Kamiel v. Hai Street Kitchen Co.

Background

Sheri Kamiel brought an employment discrimination and labor-law case against Daisuke Kawauchi, Sun Joon Kim, Hai Street Kitchen & Co. LLC, and Sakura Dining Corporation. A default judgment was entered against the defendants in April 2020. The judgment required the defendants to pay $69,428.49 jointly and separately, and required Hai Street and Sakura to pay an additional $35,000 jointly and separately. In enforcing the judgment, $153,561.86 was restrained from Kawauchi’s bank accounts, and some of that money was collected.

Kawauchi moved to vacate the default judgment and dismiss the case against him, arguing that he had not been properly served and that the court therefore lacked personal jurisdiction over him. Kamiel had attempted service in June 2019 by leaving the summons with a person identified as a managing agent at 230 Park Avenue, the address of a food court where Hai Street had been located, and then mailing the summons there.

Kawauchi stated that his employment with Sakura ended in April 2019. He submitted unemployment-benefit records, bank statements, and other documents that the court found strongly supported his position that he was unemployed on the June 2019 service date. Kamiel relied on a LinkedIn profile listing Kawauchi as Sakura’s president through January 2020, a June 2019 email referring to “cleaning up” after the stores closed, and Kawauchi’s failure to notify certain parties that he no longer worked for Sakura.

Service and Personal Jurisdiction

Federal law permits service under the law of the state where the federal court is located. Under the relevant New York provision, service may be made by delivering the summons to a person of suitable age and discretion at the defendant’s actual place of business and mailing the summons there. New York defines an actual place of business as a location the defendant has held out as a place of business through regular solicitation or advertising.

The court held that the process server’s affidavit initially created a presumption that service was proper, but Kawauchi’s sworn denial of receiving service rebutted that presumption. The burden therefore remained with Kamiel to prove valid service because the court could not find that Kawauchi had actual notice of the lawsuit before the default judgment.

The court found that Kamiel failed to prove that Kawauchi worked at Hai Street or Sakura, or otherwise maintained the 230 Park Avenue location as his actual place of business, on June 27, 2019. It held that service was invalid and that the default judgment against Kawauchi was therefore subject to being vacated because the court lacked personal jurisdiction over him.

Rulings

The court granted Kawauchi’s motion to vacate the default judgment against him. It ordered the funds collected from his bank accounts under that judgment to be returned, ordered any related restraints lifted, and ordered all enforcement efforts against him to cease.

The court granted Kamiel additional time to serve Kawauchi and required her to do so within 30 days of the order. It denied Kamiel’s request to use substitute service through Kawauchi’s counsel because she knew of a valid Oregon address where traditional service could be attempted.

The court declined to require Kawauchi to post a bond for the judgment amount and interest while the case continued. Because Kamiel was given additional time to serve him, the court denied Kawauchi’s motion to dismiss for lack of personal jurisdiction without prejudice. The case was reopened as to Kawauchi so it could proceed on the merits if he was properly served. Judge Paul A. Engelmayer directed Kamiel to serve Kawauchi by June 17, 2022, file proof of service within seven days, and required Kawauchi to respond within 21 days after receiving service.