Does a state court's assertion of quasi in rem jurisdiction over a nonresident defendant, based solely on the statutory presence of the defendant's stock in the state and unrelated to the underlying cause of action, satisfy the minimum-contacts standard of International Shoe and the Due Process Clause of the Fourteenth Amendment?

Heitner, a nonresident of Delaware, owned one share of stock in Greyhound Corp., a Delaware corporation headquartered in Phoenix, Arizona. He filed a shareholder's derivative suit in the Delaware Court of Chancery against Greyhound, its wholly owned subsidiary Greyhound Lines, and 28 present or former officers and directors. He alleged that the individual defendants breached their duties by causing the corporations to engage in conduct, occurring in Oregon, that resulted in a substantial private antitrust judgment and a criminal contempt fine.

With his complaint, Heitner moved to sequester the Delaware property of the nonresident defendants under Del. Code Ann., Tit. 10, § 366. The court issued the order, and the sequestrator placed stop-transfer orders on the books of Greyhound, seizing about 82,000 shares of Greyhound stock and options belonging to 21 defendants. The stock was deemed located in Delaware under Del. Code Ann., Tit. 8, § 169, which makes Delaware the situs of ownership of all stock in Delaware corporations, though no certificates were physically in Delaware. The defendants were notified by certified mail and publication. The sequestered property was unrelated to the cause of action, and Heitner did not allege or claim that the defendants had ever been physically present in Delaware or had committed any act there related to his claim.

Heitner filed the derivative suit in the Delaware Court of Chancery for New Castle County, which issued a sequestration order seizing defendants' Greyhound stock and options. The 21 defendants whose property was seized entered a special appearance and moved to quash service of process and vacate the sequestration order, arguing that ex parte sequestration violated due process, that the property was not attachable in Delaware, and that they lacked minimum contacts with Delaware under International Shoe. The Court of Chancery rejected these arguments, holding that the statutory Delaware situs of the stock supported quasi in rem jurisdiction. The Delaware Supreme Court affirmed, holding that jurisdiction under § 366 was quasi in rem, founded on the presence of the stock rather than on defendants' contacts, so International Shoe did not apply. The United States Supreme Court noted probable jurisdiction on appeal.

(Marshall, J.)

No. All assertions of state-court jurisdiction, including in rem and quasi in rem jurisdiction, must satisfy the "minimum contacts" and "fair play and substantial justice" standards of International Shoe Co. v. Washington, 326 U.S. 310 (1945). The Delaware sequestration statute, which rested jurisdiction solely on the statutory presence of defendants' stock, was unconstitutional as applied.

The Pennoyer v. Neff, 95 U.S. 714 (1878), framework, which divided jurisdiction into in personam and in rem categories according to a State's territorial power over persons or property, no longer stands on secure ground. International Shoe shifted the inquiry from territorial power to the relationship among the defendant, the forum, and the litigation. A proceeding "against" property is really a proceeding against the persons who hold interests in that property, so the same fairness standard should govern. The Court had already recognized this in Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950), and in decisions requiring notice to property owners. The historical pedigree of jurisdiction based on property is not decisive, because traditional notions of fair play can be offended by perpetuating ancient forms that are no longer justified.

Where the property is unrelated to the cause of action, it serves only as a device to bring the defendant into court, and the presence of property alone does not support jurisdiction. The rationale that a debtor should not evade obligations by moving assets is unpersuasive, because it supports at most attachment as security for a judgment obtained elsewhere, and the Full Faith and Credit Clause makes valid judgments enforceable nationwide.

Applying International Shoe, appellants lacked sufficient contacts with Delaware. The stock was unrelated to the claim, and defendants never set foot in Delaware or committed any related act there. Delaware's interest in supervising its corporations may support applying Delaware law, but choice of law is distinct from personal jurisdiction. See Hanson v. Denckla, 357 U.S. 235 (1958). Delaware had no consent-to-jurisdiction statute, so defendants had no reason to expect suit there. Accepting corporate positions did not amount to purposeful availment of Delaware. The judgment is reversed.

Concurrence (Powell, J.) Powell agrees that International Shoe governs in rem jurisdiction and that the statutory presence of stock and corporate positions cannot support Delaware's jurisdiction here. He reserves judgment on whether ownership of property with an indisputably and permanently located situs, such as real property, may alone provide sufficient contacts. Preserving quasi in rem jurisdiction for real property would avoid uncertainty without sacrificing fair play and substantial justice.

Concurrence in the judgment (Stevens, J.) Stevens concurs only in the judgment. Due process requires fair notice, including fair warning that an activity may subject a person to a foreign forum's jurisdiction. A purchaser of stock on the open market cannot be expected to know that doing so subjects him to suit in the state of incorporation. Delaware's sequestration statute, which treats the state of incorporation as the situs of the stock and forces defendants to submit to general jurisdiction to defend the merits, creates an unacceptable risk of judgment without notice. He fears the majority's opinion decides more than necessary and agrees with Powell that it should not invalidate quasi in rem jurisdiction over real estate.

Concurrence in part and dissent in part (Brennan, J.) Brennan joins Parts I-III but dissents from Part IV. The Delaware courts never addressed minimum contacts because the statute rests on quasi in rem jurisdiction, so the Court's minimum-contacts ruling is an advisory opinion made without a factual record or opportunity for discovery. The majority answered that appellants actually received notice by certified mail, so it assumed the procedures sufficed to bring them before the Delaware courts if minimum contacts existed. On the merits, he would hold that a chartering state generally has jurisdiction over a derivative action concerning the conduct of its corporation's directors and officers. Delaware has strong interests in providing restitution to its corporations, regulating corporate fiduciaries, and supervising entities created by its law. Because appellants voluntarily associated themselves with Delaware and invoked the benefits of its laws, he would not foreclose Delaware from asserting jurisdiction on a minimum-contacts basis, though discovery might show contacts lacking in a given case.