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Lostutter v. Olsen

United States District Court, M.D. North Carolina

August 24, 2017



          Thomas D. Schroeder United States District Judge.

         Deric James Lostutter, proceeding pro se, claims that Defendants, all residents of different States, defamed him, principally through their use of the unauthorized eponymous website In this court, the parties have engaged in a nearly non-stop campaign of motions and filings, of which the following require resolution: Defendants' motion to dismiss and motion for gatekeeper order (Doc. 13); Lostutter's motion for preliminary injunction or temporary restraining order (Doc. 16); Defendants' motion to strike several of Lostutter's “notices of filing” (Doc. 26); Lostutter's motion to strike Defendants' motion to dismiss (Doc. 29); Lostutter's motion for extension of time to serve Defendant Alexandria Goddard (Doc. 32); Lostutter's motion for contempt or in the alternative for the issuance of a warrant for arrest (Doc. 35); Defendant Michelle McKee's motion for attorneys' fees (Doc. 48); and Defendants' counsel's motion to withdraw (Doc. 50).

         Lostutter has recently voluntarily dismissed the action against Defendant McKee (Doc. 45), so the motions are moot as to her. For the reasons that follow, the court finds that Defendant Thomas Olsen has not been properly served with process, and the action will be dismissed without prejudice as to him. As to the remaining action against Defendant Goddard, the court grants her motion to dismiss for failure to state a claim as to all of Lostutter's claims except those for libel per se and libel per quod. The remainder of the parties' motions will be denied.

         I. BACKGROUND

         The allegations of the complaint are difficult to follow and presume knowledge of events it does not fully describe. As best as can be ascertained and viewed in the light most favorable to Lostutter, the complaint alleges the following:

         Lostutter styles himself as a women's rights advocate who, through his cyber-technology skills, exposes wrongdoing. Among his actions was the use of his computer skills to unearth technical information related to the prosecution of two high school football players accused of raping a 16-year-old in Steubenville, Ohio, and school administrators who covered it up. His activities were featured in the media, most notably in Rolling Stone Magazine and on CNN. (Doc. 1 ¶ 10.) As a consequence of his covert computer actions, he was charged with felony crimes and was ultimately convicted and sentenced to federal prison, where he presently resides. When not in prison, Lostutter resides in Forsyth County, North Carolina. (Id. ¶ 4.)

         Lostutter claims that Defendants, who reside in various States, have engaged in a scheme to defame him. Defendant Olsen is a resident of Escambia County, Florida, and a member of the internet “hacking activist group, ‘Anonymous.'” (Id. ¶ 5.) Defendant Goddard is a resident of Franklin County, Ohio, and is an online blogger and the founder of Xander Business Group. (Id. ¶ 6.) McKee, whom Lostutter recently dismissed from the action, is a resident of Pierce County, Washington. (Id. ¶ 7.)

         Defendants' alleged defamation campaign traces its start to April 2015, when Olsen created a website entitled in an effort to post negative information about Lostutter and to confuse the public over Lostutter's actual website, According to Lostutter, Olsen has resisted his request and efforts to remove the site. Defendants have used to upload “pornographic content” relating to Lostutter for the purpose of harassing, degrading, and embarrassing him. (Id. ¶ 14.)

         On May 9, 2016, Defendants “hatched a plot to falsely label the Plaintiff threatening, including false threats of rape and violence . . . using what appears to be Facebook Message generators to imitate Plaintiff[‘s] Facebook page, typing ridiculous threats, encouraging the readers of the blog to send the fabrications to Plaintiff's local police department and the F.B.I. in an attempt to have Plaintiff arrested and damage the Plaintiff's good name.” (Id. ¶ 15.) An article about Lostutter was linked to the webpage as “deric-threatens-to-rape-and-film-stab-a-girl-threatens-her-kid.” (Id.) Defendants also “targeted” Lostutter's Kernersville, North Carolina business, known as TechAssist, resulting in a “catastrophic loss of clientele and forcing Plaintiff to close the doors.” (Id. ¶ 16.) (It appears that Lostutter's business was a brick-and-mortar store located in Kernersville, North Carolina. (Doc. 1 ¶ 16.)) Defendants posted false accusations that Lostutter kept clients' electronic devices he was servicing. (Id. ¶ 17.) Lostutter claims a “projected” loss of “$80, 000 in revenue for the fiscal year of 2016.” (Id. ¶ 18.)

