Case of the Day: Tuttle v. Sky Bell Asset Management
Posted on October 18, 2011
The case of the day is Tuttle v. Sky Bell Asset Management, LLC (N.D. Cal. 2011). The plaintiffs sued Ernst & Young LLC, an Isle of Man company, among others, claiming that it was negligent in the audit of the Eden Rock Limited Partnership, in which the plaintiffs had invested. E&Y moved to dismiss for insufficient service of process. The plaintiffs had plenty of warning of service of process problems. After the plaintiffs corresponded with counsel for a related Ernest & Young entity about facilitating service of process, they received an email stating:
Having considered the matter fully we would ask that you arrange formal service of your clients’ claims.
A few months later, they received an email from an Ernst & Young affiliate in London stating:
I confirm that although we have in London received a copy of your summons by post this does not, of course, constitute service on the Isle of Man firm. It is not therefore clear why you are sending document requests.
Despite these notices, the plaintiffs failed to effect service for fourteen months. The judge therefore held that the plaintiffs should not be allowed additional time to effect service. (The judge cited the 120-day period of Rule 4(m), which is not strictly applicable to foreign service, but the absence of a firm deadline for foreign service in the Rule does not imply that the plaintiff need not be reasonably diligent).
The plaintiffs, out of options, argued that service on service on other Ernst & Young entities was sufficient to constitute service on the Isle of Man entity on an alter ego theory. But the judge held that the plaintiffs had not met their burden to show an alter ego relationship. “After given the opportunity to take jurisdictional discovery, plaintiffs have not demonstrated that all Ernst & Young Global entities should be treated as one globally.”