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Shaffer v. Heitner

(1977)

Supreme Court of the United States - 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683

tl;dr:

A state may not exercise personal jurisdiction over company officers on the basis of their personal property (stocks in their company) being located in the forum state, absent additional minimum contacts with the state.

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Case Summary

In the 1977 Supreme Court case Shaffer v. Heitner, a shareholder named Heitner sued Greyhound corporation and its officers, including Shaffer, in Delaware. Heitner accused them of causing Greyhound to face damages in an antitrust case and a fine in a criminal case in Oregon. Heitner didn't live or own property in Delaware, and Greyhound was mainly based in Arizona. The officers also had no connections to Delaware, except for owning Greyhound stock.

Heitner asked the court to seize the officers' stock under a Delaware law, and they argued that the court had no jurisdiction and seizing their stock violated due process. The state courts believed that having stock in Delaware was enough for jurisdiction, based on the old Pennoyer v. Neff rule. However, the Supreme Court disagreed.

Instead, the Supreme Court used the International Shoe Co. v. Washington "minimum contacts" test and found that the officers didn't have enough connection to Delaware for jurisdiction. The Court decided that the old Pennoyer v. Neff rule, which allowed jurisdiction based on property alone, didn't fit modern ideas of due process and interstate commerce. Personal jurisdiction should be based on a defendant's individual relationship to the state and the plaintiff's claim, not general rules.

This case set a new standard for personal jurisdiction involving property within a state, and all nine justices agreed on applying the "minimum contacts" test. The Court didn't decide if the outcome would be the same if the property was immovable, like real estate.

ICRAIssue, Conclusion, Rule, Analysis for Shaffer v. Heitner

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Facts & HoldingShaffer v. Heitner case brief facts & holding

Facts:Plaintiff/appellee (Heitner) owns one stock in Greyhound Corp. (GC)GC is...

Holding:All assertions of state-court jurisdiction must be evaluated according to...

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Shaffer v. Heitner | Case Brief DeepDive
Majority opinion, author: Mb. Justice Marshall
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The case involves the constitutionality of a Delaware law that allows a court to take jurisdiction of a lawsuit by seizing any property of the defendant located in Delaware. The defendants argue that the law violates the Due Process Clause of the Fourteenth Amendment. The collapse of the in personam wing of Pennoyer has weakened the foundation for in rem jurisdiction, and lower court opinions have questioned the idea that the presence of property in a state automatically gives that state jurisdiction to adjudicate rights to the property. The Supreme Court has held that property cannot be subjected to a court's judgment unless reasonable and appropriate efforts have been made to give the property owners actual notice of the action. The Due Process Clause does not allow a state to make a binding judgment against an individual or corporate defendant with which the state has no contacts, ties, or relations. Therefore, the state of Delaware didn't have the authority to make a decision in this case. The decision made by the Delaware Supreme Court is cancelled, and one of the judges didn't take part in the decision.

Opinion (Concurrence), author: Mr. Justice Powell
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Justice Powell agrees that the principles of International Shoe Co. v. Washington should apply to both in rem and in personam jurisdiction in state courts. He also agrees that the presence of stock and positions as directors and officers of a Delaware corporation are not enough to support jurisdiction in this case. However, he is undecided on whether ownership of certain property located within a state may provide the necessary contacts for jurisdiction. He suggests that the common-law concept of quasi in rem jurisdiction may be appropriate for real property. He concurs with the opinion of the Court except for his reservation.

Opinion (Concurrence), author: Mr. Justice Stevens
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The Due Process Clause requires reasonable assurance of actual notice to the defendant in in rem and quasi in rem jurisdiction cases. Fair notice includes warning that an activity may subject a person to the jurisdiction of a foreign sovereign. Purchasing securities in the domestic market should not subject one's property and affairs to the laws of the corporation's domicile nation. The Delaware sequestration statute creates an unacceptable risk of judgment without notice for those who purchase shares of stock on the open market. This coerces the defendant to either submit to personal jurisdiction in a forum that could not otherwise obtain such jurisdiction or lose the securities that have been attached. The procedure would impose a duty of inquiry on every purchaser of securities in the national market, which is unconstitutional on its face.

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Opinion (Concurring-in-part-and-dissenting-in-part), author: Mr. Justice Brennan
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The Court found Delaware's quasi in rem jurisdiction statute invalid and unconstitutional in a shareholder derivative action. The author disagrees with the Court's ruling on minimum contacts and argues that a state has a vested interest in securing an appropriate venue to settle claims involving multiple defendant fiduciaries and enforce its substantive policies with regard to the management of domestic corporations. Delaware has a significant interest in providing compensation for its local corporations that have been allegedly victimized by fiduciary misconduct and a recognized interest in providing a convenient forum for supervising and overseeing the affairs of a state-chartered corporation.

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