One Standard for Every Case

One Standard for Every Case

Shaffer v. Heitner answered the question International Shoe left open: all assertions of state-court jurisdiction must be evaluated under the standards of International Shoe and its progeny.¹ Before the decision, a court asked one question when the plaintiff sued a person (does the defendant have minimum contacts?) and a different one when the plaintiff sued a thing (does the property lie in the state, and was it seized at the outset?). Now a single inquiry governs both. The labels in rem and quasi in rem still describe what the plaintiff is claiming, but they no longer say what the state's power rests on. The Court reached that result through four arguments, each of which answers a reason for treating property differently.

The first argument is about what “jurisdiction over a thing” means. The Court began from the Restatement (Second) of Conflict of Laws, which calls the phrase a customary elliptical way of referring to jurisdiction over the interests of persons in a thing.² A parcel of land or a block of stock has no rights or duties of its own, so a decree about it always decides who may claim it. A court that asserts power over the thing therefore asserts power over the claimants, and the basis for that power must be strong enough to justify it. The due process measure of power over persons' interests is the minimum-contacts standard of International Shoe, and that standard becomes the measure in property-based cases too.³

The second argument removes the premise that made the old regime seem harmless, which was that a proceeding against property leaves its owner untouched. The common law kept that premise alive through a fiction: the law assumed that property is always in its owner's possession, so seizing it would inform the owner of the proceedings.⁴ The Court's notice decisions had already set the fiction aside. They hold that property cannot be subjected to a court's judgment unless reasonable and appropriate efforts have been made to give the owners actual notice, because an adverse judgment in rem directly affects the owner by divesting the owner of rights in the property.⁵ Those decisions had also left the law of state-court jurisdiction no longer standing securely on the foundation of Pennoyer.⁶ A judgment that takes away what a person holds makes that person a party in every practical sense, and the state needs the same justification for binding the owner that it needs for any other judgment against the owner.

The third argument is that due process cannot depend on the label attached to the action. In Mullane the Court held that Fourteenth Amendment rights cannot turn on whether an action is classified as in rem or in personam, a classification whose standards are elusive and confused and, being primarily for state courts to define, vary from state to state.⁷ If the label set the constitutional limit, a defendant's protection would change with each state's vocabulary. Attachment shows the problem most sharply. The express purpose of Delaware's sequestration procedure was to compel the defendant to enter a personal appearance, and the Court reasoned that if a direct assertion of personal jurisdiction over the defendant would violate the Constitution, an indirect assertion of that jurisdiction should be equally impermissible.⁸

The fourth argument treats history as evidence that does not settle the question. The Court accepted that the long history of basing jurisdiction on the presence of property supports the proposition that such jurisdiction satisfies due process, and then held the history not decisive. Traditional notions of fair play and substantial justice can be offended as readily by perpetuating ancient forms that are no longer justified as by adopting new procedures that conflict with basic constitutional values.⁹ Once the territorial foundation had eroded, what remained was the fiction that an assertion of jurisdiction over property is anything but an assertion of jurisdiction over its owner. That fiction supports an ancient form without substantial modern justification, and continuing to accept it would serve only to allow state-court jurisdiction that is fundamentally unfair to the defendant.¹⁰ The justifications offered for keeping the old rule, history among them, receive fuller treatment in the sections that follow.

The standard that now applies to property cases has two parts. Contacts must cross the minimum threshold, and even then jurisdiction fails unless the court finds it consistent with fair play and substantial justice. No single factor decides that second question. Courts weigh the forum state's interest in regulating the activity or providing a forum for its residents, the relative convenience of the forum to the parties in terms of witnesses, evidence, and location, whether an alternative forum exists, the desire to avoid a multiplicity of lawsuits, and any other factor bearing on fairness.¹¹ After Shaffer, the presence of the defendant's property in the forum is no longer a sufficient condition for jurisdiction over the defendant's interest in that property, because the contacts-plus-fairness test applies to every exercise of jurisdiction, whether over people or over their property.¹²

Property still counts as a contact, and it counts for a great deal when the dispute is about the property. Where claims to the property itself are the source of the controversy, it would be unusual for the state where the property lies to lack jurisdiction.¹³ Three considerations support that conclusion, and each corresponds to a part of the fairness inquiry. A defendant who claims property in the state has indicated an expectation of benefiting from the state's protection of that interest. The state has a strong interest in the marketability of property within its borders and in a peaceful procedure for resolving disputes over its possession. And the records and witnesses needed to decide such a dispute are likely to be found where the property is.¹⁴ The new standard therefore leaves many actions brought in rem where they were. It changes the cases in which the property is completely unrelated to the plaintiff's cause of action, because there the presence of the property alone does not support jurisdiction, and if no other ties among the defendant, the state, and the litigation exist, the case cannot be brought in that forum.¹⁵ A concurring Justice agreed with the result and reserved judgment on one question: whether ownership of some forms of property whose situs is indisputably and permanently within a state, real property in particular, might supply the necessary contacts without more.¹⁶ That reservation returns later in this chapter with the other survivals of property-based jurisdiction.

The Delaware facts fall on the failing side of that line. The defendants' ties to Delaware were the statutory presence of their stock there and their positions as directors and officers of a Delaware corporation, and a concurring Justice agreed that neither could supply sufficient contacts to support the Delaware courts' jurisdiction.¹⁷ A later section applies the standard to those facts in full. A second, simpler illustration shows the same hinge. Pietra, a North Carolina citizen, sues Donnor, a California citizen, over a California car accident and has a North Carolina court attach a money market account Donnor opened while visiting the state. The account has nothing to do with the accident, and Donnor has no other North Carolina contacts. A court exercising quasi in rem jurisdiction is in effect exercising jurisdiction over the defendant personally, so Pietra must show that Donnor would be subject to specific or general jurisdiction in North Carolina. She cannot, the attachment adds nothing to her showing, and most courts would decline to proceed.¹⁸

Keep the same plaintiff, defendant, and state, and change one fact: Pietra is hurt while jogging on a North Carolina rental property that Donnor owns. Ownership is conceded, and the cause of action grows out of rights and duties connected with that ownership. The Court identified this setting, a suit for injury suffered on the land of an absentee owner, as one in which the presence of property favors jurisdiction.¹⁹ The only fact that moved between the two scenes is whether the property relates to the claim.

The earlier categories of property-based actions remain useful as a way to see what is in issue and which contacts matter most. The contacts-plus-fairness test decides the outcome in each of them.²⁰