Shaffer (appellee / past defendant)
v.
Heitner (appellant / past plaintiff)
433 U.S. 186 (1977)
Facts:
Appellant Heitner owns one share in Greyhound Corp. stock. Appellee Shaffer is a director of Greyhound Corp.
Greyhound Corp. is incorporated in Delaware but has it’s principle place of business in Arizona.
Shaffer and other directors own stock in Greyhound. According to Delaware law, this stock is deemed to be located in Delaware. Other than that, Shaffer and the other directors have never been to Delaware and have no contacts there.
Procedure:
Heitner begins a shareholder’s derivative suit in Delaware, naming Greyhound’s directors as defendants.
Heitner sequesters stock owned by directors (their property, located in Delaware) to get quasi in rem jurisdiction over directors.
Directors specially appear to vacate the sequestration order, arguing that it did not afford them due process of law and that they did not have sufficient contacts in Delaware to subject them to its jurisdiction.
Court of Chancery rejects directors’ claims. Delaware Supreme Court affirms this judgment.
U.S. Supreme Court grants certiorari.
Issue:
Can a Delaware court obtain jurisdiction over nonresident defendants by sequestering their property unrelated to the cause of action?
Holding:
No.
Reasoning:
To justify exercising jurisdiction in rem, the basis for justification must be sufficient to justify exercising jurisdiction over the interests of a person in that thing.
The presence of one’s property in a state will certainly imply certain contacts with that state.
But for actions that are quasi in rem, the presence of property alone is not sufficient to justify jurisdiction. The property must be somehow related to the case of action.
v.
Heitner (appellant / past plaintiff)
433 U.S. 186 (1977)
Facts:
Appellant Heitner owns one share in Greyhound Corp. stock. Appellee Shaffer is a director of Greyhound Corp.
Greyhound Corp. is incorporated in Delaware but has it’s principle place of business in Arizona.
Shaffer and other directors own stock in Greyhound. According to Delaware law, this stock is deemed to be located in Delaware. Other than that, Shaffer and the other directors have never been to Delaware and have no contacts there.
Procedure:
Heitner begins a shareholder’s derivative suit in Delaware, naming Greyhound’s directors as defendants.
Heitner sequesters stock owned by directors (their property, located in Delaware) to get quasi in rem jurisdiction over directors.
Directors specially appear to vacate the sequestration order, arguing that it did not afford them due process of law and that they did not have sufficient contacts in Delaware to subject them to its jurisdiction.
Court of Chancery rejects directors’ claims. Delaware Supreme Court affirms this judgment.
U.S. Supreme Court grants certiorari.
Issue:
Can a Delaware court obtain jurisdiction over nonresident defendants by sequestering their property unrelated to the cause of action?
Holding:
No.
Reasoning:
To justify exercising jurisdiction in rem, the basis for justification must be sufficient to justify exercising jurisdiction over the interests of a person in that thing.
The presence of one’s property in a state will certainly imply certain contacts with that state.
But for actions that are quasi in rem, the presence of property alone is not sufficient to justify jurisdiction. The property must be somehow related to the case of action.