Shaffer v. Heitner

433 U.S. 186 (1977)

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Nature of the Case

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Facts

Heitner (P) owned one share of Greyhound (D) stock. P was a nonresident of Delaware. D who was headquartered in Arizona was subjected to a large antitrust judgment in Oregon. P brought a derivative suit in Delaware, where D was incorporated, even though P was a nonresident. P named 28 officers and directors of D as defendants and alleged that they breached their fiduciary duties. P also filed a motion for sequestration of the shares of stock owned by 21 of the officers and directors. Jurisdiction was based on sequestration of D's stock, which was deemed to be in the state of incorporation. The Delaware sequestration statute allowed property within the state to be seized ex parte to compel the owner to submit to the in personam jurisdiction of the court. No stock was actually in the state, and a freeze order was placed against the corporate books. Ds made a special appearance to challenge the court's jurisdiction to hear the matter. Ds argued that the statute was unconstitutional. D also said that there were insufficient contacts to confer jurisdiction. Delaware courts found that the statute was valid since it was not a per se seizure of the property and was merely invoked to compel out-of-state residents to defend actions within the state. The court did not really address the contact argument based on the finding that the presence of stock within the state conferred quasi-in-rem jurisdiction.