Shaffer in Later Cases

Shaffer in Later Cases

Shaffer v. Heitner subjected every assertion of state-court jurisdiction to the International Shoe standard, and the cases that followed tested how far that command reaches. Four questions arose. Could a plaintiff reach a nonresident by attaching the obligation of the defendant's liability insurer? Rush v. Savchuk said no. Does Shaffer's sweeping language also govern a nonresident served with process while physically in the forum? Burnham v. Superior Court said no, though no rationale commanded a majority. What became of the limited appearance, the device that let a defendant contest a property-based claim without submitting to personal jurisdiction? And what work can quasi in rem jurisdiction still do?

One question links all four. Whatever the plaintiff relies on, whether attached property, a legal fiction, or the defendant's presence, ask what it supplies and whether that ties the defendant to the forum and to the claim. An unfamiliar device in an exam fact pattern usually yields to that question.

Insurance Attachment After Rush

The Delaware facts made Shaffer's rule easy to apply: the Greyhound shares had nothing to do with the claim, and the directors had no other tie to the state. An attachment of an insurance policy was harder to place. It seized neither land nor stock but a contract right, the obligation of the defendant's liability insurer to defend the defendant and to pay a covered judgment, and for a few years after Shaffer courts disagreed about whether the device survived.¹

The device worked this way. A plaintiff injured by a nonresident driver often could not sue the driver in the plaintiff's home state, because the driver had no contacts there. If the driver's insurer did business in that state, however, the plaintiff could attach the insurer's obligation to defend and indemnify. The law treated the obligation as a debt the insurer owed the driver, seized it as a creditor garnishes a bank deposit, and counted it as the nonresident's property located in the forum. That is the technique of Harris v. Balk, where a debt was located wherever the debtor could be served and the insurer plays the part of the debtor. The plaintiff's claim was personal and the policy was not what the suit was about, so the action was quasi in rem type II, the form Shaffer had just curtailed. Shaffer abrogated that category almost entirely, and the central move of Harris, using unrelated local property of a nondomiciliary to support a claim that lacks forum contacts, did not survive.² The remaining question was whether a policy obligation differed enough from the debt in Harris to escape the same result.

Courts that upheld the device in those years relied on three features of it:³

1. The insurer clearly did business in the forum and would actually conduct the defense.
2. The state had an interest in providing a forum for its injured resident.
3. The limited appearance protected the named defendant by restricting potential liability to the insurance coverage.

Together these made the arrangement look fair: a local company would run the defense, the forum had reason to care about the injury, and the defendant could lose no more than the policy was worth.

The Supreme Court ended the debate in 1980 in Rush v. Savchuk, overruling this form of attachment jurisdiction and striking it down on a straightforward minimum-contacts analysis.⁴ The plaintiff, a passenger injured in an accident in Indiana, later moved to Minnesota and garnished the obligation of the Indiana driver's insurer to defend and indemnify him. That obligation was the only link between the driver and Minnesota. The driver had no Minnesota contacts of any kind, so jurisdiction failed. The Court looked at the defendant, and the defendant had done nothing that reached the forum.

All three supporting features share one flaw: each describes someone or something other than the defendant. The insurer's business in the forum is a fact about the insurer. The policy obligation sat in the forum only because the insurer happened to operate there, so it reveals nothing about what the defendant did in the forum or in relation to the claim. A seizure of property is an indirect way of reaching its owner, so the owner's contacts are what count, and an asset that arrives through a third party's activity adds none.

The forum's interest in its injured resident is a legitimate consideration, but it belongs to the fairness inquiry. That inquiry weighs factors such as the state's interest in providing a forum for its residents and the convenience of the parties, and it begins only after the defendant's conduct has crossed the minimum contacts threshold.⁵ An interest cannot be the contact itself, or every plaintiff's home state would have jurisdiction over whoever injured the plaintiff. The limited appearance, taken up in the next subsection, and the cap at policy limits fix the most the defendant can lose. Neither connects the defendant to the forum, because a defendant shielded from excess liability must still answer in a state with which he has no relationship.

