Johnson v. Rousseau Elmendorf LLC

Background

Scott Johnson sued Rousseau Elmendorf LLC and Ali Reza Raji, alleging violations of the Americans with Disabilities Act and California’s Unruh Act. The alleged access problems involved wheelchair paths and door hardware at West Auto Sales, which Raji runs. Raji stated that he worked alone and had no employees.

A process server tried to personally serve Raji three times at West Auto Sales: at 8:30 a.m. on September 29, at 5:00 p.m. on September 30, and at 4:35 p.m. on October 1. The first attempt was before the business opened, and the other two occurred shortly before the stated end of business hours. On the third attempt, the process server left the papers with a woman described as being at least 18 years old and apparently in charge of the business. Raji stated that he did not receive the papers and that no one was authorized to accept service for him.

Raji did not answer, and Johnson obtained an entry of default. After learning about the default, Raji told Johnson that he had not been properly served and asked that the default be set aside. Johnson responded that he would agree only if Raji agreed to file an answer within 10 days. Raji declined and moved to quash service, set aside the default, and dismiss the action under Federal Rule of Civil Procedure 4(m).

Service of process

Federal Rule of Civil Procedure 4 permits service under the law of the state where the federal court is located or where service occurs. California law allows substitute service at a person’s usual place of business only after reasonable diligence in attempting personal service. The plaintiff bears the burden of showing that reasonable diligence was used.

The court held that Johnson did not exercise reasonable diligence before using substitute service. Although two or three attempts often satisfy the diligence requirement, the court evaluates the circumstances of each case. Here, only two attempts occurred during business hours, and both were late in the day. After seeing that Raji was absent at 4:35 p.m. on Friday, particularly after observing the same situation the prior evening, the process server should have tried again during the middle of the workday.

The court therefore granted the motion to quash service. It also ordered that service be made within 30 days of the order and set aside the entry of default.

Motion to dismiss and extension of time

Rule 4(m) generally requires service within 90 days after the complaint is filed. If service is not completed within that period, a court may dismiss the action without prejudice against the unserved defendant or extend the service deadline. When the plaintiff shows good cause, the court must grant an extension. Good cause can include actual notice, lack of prejudice to the defendant, and severe prejudice to the plaintiff if dismissal occurs.

The court denied the motion to dismiss. It found good cause to extend the deadline because Raji received actual notice within 90 days, an extension would not prejudice him, and Johnson would be extremely prejudiced by dismissal because he would lose the claim. The court extended the time for service by 30 days.

Sanctions

The court was seriously troubled by Johnson’s counsel conditioning agreement to set aside the default on Raji’s promise to answer. It stated that this conduct could be part of a strategy involving borderline-inadequate service and an entry of default. The court declined to impose sanctions at that time but warned that it might do so if further evidence of bad-faith conduct emerged.

Disposition

The court granted the motion to quash and set aside the default, denied the motion to dismiss, and extended the time for service by 30 days.