Civil Procedure Unit 5: In Rem Jurisdiction

Lecture: Territorial Jurisdiction—Shaffer

A. Pennoyer
a. Distinguished between in personam and in rem (personal and property)
b. Also addressed issues of consent and status
c. In personam
i. Required presence in the State and consent
B. International Shoe
a. In personam jurisdiction: presence can be established through “minimum contacts” consistent
with the notions of fair play and substantial justice
b. Specific jurisdiction—arises from the events or people in the claim
i. Minimum contacts established through (1) purposeful contacts (2) claims arise or relate
to those contacts and (3) fairness factors
c. General jurisdiction—arises from the party’s “presence” in that state
i. Party must be considered “at home” there
1. People—domicile
2. Corporation—incorporation or primary place of business
ii. Contacts with the state must be “systematic, continuous, and substantial
C. Question addressed in Shaffer—is the presence of the property in and of itself a sufficient basis for the
exercise of jurisdiction?
a. In rem: all are exercising jurisdiction over property located in the state
i. Pure in rem: to establish rights in property against the whole world
ii. Quasi in rem type I: to establish rights in property against a specific person. Closely
related to pure in rem
iii. Quasi in rem type II: type of jurisdiction in Pennoyer
1. Not a claim about the property
2. Jurisdiction against a person when you cannot get in personam
a. Property is subject to the jurisdiction of the state even if the person is
not
b. P can only recover the property because court does not have
jurisdiction over the person
c. Conceptual problem with Pennoyer: D owns property; seizing the
property violates the person’s rights; a court can’t violate rights
without jurisdiction
d. Justification: mitigates the unfairness that P can’t get damages just
because D is not present
e. As Pennoyer grows more distant—it becomes easier to exercise
jurisdiction over people who are not present in the state (like through
minimum contacts—justification for this type is weaker
D. Shaffer v. Heitner
a. P: owner of one share of the corporation, Greyhound corporation
b. D: directors of the corporation
c. Background on corporations
i. Shareholders own the corporation
ii. Directors manage the corporation
1. Elected by the shareholders
2. Have duties to the corporation
a. Exercise due care to ensure the corporation does well; must be
competent
b. Loyalty duty—can’t line their own pockets with corporation’s money
d. Shareholder derivative suit—shareholder suing on behalf of the corporation
i. Ok because directors control corporation’s decision to sue others
ii. So there is no other way for the corporation to sue its directors for a breach of duty
Civil Procedure Unit 5: In Rem Jurisdiction