Specific jurisdiction does not demand as many contacts as general jurisdiction, but the claim must arise out of or relate to the defendant's own contacts with the forum, and a collision on a forum road meets that requirement.⁶ The passenger in Rush also sued over a collision, but it happened in Indiana, so the policy was the only thread, and the insurer's activity spun it. The fact that moves the answer is whether the defendant's own conduct touches the forum.

An exam stem that recites a garnished liability policy and an insurer doing business in the forum offers facts about the insurer and about the remedy. Ask whether the defendant has contacts with the forum from which the claim arises. If so, the plaintiff can proceed in personam and needs no attachment. If not, the attachment fails under Rush, however local the insurer and however modest the exposure.

Burnham and Tag Jurisdiction

Shaffer announced that “all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny.”⁸ Read literally, that sentence reaches a basis of jurisdiction with no connection to property: personal service of the summons on a defendant who is physically in the state when the papers are handed over. This basis is called tag jurisdiction, or transient jurisdiction, because it lets a plaintiff reach a defendant who is only passing through. In Burnham v. Superior Court, a New Jersey resident was served in a California divorce action while he was in the state on business and to visit his children, and the Supreme Court upheld California's jurisdiction. All nine Justices agreed on the result,⁹ but they disagreed about why, and that disagreement shows how far Shaffer's sweeping sentence actually reaches.

The Justices split three ways on the reasoning:¹⁰

• Justice Scalia and three others read Shaffer as a decision about absent defendants and relied on the long history of in-state service.
• Justice Brennan and three others held that Shaffer meant what it said, so that transient presence must satisfy International Shoe like any other basis, and they found the standard met on these facts.
• Justice Stevens, the ninth vote, found both the historical argument and the fairness argument strong and saw no need to choose between them.

The plurality read Shaffer's famous line in light of the sentences around it. Shaffer, it said, treated quasi in rem jurisdiction, that fictional “ancient form,” and in personam jurisdiction over an absent defendant as one and the same, so a minimum contact consisting of property ownership must relate to the litigation like any other contact.¹¹ A present defendant falls outside that rule because of what the contacts standard does. It substitutes for physical presence when the defendant is absent, and it was developed by analogy to presence, so using it to defeat jurisdiction over a defendant who is physically in the state would turn the standard against its own touchstone.¹² That is why the plurality could hold that jurisdiction based on physical presence alone satisfies due process: in-state service is one of the continuing traditions that define “traditional notions of fair play and substantial justice.”¹³ The plurality said it was in no way receding from or casting doubt on Shaffer.¹⁴

A concurring opinion agreed with Justice Scalia that due process generally permits jurisdiction over a defendant served while voluntarily present in the forum, but it saw no need to decide that a rule “immemorially the actual law of the land” satisfies due process for that reason alone.¹⁵ Justice Brennan and his group went further and rejected the narrow reading of Shaffer. Every rule of jurisdiction, even an ancient one, must satisfy contemporary notions of due process, so they applied the fairness inquiry, which weighs factors such as the forum state's interest and the relative convenience to the parties, with no one factor determinative.¹⁶ A defendant who visits a state uses its police, fire, and emergency services, travels its roads, and likely enjoys its economy, and the burden of defending where he was served is slight, since he has already made the trip at least once. As a rule, they concluded, jurisdiction based on a defendant's voluntary presence in the forum satisfies due process.

Place Shaffer's Delaware directors beside Burnham and the fact that moved the result is plain. The directors had never been in Delaware, and their only tie to the forum was stock that a statute placed there, which had nothing to do with the claim, so jurisdiction failed. Burnham was handed the papers inside California, and the plurality rejected the argument that a state lacks jurisdiction over an individual unless the litigation arises out of his activities there.¹⁷ An exam stem that quotes Shaffer's “all assertions” sentence and then describes a defendant served with process while in the forum is asking whether related contacts are required. They are not. Jurisdiction holds either because Shaffer concerned absent defendants (the plurality's reason) or because voluntary presence is itself a fair basis for suit (Justice Brennan's reason).

Tag jurisdiction has limits. One concurring opinion spoke of a defendant served while voluntarily present,¹⁸ and the stem should supply that fact before you apply the rule. Tag jurisdiction also does not reach a corporation through an officer who happens to be in the forum. Courts have consistently held that serving an executive officer temporarily in the state does not give personal jurisdiction over the company, because a corporation has a legal status distinct from that of its employees.¹⁹ And Burnham leaves Shaffer's own rule undisturbed: against an absent defendant, unrelated property in the forum supplies no jurisdiction.