         On December 15, 2015, Defendants engaged in a campaign to label Lostutter a “rapist.” (Id. ¶ 21.) They posted an article on the website located at, which allegedly details a false account of Lostutter sexually assaulting a former girlfriend. (Id. ¶ 21.)

         After Defendants accused Lostutter of seeking to profit from the stillborn death of his daughter in January 2016, Lostutter sought and obtained ex parte protection orders from a North Carolina State court against Defendants Olsen and McKee. (Id. ¶¶ 22-24.) Thereafter, McKee allegedly provided false information about Lostutter (including allegations of “grifting”[1]) to the local district attorney in Forsyth County, North Carolina, in connection with Lostutter's proceedings against her. (Id. ¶¶ 30-31.)

         Without offering supporting factual explanation, the complaint alleges that Defendants have charged that “Plaintiff is a scam artist” and is “ripping people off and embezzling donations.” (Id. ¶ 35.) Defendants Goddard and McKee have also allegedly “repeatedly faxed/emailed/mailed multiple authorities and solicited help of other people to maliciously prosecute the Plaintiff.” (Id. ¶¶ 42, 43.) Defendant Olsen has allegedly threatened violence against Lostutter, and all three Defendants have “repeatedly retaliated against Plaintiff.” (Id. ¶ 45.) Defendant Goddard has “sexually harassed” Lostutter on Twitter. (Id. ¶ 46.)

         Lostutter brings six claims in his complaint: negligence per se - cyber stalking-harassment (count 1); negligence per se - cyber stalking - false statement (count 2); cyber stalking - false statement - threatening language (count 3); false designation of origin in violation of North Carolina law, citing “U.S.C. § 1125” (count 4); libel per se (count 5); and libel per quod (count 6). Lostutter seeks $1 million in damages, which includes “future damages, ” payment of “reputation management services” to restore his reputation, the removal of all disparaging content from the internet involving him, and various injunctive relief. In addition, Lostutter has moved for a temporary restraining order and/or preliminary injunction. (Doc. 16.)

         Defendants move to dismiss on several grounds, but since Lostutter has dismissed Defendant McKee, the allegations as to only Defendants Olsen and Goddard remain. These Defendants argue that dismissal is warranted for lack of subject matter jurisdiction as to the amount in controversy; lack of personal jurisdiction (both general and specific) over them; improper service; and failure to state a claim upon which relief can be granted. They also seek entry of a “gatekeeper” order to prevent further lawsuits by Lostutter. (Doc. 13.) Lostutter has filed a response but addresses only the personal jurisdiction and service of process issues, and he opposes the entry of a gatekeeping order. (Docs. 18, 19.)

         II. ANALYSIS

         A. Subject Matter Jurisdiction

         Defendants argue that Lostutter has not met the amount-in-controversy requirement for diversity jurisdiction and thus that this court lacks subject matter jurisdiction over the action. (Doc. 14 at 10-11.) Because subject matter jurisdiction serves as a limitation on the court's power, the court addresses that argument first. ESAB Grp., Inc. v. Arrowood Indem. Co., No. 4:09-CV-1701-JMC-TER, 2011 WL 13176143, at *3 (D.S.C. Feb. 23, 2011) (“Because ESAB challenges this Court's subject-matter jurisdiction, the Court must address that issue prior to reaching ZIP's personal jurisdiction and forum non conveniens arguments.”); see also Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89 (1998) (“The requirement that jurisdiction be established as a threshold matter ‘spring[s] from the nature and limits of the judicial power of the United States' and is ‘inflexible and without exception.'” (citing Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382 (1884))).

