Opinion
2:03CV00613TC.
July 19, 2004
ORDER
Plaintiff Darryl Peterson brought this trademark infringement action against Defendants Rockstar Games, Inc., Apogee Software, Ltd. ("Apogee"), Gathering of Developers, Inc., and Remedy Entertainment, Ltd. ("Remedy"). The case is before the court on Remedy's Motion to Quash and/or Dismiss. With this motion, Remedy claims that the service-of-process was ineffective and moves to dismiss for lack of personal jurisdiction. For the reasons set forth below, the court grants Remedy's Motion to Quash, grants Mr. Peterson leave to effect proper service, and denies Remedy's Motion to Dismiss.
Nature of the Dispute
Mr. Peterson has used the name "Max Payne" since 1988 in his work as an actor, musician, and entertainer. Defendants have produced and sold two video games under the names, "Max Payne" and "Max Payne 2." Mr. Peterson claims that Defendants' video games infringe on his rights to the Max Payne name. He also contends that Defendants' activities in marketing and promoting the video games have misappropriated various other rights connected to the Max Payne name trademark.
Analysis
I. Motion to Quash
Mr. Peterson served Mr. Scott Miller, one of the limited partners in Defendant Apogee, in Texas, where Apogee is located. The question is whether this was effective service of process on Remedy.
"Service of process is a mechanism for bringing notice of the commencement of an action to defendant's attention and to provide a ritual that marks the court's assertion of jurisdiction over the lawsuit." Washington v. Norton Mfg., Inc., 588 F.2d 441, 444 (5th Cir. 1979). "In the federal system, service of process is governed by Rule 4 of the Federal Rules of Civil Procedure."Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1210 (10th Cir. 2000). When the parties do not dispute the facts of the purported service, the adequacy of such service is a question of law. LSJ Inv. Co., Inc. v. O.L.D., Inc., 167 F.3d 320, 322 (6th Cir. 1999).
It is Mr. Peterson's burden to establish that service was proper. Fed. Deposit Ins. Corp. v. Oaklawn Apartments, 959 F.2d 170, 174 (10th Cir. 1992); Light v. Wolf, 816 F.2d 746, 751 (D.C. Cir. 1987); Wirtz v. Mercantile Stores Co., 271 F. Supp. 830, 831 (D. Okla. 1967). Remedy contends that it has no relationship with Apogee other than an arms-length business relationship, and therefore Mr. Peterson's service on Apogee was not effective.
Rule 4(h)(1) reads:
Unless otherwise provided by federal law, service upon a domestic or foreign corporation or upon a partnership or other unincorporated association that is subject to suit under a common name, and from which a waiver of service has not been obtained and filed, shall be effected: (1) in a judicial district of the United States in the manner prescribed for individuals by subdivision (e)(1), or by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process.
Fed.R.Civ.P. 4(h)(1) (emphasis added).
Here, the question is whether Mr. Miller of Apogee can be properly characterized as Remedy's managing or general agent. Federal law controls this determination. 4A Charles Alan Wright Arthur R. Miller, Federal Practice Procedure § 1103 (3rd ed. 2002); Dodco, Inc. v. American Bonding Co., 7 F.3d 1387, 1388 (8th Cir. 1993).
Mr. Peterson apparently missed the "managing or general agent" language in Federal Rule of Civil Procedure 4(h)(1) because he used identical language in Utah Rule ov Civil Procedure 4(d)(1)(E) to argue that Apogee was Remedy's agent. Use of the state rule is allowed by Federal Rule of Civil Procedure 4(e)(1), which authorizes service according to state law. But the result is the same whether reference is made to federal or Utah law. See Ludwig v. General Binding Corp., 21 F.R.D. 178, 180 (E.D. Wis. 1957) ("Whether reliance be placed on the federal or the Wisconsin statute [which uses similar agency language to that in the federal statute], the result will be the same, for both are broad enough to cover all situations allowed within the confines of due process.").
There is no evidence that there was an express agency agreement between Remedy and Apogee. The court must therefore determine whether, in the absence of an express agreement, an agency agreement can found from the circumstances. To show an agency relationship between two companies, a party "should show that: the [first company] does all the business which the [second company] could do were it here by its own officials." Darden v. Daimler Chrysler North America Holding Corp., 191 F. Supp.2d 382, 388 (S.D.N.Y. 2002) (interior citations and quotations omitted).
A court should consider the following factors, among others, to determine whether an agency relationship exists: (1) the degree of overlap between the directors of the two companies; (2) the degree of overlap between the officers of the two companies; and (3) cross stock ownership. Kelly v. United States Steel Corp., 170 F. Supp. 649, 650-51 (W.D. Penn. 1959); see also Napier v. Thirty or More Unidentified Federal Agents, Employees, or Officers, 855 F.2d 1080, 1084 n. 4 (3d Cir. 1988) (service on New Jersey Department of the American Legion did not constitute service on national American Legion). In essence, Mr. Peterson must offer "probative evidence that the two corporations are not independently operated." Adams v. Allied Signal General Aviation Avionics, 74 F.3d 882, 885 (8th Cir. 1996).
