or 24 more parties wish to appear telephonically, counsel shall contact . . . [the] Courtroom Deputy 25 Clerk . . . sufficiently in advance of the conference so that a notation can be placed on the court 26 calendar.” (ECF No. 5 at 3 (emphasis in original).) Thus, while the order specifies pro se parties 27 must appear personally, the scheduling order provides a mechanism for telephonic appearances, 1 Plaintiffs to appear telephonically.9 2 Finally, Plaintiffs are claiming damages in this action in excess of half of a million 3 dollars ($549,000.00). (ECF No. 1 at 25-26.) It is perplexing to the Court why the relatively 4 small of cost of completing service would result in Plaintiffs refusing to hire another process 5 server to complete service in this action, particularly given the number of individual and entity 6 defendants named in this action. 7 For all of the above reasons, the Court finds Plaintiffs’ proffered reason of an inability to 8 pay for another process server to complete service in this action without assurances of successful 9 service, does not establish good cause, nor excusable neglect for the failure to complete service 10 in this action nor for the failure to comply with the Court’s previous orders. 11 C. The Court Recommends Dismissal for Failure to Serve Under Rule 4 12 Untimely service of process is governed by Federal Rule of Civil Procedure 4(m), which 13 requires a district court to dismiss a plaintiff’s causes of action against any defendant that is not 14 timely served with process, unless plaintiff shows good cause: 15 (m) Time Limit for Service. If a defendant is not served within 90 days after the complaint is filed, the court--on motion or on its own after notice to the plaintiff-- 16 must dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for 17 the failure, the court must extend the time for service for an appropriate period. 18 Fed. R. Civ. P. 4(m). 19 “Rule 4(m) requires a two-step analysis in deciding whether or not to extend the 20 prescribed time period for the service of a complaint.” In re Sheehan, 253 F.3d 507, 512 (9th 21 Cir. 2001); see also Lemoge v. United States, 587 F.3d 1188, 1198 (9th Cir. 2009); Hopson v. 22 Nove Plaza, LLC, No. 117CV01746AWISAB, 2019 WL 1078351, at *3 (E.D. Cal. Mar. 7, 23 2019). “First, upon a showing of good cause for the defective service, the court must extend the 24 time period.” In re Sheehan, 253 F.3d at 512. “Second, if there is no good cause, the court has 25 the discretion to dismiss without prejudice or to extend the time period.” Id. 26 9 The Court notes the scheduling order uses the terms “counsel” and “parties” in the section pertaining to telephonic 27 appearances. (ECF No. 5 at 3.) The Court notes that the Local Rules specify that the term “Counsel” “refers to an attorney and/or a party acting in propia persona or pro se.” L.R. 101; see also L.R. 183(a) (“All obligations placed 1 The Ninth Circuit has stated that “[g]ood cause to avoid dismissal may be demonstrated 2 by establishing, at minimum, excusable neglect,” and that “[i]n addition to excusable neglect, a 3 plaintiff may be required to show the following factors to bring the excuse to the level of good 4 cause: ‘(a) the party to be served personally received actual notice of the lawsuit; (b) the 5 defendant would suffer no prejudice; and (c) plaintiff would be severely prejudiced if his 6 complaint were dismissed.’ ” Lemoge, 587 F.3d at 1198 n.3 (quoting Boudette v. Barnette, 923 7 F.2d 754, 756 (9th Cir.1991)). 8 The Court repeatedly provided Plaintiffs with the applicable law and standards 9 concerning service of process and afforded Plaintiffs multiple opportunities to explain and rectify 10 the situation. Although explained in greater detail above, the Court shall summarize the relevant 11 timeline once again. Plaintiffs filed this action on July 1, 2019, and on July 2, 2019, the Court 12 issued an order setting the scheduling conference that explained the requirements of completing 13 service and filing proof of such with the Court. (ECF Nos. 1, 5.) Ninety (90) days after the 14 filing date was September 29, 2019. See Fed. R. Civ. P. 4(m) (defendant must be served within 15 ninety days of filing of a complaint). In anticipation of the expiration of the ninety-day period, 16 on September 24, 2019, the Court ordered Plaintiffs to file a notice of status of service within 17 fourteen (14) days of service of the order. (ECF No. 10.) On October 7, 2019, Plaintiffs filed 18 certificates of service and a request for entry of default. (ECF Nos. 11, 12.) Therefore, the 19 proofs of service were first filed in this action beyond the ninety (90) day deadline. 