Summary
The Supreme Court considered whether Delaware could exercise quasi in rem jurisdiction over nonresident corporate officers and directors by sequestering their stock in a Delaware corporation. The Court held that the Due Process Clause requires the same minimum-contacts, fair-play, and substantial-justice analysis for jurisdiction over property interests as for in personam jurisdiction, and reversed the Delaware Supreme Court.
Topics
Practice areas
Questions Presented
- Whether the Due Process Clause permits Delaware to exercise quasi in rem jurisdiction over nonresident defendants solely because stock or other property is deemed to be located in Delaware.
- Whether Delaware's statutory situs of Greyhound stock constitutes sufficient minimum contacts among the defendants, Delaware, and the litigation under International Shoe.
- Whether the defendants' positions as officers or directors of a Delaware corporation supplied sufficient contacts to support jurisdiction in this action.
Holdings
- All assertions of state-court jurisdiction, including in rem and quasi in rem jurisdiction, must be evaluated under the minimum-contacts standards derived from International Shoe and its progeny.
- The defendants' Greyhound stock, deemed present in Delaware solely by statute, did not provide sufficient contacts to support Delaware's jurisdiction because the stock was neither the subject matter of the litigation nor related to the underlying cause of action.
- The defendants' positions as officers or directors of a corporation chartered in Delaware did not, on this record, establish sufficient minimum contacts to support Delaware jurisdiction.
Key quotations
“We therefore conclude that all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny.” (at 212)
“Delaware's assertion of jurisdiction over appellants in this case is inconsistent with that constitutional limitation on state power.” (at 217)
Factual background
Heitner, a nonresident of Delaware and owner of one share of Greyhound Corporation stock, filed a shareholder derivative action alleging that Greyhound's officers and directors breached their duties by causing Greyhound and its subsidiary to incur substantial antitrust damages and criminal contempt fines arising from conduct in Oregon. Heitner sought sequestration of stock, options, and other property attributed to the individual defendants in Delaware under Delaware statutes treating stock of Delaware corporations as located in the State. The defendants were nonresidents, had not been alleged to have entered Delaware or committed acts there related to the claims, and the seized property was unrelated to the underlying dispute.
Procedural history
Heitner filed a shareholder derivative action in the Delaware Court of Chancery against Greyhound Corporation, Greyhound Lines, Inc., and 28 present or former officers and directors. At the outset, the Chancery Court ordered sequestration of Delaware property belonging to nonresident defendants. The Chancery Court rejected the defendants' due-process and jurisdictional objections, and the Delaware Supreme Court affirmed. The United States Supreme Court noted probable jurisdiction and reversed.