Limited Appearances

A defendant whose property has been seized in a property-based action faces a choice that the old procedure built in. Appearing is a traditional basis for personal jurisdiction, so a defendant who comes in to assert an interest in the seized thing risks converting a proceeding limited to the property into one that reaches the defendant personally.²² Where the forum offered no way around the problem, the defendant could default and forfeit the property, or defend on the merits and submit to personal jurisdiction.²³ The right choice depended on the value of the attached property compared with the damages the plaintiff sought, and a defendant with a good defense often had to default anyway.

The limited appearance answers that dilemma by separating defending from submitting. In states that adopted it, the defendant may defend the action on the merits. If the defendant loses, only the property is forfeited, and if the defendant wins, the judgment carries no binding effect, so the plaintiff may sue again in a court that can obtain jurisdiction.²⁴ The loss follows from what the court's power rested on. The seizure gave the court authority over the property alone, and the limited appearance keeps the case inside that authority, so the judgment cannot grow into a personal obligation. The win follows from the same structure, because a court that never had power over the defendant personally cannot settle the plaintiff's personal claim for all purposes. Some courts have suggested giving binding effect to the specific issues actually decided, to spare the parties a second full trial, but even that limited effect treats the judgment as personal, to the defendant's detriment. The device began as a partial remedy for attachment cases in which a defendant's property was held hostage, and it let the defendant defend that property without risking a personal judgment.²⁵

The limited appearance sits beside two other appearances with which it is often confused, and the three differ in what the defendant does and what the defendant risks:

• A special appearance is made for the sole purpose of objecting to the court's jurisdiction.²⁶
• A limited appearance is made for the limited purpose of litigating one's interest in the property, without subjecting the defendant to personal jurisdiction.²⁷
• A general appearance subjects the defendant to the court's personal jurisdiction.²⁸

The Delaware defendants in Shaffer illustrate the first category. As described earlier in this chapter, Delaware's sequestration practice made a general appearance the only route to the merits, which left the Greyhound directors to contest the court's power through special appearances. Where the federal rules govern, the line between special and general appearances has been abolished. A defendant raises a personal-jurisdiction objection in a pretrial motion to dismiss or in the answer under Rule 12(b), and an objection left out of the first motion or the answer is waived.²⁹ The federal rules say nothing about limited appearances, so in federal court their availability depends on whether the court looks to state law, and state courts are split, with the slightly more common view allowing them. Check the law of the forum before assuming the device exists.

The first owner could also have entered a general appearance in State P, and doing so would have surrendered the protection. The appearance becomes a basis for personal jurisdiction, and a judgment can then exceed the value of the attached parcel.³⁰ What protects the first owner is the choice of appearance, backed by a forum that recognizes it.

The hypothetical describes the setting the device was built for, a plaintiff who attaches property on a claim that has nothing to do with it, and Shaffer removed most of that setting. Under the unified test, jurisdiction over such a claim must rest on minimum contacts between the defendant and the forum, and the property's presence alone does not supply them. The limited appearance had softened the consequences of litigating in a forum with no tie to the defendant. The contacts requirement attacks the same unfairness at its source by asking whether the forum may hear the case at all, so a defendant without contacts challenges jurisdiction directly and need not bargain over how much exposure to accept. A limited appearance is therefore no longer the sole safeguard against unfairness to a defendant in a quasi in rem action.³¹

The device has not disappeared. Because both in rem and in personam jurisdiction now require minimum contacts, relatively few cases remain in which a court has in rem jurisdiction but would lack in personam jurisdiction, and limited appearances have become much less frequent.³² Such cases still arise occasionally, and when one does, the defendant can usually make a limited appearance to assure that the matter remains an in rem action.³³ The natural setting is a dispute over a claim to the property itself, where the forum can fairly decide who holds the thing and the defendant wants to assert an interest in it without inviting a personal judgment.

