SDNY Says You're Gonna Have To Serve Somebody (And Email Ain't Gonna Cut it)

August 11, 2020

Famed rock 'n roll litigator Bob Dylan offers a fabulous course on civil procedure. In one of his most popular lectures, lawyer Dylan explains that you're gonna have to serve somebody, yes, indeed you're gonna have to serve somebody, well, it may be the devil or it may be the Lord, but, you're gonna have to serve somebody. Of course the way Dylan delivers his lesson is a lot more catchy than drab prose, plus his method has a beat and you can dance to it. In a recent Petition to the United States District Court for the Southern District of New York, we come across the plight of a former employee seeking to vacate an arbitration award. In order to stand before the folks in the robes, the employee needed to serve somebody. He did. Well, technically he did. Well, maybe not technically but he did give it the old college try. 

The AAA Dismissal

In 2017, Damian Dalla-Longa initiated an American Arbitration Association ("AAA") proceeding against his former employer Magnetar Capital LLC. On September 9, 2019, an AAA Award dismissed with prejudice all of Dalla-Longa's claims. On December 9, 2019, Dalla-Longa filed a Petition with the United States District Court for the Southern District of New York ("SDNY") seeking to vacate the AAA award. 

So . . . as you can see this is gonna be one of those boy-sues-company-company-wins-arbitration-boy-appeals-arbitration-loss-to-federal- court tales. Ho hum.

FAA 3 Month Service Requirement

In any event, Dalla-Longa's Petition to Vacate was filed on December 9, 2019 "at 9:06 PM that evening, Petitioner's counsel emailed a copy of the Petition to Respondent's counsel in the underlying arbitration." Damain Dalla-Longa, Petitioner, v. Magnetar Capital, Respondent (Opinion and Order, SDNY, 19-CV-11246) Under the applicable Federal Arbitration Act ("FAA") 9 U.S. Code Section 12: Notice of motions to vacate or modify; service; stay of proceedings:

Notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered. If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court. If the adverse party shall be a nonresident then the notice of the application shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court. For the purposes of the motion any judge who might make an order to stay the proceedings in an action brought in the same court may make an order, to be served with the notice of motion, staying the proceedings of the adverse party to enforce the award.

Under FAA Section 12, the Notice of the motion to vacate has to be served within three months after the award is filed or delivered. The Award was rendered on September 9, 2019, so, within three months would be like by December 9th or thereabouts, right? 

FRCP Service Mechanics

Service on district-resident adverse parties (the circumstance here) is done subject to the law of the district within which the Award was made. Under the Federal Rules of Civil Procedure ("FRCP") Rule 5: Serving and Filing Pleadings and other Papers:

. . .

(b) Service: How Made.

(1) Serving an Attorney. If a party is represented by an attorney, service under this rule must be made on the attorney unless the court orders service on the party.

(2) Service in General. A paper is served under this rule by:

(A) handing it to the person;

(B) leaving it:

(i) at the person's office with a clerk or other person in charge or, if no one is in charge, in a conspicuous place in the office; or

(ii) if the person has no office or the office is closed, at the person's dwelling or usual place of abode with someone of suitable age and discretion who resides there;

(C) mailing it to the person's last known address-in which event service is complete upon mailing;

(D) leaving it with the court clerk if the person has no known address;

(E) sending it to a registered user by filing it with the court's electronic-filing system or sending it by other electronic means that the person consented to in writing-in either of which events service is complete upon filing or sending, but is not effective if the filer or sender learns that it did not reach the person to be served; or

(F) delivering it by any other means that the person consented to in writing-in which event service is complete when the person making service delivers it to the agency designated to make delivery.

Clearly, ya gotta serve somebody and it seems like Dalla-Longa's email did, in fact, serve somebody. After all, email is like "mailing," no? Or it's like "sending it by other electronic means that the person consented to in writing." Maybe that "electronic means" will cover Dalla-Longa's email. No? Regardless, Dalla-Longa served somebody . . . or so it seems.

SDNY Cites Two Problems

In rejecting Dalla-Longa's Petition to Vacate, SDNY cited two crippling failures:

First, Petitioner Dalla-Longa didn't timely serve proper Notice on Respondent Magnetech within three months of the September 9, 2019, AAA Award. 

Second, Petitioner's email service was improper under FRCP 5(b)(2)(E)

Petitioner asserted to the Court, in part, that the parties had previously consented to service in accordance with AAA Employment Arbitration Rules and Mediation Procedure Rule 38, which states:

Any papers, notices, or process necessary for the initiation or continuation of an arbitration under these rules, for any court action in connection therewith, or for the entry of judgment on any award made under these rules may be served on a party by mail . . . . Where all parties and the arbitrator agree, notices may be transmitted by electronic mail (e-mail), or other methods of communication." 

SDNY Preserves Its Turf

Sure, the AAA has rules governing email. But the Petition to Vacate was filed at SDNY. We're in a federal court. Courts don't like to be told how to do their business by arbitration associations. Proof of that is found when the SDNY says that the AAA's Rules have nothing to do with the service of notice in a federal district court. You know -- the whole render unto Caesar the things that are Caesar's (or AAA); and unto SDNY the things that are SDNY's. When it comes to serving notices in SDNY, that court references the FRCP and not the AAA Procedure Rules:

Consent to service of notice of petitions to vacate arbitration awards by email cannot be implied by prior conduct in the underlying arbitration. The Second Circuit recently addressed exactly this issue in an unpublished opinion. There, a petitioner attempted to serve by email a notice of a petition to vacate an arbitration award. See Martin, 676 F. App'x at 28. The Second Circuit rejected petitioner's argument that consent to service by email "can be implied . . . from the parties' pattern and practice of communicating by e-mail in the underlying arbitration": 

The argument fails because the plain language of Rule 5 requires the recipient of electronic service to have "consented in writing," which was not done here. Further, the advisory committee notes to the Rule explain that the requisite consent "must be express, and cannot be implied from conduct." 

Id. at 29 (citing FED. R. CIV. P. 5 advisory committee's note to 2001 amendment). This ruling is persuasive and consistent with past rulings in this District. . . .

at Page 4 of the SDNY Opinion

The Old College Try

When all else fails, sometimes you have to call an audible, fake a run, fake a pass, do whatever you can to buy time, and, then, when nothing else is opening up, you rear back and throw the damn ball as far down field as you can hoping against hope that one of your guys will jump higher than one of their guys, grab the ball, hold on to it, and land in the end zone as time expires. The old Hail Mary play sometimes works in college or professional sports. It's always fun to watch. Usually, it fails but when it works, it's the stuff of highlight reels. In court, however, such antics rarely work, as noted by SDNY: 

Petitioner argues that the Court should excuse any errors in service because every effort was made to ensure that service was proper. But the law does not excuse improper service on equitable grounds. "No exception to [the] three month limitations period [to serve notice of a motion to vacate an arbitration award] is mentioned in the statute," and "there is no common law exception to the three month limitations period on the motion to vacate." . . .

. . .

Finally, Petitioner asserts in a conclusory fashion that Respondent's motion is "futile" because, "[u]nder New York's Saving Statute, CPLR § 205(a), the case could be refiled within six months." But CPLR § 205(a) applies only where "an action is timely commenced." Where, as here, an action is dismissed for failure to timely serve, CPLR § 205(a) does not apply. . . .

at Page 5 - 6 of the SDNY Opinion

Accordingly, SDNY granted Respondent Magnetar's Motion to Dismiss the Petition to Vacate the AAA Award.


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