Shaffer v Heitner

Dispute

A minority shareholder in Greyhound attempted to sue Greyhound in Delaware by sequestration of stocks which were situated in Delaware under statute. The sequestrator “seized” these stocks by placing a stop transfer order on them and the suit proceeded. 21 defendants, none of whom were in Delaware, entered special appearance to quash jurisdiction. Trial court rejected the motion and the Delaware Supreme Court affirmed. Defendants appealed to SCOTUS.

Questions of law

Where does the line fall for quasi in rem jurisdiction and the attachment of property for the purposes of recognizing jurisdiction?

Conclusions

SCOTUS reasoned to abandon the in rem policy from Pennoyer, choosing instead to move toward the test of “fair play and substantial justice” from International Shoe. This is not a total abandonment of in rem because, as they say, “when claims to the property itself are the source of the underlying controversy…it would be unusual for the State where the property is located to not have jurisdiction.” They found that pulling someone into a jurisdiction merely because of property, without a controversy touching that property, presented a fairness problem. “We therefore conclude that all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny.”

SCOTUS overturned.

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