Optical Solutions v Nanometrics

2018 DNH 029

• Court: District Court, D. New Hampshire
• Decided: February 9, 2018
• Docket: 17-cv-429-JL
• Status: Published

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Optical Solutions, Inc.

v. Civil No. 17-cv-429-JL Opinion No. 2018 DNH 029 Nanometrics, Inc.

ORDER ON MOTION TO REMAND

The question before the court is when the 30-day period to

seek removal under 28 U.S.C. § 1446(b) commences. Is it when,

pursuant to New Hampshire’s long arm statute, a plaintiff serves

a copy of the summons and Complaint on the Secretary of State

(after first sending the defendant a “courtesy copy,”)? Or is

it when a defendant received the summons and complaint from the

Secretary of State?

After filing its Complaint in New Hampshire Superior Court

on August 2, 2017, plaintiff Optical Solutions, Inc. (“OSI”)

sent a copy of the Complaint and summons to defendant

Nanometrics’ general counsel, which was received on August 4.

On August 8, OSI, via the Merrimack County Sheriff, served the

Complaint upon the Secretary of State. On August 14, OSI mailed

a copy of the Complaint, summons, and affidavit of service upon

the Secretary of State to Nanometrics’ headquarters in

California by registered mail. Nanometrics received those documents on August 18, 2017, and removed the suit to this court

on September 18, 2017. OSI moved to remand, arguing that the

removal window closed on September 8, 2017, 30 days after the

Secretary of State was served. Nanometrics asserts that the

clock did not begin to run until August 18, when it received the

suit papers after the Secretary was served. After reviewing the

parties’ submissions and conducting oral argument, the court

finds that removal was timely and therefore denies plaintiff’s

motion to remand.

I. Applicable legal standard

The federal statute governing removal of actions from state

court, provides:

The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

28 U.S.C. § 1446(b). “The defendant seeking removal bears the

burden of establishing that the defendant has complied with the

removal procedures.” 16 James Wm. Moore, Moore’s Federal

Practice § 107.11[3], at 107–46 (3d ed. 2010); see also Santa

Rosa Med. Ctr., Inc. v. Converse of P.R., Inc., 706 F. Supp.

111, 114 (D.P.R. 1988) (“The petitioning defendant bears the 2 burden of establishing compliance with the requirements of the

removal statute . . . .”).

II. Factual background

As a result of a business dispute, OSI filed a complaint

against Nanometrics in New Hampshire Superior Court on August 2,

2017.1 The following day, counsel for OSI sent Nanometrics’

general counsel a letter with copies of the state court

Complaint and summons, for the purpose of giving Nanometrics

“one last chance” to settle the parties’ dispute.2

On August 8, 2017, a Merrimack County Sheriff served OSI’s

Complaint and summons on the New Hampshire Secretary of State,

pursuant to New Hampshire’s long-arm statute, N.H. Rev. Stat.

Ann. § 508:4.3 OSI mailed a copy of the Complaint, summons and

affidavit of service on the Secretary of State to Nanometrics’

California headquarters and Delaware registered agent on August

1 Complaint, doc. no. 1-1. 2 Pltff. Mem., doc. no. 9-1, at 1-2; Def. Obj., doc. no. 13, at 2. 3 Pltff. Mem., doc. no. 9-1, at 2.

3 14, 2017.4 Nanometrics received the documents on August 18,

2017.5

Invoking this court’s diversity jurisdiction, Nanometrics

removed the case on September 18, 2017.6 Shortly thereafter,

Nanometrics moved to dismiss the Complaint, arguing that it was

not subject to personal jurisdiction in New Hampshire and that

OSI failed to state a claim for relief.7 Nanometrics also moved

for a change of venue.

OSI moved to remand, arguing only that Nanometrics’ removal

was untimely because its statutory 30-day removal clock began

running on August 8, 2017, when the Merrimack County Sheriff

served the New Hampshire Secretary of State.8 See 28 U.S.C. §

1446(b).

