Beware and Be Aware of Rules Governing Service of Process on Corporations

A recent decision by the Georgia Court of Appeals serves as a valuable reminder of just how easy it is to accomplish service on a corporation without the corporation ever realizing that it has been served.  In S.D.E., Inc. v. Finley, decided in March 2017, a corporation unsuccessfully appealed after a default judgment was entered against it following a shift manager’s failure to forward a summons and complaint to corporate headquarters.  In other words, the corporation lost the case and had a judgment entered against it because it did not file an answer to the lawsuit – because management did not know about the lawsuit in time to answer it.

Georgia’s rules for service of process on corporations are set forth in more than one statute.  But, the statute that receives the most attention states that service on a corporation may be accomplished by delivery by a sheriff or other process server “to the president or other officer of such corporation . . . , a managing agent thereof, or a registered agent thereof.”  It is generally easy to determine whether someone is an officer of a corporation such that service on the corporation can be accomplished by delivery to him or her.  A registered agent for a corporation is the person or entity that has been listed with the Georgia Secretary of State as the corporation’s registered agent.  So there should be no confusion over whether someone is an officer or registered agent for a corporation.  The issue before the Court of Appeals was with the interpretation of the final category referenced in the statute:  a “managing agent”.

Specifically, the issue before the Court of Appeals was whether a restaurant shift manager could be considered a “managing agent” of the corporation, such that the sheriff’s delivery of the summons and complaint to her constituted service on the corporation.  The Court of Appeals concluded that the shift manager was, indeed, a “managing agent” under the specific facts of that case.

The title of shift manager was not controlling.  Rather, the Court of Appeals noted that this person’s duties included managing inventory, handling customer complaints, overseeing cashiers, monitoring profitability, and ensuring food quality, cleanliness, service, and safety while she was on duty.  She was responsible for reporting any incidents that occurred during her shift to upper management.  In other words, this person’s duties supported the conclusion that, while she was on duty, she was a “managing agent” who could be served with a summons and complaint directed to the corporation.

Significantly, another shift manager for the corporation had also been served with a summons and complaint in a different lawsuit around the same time.  The corporation had acted on that service; had not disciplined that shift manager for accepting service; and had not responded by training shift managers to direct process servers to a higher ranking official to complete service.   Had the corporation disciplined the other shift manager for accepting service, or trained shift managers to direct process servers to a higher ranking official to complete service, the Court of Appeals might have been swayed to accept the argument that the corporation’s shift managers were not managing agents.  Or, had the corporation responded to the service of process on the other shift manager by training its shift managers to recognize efforts to serve a summons and complaint and instructing shift managers to forward suit papers promptly to upper management, perhaps the corporation would have timely responded to the lawsuit instead of having a default judgment entered against it.

The takeaway here is that even an employee who may appear to the company to be merely a low-level supervisor without authority to accept service of process could be viewed by others as a “managing agent”.  It would be wise for the company to carefully train these employees to respond to possible efforts to serve them with a summons and complaint directed to the company.

The analysis set forth in this article is provided for general understanding only and should not be considered legal advice.  Counsel should be consulted regarding any specific legal issues.

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