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Federal Trade Commission v. Repair All PC, LLC

United States District Court, N.D. Ohio, Eastern Division

May 31, 2017

FEDERAL TRADE COMMISSION, Plaintiffs,
v.
REPAIR ALL PC, LLC, Defendants.

          OPINION AND ORDER

          DAN AARON POLSTER UNITED STATES DISTRICT JUDGE.

         On May 26, 2017, the Court held a hearing on the following subjects: service of process and the merits of the TRO against Defendants Lalit and Roopkala Chadha and I Fix PC d/b/a/ Techers247.[1] Prior to the hearing, the Chadhas and the FTC both filed motions on the service issue: the Motion to Dismiss for Insufficient Service of Process filed by Defendants Lalit and Roopkala Chadha (Doc #: 29 (“the Chadhas' Motion”)) and Plaintiff FTC's Motion for Leave to Serve Defendants Lalit Chadha, Roopkala Chadha, and I FIX PC d/b/a Techers247, by Alternative Service of Process (Doc #: 33 (“the FTC's Motion”)). At the hearing, the Court denied the Chadhas' Motion and granted the FTC's Motion, summarizing these rulings. However, to explain the rulings in further detail, the Court issues this Opinion and Order.

         I.

         On April 24, 2017, the FTC brought this action ex parte seeking a temporary restraining order (“TRO”) with an asset freeze and appointment of a Receiver, and an order to show cause why a preliminary injunction should not issue against six individual Defendants and seven related entities. (Doc #: 4.) The FTC alleged that the Defendants formed a common enterprise through which they operated a complex, fraudulent scheme that tricked unsuspecting American consumers into spending money to fix non-existent problems with their computers. That same day, the Court granted the ex parte TRO based on a wealth of documentary evidence against the Defendants, appointed a Receiver, and scheduled a Preliminary Injunction Hearing on May 9, 2017 (Doc #: 9), later continued to May 10, 2017 (Doc #: 10).[2] The Court subsequently granted the FTC's motion to lift the seal on the case and place all filings on the public record, presumably to serve the Defendants with the Complaint and TRO. (Respectively, Doc ##: 12, 13.)

         On April 27, 2017, the FTC successfully served Individual Defendants Jessica Marie Serrano, Dishant Khanna, and related entities Repair All PC, LLC, Pro PC Repair, LLC and I Fix PC, LLC in Ohio (respectively, Doc ##: 40, 41, 39, 38, 37), Individual Defendant Mohit Malik and related entities Webtech World, LLC and Online Assist, LLC in New Jersey (respectively, Doc ##: 42, 43, 44), and Individual Defendant Romil Bhatia and related entity Datadeck, LLC in Canada (respectively, Doc ##: 35, 45). The FTC failed, however, in its attempts to formally serve Individual Defendants Lalit and Roopkala Chadha at their residence in Ontario, Canada, which the Chadhas also listed as the principal place of business and mailing address for related entity Techers247.

         Nonetheless, the Chadhas, who have been in regular communication with the FTC via email and telephone since the case was unsealed, claim to have left Canada in March of this year to take care of a sick family member and expect to be there for another 6 to 8 months. Lalit Chadha advised the FTC that the best way to communicate with him and Roopkala is through email, and the FTC has emailed all the case documents to them at their email address. According to the FTC, Lalit Chadha told the FTC that he and his wife would waive service of process if the FTC sent them the appropriate forms. Although Lalit Chadha acknowledged receipt of the forms, the Chadhas never signed and returned them.

         On May 4, 2017, the Court converted the May 10 Preliminary Injunction Hearing into a teleconference and, upon consideration of notice filed by counsel for the Ohio Defendants and for good cause shown, rescheduled the Preliminary Injunction Hearing on May 26, 2017 and extended the TRO through May 26, 2017. (Doc ##: 17, 18.)

         On May 8, 2017, counsel filed notices of appearance for all Defendants except the Chadhas. However, on Monday, May 10, 2017, just prior to the scheduled teleconference, Cleveland Attorneys Peter Turner and Kinsey McInturf of the law firm Meyers, Roman, Friedberg & Lewis entered their appearance as counsel of record for the Chadhas. (Doc #: 26.) All counsel participated in the May 10 teleconference. At that time, FTC counsel Fil M. de Banate reported that he had discussions with counsel for the Ohio and New Jersey Defendants regarding a stipulated preliminary injunction and expected to present a proposed order to them for their consideration shortly. He offered to do the same with counsel for the other Defendants who just filed notices of appearance. The Court noted that, if all agreed to an extension of the TRO and a continuance of the Preliminary Injunction Hearing to a date certain, the Court would grant it. On May 19, 2017, all Defendants except the Chadhas filed an unopposed motion for extension of the TRO and preliminary injunction hearing to June 22, 2017, which the Court granted. (Respectively, Doc ##: 31, 32.)