iii. By suing on behalf of the corporation it is sort of a class action on behalf of the
shareholder
e. These types of suits, as well as class actions, are usually thought of by lawyers, not a P actively
seeking to initiate litigation
f. Delaware—full equity court—super corporate
g. Quasi in rem type II jurisdiction: stock is unrelated to the claim against the owner
i. Asserting jurisdiction over the directors who own company stock
ii. Stock is deemed located in Delaware
iii. Seized through sequestration—order of attachment
1. At the outset of the lawsuit, P obtains an order directing the sheriff to seize the
property
2. In real property, sheriff goes out and posts a notice on the property
3. In this case, notification to people who keep records of the stock that the stock
cannot be moved
h. D’s claim: exercise of jurisdiction over directors on the basis of their ownership of the stock is
unconstitutional
E. SCOTUS in Shaffer
a. Purpose of sequestration is to get the defendants to appear in court
b. If a person is not subject to direct jurisdiction under in personam, it is not just to assert indirect
jurisidiction over that person through quasi in rem type II
c. Reversal of Pennoyer
d. Issue is not that the shares are not located in Delaware, the problem is the claim does not arise
out of and relate to that contact
e. Core decision: under the fairness framework, jurisdiction fails because the presence of the
property is unrelated to the claim
f. Pennoyer: concern over P being powerless to get redress for D’s wrong if D is not present
i. Now, minimum contacts protects P against that
ii. Is quasi in rem type II necessary now?
1. Arg 1: In personam jurisdiction is braoder now than it was in Pennoyer. No, now
that there are more protections for P for in personam
2. If you cannot seize the property, do you have to fear that D will run away with
it?
3. Arg 2: If the concern is seizing the property so D cannot hide it or dispose of it
while litigation is going on in another forum, in rem jurisdiction is appropriate.
No, if in personam is justified in another state, sue D in that state and bring an
in rem action for seizure of shares to Delaware until he can get a valid
judgment
F. Consistent with traditional notions of fair play and substantial justice?
a. Throwing out a traditional notion of fair play (quasi in rem type II protects P)
b. But my sense is it is just because protections for P have been appropriately built into in
personam jurisdiction in the exercise of jurisdiction over foreign parties that are not present
G. Does this decision interfere with the other types of in rem?
a. If you apply minimum contacts frame and apply it to disputes over the ownership of property,
the exercise of jurisdiction under the other two frames is justified
i. Ownership is purposeful
ii. Claim arises out of and relates to the ownership
iii. Both the plaintiff and the state have a strong interest in the litigation
1. Very powerful state interest in determining ownership over the property
located within its bounds
2. Also a powerful state interest in providing a forum for owners of property
located within its bounds to be able to seek litigation in disputes
b. Concern that the disturbance with the traditional way of doing things will provoke questions over
titles that were previously settled
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H. After Shaffer quasi in rem type II is dead because the claim does not sufficiently arise out of or relate to
the property
I. What about movable property?
a. Hypo: A steals a horse from B and moves it to Utah where he files suit for ownership
i. No jurisdiction because the owner does not have purposeful contact with the state; only
contact is that his stolen property was taken there
b. Critical framework can move beyond question of relation of the claim to the property and also
consider whether or not that contact was purposeful
i. E.g. did the directors know that they were submitting to Delaware jurisdiction just by
purchasing shares in a Delaware corporation
J. Is there in personam jurisdiction over the directors?
a. Problem with Delaware’s laws
b. Delaware does not assert an interest
c. Delaware passes new law immediately: if you assume directorship over a Delaware corporation
then you consent to litigation in Delaware regarding a breach of duty to that corporation
d. Now that Delaware has passed the law, can minimum contacts be established?
i. Directors are businessmen who have some sophistication in corporate law likely
understand the duties associated with the directorship and the corporation’s and, by
association, their contact with Delaware. Probably a purposeful affiliation with the
State.
1. Further, directors receive substantial benefits from its association with the
State
ii. The claim arises out of the benefits that the directors receive from that contact
iii. Delaware has an interest in developing the underlying law because those decisions
affect the collective corporate community in the State. Delaware’s substantial interest in
affecting the overall structure of Delaware corporate law
iv. Marshall’s assertion that in personam jurisdiction could never be established might be
false
Lecture: Burnham
A. Shaffer
a. QIR II is limited jurisdiction: single contact necessitates the property relate to the claim
b. Marshall deploys critical framework of International Shoe and asserts that all assertions of
jurisdiction should be subject the this standard
c. Concurring opinions: uncomfortable with the application of this standard to real property
i. Claim of ownership is a contact, that contact is related to the claim
B. Burnham v. Superior Court of California
a. Facts
i. Mrs. lives in CA
ii. When they were together, they lived in NJ with their children
iii. Reasonable amicable split with decision that wife and kids would move to CA, husband
would stay behind and file a no contest divorce for irreconcilable differences
iv. Husband instead files for divorce on the basis of desertion
v. Wife files in CA
vi. Can CA dissolve a NJ marriage?
1. Pennoyer—status issues are not subject to the same jurisdictional restrictions—
states have the power to dissolve marriages of people who have established
residence there
2. Yes, CA has status jurisdiction
3. No need for service of process in the state because it is a status issue
4. BUT jurisdiction of the court to award child support and other monies require
in personam jurisdiction
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5. Husband has legal obligation to wife and kids with his blessing. Why isn’t that a
purposeful contact?
a. Prior ruling: similar case found contact was not purposeful. Husband
did not choose to go to the foreign state nor did he send the family
there
6. Husband goes to CA for business, visits his children, and upon returning them is
served
b. Claim: he doesn’t have minimum contacts with CA. Brief presence not related to claim
i. Shaffer: minimum contacts apply to all assertions of jurisdiction (specific jurisdiction)
ii. Goodyear: if you aren’t at home, you cannot be sued for unrelated claims to your
contact with the foreign state (general jurisdiction)
iii. Essentially an argument for quashing the validity of general jurisdiction the same as
International Shoe and Shaffer did the validity of quasi in rem type II jurisdiction by
extending International Shoe’s standards to in personam jurisdiction—presence
determined by minimum contacts with the forum at the exclusion of physical presence
at time of service being deemed sufficient
1. Due process requirement to assure the suit does not offend “traditional
notions of fair play and substantial justice”
2. Substantial, “continuous, and systematic” activities in the state
3. Purposefully directed at the forum state
4. D derives a benefit from conducting his state-directed activities, and so is also
subject to certain obligations within the state as well (reciprocity argument)
c. SCOTUS—majority
i. Shaffer’s assertion that continuous and systematic contacts only applies to absent
defendants
1. “If he be not present, the test is…”
ii. Shaffer and international Shoe expanded jurisdiction in regards to absent D’s. These
were not intended to change exercise of jurisdiction on present people
iii. Longstanding rule from Pennoyer that presence in the state in itself is enough to assert
jurisdiction
iv. Originalist argument: purpose of the due process clause—original intent of framers
v. Constitutional argument: international shoe refers to “traditional notions of fair play
and substantial justice”
1. Because tradition says presence is enough to assert jurisdiction
vi. Shaffer and International Shoe were only about quasi in rem jurisdiction
d. White: need a showing of how the rule is generally unfair before I question it
e. Brennan:
i. Fair notice—should have been aware that you were subjecting himself to suit by
entering the suit because of general awareness of this longstanding practice
1. Scalia: this is actually a tradition argument. He had fair notice by virtue of
precedent
ii. Reciprocity—he received benefits while in the state therefore
iii. he is also is subject to obligations
1. Scalia: these potential losses far outweigh the benefits he received over the
brief period he was present. Also, this argument could justify jurisdiction even
if he was not served while in CA
f. Stevens: all these arguments are persuasive. This is an easy case. Cannot concur with any,
however, because of a fear of an unnecessarily broad reach
C. Grace v. MacArthur
a. D served while on plane crossing over AK. Jurisdiction upheld
b. Args against
i. Did she purposefully avail herself? How was she to know the route the plane was going
to take? Did she really intend to be in AK?
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ii. Even if you are intentionally where you are, does it constitute presence?
D. Exceptions to presence—lack of intent
a. Forced into the state or led there under false pretenses
b. Participating in a judicial proceeding (e.g. witness)