III. Analysis

“[A] defendant’s statutory period to remove does not begin

to run . . . until the defendant has been served.” Novak v.

4 Id. at 2. 5 Id. Earlier that day, OSI counsel confirmed to Nanometrics’ counsel that the August 3, 2017 mailing was not intended to constitute service. Def. Obj., doc. no. 13, at 2-3. 6 Notice of Removal, doc. no. 1. 7 Doc. nos. 5, 6. 8 Doc. no. 9.

4 Bank of New York Mellon Trust Co., NA, 783 F.3d 910, 911 (1st

Cir. 2015) (citing Murphy Bros., Inc. v. Michetti Pipe

Stringing, Inc., 526 U.S. 344, 347-48 (1999)). OSI served

Nanometrics through New Hampshire’s long-arm statute, N.H. Rev.

Stat. Ann. § 510:4. “Strict compliance” with the statute’s

provisions is required to effect service. Impact Foods Sales,

Inc. v. Evans, 160 N.H. 386, 391 (2010). The question for the

court is when service occurred for purposes of the federal

removal statute.

New Hampshire’s long-arm statute provides that service “may

be made by leaving a copy” of the summons and complaint with the

Secretary of State. N.H. Rev. Stat. Ann. § 510:4, II. While

such service “is of the same legal force and effect as if served

on the defendant,” id., such effect is predicated on a

subsequent proviso clause,9 which requires: 1) notice of that

service to the defendant; and 2) proof provided to the court of

the defendant’s receipt of the service. Id.

OSI argues that the “date of service” for purposes of

calculating the removal period is the date the Secretary is

9 A proviso is a condition on “the principal matter that it qualifies--almost always the matter immediately preceding.” Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 154 (Thompson/West 2012).

5 served, and that the proviso clause does not operate to make the

service date dependent on those additional tasks, i.e., notice

of service to the defendant and proof of the defendant’s receipt

to the court. Instead, OSI asserts that service on the

Secretary of State, combined with Nanometrics actual notice --

obtained through the “courtesy copy” -- triggered the removal

clock no later than August 8. OSI’s reading of this statute is

at odds with the conclusions of United States Supreme Court, the

New Hampshire Supreme Court, and the First Circuit Court of

Appeals. The court therefore rejects it.

In Murphy Bros., supra, the Court rejected the so-called

“receipt rule” under which the removal period would begin to run

when the defendant received a courtesy copy of the complaint

prior to service of official process, pursuant to the “or

otherwise” clause of the removal statute. 526 U.S. at 353-54.

In describing the various permutations of service permitted

under different state laws, the Court observed that “if the

Complaint is filed in court prior to any service, the removal

period runs from the service of the summons.” 526 U.S. at 354.

Otherwise, the Court noted, removal would be the “sole instance

in which one’s procedural rights slip away before service of a

summons, i.e., before one is subject to any court’s authority.”

Id. at 356.

6 Next, the New Hampshire Supreme Court shed light on the

definition of “service” in Impact Foods, supra, holding that “in

order to effect valid service of process” all three steps

outlined in N.H. Rev. Stat. Ann. § 510:4 “must be taken.” 160

N.H. at 391. The Court therefore vacated a default judgment

entered when the notice to the defendant lacked notice of actual

service on the Secretary of State, but included only a copy of

the instructions given to a sheriff to serve the Secretary. Id.

at 388-89.

In a case decided under New Hampshire law, our Court of

Appeals presaged the result in Impact Foods. See M&K Welding v.

Leasing Partners, LLC, 386 F.3d 361, 363-64 (1st Cir. 2004).

The court accurately predicted that the New Hampshire Supreme

Court “would take literally the requirement in section 510:4,

II, that notice be given of the actual service on the Secretary

of State” for service to be complete. Id. at 365-66. Although

M&K Welding involved a default for failing to respond to a

complaint, the Court provided a warning that is directly

applicable to this case:

Appellant’s interpretation would give rise to many questions. From what time do the twenty or so days [to answer the Complaint] run? If only from the time of service on the Secretary, how will a defendant know? If a defendant fears that the starting date is that of his receipt of the summons, and it happens that the Secretary is never served, is this a tolerable

7 procedure? Any actions taken by defendant to respond would have proven needless.