Mr. Peterson has established no overlap between directors or officers, nor has he shown any cross ownership between Apogee and Remedy. In contrast, Remedy has pointed to evidence demonstrating that Apogee and Remedy are two separate companies that do not share any directors, officers, or employees, and operate independently of one another. (Myllyrinne Decl. at ¶ 18; Supp. Miller Decl. at ¶¶ 4-15.) In support of his contention that an agency relationship exists between Apogee and Remedy, Mr. Peterson argues that Remedy does business in the United States through Apogee, and that the line between the two is "extremely blurry." (Pl.'s Mem. in Opp. at 10.) Further, Mr. Peterson argues that Apogee and Remedy chose the name "Max Payne," and together they provided the games to co-defendant Take-Two Interactive Software, Inc. ("Take-Two") for reproduction and distribution. (Id.; Myllyrinne Decl. at ¶¶ 13, 19; Supp. Miller Decl. at ¶ 18.) As for specific evidence, Mr. Peterson points out that Apogee represented that it "co-developed" the Max Payne video games with Remedy. (Id. at Ex. 1; Myllyrinne Decl. at ¶ 12; Supp. Miller Decl. at ¶ 14.)
These facts do nothing more than establish a business relationship between Apogee and Remedy. "A close business relationship," even rising to the level of "commercial and economical" control of a subsidiary corporation by a parent corporation, is not an agency for purposes of service of process under Rule 4(h). United States v. Investronica, Inc., 2 F. Supp.2d 330, 335 (W.D.N.Y. 1998); Wirtz, 271 F. Supp. at 831;see also Adams, 74 F.3d at 885-86 (service on officer of subsidiary not valid service on parent where plaintiff offered no probative evidence that companies were not separate). At most, these facts show that Apogee and Remedy chose the "Max Payne" name together, and then marketed the game together. Mr. Peterson has not provided any evidence that either Apogee or Remedy had the power to act for, or bind, the other.
In Kelly v. United States Steel Corp., 170 F. Supp. 649 (W.D. Penn. 1959), an analogous case, the court analyzed the relationship between two companies, Atlas and Thew, for evidence of whether Atlas was the agent of Thew. Kelly, 170 F. Supp. at 650. There, the court found that Atlas, as the buyer of Thew's manufactured goods, had nothing more than an arms-length business relationship with Thew. Id. It is important that the court made this finding despite the fact that Atlas had used Thew's name with Atlas' number in a telephone directory. Id.
Similarly, in Wirtz v. Mercantile Stores Co., 271 F. Supp. 830 (D. Okla. 1967), the court held that the plaintiff could not serve defendant Mercantile Stores Co. by serving an employee of its co-defendant, Muskogee Jones Co., which also happened to be a subsidiary of Mercantile. The court held that the service was improper, even though Mercantile controlled some of Muskogee's business practices and some officers were employed by both companies, because Mercantile lacked any contacts with the forum and the employee of Muskogee that was served was not authorized by Mercantile to accept service. Wirtz, 271 F. Supp. at 831-32.
Finally, Ludwig v. General Building Corp., 21 F.R.D. 178 (E.D. Wis. 1957), further demonstrates that a mere business relationship does not constitute agency for service of process. In Ludwig, the plaintiff attempted to serve the defendant General Building Corporation by serving David Montguire, who was a vice-president of General Building's wholly-owned subsidiary Rex-O-Graph, Inc. Ludwig, 21 F.R.D. at 179. Although Mr. Montguire was the vice-president of Rex-O-Graph, his salary was paid by, and some of his duties set by, the parent corporation, General Building. Id. at 181. General Building also dictated some of Rex-O-Graph's business decisions, such as advertising and training. Despite these connections, the court dismissed the case due to improper service because the companies had otherwise observed corporate formalities, General Building had no other connections to the forum, and General Building had not agreed to allow the subsidiary to accept service on its behalf. Id. at 181-82.
Based on the above, the court concludes that Apogee is not Remedy's agent, and there has not been effective service of process on Remedy.
In the Tenth Circuit, the general rule is that "when a court finds that service is insufficient but curable, it generally should quash the service and give the plaintiff an opportunity to re-serve the defendant." Pell v. Azar Nut Co., 711 F.2d 949, 950 n. 2 (10th Cir. 1983). Accordingly, the court grants Remedy's motion to quash service of process, but Mr. Peterson will have ninety days leave to effect proper service on Remedy. See Fed.R.Civ.P. 4(m) (if plaintiff does not timely serve defendant, district court may dismiss or extend time for service).
Mr. Peterson may also wish to explore whether Remedy would waive service as provided by Rule 4(d). Apparently, Mr. Peterson never requested that Remedy waive service, (see Defs.' Mem. in Supp. at 4) and significantly, Remedy gave no indication that it would not waive service. (Id.).
The court does not reach the question of whether there is personal jurisdiction over Remedy in view of the fact that no service of process has been made on it. Remedy's motion is therefore denied without prejudice. If service of process is properly made upon Remedy, Remedy is free to resubmit its motion.
Conclusion
Based on the foregoing, Remedy's Motion to Quash is GRANTED, and the court GRANTS Mr. Peterson Ninety (90) Days to effect proper service on Remedy. Remedy's Motion to Dismiss based on lack of personal jurisdiction is DENIED without prejudice.
SO ORDERED.