Where a party tries to effect service of process using a third-party delivery service, the Rules of Civil Procedure require the party use certain companies approved by the Secretary of the Treasury. BIOMILQ, Inc. v. Guiliano, 2023 NCBC 91 (J. Robinson). Because the counterclaim-plaintiff used a delivery serviced not approved by Treasury, the attempted service was insufficient and the claims were dismissed.

Plaintiff filed suit against Shayne Guiliano and 108LABS, LLC (“Counterclaim-Plaintiffs”), alleging misappropriation of trade secrets.  Counterclaim-Plaintiffs asserted numerous claims against Plaintiff and others who were not parties to the original lawsuit.  In attempting to serve their counterclaim on these new entities/individuals, Counterclaim-Plaintiffs used Federal Express Corporation’s “FedEx Express Saver” services which purported to effect service on the newly added parties.  The newly added parties moved to dismiss pursuant to N.C.R.C.P. 12(b)(5), contending that FedEx Express Saver did not constitute a “designated delivery service” as required under Rule 4(j).  The Counterclaim-Plaintiffs disputed the motion, contending that the service providers as provided by the U.S. Treasury are merely illustrative and do not compromise the exhaustive list.  Moreover, Counterclaim-Plaintiffs argued, because the newly added parties actually received the summons and lawsuit, service was effected even if FedEx’s Express Saver was technically not a provider designated by the Treasury.

The Business Court disagreed.  Noting that the plain language of Rule 4(j) permits effective service to be accomplished only by a delivery service that has been designated by the U.S. Treasury as provided for in 26 U.S.C. §7502(f)(2), the Business Court held IRS Notice 2016-30 (“Notice”) constituted an exhaustive list of authorized service providers.  The Business Court further noted that FedEx Express Saver was plainly not among the providers so listed and that the Notice itself stated that “[FedEx is]…not designated with respect to any type of delivery service not enumerated in this list.” (Opinion, ¶26).   The fact that the newly added parties had actually received the summons and lawsuit, the Business Court held, was not a sufficient basis for the Court to exercise jurisdiction over the new parties, citing long-held North Carolina precedent. (Id., ¶27).  Finding that it lacked jurisdiction over the newly added parties, the Business Court dismissed the Counterclaim-Plaintiffs’ claims pursuant to Rule 12(b)(5).

Based upon this decision, a business which has been served with a lawsuit through a delivery service should examine whether a properly designated service was used by the plaintiff, especially when the statute of limitations is close to expiring.

Additional Legal Points: A “rebuttable presumption” that service has been properly effected exists only after proof of proper service has been established and, presumably, before a default judgment can be entered. (Opinion, ¶29).