         The party seeking to invoke the court's jurisdiction bears the burden of establishing the court's subject matter jurisdiction. McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936). For diversity jurisdiction, the amount in controversy must exceed $75, 000. 28 U.S.C. § 1332(a). Courts apply the “legal certainty” test in determining whether the amount in controversy requirement is met. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). “[T]he court should look to the face of the complaint itself to determine whether it is a legal certainty that plaintiff's claims do not reach the required amount.” Shanaghan v. Cahill, 58 F.3d 106, 112 (4th Cir. 1995). “Unless the claim for an amount over the jurisdictional prerequisite is made in bad faith, or unless it is plain from the complaint that an amount less than the jurisdictional amount is all that is at issue, the district court has jurisdiction over the case.” Id.; Lunsford v. Cemex, Inc., 733 F.Supp.2d 652, 657 (M.D. N.C. 2010) (“The amount claimed in the complaint controls when assessing the amount in controversy, unless it appears to a legal certainty on the face of the complaint that the claim is for less than the jurisdictional amount.”). “[T]he legal impossibility of recovery must be so certain as virtually to negative the plaintiff's good faith in asserting the claim. If the right of recovery is uncertain, the doubt should be resolved, for jurisdictional purposes, in favor of the subjective good faith of the plaintiff.” McDonald v. Patton, 240 F.2d 424, 426 (4th Cir. 1957). In determining whether the threshold amount is met, a plaintiff may aggregate separate claims for damages as long as they are not actually one claim with separate legal theories of recovery. Shanaghan v. Cahill, 58 F.3d 106, 109 (4th Cir. 1995).

         Here, Lostutter's verified complaint alleges $1, 000, 000 in damages, based in part on a “projected [loss of] $80, 000 in revenue [to Opsec CyberSecurity Solutions, LLC d/b/a TechAssist] for the fiscal year 2016, ”[2] as well as damage to his reputation from false claims of rape and sexual assault. (Doc. 1 ¶ 18.) Although Defendants do not argue it, [3] the complaint alleges the business is a North Carolina limited liability company. (Doc. 1 ¶ 4.) Under North Carolina law, a limited liability company is a separate entity from its owners. N.C. Gen. Stat. § 57D-2-01(a). The complaint further alleges it is Lostutter's business. (Doc. 1 ¶ 16 (“his DBA”); Id. ¶ 17 (“Plaintiff's business”).) Thus, it is unclear how much of the business's revenue is attributable to Lostutter as his loss, as opposed to that of his business (which is not named as a plaintiff).

         In any event, Defendants offer no authority to suggest that Lostutter's reputational loss is insufficient to a legal certainty. Between the reputational loss alleged and whatever loss Lostutter derives from his business, he has facially alleged an adequate jurisdictional amount which Defendants have not demonstrated fails to reach the threshold to a legal certainty. Should Defendants determine otherwise, they may renew their argument. Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 574 (2004) (noting that the court's subject matter jurisdiction at the time of the filing of the complaint is always subject to later attack).

         Defendants' motion to dismiss for lack of subject matter jurisdiction is therefore denied at this time.

         B. Service of Process

         Defendants Olsen and Goddard maintain they have not been properly served with process and move to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(5). Lostutter contends he has submitted evidence of proper service as to both.