20 After finding the proofs of service facially invalid and insufficient to prove service, on 21 October 25, 2019, given Plaintiffs’ pro se status and the interests of justice, the Court granted 22 Plaintiffs an additional thirty (30) days to prove service. (ECF No. 13 at 22-25.) On November 23 21, 2019, Plaintiffs filed a motion to reconsider and a supplemental affidavit. (ECF Nos. 16, 17, 24 18.) On December 16, 2019, the Court rejected the modified proofs of service as facially invalid 25 and granted Plaintiffs an additional thirty (30) days to provide sufficient affidavits explaining the 26 modifications and effectuation of service. (ECF No. 20.) On January 17, 2020, Plaintiffs filed a 27 motion for an extension and reconsideration. (ECF No. 21.) On January 24, 2020, the Court 1 utilize the services of an alternative process server. (ECF No. 22.) On February 24, 2020, 2 Plaintiffs then filed an affidavit and exhibits which the Court has considered herein. (ECF No. 3 25.) 4 Given the Court’s previous orders granting Plaintiffs additional time to complete service, 5 Plaintiffs’ proffered reason for now failing to hire a new process server, the monetary cost, does 6 not even present excusable neglect for the failure to serve under Rule 4, let alone good cause. 7 See Hopson, 2019 WL 1078351, at *2–3 (Here, Hobson has failed to even attempt to show good 8 cause or excusable neglect for her failure to serve Nove Plaza by now. Hobson did not provide 9 the Court with a meaningful response to the Court’s order to show cause from February 1, 2019, 10 despite being ordered to do so and despite being given additional time to do so . . . In the past, 11 the Court exercised its discretion to grant Hobson multiple extensions to the service period. But 12 now, the Court will neither grant another extension nor reward Hobson for her failure to comply 13 with the Court’ s recent order to show cause.”) (emphasis in original). Further, other factors that 14 would present good cause are not present, as based on the totality of the facts and documents 15 presented through the various filings, the Court cannot say which Defendants or whether any 16 Defendant received actual notice of the lawsuit, nor that any Defendant would suffer no 17 prejudice if a further extension was granted. Lemoge, 587 F.3d at 1198 n.3. 18 Accordingly, the Court would recommend exercising its discretion to decline extending 19 the time period for service yet again, and recommends dismissing this action without prejudice. 20 D. The Court Recommends Dismissal for Failure to Comply with Court Orders 21 For all of the same reasons discussed above, the Court finds Plaintiffs have repeatedly 22 failed to comply with the orders of this Court, and recommends dismissal of the action for such 23 failure. 24 A court may dismiss an action based on a party’s failure to prosecute an action, failure to 25 obey a court order, or failure to comply with local rules. See, e.g. Ghazali v. Moran, 46 F.3d 52, 26 53-54 (9th Cir. 1995) (dismissal for noncompliance with local rule); Ferdik v. Bonzelet, 963 F.2d 27 1258, 1260-61 (9th Cir. 1992) (dismissal for failure to comply with an order to file an amended 1 comply with local rule requiring pro se plaintiffs to keep court apprised of address); Malone v. 2 United States Postal Serv., 833 F.2d 128, 130 (9th Cir. 1987) (dismissal for failure to comply 3 with court order); Henderson v. Duncan, 779 F.2d 1421, 1424 (9th Cir. 1986) (dismissal for lack 4 of prosecution and failure to comply with local rules). 5 In determining whether to dismiss an action for failure to comply with a pretrial order, 6 the Court must weigh “(1) the public’s interest in expeditious resolution of litigation; (2) the 7 court’s need to manage its docket; (3) the risk of prejudice to the defendants; (4) the public 8 policy favoring disposition of cases on their merits; and (5) the availability of less drastic 9 sanctions.” In re Phenylpropanolamine (PPA) Products Liability Litigation, 460 F.3d 1217, 1226 10 (9th Cir. 2006); Thompson v. Hous. Auth. of City of Los Angeles, 782 F.2d 829, 831 (9th Cir. 11 1986). These factors guide a court in deciding what to do, and are not conditions that must be 12 met in order for a court to take action. In re Phenylpropanolamine (PPA) Products Liability 13 Litigation, 460 F.3d at 1226. 