Shaffer v. Heitner

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Shaffer v. Heitner
Court U.S. Supreme Court
Citation 433 U.S. 186
Date decided

Facts: Heitner is the owner of one share of stock in the Greyhound Corp., a business incorporated in Delaware but with principle place of business in Phoenix, AZ. Heitner filed a shareholder's derivative suit (filed by a shareholders on behalf of the corporation) in Delaware and named as defendants, Greyhound's wholly-owned subsidiary Greyhound lines, Inc., and 28 present or former officers and directors of one or both of the corporations.


Procedural History: At the same time as the suit, Heitner filed a motion for an order of sequestration of the Delaware property of the defendants. The sequestrator seized about 82,000 shares of greyhound common stock and options. Defendants entered special appearances to move to quash service of process and vacate sequestration order, and asserted that the courts didn't have jurisdiction. Deleware courts rejected defendant's claim of lack of jurisdiction based on quasi in rem jurisdiction.

Issues:

  1. Whether the standard of fairness and substantial justice set forth in International Shoe should be held to govern actions in rem as well as in personam.
  2. Whether in rem jurisdiction can be upheld using the standard from International Shoe, that is, the standard of fairness and substantial justice.

Holding: Yes, the standards should now also be applied to in rem jurisdiction. Jurisdiction is not upheld.

Reasons: If a direct assertion of jurisdiction over the defendant would violate the Constitution, it would seem that an indirect assertion of that jurisdiction should be equally impermissible. Jurisdiction is not upheld because the controversy did not arise from the defendants' ownership of the property in the forum state that was used to qualify for in rem jurisdiction. Forum state doesn't have enough interest in the litigation of the case. Delaware wasn't proven to be a fair location for the defendant.

Judgment: Reversed.