         Service of process is governed by Federal Rule of Civil Procedure 4(e)(1), which provides in part that an individual can 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 or where service is made.” North Carolina Rule of Civil Procedure 4(j)(1)(d) in turn provides in relevant part that a natural person can be served “[b]y depositing with a designated delivery service authorized pursuant to 26 U.S.C. § 7502(f)(2) a copy of the summons and complaint, addressed to the party to be served, delivering to the addressee, and obtaining a delivery receipt.” The burden of proving service under Rule 4 rests with the plaintiff. O'Meara v. Waters, 464 F.Supp.2d 474, 476 (D. Md. 2006). While mere technicalities ordinarily should not stand in the way of finding proper service and courts will liberally construe the rules when actual notice occurs, “the rules ‘are there to be followed, and plain requirements may not be ignored.'” Garvey v. Seterus, Inc., No. 5:16CV00209-RLV, 2017 WL 2722307, at *5 (W.D. N.C. June 23, 2017) (citations omitted).

         As to Olsen, Lostutter has filed an affidavit of service claiming to have served him through United Parcel Service (“UPS”), with signature confirmation. Olsen argues that Lostutter's affidavit fails to list the address where the summons and complaint were delivered or where, when, or by whom they were received. (Doc. 14 at 13.) Attached to Lostutter's affidavit is a receipt from UPS, which clearly shows a delivery address of 348 West Herman Street in Pensacola, Florida, as well as a delivery time and date. (Doc. 18 at 7-8.) While the shipment receipt purports to require “signature confirmation, ” and the UPS “Proof of Delivery” receipt shows that signature was “required, ” the receipt shows only that delivery was “Left At: Reception” at 10:04 a.m. (Doc. 6 at 5.) This fails to comply with North Carolina's Rule 4, which requires that the summons and complaint be “deliver[ed] to the addressee.” N.C. R. Civ. P. 4(j)(1)(d). Moreover, there is no evidence that anyone at reception signed for the delivery and, if so, who they were and whether they were authorized to accept service on behalf of Olsen. Cf. Baker v. Joseph, 938 F.Supp.2d 1265, 1268-69 (S.D. Fla. 2013) (service of process held insufficient under New York law where plaintiffs affixed process on defendant's residence door and later claimed, without proof, to have attempted service on adult male at defendant's residence); Williams v. Hetzel, No. 12- CV-23300-UU, 2012 WL 2577042, at *1 (W.D. N.C. July 3, 2012) (finding defendant named in individual capacity not properly served where process was sent via certified mail to defendant's office, but was not signed for by defendant).

         Service also appears to be defective under Florida law. Florida permits service “by delivering a copy of [the summons] to the person to be served with a copy of the complaint, petition, or initial pleading or paper or by leaving the copies at his or her usual place of abode with any person residing therein who is 15 years of age or older and informing the person of their contents." Fla. Stat. § 48.031(1)(a); Thomas v. Derryberry, No. 8:16-CV-3482-T-33AEP, 2017 WL 2448177, at *2-3 (M.D. Fla. June 6, 2017) (quashing service). There is no evidence this was done, and leaving a copy with the receptionist is insufficient. Schupak v. Sutton Hill Assocs., 710 So.2d 707, 708-09 (Fla. App. 1998) (holding that service on doorman at residence fails to comply with Fla Stat. § 48.031(1)). Finally, there is no evidence that Lostutter complied with any of the provisions of Federal Rule of Civil Procedure 4(e)(2), which provides alternate means of service by way of personal service, leaving a copy with a someone at the defendant's personal abode, or delivering a copy to an authorized agent for service of process.

         Thus, contrary to Lostutter's argument that Olsen was properly served at his home (Doc. 18 at 3), there is no evidence that Olsen in fact was properly served with process. For these reasons, service of process is insufficient as to Defendant Olsen. Because this defect is capable of being cured, the motion to dismiss as to him will be granted without prejudice.

         As to Defendant Goddard, Lostutter does not dispute that she was not served properly within the initial 90 days of issuance of the summons on September 2, 2016. (See Doc. 18 at 2-3.) However, on November 29, 2016, Lostutter timely moved for an extension of time to serve her under Rule 4(m) (Doc. 32) and contends he in fact personally served her by sheriff on December 9, 2016, at her home in Dublin, Ohio (Doc. 39). Goddard does not dispute this later service.