14 In this instance the public’s interest in expeditious resolution of the litigation and the 15 Court’s need to manage its docket weigh in favor of dismissal. Id. Plaintiffs were repeatedly 16 provided with the legal standards for service and were repeatedly granted extensions to comply 17 with such requirements and to comply with the Court’s orders. Plaintiffs’ failure to comply with 18 the orders of the Court hinders the Court’s ability to move this action towards disposition, and 19 indicates that Plaintiffs do not intend to diligently litigate this action. 20 Since it appears that Plaintiffs do not intend to litigate this action diligently there arises a 21 rebuttable presumption of prejudice to the Defendants in this action. In re Eisen, 31 F.3d 1447, 22 1452-53 (9th Cir. 1994). This risk of prejudice may be rebutted if Plaintiffs offer an excuse for 23 the delay. In re Eisen, 31 F.3d at 1453. The delay in this action is solely attributable to 24 Plaintiffs’ failure to comply with the Court’s previous orders and attempts to take shortcuts in 25 completing service. The record demonstrates that Plaintiffs do not intend to diligently complete 26 service and the risk of prejudice to the Defendants weighs in favor of dismissal. 27 The public policy in favor of deciding cases on their merits is outweighed by the factors 1 proceed no further without Plaintiffs complying with the orders of this Court and completing 2 service on the Defendants. This action cannot simply remain idle on the Court’s docket, 3 unprosecuted. In this instance, this factor does not outweigh Plaintiffs’ failure to comply with 4 the Court’s orders. 5 Finally, a court’s warning to a party that their failure to obey the court’s order will result 6 in dismissal satisfies the “consideration of alternatives” requirement. Ferdik, 963 F.2d at 1262; 7 Malone, 833 F.2d at 132-33; Henderson, 779 F.2d at 1424. On October 25, 2019, December 16, 8 2019, and in the Court’s last order issued on January 24, 2020, the Court clearly advised 9 Plaintiffs that the failure to comply with the orders would result in the recommendation of 10 dismissal because Plaintiffs had failed to demonstrate that any defendant had been properly 11 served with the complaint and summonses in accordance with the requirements of Federal Rule 12 of Civil Procedure 4 and the California Code of Civil Procedure. (ECF Nos. 13 at 27; 20 at 20; 13 22 at 7.) Thus, Plaintiffs had adequate warning that dismissal would result from noncompliance 14 with the Court’s orders. 15 For all of these reasons, the Court recommends dismissal of the action for failure to obey 16 Court orders. 17 /// 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 1 V. 2 CONCLUSION AND RECOMMENDATION 3 For the reasons explained above, IT IS HEREBY RECOMMENDED that this action be 4 | DISMISSED WITHOUT PREJUDICE for Plaintiffs’ failure to comply with the Court’s orders, 5 | and failure to serve Defendants in compliance with Federal Rule of Civil Procedure 4(m). 6 This findings and recommendations is submitted to the district judge assigned to this 7 | action, pursuant to 28 U.S.C. § 636(b)(1)(B) and this Court’s Local Rule 304. Within twenty- 8 | one (21) days of service of this recommendation, Plaintiffs may file written objections to this 9 | findings and recommendations with the Court. Such a document should be captioned 10 | “Objections to Magistrate Judge’s Findings and Recommendations.” The district judge will 11 review the magistrate judge’s findings and recommendations pursuant to 28 U.S.C. § 12 | 636(b)(1)(C). Plaintiffs are advised that failure to file objections within the specified time may 13 | result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th Cir. 2014) 14 | (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)). 15 16 IT IS SO ORDERED. OF. nf ee 17 | Dated: _March 19, 2020 _ ef UNITED STATES MAGISTRATE JUDGE 19 20 21 22 23 24 25 26 27 28