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Shaffer v. Heitner

From lawbrain.com

Shaffer v. Heitner, 433 U.S. 186 (1977), was a United States Supreme Court case concerning civil procedure that dealt with concepts of personal jurisdiction and Quasi in Rem jurisdiction.

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Contents

Summary of Case Facts

Shareholder and plaintiff, Heitner, filed a shareholder’s derivative suit against the defendants, officers and directors of the Greyhound Corporation (Shaffer et al). Plaintiff moved for sequestration of the defendants’ shares of stock in the company. The shares of stock were legally determined to be in Delaware, as Greyhound was a Delaware corporation. The sequestration statute in Delaware also afforded a plaintiff personal jurisdiction over a defendant by virtue of the seizure of their property located within the state. The defendants made a special appearance in the Delaware court for the purpose of moving to quash service of process and to vacate the sequestration order, and to contest personal jurisdiction, pointing out that none of them had ever set foot in Delaware or conducted any activities in that state. The defendants also argued that the sequestration statute as applied in this case violated the Due Process Clause of the 14th Amendment because it permitted state courts to exercise jurisdiction despite the absence of sufficient contacts among the defendants, the litigation, and the State of Delaware.

Issue

Can personal jurisdiction be obtained merely by owning property in a state, and furthermore must the use of Quasi in Rem jurisdiction meet the International Shoe standard of minimum contacts with the forum state?

Holding and Law

No, a state cannot obtain personal jurisdiction over a defendant simply by virtue of the defendant’s owning property in that state. And, yes, to meet the requirements for Quasi in Rem jurisdiction it is imperative that the minimum contacts standard set forth in International Shoe be met. The court ruled that a defendant must meet a minimum level of purposeful contacts with the forum state – only then will a defendant be considered to have consented to the jurisdiction of a state and its court system. The court clarified the distinction between jurisdiction over things and jurisdiction over persons, in that obtaining jurisdiction over a thing is really to have jurisdiction over one’s interest in that thing. The Delaware sequestration statute allowing the seizure of the defendants’ shares of stock for the purpose of requiring a court appearance violated the defendants’ 14th Amendment rights, in that the court believed that their mere ownership of stock in the forum state did not rise to the minimum level of purposeful contact required to obtain jurisdiction.

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