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Inc. v. United States Postal Service

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

June 20, 2018




         The New 75th & Cottage Currency Exchange sued the Postal Service in Illinois state court, alleging that the Postal Service improperly dishonored a check that it had issued. The Currency Exchange seeks relief under three Illinois statutes. As a federal agency, the Postal Service removed the case to federal court and then moved to dismiss the case. R. 1; R. 12, Mot. Dismiss.[1] That motion is granted: the Currency Exchange did not properly serve the Postal Service and failed to exhaust its administrative remedies. (And, in two instances, the complaint fails to state a claim.) The case is dismissed.

         I. Background

         In November 2016, the Postal Service issued a check for $448.66 to Bianca Williams. R. 26, Compl. ¶ 4.[2] Williams sold the check to the Currency Exchange for cash. Id. ¶ 6. The Currency Exchange later tried to present the check for payment, but it was dishonored with the phrase “Stop Payment” included as the reason for return. Id. ¶ 7, Exh. A. The Currency Exchange was charged a $25 fee for the return of the check. Id. ¶ 7.

         In January 2017, the Currency Exchange sent a letter to a Chicago post office, seeking to collect on the amount of the check. R. 18, Pl.'s Resp. Br. Exh. A. The letter threatened to pursue claims against the Postal Service if it did not reimburse the Currency Exchange for the value of the check, the check-return fee, attorneys' fees, and court costs. Id. There is no indication that the Postal Service ever responded to that letter. So, in March 2017, the Currency Exchange sent a similar letter, this time to the Postal Service's Tort Claims Office in Chicago. Id. The Postal Service acknowledged receipt of this second letter and requested further documentation. Id. Exh. B. But before receiving a final decision from the Postal Service (known as a final “disposition” in the pertinent statute, 28 U.S.C. § 2675(a)), the Currency Exchange filed suit in May 2017. Compl. at 1. The Postal Service eventually denied the Currency Exchange's claim. Pl.'s Resp. Br. Exh. C.

         In the now-removed complaint, the Currency Exchange asserts that it is entitled to relief under three Illinois statutes. Compl. ¶¶ 9-10. The Currency Exchange's attempts to serve the Postal Service with this complaint and summons were plagued with difficulties. The Currency Exchange first attempted to serve the Postal Service at its Chicago Tort Claims Office, believing that the Postal Service would be amenable to service at that address based on their past interactions. Pl.'s Resp. Br. at 2-3. But when the Currency Exchange's process server attempted service at the Chicago Tort Claims Office, a Postal Service employee told the process server that “service of process must be sent to “E[a]gan, MN.” Id.[3] The Currency Exchange took the employee's word for it and directed service to the Postal Service accounting center in Eagan, Minnesota. See R. 13, Def.'s Br. at 4; Pl.'s Resp. Br. at 2-3. The Currency Exchange did not make any other attempts at service.

         II. Legal Standard

         The Postal Service has moved to dismiss under Federal Rules of Civil Procedure 12(b)(5), 12(b)(1), and 12(b)(6). Rule 12(b)(5) allows “[a] defendant … [to] enforce the service of process requirements through a pretrial motion to dismiss.” Cardenas v. City of Chicago, 646 F.3d 1001, 1005 (7th Cir. 2011). The plaintiff bears the burden of showing that service was proper, id., and the “court may consider affidavits and other documentary evidence” outside the pleadings. Paulsen v. Abbott Labs., 2018 WL 1508532, at *5 (N.D. Ill. Mar. 27, 2018); see also Durukan Amer., LLC v. Rain Trading, Inc. 787 F.3d 1161, 1164 (7th Cir. 2015) (considering affidavits and employment records in concluding that there was a dispute of fact over service of process). If service is found to be insufficient, then the next question is whether to extend the time to serve or, instead, to dismiss the case for lack of service. That decision is a highly discretionary one. Cardenas, 646 F.3d at 1005.

         “Federal Rule of Civil Procedure 12(b)(1) allows a party to move to dismiss a claim for lack of subject matter jurisdiction.” Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). In considering a motion to dismiss for lack of subject matter jurisdiction, the Court “must accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff.” Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir. 1999). When a key fact is disputed, the Court can also look beyond the allegations contained in the pleadings to determine whether jurisdiction is proper. Id.

         “A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted.” Hallinan, 570 F.3d at 820. Generally, the complaint only needs “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). But claims alleging fraud must also satisfy the heightened standard of Rule 9(b), meaning they “state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b) (emphasis added). On a Rule 12(b)(6) motion, the Court considers whether the complaint contains sufficient “factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (cleaned up).[4]Mere legal conclusions are not entitled to the presumption of truth. Id. at 678-79. The complaint's allegations “must … raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.

         III. Analysis

         A. Service of Process

         The Postal Service first argues that the Currency Exchange did not effectuate proper service. Even though the Currency Exchange initially filed in Illinois court, federal law governs service of process on the United States Postal Service. 39 U.S.C. § 409(b). As a result, the Currency Exchange had to follow Federal Rule of Civil Procedure 4(i)'s requirements for serving the United States government and its agencies. Rule 4(i) requires that the plaintiff either “deliver a copy of the summons and of the complaint to the United States attorney for the district where the action is brought” or mail the summons and complaint to the civil-process clerk at the United States Attorney's Office. Fed.R.Civ.P. 4(i)(1)(A). The plaintiff must also send a copy of the summons and complaint to the United States Attorney General. Fed.R.Civ.P. 4(i)(1)(B). But the Currency Exchange followed neither of these instructions. Instead, it attempted to serve the Postal Service in Eagan, Minnesota, based solely on the word of an unidentified Postal Service employee. The Currency Exchange did not follow Rule 4(i)'s procedural requirements, meaning it failed to properly serve the Postal Service.[5]

         Although the Currency Exchange is now outside of the 90-day window for accomplishing service, the Court would have to give an extension of time if the Currency Exchange showed good cause for the delay. Fed.R.Civ.P. 4(m); Coleman v. Milwaukee Bd. of Sch. Directors, 290 F.3d 932, 933-34 (7th Cir. 2002). Good cause generally does not include “half-hearted” attempts to serve the defendant, Geiger v. Allen,850 F.2d 330, 333 (7th Cir. 1988), nor anything less than “reasonable diligence, ” Schmude v. Sheahan, 214 F.R.D. 487, 490 (N.D. Ill. 2003) (citing Bachenski v. Malnati, 11 F.3d 1371, 1377 (7th Cir. 1993)). Here, the Currency Exchange failed to follow the simple requirements of Rule 4(i). Attorney inadvertence is not an acceptable excuse without substantial extenuating factors, Floyd v. United States, 900 F.2d 1045, 1047 (7th Cir. 1990), and the Currency Exchange does not present any compelling reason for its mistake. The mere word of an unknown Postal Service ...

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