Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-00849/USCOURTS-casd-3_13-cv-00849-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1330 Breach of Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

DRAGAN VASIC, on behalf of

himself and all others similarly

situated, 

Plaintiff,

vs.

PATENT HEALTH, L.L.C., an Ohio

Limited Liability Company, ARTHUR

MIDDLETON CAPITAL

HOLDINGS, INC., an Ohio

Corporation, WALGREEN, CO., an

Illinois Corporation, and DOES 1

THROUGH 20,

Defendants.

 

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Case No. 13cv849 AJB (MDD)

ORDER:

(1) DENYING DEFENDANT

ARTHUR MIDDLETON CAPITAL

HOLDINGS, INC. MOTION TO

DISMISS PURSUANT TO RULE

12(B)(1); AND 

(2) GRANTING DEFENDANTS

ARTHUR MIDDLETON CAPITAL

HOLDINGS, INC. AND PATENT

HEALTH LLC’S MOTION TO

QUASH SERVICE

(Doc. No. 6)

Presently before the Court is Defendant Arthur Middleton Capital Holdings, Inc.’s

(“Arthur Middleton”) motion to dismiss the First Amended Complaint (“FAC”) for lack

of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), and

Defendant Arthur Middleton and Defendant Patent Health LLC’s (“Patent Health”)

(collectively, “Defendants”) motion to quash service of process pursuant to Rule

12(b)(5).1

 (Doc. No. 6.) Plaintiff Dragen Vasic (“Plaintiff”) filed an opposition on July

1, 2013, (Doc. No. 8), and Defendants filed a reply on July 8, 2013, (Doc. No. 9). This

motion is suitable for disposition without oral argument pursuant to Civil Local Rule

1

 Defendants only argue service of process should be quashed with regard to Arthur Middleton and Patent Health, and do not make similar allegations with regard to service of process on Walgreen Company, the remaining defendant. 

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7.1.d.1. (Doc. No. 18.) For the reasons set forth below, the Court DENIES Arthur

Middleton’s motion to dismiss the FAC pursuant to Rule 12(b)(1), and GRANTS

Defendants’ motion to quash service of process pursuant to Rule 12(b)(5).

BACKGROUND

On April 8, 2013, Plaintiff initiated this action against Patent Health on behalf of

himself and others similarly situated. (Doc. No. 1.) The original complaint alleged

violation of the Consumer Legal Remedies Act (“CLRA”), California’s Unfair Competition Law (“UCL”), and breach of express warranty. (Id.) Each cause of action was based

on allegations that a Trigosamine line of Glucosamine-based supplements (“Trigosamine

Products”) conveyed messages to consumers that were unsubstantiated by competent

scientific evidence and were factually baseless. (Id. at ¶ 19.) On May 23, 2013, Plaintiff

filed the operative FAC as a matter of right. (Doc. No. 4.) The FAC added two named

defendants, Arthur Middleton and Walgreen Company (“Walgreen”), and omitted the

third cause of action for breach of express warranty. (Id.) 

The FAC alleges that each of the named defendants distributes, markets, and sells

the Trigosamine Products in California. (Id. at ¶¶ 1-9, 14-16.) The FAC further alleges

that Plaintiff is a citizen of California, (Id. at ¶ 13), Defendant Patent Health is a limited

liability company with its principal place of business located at 8000 Freedom Avenue

NW, North Canton, Ohio 44720, (Id. at ¶ 14), Defendant Arthur Middleton is an Ohio

Corporation with its principal place of business located at 8000 Freedom Avenue NW,

North Canton, Ohio 44720, (Id. at ¶ 15), and Defendant Walgreen is an Illinois corporation with its principal place of business located at 200 Wilmot Road, Deerfield, Illinois

60015, (Id. at ¶ 16.) The FAC contends subject matter jurisdiction is proper pursuant to

the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2), and that the Court has

personal jurisdiction over the defendants because they each marketed, promoted,

distributed, and sold the Trigosamine Products in California. (Id. at ¶¶ 10-11.)

On June 17, 2013, Defendant Arthur Middleton filed a motion to dismiss based on

lack of subject matter jurisdiction pursuant to Rule 12(b)(1), which was combined with a

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motion to quash service of process pursuant to Rule12(b)(5), filed by Arthur Middleton

and Patent Health. (Doc. No. 6.) Plaintiff opposed both motions. (Doc. No. 8.) 

