Piper, Inc. v. Pavlyukovskyy

Background

Piper, Inc. was co-founded by Mark Pavlyukovskyy in 2014. Piper alleged that Pavlyukovskyy’s employment ended on September 4, 2018, because of misuse of Piper funds and other breaches of fiduciary duties. He later signed a Separation Agreement with Piper. In 2018, he founded My Creativity Box, doing business as “Mochi.”

Piper alleged that Pavlyukovskyy engaged in misconduct after the Separation Agreement, including breach of contract, trademark infringement, and misappropriation of trade secrets. Piper filed the lawsuit on June 2, 2020, and later filed a Second Amended Complaint. My Creativity Box was voluntarily dismissed from the case on October 20, 2020.

Pavlyukovskyy moved to dismiss under Federal Rule of Civil Procedure 12(b)(5), which allows a defendant to challenge insufficient service of process. Piper had filed a certificate stating that it served Pavlyukovskyy through substitute service at his usual place of business on August 19, 2020.

Rule 4(e) or Rule 4(f)

Pavlyukovskyy argued that Rule 4(f), which governs service on an individual in a foreign country, applied because he said he had moved to New Zealand in March 2020 and was there when Piper filed the case and attempted service. Piper relied on Rule 4(e), which governs service on an individual within a United States judicial district.

The court held that Rule 4(e) was available regardless of whether Pavlyukovskyy was physically present in the United States. The court explained that the rule depends on where service is carried out, not on where the person being served is located.

Substitute Service

Under Rule 4(e)(1), a plaintiff may follow the service law of the state where the federal court is located or where service is made. Piper used California’s substitute-service law. That law permits substitute service when personal service cannot be completed with reasonable diligence. It requires leaving the summons and complaint at the defendant’s dwelling, usual place of abode, usual place of business, or usual mailing address with a qualified person who is apparently in charge, informing that person of the documents’ contents, and then mailing copies to the same address.

The court found that Piper exercised reasonable diligence. Piper attempted personal service twice at Pavlyukovskyy’s last known San Francisco residence, learned that he no longer lived there, attempted service at another address, mailed a request to waive service to Pavlyukovskyy at My Creativity Box’s business address and to his attorney, hired investigators in California, Ohio, and New Zealand, searched public records, contacted an organization connected to his New Zealand fellowship, and sent him emails seeking to deliver the documents. The court found that a social-media post about Pavlyukovskyy’s New Zealand residence did not negate these efforts.

The court also found that the My Creativity Box offices at 953 De Haro Street in San Francisco qualified as Pavlyukovskyy’s usual place of business. Piper presented evidence that My Creativity Box listed that address in business, federal-agency, and other records. The building’s manager confirmed that My Creativity Box was still located there and that its employees remained active there. Pavlyukovskyy did not dispute that he was My Creativity Box’s founder and one of its two employees. The court concluded that substitute service at that location, followed by mailing, was proper under California law and therefore proper under Rule 4(e).

Disposition

Judge William H. Orrick denied Pavlyukovskyy’s motion to dismiss for insufficient service of process. The court ordered Pavlyukovskyy to respond to the Complaint within 20 days from November 23, 2020.