Defendant Must be Served With Paper Copy of Complaint

[T]he Trust submits proof that service upon them was made pursuant to Business Corporation Law (“BCL”) § 306 and Limited Liability Company (“LLC”) Law § 303 by delivering to the Secretary of State a hard copy of the 23-page summons and a flash drive containing an electronic copy of the 809-page Complaint and 242-page “Schedule A”.

However, there is nothing in the CPLR, the BCL or the LLC Law that authorizes a plaintiff to serve a complaint as an initiatory paper on a non-consenting defendant other than by delivery of a hard copy of the pleading. To be sure, CPLR 2103 does permit papers to be served on an attorney by electronic means, but this rule deals with the service of interlocutory papers after jurisdiction has been acquired and an action is pending. And the provisions of the rule governing service on a party to the action refer only to the delivery, mailing, transmittal or dispatching of papers.

CPLR 2103’s limited authorization to serve an attorney by electronic means is further qualified by the proviso that electronic service only is permitted where and in the manner authorized by the chief administrator of the courts by rule and, unless such rule shall provide otherwise, such transmission shall be upon the party’s written consent. In cases like this, commenced by mandatory electronic filing via the New York State Courts Electronic Filing (“NYSCEF”) system, court rules require that service of initiating documents shall be made as provided in Article 3 of the CPLR, or by electronic means if the party served agrees to accept such service.

Further, under 22 NYCRR 202.5-a, entitled Filing by Electronic Transmission, a court may allow counsel to communicate with one another by electronic means and may direct counsel to submit documents by e-mail or by other electronic means, such as by a computer flash drive. But there is nothing in the rule that allows initiatory papers to be served on a party by electronic means. And under the prior version of the rule, which was in effect on the date of commencement, initiatory papers could be delivered to the court clerk electronically, but service of process by electronic means was not authorized.

Thus, neither the governing statutes nor the rules of the Chief Administrative Judge authorize service of initiatory papers by electronic means absent the consent of the defendants, and there is no proof that any of the Corporate Defendants consented to service of the Complaint by delivery of a flash drive.

. . .

The Court recognizes the enormous burden associated with service of an 809-page Complaint and 242-page schedule upon the 1,411 defendants named in this action. But the law requires a plaintiff to strictly comply with the legally-prescribed methods of service. When the requirements for service of process have not been met, it is irrelevant for jurisdictional purposes that the defendant(s) may have actually received the documents.

And despite plaintiff’s creative and well-intentioned attempt to avoid the printing and distribution of almost 1.5 million pages of pleadings (exclusive of any duplicate copies required by the Secretary of State), the Trust’s use of an unauthorized method of services carries its own risks and concerns. In this age of increased awareness of cyber-security and daily reminders of the risks posed by malicious computer hackers and international ransomware gangs, a prudent corporation may have good reasons for refusing to allow an unknown flash drive to be inserted into its computer network. These risks can be avoided (or at least mitigated) if electronic service is made via a trusted system like NYSCEF or some other method of electronic transmission agreed upon by the parties.

Moreover, the use of a flash drive was not the only way the Trust could have avoided the burdens attendant to the delivery of paper copies of the 809-page Complaint and 242-page Schedule A to 1,411 defendants. Had the Trust commenced this action through the filing a summons with notice, any defendant who appeared and demanded a complaint through counsel could have been served with an electronic copy of the Complaint and Schedule A as an interlocutory paper via NYSCEF or other electronic means.