DISCUSSION

I. Motion to Dismiss Pursuant to Rule 12(b)(1)

Federal Rule of Civil Procedure 12(b)(1) provides for dismissal based on “lack of

subject matter jurisdiction.” Fed. R. Civ. P. 12(b)(1). A jurisdictional attack under Rule

12(b)(1) may either be “facial” or “factual.” White v. Lee, 227 F.3d 1213, 1242 (9th Cir.

2000). “In a facial attack, the challenger asserts that the allegations contained in a

complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a

factual attack, the challenger disputes the truth of the allegations that, by themselves,

would otherwise invoke federal jurisdiction.” Safe Air for Everyone v. Meyer, 373 F.3d

1035, 1039 (9th Cir. 2004). Here, the FAC alleges that Defendant Arthur Middleton is an

Ohio Corporation that distributes, markets, and sells the Trigosamine Products to tens of

thousands of consumers in California. (FAC ¶ 15.) Defendant Arthur Middleton

disputes the truthfulness of this assertion, contending that it merely holds stock in other

corporations (such as Patent Health) and does not manufacturer, distribute, market, or sell

any products to any consumers. (Doc. No. 6 at 2:6-10.) As a result, Arthur Middleton’s

jurisdictional attack is factual rather than facial. (Doc. No. 6 at 2:6-8; Doc. No. 8 at 5:14-

26; Doc. No. 9 at 1:22-23.) 

 In a factual attack, the court need not presume the truthfulness of the plaintiff’s

allegations, and “may look beyond the complaint to matters of public record without

having to convert the motion into one for summary judgment.” White, 227 F.3d at 1242. 

Once the moving party has converted the motion to dismiss into a factual motion by

presenting affidavits or other evidence properly brought before the court, the party

opposing the motion must furnish affidavits or other evidence necessary to satisfy its

burden of establishing subject matter jurisdiction.” Safe Air for Everyone, 373 F.3d at

1039 (quotation omitted). Nonetheless, “jurisdictional dismissal in cases premised on

federal-question jurisdiction are exceptional,” Sun Valley Gasoline., Inc. v. Ernst Enters.,

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711 F.2d 138, 140 (9th Cir. 1983), and the Ninth Circuit has cautioned that a

“[j]urisdictional finding of genuinely disputed facts is inappropriate when the ‘jurisdictional issue and the substantive issues are so intertwined that the question of jurisdiction

is dependent on the resolution of factual issues going to the merits’ of an action.” Sun

Valley Gasoline,711 F.2d 138, 139; see also Kingman Reef Atoll Investments, L.L.C. v.

United States, 541 F.3d 1189, 1196 (9th Cir. 2008). The question of jurisdiction and the

merits of an action are so intertwined where “a statute provides the basis for both the

subject matter jurisdiction of the federal court and the plaintiff's substantive claim for

relief.” Kingman, 541 F.3d at 1196.

Here, Arthur Middleton converted the motion to dismiss into a factual jurisdictional attack by submitting a declaration from Kimberly A. Raines, an officer of Arthur

Middleton. (Doc. No. 6, Ex. 2, Raines Decl.) Raines declares that Arthur Middleton is

the sole member of Patent Health, and that Arthur Middleton is a holding company that

does not “manufacture, distribute, market or sell, anything, of any kind, to anyone. (Id. at

¶¶ 1-2.) In response, Plaintiff argues that Arthur Middleton cannot rely on a self-serving

affidavit to defeat subject matter jurisdiction, and in any event, the Raines Declaration

merely raises a factual dispute regarding whether Arthur Middleton is engaged in the

manufacturer, distribution, and sale of the Trigosamine Products at issue. Plaintiff did

not submit a contrary affidavit or declaration in support, and instead relied on the factual

allegations in the FAC. (FAC ¶¶ 15, 17-19, 24-57.) Plaintiff contends these factual

disputes are not properly resolved under Rule 12(b)(1).2

Although Arthur Middleton is correct, in that the Court is not limited to the

allegations contained in the FAC, and may rely on affidavits in ruling on a factual

jurisdictional attack, the Raines Declaration does nothing more than create a factual

dispute as to whether Arthur Middleton does in fact manufacture, market, distribute, or

2

 Plaintiff also argued that Arthur Middleton’s cursory allegations that the Court lacks personal jurisdiction over Arthur Middleton are without merit based on alter ego liability. The Court need not address these contentions because Defendants’ motion did

not specifically raise these arguments. 

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sell the Trigosamine Products as alleged in the FAC. Therefore, whether Arthur Middleton does in fact manufacture, market, distribute, or sell the Trigosamine Products is

dispositive of both the Court’s subject matter jurisdiction and the merits of Plaintiff’s

CLRA and UCL claims. Safe Air for Everyone, 373 F.3d at 1039; see also Cattie v.

