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McGehee v. Diversified Global Services, LLC

United States District Court, M.D. Tennessee, Nashville Division

March 17, 2017

GRISELDA McGEHEE, ET AL., Plaintiff,
v.
DIVERSIFIED GLOBAL SERVICES, LLC, and DEBORAH MILLER, Defendants.

          Crenshaw Judge

          ALISTAIR E. NEWBERN United States Magistrate Judge

         To The Honorable Waverly D. Crenshaw, Jr., District Judge

         REPORT AND RECOMMENDATION

         “Service of process, under longstanding tradition in our system of justice, is fundamental to any procedural imposition on a named defendant.” Murphy Bros. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 350 (1999). Procedurally adequate service under Federal Rule of Civil Procedure 4 is the necessary prerequisite to a court's exercise of personal jurisdiction. Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987). Without it, “[a] defendant is always free to ignore the judicial proceedings, risk a default judgment, and then challenge that judgment on jurisdictional grounds.” Insurance Corp. of Ireland, 456 U.S. at 706; Baldwin v. Iowa State Traveling Men's Ass'n, 283 U.S. 522, 525 (1931). If proper service was never achieved, that challenge will be successful.

         Plaintiffs, who are former employees of Defendant Diversified Global Services, LLC, filed this wage and hour case on August 15, 2014, asserting claims of fraud and violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., against Diversified Global Services and its co- owner, Deborah Miller. (Doc. No. 1.) On April 11, 2016, the Court granted Plaintiffs' Motion for Default Judgment against Miller, finding that she had failed to respond to the lawsuit against her. (Doc. No. 32.) The case was dismissed and the Clerk was directed to close the file. (Id.)

         Pending now before the Court is Miller's Motion to Alter or Amend the Judgment, filed May 9, 2016, in which Miller claims the default judgment against her is void because she was never properly served. (Doc. No. 43.) The motion was “referred to the Magistrate Judge to determine whether default and default judgment were properly entered in this matter.” (Doc. No. 44.) For the reasons given below, the undersigned finds that Miller was not properly served with process and that this Court therefore lacked the authority to enter default and default judgment against her. It is therefore RECOMMENDED that Miller's motion be GRANTED.

         I. Background

         Federal Rule of Civil Procedure 4 allows for service upon individuals by several methods: in person, by leaving process at the individual's dwelling place, or by “delivering a copy of [the complaint and summons] to an agent authorized by appointment or by law to receive service of process.” Fed.R.Civ.P. 4(e)(2). The question presented by Miller's motion is whether any of these methods was ever properly used to serve her at the initiation of this lawsuit.

         There is no indication in the record that Plaintiffs ever attempted to serve Miller personally, nor were they required to do so.[1] Instead, the record reflects that a process server delivered the complaint and summons addressed to Deborah Miller to attorney P. Edward Schell on September 9, 2014. (Doc. No. 6.) Miller did not answer the complaint and did not appear at an initial case management conference. Plaintiffs moved for entry of default against both Defendants. (Doc. No. 7.)

         The Clerk of Court granted entry of default against Diversified Global Services. (Doc. No. 8.) With regard to Miller, however, the Clerk found that “Plaintiffs claim to have served Defendant Miller through an agent authorized to accept service on her behalf at an address not specified in the Complaint and different than the address to which notice of the instant motion was sent as indicated in the certificate of service.” (Id.) The Clerk further noted that “[n]o evidence of [Schell's] alleged agency is provided in Plaintiffs' request.” (Id.) The Clerk therefore denied entry of default. (Id.) The Clerk's Order was served on Miller by mail at a Spring Hill, Tennessee, address and returned as unclaimed. (Doc. No. 11.)

         The Clerk entered default judgment against Diversified Global Services in the amount of $14, 879.84. (Doc. No. 12.) The Court granted Plaintiffs' motion for attorneys' fees and costs (Doc. No. 16) in the amount of $16, 773.19. (Doc. No. 21.)

         Only after default judgment was granted against Diversified Global Services did Plaintiffs again move for entry of default against Miller. (Doc. No. 22.) In support of this second motion, Plaintiffs provide a declaration from their counsel Karla Campbell regarding Schell's status as Miller's agent. (Doc. No. 23.) In the declaration, Campbell states that, shortly after serving Diversified Global Services, she “was contacted by telephone by two attorneys, Edward Schell and Griffin Dunham, purporting to represent Defendant Miller in this matter. Both attorneys represented to me that they were authorized to accept service on behalf of Defendant Miller.” (Id.) Campbell's communications with Schell are apparently not recorded. However, Plaintiffs provide email correspondence between Campbell and Dunham from the day after Schell accepted service. In that correspondence, Dunham states, “I can accept service on behalf of any party that hasn't been served.” (Doc. No. 23-1.) Campbell responds, “My process server confirms that attorney Schell signed for the summons yesterday, so I consider Ms. Miller to have been served on that date, even though she may be changing representation.” (Id.) Plaintiffs served the second motion for default on Schell at a business address and on Miller at a residential address in Franklin, Tennessee. (Id.) Plaintiffs did not serve Dunham. Miller did not respond, through Schell or otherwise.

         The Clerk entered default against Miller. (Doc. No. 26.) The entry of default was served only on Miller by certified mail to the Franklin, Tennessee address. (Doc. No. 27.) That mail was returned to the Court as unclaimed on March 11, 2016. (Doc. No. 28.)

         Plaintiffs moved for default judgment on March 17, 2016. (Doc. No. 29.) Plaintiffs served their motion on Schell at his business address and Miller at the Franklin, Tennessee address. (Id.) Again, Miller did not respond. The Court granted Plaintiffs' motion for default judgment, finding that “[d]espite having been served and having default entered against her, Defendant Miller has not filed a response to the Complaint, the Motion for Default, or the ...


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