United States District Court, C.D. California
ORDER GRANTING PLAINTIFF'S MOTION FOR SERVICE
THROUGH THE SECRETARY OF STATE 
D. WRIGHT, II UNITED STATES DISTRICT JUDGE
a government enforcement action brought by Plaintiff Federal
Trade Commission ("FTC") against Defendant
Discountm brokers, Inc. ("DMB"). The FTC alleges
that DMB held itself out as a legitimate seller of gold and
silver, and advertised gold and silver as a "safe"
retirement investment. (Compl. ¶ 11.) However, when
customers would place orders for gold and silver, DMB would
often fail to deliver the product. (Id.) The FTC
estimates that Defendants may have scammed consumers out of
more than $33 million using this scheme. (Id.)
24, 2016, the FTC moved for an order directing service of
process on DMB through the California Secretary of State, and
for an order extending the period in which to serve DMB. (ECF
No. 23.) No timely opposition was filed. For the reasons
discussion below, the Court GRANTS the
FTC's Motion. (ECF No. 23.)
Service Through Secretary of State
domestic corporation may be served by "following state
law for serving a summons in an action brought in courts of
general jurisdiction in the state where the district court is
located." Fed.R.Civ.P. 4(e)(1), 4(h)(1)(A). Under
California law, a defendant may be served by either
personally delivering the documents to the person to be
served, or by leaving a copy of the documents at the
defendant's home or usual place of business with the
"person who is apparently in charge" and then
mailing a copy thereafter to the person to be served. Code
Civ. Proc. §§ 415.10, 415.20(a), (b). When serving
a corporation, the person to be served is either the
designated agent for service of process, or an officer of the
company. See Id. § 416.10(a), (b). Finally, if
the corporation "cannot be served with reasonable
diligence" using one of the foregoing methods, the party
attempting to effect service may apply to the Court for an
order permitting service through the California Secretary of
State. Cal. Corp. Code § 1702(a).
the Court is satisfied that the FTC has exhausted all methods
of service short of service on the Secretary of State.
DMB's designated agent for service of process and only
officer is Michael Berman. (Averill Decl. ¶ 4.) Although
the FTC was able to serve Berman by substituted service
(i.e., by leaving the summons and complaint with Berman's
father, with whom he shares a residence), such service would
be ineffective as to DMB because Berman's personal
residence is not DMB's business address. (ECF No. 16.)
The FTC has attempted to serve Berman himself a total of six
times at the residence without success. (Demirjyan Decl.
¶¶ 3-5.) Moreover, the business addresses listed on
the Secretary of State for DMB are private mailboxes, and DMB
no longer receives mail at those locations. (Averill Decl.
¶¶ 7, 12, 14.) The FTC even attempted to send
requests for waiver of service to both his residence and the
above business addresses, but did not receive a signed waiver
in response. (Id. ¶ 14.) The FTC has been
unable to find an alternate address or way to contact Berman.
(Id. ¶¶ 18-19.)
on the foregoing, it appears that DMB cannot be served with
reasonable diligence short of serving the Secretary of State.
Rule 4(m) Period
also moves for an extension of time in which to serve DMB.
Under Federal Rule of Civil Procedure 4(m), if a defendant is
not served "within 90 days after the complaint is filed,
" the court "must dismiss the action without
prejudice against that defendant or order that service be
made within a specified time." Fed.R.Civ.P. 4(m).
However, if the plaintiff shows "good cause" for
having not served the defendant, the court "must extend
the time for service for an appropriate period." Here,
the 90-day deadline expired on June 27, 2016. However, for
the reasons described, above the Court finds that there is
good cause for the FTC's failure to do so. Thus, the
Court hereby extends the deadline in which to serve DMB by an
additional 45 days.
reasons discussed above, the Court GRANTS the FTC's
Motion. (ECF No. 23.) The FTC is ORDERED to serve DMB in
compliance with California Corporations Code section 1702
within 45 days from the date of this order.