Shaffer v. Heitner

433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 · Supreme Court of the United States · 1977

Civil Procedure Assigned in 15 casebooks

Case brief summary

Rule

Courts need a fair connection, called minimum contacts, between the defendant and the state before deciding a case, even if the case involves property the defendant owns there instead of suing them directly.

Facts

A shareholder sued Greyhound officers in Delaware over losses from Oregon events. The defendants had no ties to Delaware, but their company stock counted as located there, so the court froze it to force them into court.

Procedural history

Delaware's courts upheld freezing the stock, saying its location alone gave them power over the case. The defendants then appealed to the United States Supreme Court.

Issue

Can a state court base its power over a defendant just on property located there, like company stock, when the lawsuit has nothing to do with that property?

Holding

No. Any claim of court power, whether based on property or not, must meet the same minimum contacts test, and that test was not met here.

Reasoning

The Court said old rules separating property cases from personal cases no longer make sense, since judgments about property still affect their owner. Simply owning stock in a Delaware company isn't enough connection to justify a lawsuit there.

Opinions

Majority (Marshall): All assertions of state court power must satisfy the same fairness based minimum contacts test, and Delaware lacked sufficient contacts here.

Concurrences (Powell, Stevens): Agreed with the outcome but wanted to preserve old property based jurisdiction rules for real estate and warned the decision should not be read too broadly.

Dissent (Brennan): Agreed the old property only rule should be replaced by minimum contacts, but believed Delaware's strong interest in regulating its own corporations' officers gave it enough connection to the case.

Test yourself

Question 1 of 5

What property did Heitner seek to sequester to obtain jurisdiction over the individual defendants?

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What were the facts underlying Heitner's derivative suit against the Greyhound officers and directors?
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