Shaffer v. Heitner PDF

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Personal Jurisdiction: In rem become In personum Rule §§: International Shoe & Hanson v. Denckla Shaffer v. Heitner 433 U.S. 186 (1977)

“Greyhound Bus” | p. 90-99 Facts: Heitner brings a stock derivative suit against the board of directors in Delaware. In order to gain jurisdiction he cites minimum contacts (inc. in Delaware) and attaches the directors stocks (quasi in rem) to show court has power over directors. None of the directors have set foot in Delaware, nor do business in Delaware. Procedural History: DE Court of Chancery, judges agree with Heitner citing DE law that forces stock of DE coprs. to be in DE (even though certificates might be elsewhere). Thus giving Heitner in rem jurisdiction over their property and in personam jurisdiction of the directors for minimum contacts. Issue: Can states assume jurisdiction over a case based solely on sequestering property (in this case the stocks) of the defendant in the forum state? Rule of Law: Directorship does not mean consent to jurisdiction in DE. No minimum contacts exist. Specifically cites Hanson v. Deckla. Also states buying stock of a DE Corp. does not give in rem (quasi in rem here) jurisdiction to be hauled into a DE court. Jurisdiction of property is personal jurisdiction. All in rem is in personam. Holding: No, they must still meet the International Shoe minimum contacts test between the person and the forum state. Reasoning: Sequestering the property deprived the directors of due process. Also not related to the subject matter of litigation (quasi in rem). Concept:  Application of Minimum Contacts  In rem personal jurisdiction

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Personal Jurisdiction: In rem become In personum allowed. They just stated here there were not minimum contacts for 21 of the 28 defendants. d) J. Brennan disagrees with the court decision here. They’re joining of board of directors of a company incorporated in Delaware does not give consent to being hauled in Delaware court. It still leaves open this possibility for in personam. e) Court stated that quasi in rem was unconstitutional but not in rem jurisdiction. Still allows it but gives a much stronger standard for jurisdiction to be created.

_________________________________________________________ _________________________________________________________ Other Opinions: Stevens, J. – Agrees with application of International Shoe but takes a harder stance that purchase of stock in a company can not mean anyone consents to giving jurisdiction to where that company is incorporated. (Stocks cannot be used for quasi in rem jurisdiction). Brennan, J. – Agrees with application of International Shoe but states that minimum standards and fairness have been given as the Directors voluntarily accepted directorships, chose for that company to be incorporated in Delaware, and their stock (often part of their salary for being a director) was able to be attached for in rem jurisdiction (so not quasi in rem any more). Questions 1. Jurisdiction of the corporation is not the issue. It is whether its directors should be forced to defend in Delaware giving it jurisdiction (none were residents of Delaware, but they did hold stock in Greyhound). 2. Explain why Shaffer did not decide: a) Property (in rem) still gives a court power over the individual just in this case they have no property in Delaware for the court to claim power over. b) Stock is property but it does not go into the issue about where that property will be held. (State of incorporation of the company or where the individual holds it) In this case it simply couldn’t be attached according to the Supreme Court. Stevens took a hard line stating it wasn’t reasonable to have the Delaware statute claiming control over all stock to be “located” in Delaware because company was incorporated in Delaware. c) If the minimum contacts standard is applied and they have significant enough contacts in the state then it would still be

3. a) This would not be allowed because of Hanson v. Deckla because it does not pass the minimum contacts standard and fairness rule. b) This would not be allowed because the case is not about the property specifically but the debt owed to Mitchell because of Neff’s failure to pay. The property is not what is at dispute. 4. This would be ruled unconstitutional by the Supreme Court as a person could still have in personam for living in Delaware and in rem by having property in the state. Where would you be able to sue the person for relief? That simply doesn’t exist and would make a shelter / haven for people to avoid a suit. 5. Basically stating it is looking at “minimum contacts” not “best contacts as he says in his dissention opinion.

Personal Jurisdiction: In rem become In personum...