         Personal service by sheriff is permitted under North Carolina law, N.C. R. Civ. P. 4(a) (who may serve), as well as under federal law, Fed.R.Civ.P. 4(j)(1)(a)(personal service) & 4(e)(2) (permitting personal service). Moreover, although no party has addressed the point, Ohio law appears to permit service on an individual by sheriff as well. Ohio R. Civ. P. 4.1 (B) & (C); Rhodes v. Valley Greyhound Lines, 98 Ohio App. 187, 190, 128 N.E.2d 824, 827 (1954) (upholding personal service by sheriff).

         Here, Lostutter filed an affidavit from a deputy sheriff in Franklin County, Ohio, stating that he received the summons and complaint on November 15, 2016, and personally served the documents on Goddard at her residence on December 9, 2016, at 12:08 p.m. (Doc. 39.) Thus, service appears to be proper, and the only issue is whether service is effective when a plaintiff timely seeks an extension of time to serve under Rule 4(m) and serves a defendant within that additional time but before the court acts on the motion for extension.

         Rule 4(m) provides that if a plaintiff does not serve a defendant within 90 days after the complaint is filed, the court

on motion or on its own after notice to the plaintiff - must dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period.

         While Rule 4(m) does not define “good cause, ”[4] it is generally regarded to mean “reasonable and diligent efforts . . . to effect service prior to the” deadline. Chen v. Mayor & City Council of Baltimore, 292 F.R.D. 288, 293 (D. Md. 2013) (citation omitted). In an unpublished case, [5] the Fourth Circuit has recently articulated several factors to consider in assessing whether good cause has been shown. See Scott v. Md. State Dep't of Labor, 673 F. App'x 299, 305-06 (4th Cir. 2016) (listing the factors of whether delay was outside plaintiff's control, the defendant was evasive, the plaintiff acted diligently or made reasonable efforts, the plaintiff is pro se, the defendant will be prejudiced, the plaintiff asked for an extension of time under Rule 6(b)(1)(A)), petition for cert. filed, ___ U.S.L.W. ___ (June 23, 2017) (No. 16-1546). Courts have specifically found that failure to obtain service due to a defendant's evasion constitutes good cause. Ruiz Varela v. Sanchez Velez, 814 F.2d 821, 823 (1st Cir. 1987) (citing cases).

         Here, Lostutter, who is proceeding pro se, timely moved for an extension (although not citing Rule 6(b)(1)(A)) and stated that while he tried to serve Goddard, she evaded his service attempts on three occasions and has a history of doing so in other litigation. (Doc. 32 at 1-2.) Lostutter has included evidence of his initial September 6, 2016 attempt to serve Goddard. (Doc. 6 at 8.) There is also evidence that Goddard was aware of Lostutter's action against her and thus had incentive to evade service. (Doc. 32 at 2 (noting that before service Goddard had posted the complaint on her website and retained counsel).) Her knowledge of the action also suggests she was not prejudiced by any delay.

         These various factors weigh in favor of finding good cause. Yongo v. Nationwide Affinity Ins. Co. of Am., No. 5:07-CV-94-D, 2008 WL 516744, at *9 (E.D. N.C. Feb. 25, 2008) (finding good cause in light of plaintiff's diligent, repeated efforts to serve defendants, application for new summons less than a month after expiration of service deadline, and pro se status); Selman v. Am. Sports Underwriters, Inc., 697 F.Supp. 225, 235 (W.D. Va. 1988) (denying motion to dismiss for insufficient service of process; good cause found where defendants received actual notice of action, plaintiff had been diligent and given reasonable effort by making multiple attempts at service, and had a good faith belief that service was accomplished).

         Thus, the court will grant the motion for extension of time (Doc. 32) and deny the motion to dismiss for insufficient ...

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