Wal-Mart Stores, Inc., 504 F. Supp. 2d 939, 944 (S.D. Cal. 2007) (“On these facts,

however, the jurisdictional question of standing is intertwined with the issue of whether

Wal-Mart Stores was actually responsible for marketing the linens on the Wal-Mart.com

website, which goes to the merits of the suit.”); Quantum Corp. v. Sony Corp., 16

U.S.P.Q.2d 1447, 1450 (N.D. Cal. 1990) (denying motion to dismiss under Rule 12(b)(1)

because the issue of jurisdiction and whether the defendant actually engaged in infringing

conduct were inextricably intertwined). Arthur Middleton acknowledges this in its reply. 

(Doc. No. 9 at 3:9-11) (“Here, the issue of jurisdiction is inextricably entwined with the

factual allegations relating to the merits. . .”). Accordingly, Arthur Middleton’s factual

challenge under Rule 12(b)(1) is DENIED.

II. Motion to Quash Service of Process Pursuant to Rule 12(b)(5)

Next, Defendants move to quash service of process on Arthur Middleton, an Ohio

corporation, and Patent Health, an Ohio limited liability company, on the basis that

neither was properly served with the summons and operative complaint as required by

law. (Doc. No. 6 at 3:9-12.) A federal court lacks personal jurisdiction over a defendant

if service of process is insufficient. See Omni Capital Int’l v. Rudolf Wolff & Co., 484

U.S. 97, 104, 108 S. Ct. 404 (1987). Under Rule 12(b)(5), a defendant may challenge

any departure from the proper procedure for serving the summons and complaint as

“insufficient service of process.” Fed. R. Civ. Proc. 12(b)(5). Once a defendant challenges service of process, the plaintiff has the burden of establishing the validity of

service of process under Rule 4. See, e.g., Brockmeyer v. May, 383 F.3d 798, 801 (9th

Cir. 2004); Solorio v. Astrue, No. 07–cv–00508–H (POR), 2008 WL 5122177, *1 (S.D.

Cal. Dec. 5, 2008). Upon deciding that process has not been properly served on the

defendant, a district court has broad discretion to either dismiss the complaint or quash

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service of process. Umbenhauer v. Woog, 969 F.2d 25, 31 (3d Cir. 1992). However, if it

appears that effective service can be made and there has been no prejudice to the defendant, a court will quash service rather than dismiss the action. See id.

A. Service of Process Under the Federal Rules of Civil Procedure

Under the Federal Rules, service of process requires an individual, “who is at least

19 years old and not a party,” to serve a copy of the summons and complaint on the

defendant. Fed. R. Civ. Proc. 4(c). Rule 4(h) governs the specific requirements for

service of process on a corporation or limited liability company within a judicial district. 

Fed. R. Civ. Proc. 4(h)(1). Service of process on a corporation, partnership, or association is valid only if the plaintiff either: (A) followed the requirements for service of

process on an individual under Rule 4(e)(1); or (B) “deliver[ed] a copy of the summons

and of the complaint to an officer, a managing or general agent, or any other agent

authorized by appointment by law to receive service of process.” Id. Under Rule

4(h)(1)(A), the validity of service of process on an individual under Rule 4(e)(1) is

determined in accordance with state law where the district court is located or where

service is made. Fed. R. Civ. Proc. 4(e)(1), 4(h)(1)(A);3 see also Guion v. Shoot The

Moon, LLC, CV-10-174-N-BLW, 2010 WL 2384832, at *1 (D. Idaho June 9, 2010)

(stating that where a defendant is an out of state corporation, service is valid when it

complies with the federal rules, the rules of the state where the district court sits, or the

rules of the state where service is made). Therefore, because the instant action was filed

in California, and service of process was effectuated in Ohio, the validity of service can

be determined under either California or Ohio law.

B. Service of Process Under State Law

Under California law, service of process on a corporation or limited liability

company is valid so long as a copy of the summons and complaint are delivered by one of

3 Under Rule 4(e)(2) the plaintiff can also effectuate service by: (A) delivery a copy of the summons and the complaint to the individual personally; (B) leaving a copy of

each at the individual’s dwelling or usual place of abode with someone of suitable age

and discretion who resides there; or (C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process.

