Hancock v. Beauty Fashion Sales Group Inc.

Background

Francine Hancock brought claims against Beauty Fashion Sales Group Inc. (BFSG) and Lindsay Saville under the Fair Labor Standards Act, New York Labor Law, and New York common law theories of breach of contract, promissory estoppel, and unjust enrichment. The defendants moved under Federal Rules of Civil Procedure 12(b)(5) and 12(b)(6). Rule 12(b)(5) concerns insufficient service of process; Rule 12(b)(6) concerns failure to state a legally sufficient claim.

Service on BFSG

Hancock attempted to serve BFSG by serving the New York Secretary of State under Section 306 of the New York Business Corporation Law. The opinion states that BFSG was incorporated in Florida and was listed as inactive with the New York Secretary of State. Because BFSG was not registered to do business in New York, the court held that service under Section 306 was invalid. The court explained that service on an unauthorized foreign corporation could instead have been made under Section 307, subject to that statute’s requirements.

Service on Saville

Hancock’s process server made three unsuccessful attempts to serve Saville personally at her Florida home. The court found that these attempts were enough to satisfy the diligence requirement for “nail and mail” service under New York law. The process server then affixed copies of the summons and complaint to Saville’s front gate.

The court held, however, that Hancock had not shown that the mailing required for “nail and mail” service occurred within 20 days of the papers being affixed. The service affidavit did not clearly establish that the summons and complaint had been mailed, and the affidavit’s mailing section was incomplete. The court therefore found that Hancock had not met her burden to prove proper service on Saville.

Good Cause and Extension of Time

The court found that Hancock had not established good cause for failing to complete service properly. The defendants had notified Hancock of the service problems before filing the motion, but the court found that she did not reasonably correct the defects.

Even without good cause, Rule 4(m) permits a court to grant a discretionary extension for service. The court found that two factors favored an extension: the defendants had actual notice of the action and were not substantially prejudiced because they had participated in motion practice. Two other factors weighed against an extension: the limitations periods had not expired, and there was no evidence that the defendants concealed the service defects. Balancing these considerations and favoring resolution on the merits, the court granted Hancock additional time to complete service.

Ruling

Judge Mary Kay Vyskocil denied the defendants’ motion to dismiss under Rules 12(b)(5) and 12(b)(6) without prejudice. The opinion’s analysis focused on service of process and did not decide whether Hancock’s wage or contract-related claims ultimately state valid claims. The court also denied the defendants’ motion for oral argument. Hancock was ordered to properly serve both defendants and promptly file proof of service within 21 days of the order. The defendants may renew their motion to dismiss within 21 days after Hancock files proof of service.