August Home, Inc. v. SHOPRIME Corp.

Background

August Home, Inc. alleged that Shoprime Corp. and Royal Music, LLC sold August smart-home entry products on Amazon as “New” without being authorized resellers or distributors. August Home asserted claims for federal trademark infringement and dilution, violations of California’s Unfair Competition Law, state trademark infringement, and interference with contractual relations. The clerk had entered default against Royal Music, LLC, but August Home had not moved for entry of default against Shoprime.

August Home asked for permission to serve Shoprime by publication. The company reported four unsuccessful attempts to serve Shoprime’s registered agent, Eli Alhalabi, at addresses in New York. It also reported an unsuccessful attempt to serve Shoprime through the New York Secretary of State and described searches for websites, email addresses, and social-media profiles connected to Shoprime or Alhalabi.

Legal standard

Federal Rule of Civil Procedure 4(e)(1) permits service under the law of the state where the federal court is located or where service is made. Under California law, a court may permit service by publication if the defendant cannot be served by another method with reasonable diligence and the plaintiff provides evidence that a cause of action exists against the defendant. Publication is a last resort because it rarely results in actual notice. Reasonable diligence requires a thorough, systematic, good-faith investigation.

The party seeking publication must also provide a sworn statement from someone with personal knowledge supporting the essential facts of the claim. The court explained that service by publication is not appropriate or valid without that required affidavit.

Court’s analysis

The court held that August Home’s efforts did not show reasonable diligence. August Home had not attempted service by mail or substitute service at the addresses it had located. The court stated that mailing notice or contacting the post office might have produced a forwarding address, particularly because the process server’s notes indicated that Shoprime and Alhalabi had moved from one address within the prior year.

The court also found that August Home had not thoroughly investigated Alhalabi. It had identified him as Shoprime’s registered agent and conducted some Internet and social-media searches, but it had not investigated his relatives, friends, acquaintances, employer, relevant directories, public records, or other people associated with Shoprime who might accept substitute service. August Home also had not identified an accurate current address for Shoprime.

The court rejected August Home’s argument that Shoprime was evading service. The record did not show that Shoprime, Alhalabi, or their lawyers had actual notice of the lawsuit. The New York Secretary of State’s rejection of service was based on the action being filed in California rather than New York, and the court found that the absence of an updated address, public website, or public email address did not by itself show deliberate concealment.

Finally, the court noted that August Home had not filed the required affidavit establishing that it had a claim against Shoprime. The declaration describing the process server’s efforts did not independently support the existence of a cause of action.

Disposition

Judge Ryu denied August Home’s motion for service by publication without prejudice. The opinion did not decide the merits of August Home’s trademark or related claims.