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Farm Bureau General Insurance Company of Michigan v. Smart Balance Wheel

United States District Court, E.D. Michigan, Southern Division

November 17, 2017

SMART BALANCE WHEELS, et al., Defendants.

          Paul D. Borman District Judge



         I. Background

         A. Factual Background

         The instant lawsuit arises out of a September 24, 2016 house fire that started in the basement of Mohanad Isso's house. Plaintiff Farm Bureau General Insurance Company of Michigan (“Farm Bureau”) insured Mr. Isso's house and paid his insurance claim, thereby becoming subrogated to his rights. According to the complaint, an investigation revealed that the fire was caused by a toy known as a hoverboard, which was located in Mr. Isso's basement. (DE 1.) Mr. Isso reported to Farm Bureau that he purchased the “Smart Balance Wheel” brand hoverboard off of eBay approximately one or two years prior to the fire, and that while he does not have records of the transaction, he did locate the user manual for the hoverboard. However, the user manual did not provide a manufacturer's name or address. (DE 10 at 11.) Farm Bureau seeks to bring this lawsuit against those Defendants who designed, manufactured and sold the “Smart Balance Wheel” brand hoverboard and its battery.

         B. Procedural History

         Farm Bureau searched the Internet to find the names or corporate headquarters for the companies that manufacture, distribute or sell the “Smart Balance Wheel” brand hoverboard, and located several websites and Facebook pages listing email addresses. However, Farm Bureau has had difficulty locating the corporate name(s) or physical contact information of the manufacturer(s). On July 21, 2017, Farm Bureau filed a motion to amend its complaint and for alternate service to name the defendants that appear to be affiliated with the Smart Balance Wheel brand hoverboard, and for an order allowing Farm Bureau to serve process by alternate means: by email to the email addresses listed on the company websites and by first-class mail to the “billing address” identified on one of the websites. (DE 10.) This motion was referred to me on August 1, 2017. (DE 11.)

         On October 2, 2017, the Court entered an Order granting Farm Bureau's motion to amend the complaint and granting in part and denying in part the motion for alternate service. (DE 13.) The Court found that Farm Bureau established that Defendants conduct business on the internet and via email, and that service by email would not violate any international agreement. However, the Court found that Farm Bureau had not met its burden so show that the email addresses at issue have been “sufficiently tested” to confirm they are valid and thus “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” (Id. at 7-11 (citing Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950).) Accordingly, the Court ordered Farm Bureau to appear for an evidentiary hearing to present evidence demonstrating that each of the email addresses it requests to serve have been “sufficiently tested” and therefore are valid, and that service will comport with constitutional notions of due process. (Id. at 11-12.)

         C. The October 25, 2017 Evidentiary Hearing

         On October 25, 2017, Farm Bureau's counsel appeared for the evidentiary hearing. He was placed under oath and presented testimony and evidence identifying the proposed Defendants and the proposed contact information for each Defendant, and regarding his efforts to demonstrate that the proposed email addresses have been “sufficiently tested” and are valid. He established that each of the proposed Defendants Farm Bureau seeks to serve via email do business on the internet and through email, including making their products available for purchase online, and testified that the websites found do not provide the formal name of the manufacturer(s) or provide the physical contact information for the manufacturer(s). Farm Bureau's counsel identified the specific email address(es) associated with each proposed Defendant and further detailed his efforts to verify that each of the email addresses at which he seeks to serve those Defendants is valid, including dates emails were sent to each email address, and that emails mailed to each of the email addresses in question were not returned as undeliverable or did not “bounce back.” At the close of the hearing, Farm Bureau was directed to: (1) file its Amended Complaint identifying all proposed Defendants; (2) attempt to send emails to each of the email addresses at issue again, but requesting a “delivery receipt” and “read receipt” for each; and (3) conduct a “reverse lookup” for the telephone number identified on the website to attempt to obtain a physical address for that Defendant.

         D. Farm Bureau's First Amended Complaint and Supplemental Brief on its Request for Alternate Service

         On November 2, 2017, Farm Bureau filed its First Amended Complaint identifying the five Defendants it seeks leave to serve via alternate service, including providing the domain name and associated email address for each John Doe Defendant. (DE 15.)[1] Farm Bureau also filed a supplemental brief in support of its motion for alternate service. (DE 17.) In that supplemental brief, Farm Bureau identified the five Defendants in its First Amended Complaint that it requests to serve via alternate service, and detailed the requested alternate means of service for each Defendant. (Id. at 1-2.) Farm Bureau also attached counsel's second supplemental affidavit to its supplemental brief. (DE 17-1.) In that affidavit, Farm Bureau's counsel listed the specific email addresses contacted for each Defendant, and explained that, in compliance with the direction of the Court, he “turned on the ‘delivery receipt' and ‘read receipt' functions and sent emails to” each of the four listed email addresses. (Id. ¶ 2.) For each of those test emails sent, Farm Bureau's counsel “received messages stating that the emails had been delivered to those email addresses[, ]” but “did not receive any ‘read' receipts.” (Id.)[2] Counsel further “test[ed]” whether the “delivery receipt” function worked properly by sending a test email to a similar, but not identical, email address. (Id.) In response to that test email, counsel “received a message stating that it was NOT delivered[, ]” “indicat[ing] that the email addresses to which Farm Bureau asks to serve process by email are currently receiving emails.” (Id.)

         II. Motion for Alternate Service [3]

         Farm Bureau requests permission to serve the five “John Doe” Defendants in its ...

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