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the following methods: (1) “[t]o the person designated as agent for service of process”

under the Corporations Code, Cal. Code Civ. Proc. § 416.10(a); (2) “[t]o the president,

chief executive officer, or other head of the corporation, a vice president, a secretary or

assistant secretary, a treasurer or assistant treasurer, a controller or chief financial officer,

a general manager, or a person authorized by the corporation to receive service of

process,” Cal. Code Civ. Proc. § 416.10(b); or (3) to an “agent of the corporation” or the

California Secretary of State, Cal. Code Civ. Proc. § 416.10(d).

Ohio law is similar, yet provides additional avenues to effectuate service of process

on a corporation or limited liability company. Under Civil Rule 4.2(F), service may be

made upon a corporation, either domestic or foreign, by: (1) serving the agent authorized

by appointment or by law to receive service of process; (2) serving the corporation by

certified or express mail at any of its usual places of business; or (3) serving an officer or

a managing or general agent of the corporation. Likewise, Civil Rule 4.2(H) provides

that a limited liability company may be served by “serving the entity at any of its usual

places of business by a method authorized under Civ. R. 4.1(A)(1), or by serving a

partner, limited partner, manager, or member.” Civil Rule 4.1(A)(1) provides that service

of process can be made “by United States certified or express mail . . . unless otherwise

permitted by these rules” as “[e]videnced by return receipt signed by any person.” The

Supreme Court of Ohio has held that service of process by certified mail under Civil Rule

4 is consistent with due process standards when it is reasonably calculated to give

interested parties notice of a pending action. See Mitchell v. Mitchell, 64 Ohio St.2d 49,

18 O.O.3d 254, 413 N.E.2d 1182 (Ohio 1980). 

C. Service of Process was Proper Under Ohio Law

Here, Defendants contend Arthur Middleton and Patent Health were not properly

served with the summons and complaint, and therefore service should be quashed. In

response, Plaintiff argues that Arthur Middleton and Patent Health were properly served

with the FAC and summons via certified mail on May 29, 2013, and June 10, 2013,

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respectively, and that each time Alan Hardins (“Hardins”) signed for the packages.4 In

support, Plaintiff attaches the certified mail return receipts, which were sent to the

principal place of business for both Defendants (the same address), and signed by

Hardins. (Doc. No. 8, Exs. B, C.) 

Although service via certified mail as stated above would normally suffice under

Ohio Law, the Raines Declaration, which states that the summons was not included with

the complaint sent to either Defendant, is convincing, un-rebutted evidence that the

summons was not included. See, e.g., SEC v. Internet Solutions for Bus. Inc., 509 F.3d

1161, 1166 (9th Cir. 2007) (citation and quotation marks omitted) (“A signed return of

service constitutes prima facie evidence of valid service which can be overcome only by

strong and convincing evidence.”); Academy of IRM v. LVI Env’t Serv., Inc., 344 Md.

434, 447, 687 A.2d 669 (Ohio 1997) (“Simply because delivery was made to a person

other than the officer identified on the receipt or in the summons does not mean that

service was invalid and personal jurisdiction was lacking”). Plaintiff did not attach an

affidavit or declaration in support his allegations, or contest the Raines Declaration. See,

e.g., Schagene v. Grumman, No.: 11-cv-1642 AJB (NLS), 2012 U.S. Dist. LEXIS 7693,

2012 WL 216531 (S.D. Cal. Jan. 24, 2012); Cheng v. AIM Sports, Inc., No.: CV10-3814

PSG (PLAx), 2011 U.S. Dist. LEXIS 11666, 2011 WL 320993 (C.D. Cal. Jan. 26, 2011). 

Accordingly, because no contrary affidavit or declaration was filed by Plaintiff, the Court

GRANTS Defendants’ motion to quash. Nevertheless, because Federal Rule of Civil

Procedure 4(m) requires service of process within one-hundred and twenty (120) days

from the filing of a complaint, Plaintiff has until September 21, 2013 to effect service on

Defendants Arthur Middleton and Patent Health. 

CONCLUSION 

For the reasons set forth above, the Court DENIES Defendant Arthur Middleton’s

motion to dismiss pursuant to Rule 12(b)(1), and GRANTS Defendants’ motion to quash

4

 Defendants are unsure of the exact spelling of the name because of the handwritten signature. (Doc. No. 8 at 8:2-3 n.8.)

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service pursuant to Rule 12(b)(5). (Doc. No. 6.) Plaintiff has until September 21, 2013

to effect service on Defendants Arthur Middleton and Patent Health.

IT IS SO ORDERED.

DATED: September 3, 2013

Hon. Anthony J. Battaglia

U.S. District Judge

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