         On that same date, the Chadhas filed a Motion to Dismiss for Insufficient Service of Process, arguing that, because they are Indian citizens located in India, service can only be perfected upon them pursuant to the Hague Convention Because they were not properly served, the Court lacks personal jurisdiction over them and cannot enter a preliminary injunction against them. (Doc #: 29.) The FTC responded with its own motion, i.e., a Motion for Leave to Serve Defendants Lalit Chadha, Roopkala Chadha, and I Fix PC, d/b/a Techers247, by Alternative Service of Process. (Doc #: 33.) The FTC contended that the Court can and should authorize service on the Chadhas through their Cleveland counsel by electronic mail, fax, registered mail, or courier service. (Id.) And, because the Chadhas are the only two partners and agents responsible for Techers247, the Court should authorize service on Techers247 via counsel as well. (Id.)

         As the Chadhas were the only Individual Defendants who did not agree to an extension of the TRO and Preliminary Injunction Hearing, the Court held a teleconference on May 23, 2017 with FTC counsel, counsel for the Chadhas, and Lalit Chadha himself to determine the protocol for the May 26 hearing. It was decided that the Court would first deal with the parties' motions and then proceed to the merits. Counsel were advised to be prepared for an evidentiary hearing on all matters and to bring their clients and witnesses.

         II.

         The requirement of proper service of process “is not some mindless technicality.” Studio A Entm't, Inv. v. Active Distribs., Inc., No. 1:06 CV 2496, 2008 WL 162785, at *2 (N.D. Ohio Jan. 15, 2008) (quoting Friedman v. Estate of Presser, 929 F.2d 1151, 1156 (6th Cir. 1991). The Sixth Circuit and other circuits have held that the service of a summons and complaint “must meet constitutional due process and the requirements of the federal rules in order for jurisdiction to exist over a defendant.” Id. (citing German Free State of Bavaria v. Toyobo Co., No. 1:06-cv-407, 2007 U.S. Dist. LEXIS 19828, at *11-12 (W.D. Mich. Mar. 20, 2007).

         Rule 4(f) of the Federal Rules of Civil Procedure governs international service of process on foreign individuals. Rule 4(f)(1) allows for service “by any internationally agreed means reasonably calculated to give notice, ” which typically contemplates service authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents (the “Hague Convention”). Under Rule 4(f)(2), if there is no internationally agreed means, or when the international agreement provides for “other” means of service, then service may be effectuated by, inter alia, laws of the foreign country, or registered mail by the Clerk of Courts unless prohibited by the laws of the foreign country. Rule 4(f)(3) allows for service “by other means not prohibited by international agreement, as the court orders.” Service under Rule 4(f)(3) “must be (1) directed by the court; and (2) not prohibited by international agreement. No other limitations are evident from the text.” Popular Enters., LLC v. Webcom Media Grp., Inc., 225 F.R.D. 560, 561 (E.D. Tenn. 2004); FTC v. 247 Inc., No. 12 Civ. 7189(PAE), 2013 WL 841037, at *2 (S.D.N.Y. Mar. 7, 2013); SEC v. Anticevic, No. 05 Civ. 6991(KMW), 2009 WL 361739, at *3 (S.D.N.Y. Feb. 13, 2009). Rule 4(f)(3) empowers the court with flexibility and discretion to fit the manner of service utilized to the facts and circumstances of the particular case. Anticevic, 2009 WL 361739, at *.3

         “Notably, it has been held that there is no requirement that a party first exhaust the other methods contemplated in Rule 4(f) subsections (1) and (2) before petitioning the court for permission to use alternative means under Rule 4(f)(3).” Studio A Entm't, 2008 WL 162785, at *3; see also Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1015 (9th Cir. 2002) (explaining that Rule 4(f) does not denote any hierarchy or preference of one method over another). The task of determining whether a given case requires alternate service of process “is placed squarely within the sound discretion of the district court.” Id. (quoting Williams v. Advert. Sex LLC, 231 F.R.D. 483, 486 (N.D. W.Va. 2005), in turn citing Rio Props., ...


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