The Wisconsin Supreme Court recently ruled in the case Johnson v. Cintas Corporation No. 2 that a circuit court lacked personal jurisdiction over the intended defendant because the summons and complaint named the intended defendant’s parent company, not the intended defendant, despite the fact that the intended defendant was a wholly-owned subsidiary of the named parent, the subsidiary had been served with the summons and complaint, and the subsidiary held itself out as its parent.
Plaintiff Johnson filed a summons and complaint against Cintas Corporation (Cintas), which he identified as his employer in the complaint, based on its purported refusal to pay him benefits after he was injured in an automobile accident which he contended was related to his employment. However, Plaintiff’s actual employer was a company called Cintas Corporation No. 2 (Cintas No. 2), a wholly-owned subsidiary of Cintas but ultimately a separate legal entity. Plaintiff believed that Cintas was his employer because Cintas No. 2 (again, his actual employer) held itself and identified itself publically and to Plaintiff as Cintas. Plaintiff served his summons naming Cintas as defendant on the registered agent for Cintas No. 2. When no one answered, Plaintiff moved for a default judgment, which the circuit court granted after allowing Plaintiff to amend summons and complaint to name Cintas No. 2 as the named defendant (Plaintiff subsequently learned the identify and relationship between him and Cintas and Cintas No. 2). The circuit court denied Cintas No. 2’s subsequent motion for relief from default judgment. The court of appeals reversed, holding that because the summons served on Cintas No. 2 did not name Cintas No. 2 as defendant, the circuit court lacked personal jurisdiction over Cintas No. 2.
The Supreme Court’s decision largely turned on the distinction between fundamentally and technically defective service. If service is fundamentally defective, a court lacks personal jurisdiction over the defendant even if the defect did not prejudice the defendant. If service is technically deficient, a court has personal jurisdiction if the plaintiff can show that the defect did not prejudice the defendant. The court noted that the difference between a fundamental and technical defect, “can be a fine one.” The Court first discussed one case which held that the failure to name a defendant in the summons and complaint is a fundamental defect that deprives the court of personal jurisdiction over the unnamed defendant, even where the intended defendant was served with the summons and complaint, and another which held that a “misnomer” of a party may be corrected at any point by amendment. The court further noted that there is a difference between an amendment that merely corrects the defendant’s name and one that brings a new party into the action – an amendment to correct the name under which the right party is sued is permitted, while one that has the effect of brining in a new party will be refused.
In ruling that Plaintiff’s failure to name Cintas No. 2 was a fundamental defect, the court emphasized that, although they have similar names, Cintas No. 2 is a separate legal entity from Cintas and a summons which does not name the party intended to be sued fails, as a matter of law, to give notice to that party that an action has been commenced against it. Because Cintas No. 2 was not named in the summons, the circuit court did not have personal jurisdiction over Cintas No. 2, even if Cintas No. 2 was served with the summons. The Court did not view this as a case where the entity clearly and unequivocally intended to be sued was simply misnamed. Plaintiff’s amendment subsequently naming Cintas No. 2 also did not correct the misnaming of the only party who was unequivocally intended to be sued; rather, it replaced Cintas with an entirely new and distinct party – Cintas No. 2. In order to exercise personal service over Cintas No. 2, the amended complaint naming Cintas No. 2 therefore had to be served on Cintas No. 2. Because this did not occur, the court lacked personal jurisdiction over Cintas No. 2 and the default judgment was vacated.
While acknowledging that Cintas No. 2 held itself out to the public and to Plaintiff specifically as Cintas, the Supreme Court rejected Plaintiff’s argument that Cintas No. 2’s doing so rendered Plaintiff’s defects technical, not fundamental. The Supreme Court reiterated that Cintas and Cintas No. 2 are distinct and separate legal entities and that the summons served on Cintas No. 2 named Cintas, not Cintas No. 2, as the party being sued, depriving the court of personal jurisdiction over the unnamed party – Cintas No. 2.
Justice Bradley, joined by Chief Justice Abrahamson, dissented, claiming that the majority failed to properly examine the misnomer argument and that the majority’s ruling creates a bright line rule that a misnomer which happens to state the correct name of another legal entity is transformed from a technical to fundamental defect.