A limited appearance answers a narrow question about what defending costs. It cannot answer whether the forum may hear the case. An exam answer should first ask whether the property-based claim satisfies the contacts standard, because a defendant who lacks contacts has a jurisdictional objection that no appearance, limited or general, can cure. Once jurisdiction over the property exists, ask which appearance the defendant is making and whether the forum's law recognizes a limited one.

Remaining Practical Uses

After Shaffer, attaching a defendant's local property no longer excuses a plaintiff from showing a tie among the defendant, the forum, and the claim. The growth of personal jurisdiction since International Shoe had already reduced the occasions on which a plaintiff needed property to reach a nonresident, and the contacts requirement in Shaffer removed most of the rest. Quasi in rem jurisdiction is now largely, though perhaps not completely, obsolete, and it does independent work only where it supplements the rules that decide which defendants a court may reach.³⁵

The main surviving use comes from the fact that a court's power over a nonresident has two layers. The Constitution sets the outer limit, and the state's long-arm statute decides how much of that room the state's courts actually claim. A statute that reaches only listed kinds of conduct can leave out a defendant whose contacts would satisfy due process, and in that case personal jurisdiction fails for want of statutory authority even though the Constitution would have allowed suit.³⁶ An attachment statute is a separate grant of authority keyed to the defendant's local property, so the kind of claim does not matter to it. If the state has one and the defendant owns property in the state, quasi in rem jurisdiction is permissible, and the attachment statute fills the void that the weak long-arm statute leaves.³⁷

The limit on collection is the price of using the device. A quasi in rem judgment is limited to the value of the attached property, and in many states the defendant may enter and defend on the merits without submitting to the court's personal jurisdiction.³⁸ A plaintiff whose realistic aim is the attached asset gives up little by accepting that limit, while a plaintiff seeking a larger recovery would prefer the full personal judgment that a broader long-arm statute would have allowed. Attachment also raises fairness concerns that other ways of bringing a party into court do not, because the plaintiff asserts no preexisting interest in the property and uses it only as a device to obtain jurisdiction over the defendant.³⁹ And it does nothing for a plaintiff against a defendant with no forum contacts at all. A nonresident whose only link to the state is an unrelated bank account stands where the Greyhound directors stood, because a plaintiff cannot go forward on property alone unless the defendant has minimum contacts with the forum state, just as in an in personam suit.⁴⁰

Some courts have sustained property-based jurisdiction on contacts they assumed were too thin for personal jurisdiction. In a 1978 Second Circuit decision, a plaintiff sued an Ohio company that sold millions of dollars' worth of its product to New York customers and attached a debt that one of those customers owed the company. The court called the test narrower for quasi in rem jurisdiction and upheld the attachment.⁴¹ That position is contested, because the unified standard points the other way, and an exam answer should treat the two tests as the same and mention the narrower approach only as a possible argument.⁴²

Federal courts control the device more tightly. Rule 4(n)(2), added by the 1993 amendments to the federal rules, authorizes quasi in rem jurisdiction only when personal jurisdiction cannot be asserted through regular service of process.⁴³ Stated as two requirements, the plaintiff must be unable to obtain personal jurisdiction over the defendant through reasonable efforts, and the law of the state where the federal court sits must permit quasi in rem jurisdiction.⁴⁴ The ordering follows from the structure of the rule. Personal jurisdiction yields a judgment collectible from all of the defendant's assets, so a court turns to attachment only as a fallback, and since contacts adequate for quasi in rem jurisdiction will usually support personal jurisdiction too, the fallback is seldom needed. The constitutional floor stays in place, because a federal court's quasi in rem jurisdiction still requires minimum contacts between the defendant and the state where the court sits.⁴⁵

Two plaintiffs in federal court show how the rule sorts cases. A plaintiff who can serve the defendant under the ordinary rules and the state long-arm statute obtains personal jurisdiction, so Rule 4(n)(2) offers no route to the narrower remedy. A plaintiff whose long-arm argument fails has satisfied the first requirement, and the answer then turns on whether state law permits attachment of the property involved. Most states permit it for tangible property present in the state or for a debt owed by a debtor who is present there, and a sound answer notes that the defendant can still invoke Shaffer, which would end the attempt if the defendant lacked minimum contacts.⁴⁶ If the stem says nothing about the state's attachment law, state an assumption about it and say what follows if the assumption is wrong.