Shaffer v. Heitner

Shaffer v. Heitner
Supreme Court of the United States
Argued February 22, 1977 Decided June 24, 1977
Full case name	Shaffer, et al. v. Heitner
Citations	433 U.S. 186 (more) 97 S. Ct. 2569; 53 L. Ed. 2d 683; 1977 U.S. LEXIS 139
Prior history	Appeal from the Supreme Court of Delaware
Holding
The mere ownership of property in a state is not a sufficient contact to subject the property owner to a lawsuit in that state, unless that property is the subject of the lawsuit.
Court membership
Case opinions
Majority	Marshall, joined by Burger, Stewart, White, Blackmun
Concurrence	Powell
Concurrence	Stevens
Concur/dissent	Brennan
Rehnquist took no part in the consideration or decision of the case.
This case overturned a previous ruling or rulings
Pennoyer v. Neff (1878) Harris v. Balk (1905)

Shaffer v. Heitner, 433 U.S. 186 (1977) is a United States corporate law case in which the Supreme Court of the United States established that a defendant's ownership of stock in a corporation incorporated within a state, without more, is insufficient to allow that state courts to exercise jurisdiction over the defendant. The case set forth a framework for evaluating when a defendant will be deemed to have minimum contacts with the forum state sufficient for the exercise of jurisdiction to be consistent with due process under the Fourteenth Amendment.

Arnold Heitner, who as trustee owned one share of stock in Greyhound Corporation, a Delaware corporation, instituted a shareholder’s derivative suit in the Delaware Court of Chancery against 28 of the company's directors and officers. Most of these individuals resided outside Delaware. To secure jurisdiction over these defendants, at the outset of the litigation Heitner filed a motion for an order to "sequester" the shares of Greyhound stock owned by the defendants, meaning that they would be unable to sell the stock. The defendants were notified by certified mail and by publication of a legal notice in a newspaper.

By sequestering defendants' property, Delaware sought to exercise quasi in rem jurisdiction over the defendants. The defendants at issue were not subject to personal jurisdiction because they did not reside in Delaware and had not taken any actions in Delaware that were the subject matter of the lawsuit. However, because Delaware law deemed all stock in Delaware corporations to have a situs within the state, Delaware exercised jurisdiction over the stock itself. The defendants then had the choice of either filing an appearance in the lawsuit, thereby subjecting themselves to jurisdiction, or failing to appear to defend themselves, thus risking losing their stock.