The Law School Authority

Shaffer v. Heitner Case Brief

Summary of Shaffer v. Heitner
433 U.S. 186 [1977]

In Rem

Relevant Facts: EE, Heitner, a nonresident of DE, is the owner of one share of stock in Greyhound, a business incorporated in DE, w/ its principal place of business in Phoenix, AZ.

EE contends that 28 former officers and directors violated their duties to Greyhound by causing it to engage in actions that resulted in the corp being held liable for substantial damages in a antitrust suit, which activities arose in Oregon.

Legal Issue(s): Whether a Delaware statute that allows a court of that State to take jurisdiction of a lawsuit by sequestering any property of the defendant that happens to be located in Delaware is constitutional?

Court’s Holding: No, violated the due process clause.

Procedure:

Law or Rule(s):  In order to justify exercise of jurisdiction in rem, basis for jurisdiction must be sufficient to justify exercising jurisdiction over interests of persons in a thing; standard for determining whether exercise of jurisdiction over interests of persons is consistent with due process clause is minimum contacts standard-contacts, ties or relations w/ the state.

Court Rationale:  In order to justify an exercise of jurisdiction in rem, the basis for jurisdiction must be sufficient to justify exercising “jurisdiction over the interests of persons in the thing.” The presence of property in a State may bear upon the existence of jurisdiction by providing contacts among the forum State, the defendant, and the litigation, as for example, when claims to the property itself are the source of the underlying controversy between the plaintiff and defendant, where it would be unusual for the State where the property is located not to have jurisdiction.

But where, as in the instant quasi in rem action, the property now serving as the basis for state-court jurisdiction is completely unrelated to the plaintiff’s cause of action, the presence of the property alone, i. e., absent other ties among the defendant, the State, and the litigation, would not support the State’s jurisdiction.  Delaware’s assertion of jurisdiction over appellants, based solely as it is on the statutory presence of appellants’ property in Delaware, violates the Due Process Clause, which “does not contemplate that a state may make binding a judgment . . . against an individual or corporate defendant with which the state has no contacts, ties, or relations.”

Plaintiff’s Argument: (EE)

Defendant’s Argument: (ant) The sequestration statute violates the D. P. of the 14th b/c it permits the state cts to exercise jurisdiction despite the absence of sufficient contacts AND b/c it authorizes the deprivation of df’s property w/o providing adequate procedural safeguards.

intimations – clues or suggestions

sequestration – The separating or removal of property from the person in possession, pending some further action or proceedings affecting the property. Process of attaching property.



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