Id. at 366. And, most presciently, the Court concluded,

“Finally, for cases such as this, which are removed to federal

court, will there be confusion and disputes about the running of

time within which notices of removal can be filed?” Id. at 367.

With these guideposts in mind, the court finds that

Nanometrics’ time to remove did not begin to run until it

received formal notice of service on the Secretary of State,

which the parties agree occurred on August 18, 2017. The notice

of removal is therefore timely. Other district courts in this

circuit have reached similar results in comparable

circumstances. See, e.g., Renaissance Mktg., Inc. v.

Monitronics Int’l Inc., 606 F. Supp. 2d, 201, 206 (D.P.R. 2009)

(collecting cases and observing that courts have “consistently

held” that service on a statutory agent does start the removal

clock running); Wilbert v. UNUM Life Ins. Co., 981 F. Supp. 61,

63 (D.R.I. 1997) (“[w]hen a statutory agent is served, the clock

for removal does not begin ticking as it would if the defendant

itself has been served but rather starts when the defendant

received actual notice of the service from the statutory

agent.”); Colello v. Baker Material Handling Corp., 849 F. Supp.

3, 4 (D. Me. 1994) (“Courts in most, if not all, jurisdictions

8 have held that the thirty-day removal period does not commence

with service on ‘statutory agents.’”).

OSI tries to elide the import of these cases by suggesting

that its “courtesy copy” kept Nanometrics from being “in the

dark” about the suit, as the court in M&K Welding had feared.

But not only does Murphy Bros. suggest that the courtesy copy is

a non-factor in the timeliness analysis, each of the cases cited

above involved statutory service on the defendant, not simply

receipt of a courtesy copy devoid of formal service. Indeed,

OSI has cited no case where a court held that the removal period

begins to run when service on an agent is preceded by a courtesy

copy, but before the defendant has been formally served. OSI’s

motion to remand is therefore denied.10

10In its supplemental filing, doc. no. 17, Nanometrics argues that the court should not consider whether OSI complied with N.H. Rev. Stat Ann. § 510:4 because that statute pertains only to individuals. Instead, Nanometrics contends that the court should focus on the timeliness of its removal in the context of the corporate long-arm statute, N.H. Rev. Stat. Ann. § 293- A:15.10. In reply, doc. no. 19, OSI asks the court to reject this proposition. While Nanometrics correctly notes that Sawtelle v. Farrell, 70 F.3d 1381, 1388 (1st Cir. 1995) and cases from this district have observed that the latter statute is appropriate for corporate defendants, they are not dispositive here. In each of the cited cases, the issue in dispute was personal jurisdiction over a non-resident defendant, an issue not presently before the court. Moreover, the corporate long-arm statute explicitly states that it is not “the only means, or necessarily the required means, of service on a foreign corporation.” N.H. Rev. Stat. Ann. § 293-A:15.10(d). 9 IV. Conclusion

Having concluded that Nanometrics removal was timely, OSI’s

motion to remand11 is DENIED.12

SO ORDERED.

____________________________ Joseph N. Laplante United States District Judge

Dated: February 8, 2018

cc: Matthew R. Johnson, Esq. Gregory L. Silverman, Esq. Kathleen Goodhart, Esq.

Regardless, having found that removal was timely under section 510:4, the court need not address Nanometrics’s argument that it was also timely under § 293-A:15.10. 11 Doc. no. 9. 12Having found that Nanometrics’s removal period did not commence until it received notice on August 18, 2017, the court need not decide the potential legal effect, if any, of OSI’s counsel’s statement regarding the courtesy copy, supra, n.5. Nor does the court address Nanometrics’s argument that the removal clock did not begin to run until August 31, 2017, when OSI informed the state court that proof of service on the Secretary of State had been delivered to OSI, the final requirement of N.H. Rev. Stat. Ann. § 510:4.