A nonresident Greyhound shareholder filed a derivative suit in Delaware against Greyhound, its subsidiary, and 28 present or former officers and directors, alleging misconduct that caused antitrust and contempt liability arising from conduct in Oregon. To obtain jurisdiction over the individual defendants, the plaintiff invoked Delaware’s sequestration statute and seized their Greyhound stock and stock-related rights, which Delaware law deemed located in Delaware because Greyhound was incorporated there. Most defendants were nonresidents, and the stock certificates were not physically in Delaware. The defendants specially appeared and argued that Delaware lacked jurisdiction because they had insufficient contacts with the state under International Shoe.
Does the Due Process Clause permit a state to exercise quasi in rem jurisdiction over nonresident defendants solely by seizing property deemed located in the state, without showing minimum contacts among the defendants, the litigation, and the forum?
All assertions of state-court jurisdiction, including in rem and quasi in rem jurisdiction, must satisfy the minimum-contacts standard of International Shoe Co. v. Washington, 326 U.S. 310 (1945). The mere presence of property in the forum does not automatically establish jurisdiction; the property’s relationship to the litigation and the defendant’s purposeful contacts with the forum must make the exercise of jurisdiction fair.
No. Delaware’s assertion of jurisdiction based solely on sequestration of the defendants’ stock and stock rights in a Delaware corporation violated due process because the defendants lacked sufficient contacts with Delaware related to this suit.
The Court rejected the old Pennoyer framework that treated in personam and quasi in rem jurisdiction as categorically distinct for due process purposes. It held that the fairness principles of International Shoe govern every assertion of jurisdiction because any judgment affects the defendant’s interests, whether labeled personal or property-based. Here, the defendants’ stock ownership in a Delaware corporation was unrelated to the underlying claims, which concerned conduct in Oregon, and Delaware’s statutory designation of stock situs could not by itself create the necessary contacts. Delaware’s general interest in regulating its corporations did not make it fair to compel these nonresident defendants to litigate there absent purposeful forum ties sufficient under due process.
Justice Brennan concurred in the judgment in part and dissented in part, arguing that Delaware’s substantial interest in overseeing the conduct of directors and officers of its domestic corporations, together with the defendants’ acceptance of positions in a Delaware corporation, supported jurisdiction over many of the defendants.
Shaffer transformed personal-jurisdiction doctrine by extending International Shoe beyond in personam cases to all state-court jurisdiction, effectively overruling the broad property-based approach of Pennoyer v. Neff, 95 U.S. 714 (1878), and Harris v. Balk, 198 U.S. 215 (1905), insofar as they allowed jurisdiction based solely on property presence. The decision sharply limited quasi in rem jurisdiction and required a defendant-focused minimum-contacts analysis even when property is attached. It is a foundational modern jurisdiction case alongside International Shoe Co. v. Washington, 326 U.S. 310 (1945), Hanson v. Denckla, 357 U.S. 235 (1958), and was later reinforced by Burnham v. Superior Court of California, County of Marin, 495 U.S. 604 (1990), and Daimler AG v. Bauman, 571 U.S. 117 (2014), in the broader development of due process limits on state adjudicatory power.
Pennoyer v. Neff, 95 U.S. 714 (1878) |
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Harris v. Balk, 198 U.S. 215 (1905) |
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International Shoe Co. v. Washington, 326 U.S. 310 (1945) |
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Hanson v. Denckla, 357 U.S. 235 (1958) |
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Burnham v. Superior Court of California, 495 U.S. 604 (1990) |
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Daimler AG v. Bauman, 571 U.S. 117 (2014) |
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International Shoe Co. v. Washington, 326 U.S. 310 (1945) |
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