SHAFFER v. HEITNER

Procedural Basis: Writ of certiorari reviewing affirmance of rejection of arguments contesting jurisdiction for shareholder’s derivative suit.

Facts: Heitner (P), a non-resident of Delaware, owned one share of stock in Greyhound Corp., a business incorporated in Del.  Heitner (P) filed a shareholder’s derivative suit in Del state court, naming 28 officers or directors of Greyhound as defendants, alleging that they had breached their fiduciary duties.  At the same time the complaint was filed, Heitner (P) filed a motion for sequestration of shares of approximately 82,000 shares of stock owned by 21 of the officers and directors.  Those 21 defendants entered a special appearance in Del, contending that the sequestration procedure violated due process and that the property was incapable of attachment in Del.  The 21 defendants also asserted that they did not have sufficient minimum contacts to justify Del jurisdiction.  The court of Chancery rejected these arguments and the Del Supreme Court affirmed, holding that a sufficient interest in the action to justify jurisdiction.  The Supreme Court granted certiorari.

Issue: Is in rem jurisdiction subject to a minimum contacts analysis?

Rule: Minimum contacts must exist in order for in rem jurisdiction to attach.

Analysis:  The officers and directors holdings in Greyhound do not provide contacts with Del sufficient to satisfy Del jurisdiction.  Del is not a fair forum for this litigation.  The officers and directors had never stepped foot in Del nor had they purposely availed themselves of the benefits and protections of the state. 

Conclusion:  Reversed.

Concurrence: (Powell) Favors the preservation of the common law concept of quasi in rem jurisdiction in the case of real property.

Concurrence: (Stevens) Finds the Del sequestration statute unconstitutional, creating an unacceptable risk of judgment w/o notice.

Dissent & Concurrence: (Brennan) Because the officers and directors associated themselves with Del, they invoked the benefits and protections of its laws.  It would not be unfair to subject them to Del’s jurisdiction.