F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

U N I T E D S T A T E S O F A M E R I C A , Plaintiff-Appellee

,

v

.

T A R E K O B A I D , Claimant-Appellant

,

C E R T A I N R I G H T S T O A

N D I N T E R E S T S
I N S H A R E S O F S E R

I E S D P R

E F E R R E D S T O C K I N P A L A N T I R T E C H

N O L O G I E S , Defendant. N o. 18-56657

D.C. No. 2:17-cv-04446- DSF

- PL A

OPI NI ON

A ppeal from the United States District Court for the Central District of California Dale S. F ischer, District J udg e, Presiding

Arg u ed and Submitted September 11, 2019

Pasadena, California

F iled Aug ust 24, 2020

B efore: J ohnnie B . Rawlinson, Sandra S. I kuta, and Mark J . B e nnett, Circuit J udg es.

Opinion by

J u dg e Rawlinson; Dissent by

J udg e I k utaU N I T E D S T A T E S V

. O B A I D 2

SUMMARY *

P ersonal Jurisdiction / In Rem Civil F orf eiture / Venue

The panel affirmed the district court’s order deny i ng Tarek O baid’s motion to dismiss for lack o f p e r sonal jurisdiction and for lack of proper venue a civil f o rf eiture

case involving Obaid’s shares of stock in Pa l a ntir Technolog ies, a corporation with its principal place o f business in California.

Obaid is a citiz e n of Saudi Arabia who wired $2 million from his a ccount in Switz erland to a bank in Califo r n i a to purchase stock in Palantir. The g overnment filed this in rem civil forfeiture action ag a inst Obaid’s Palantir shares. Obaid moved to dismiss the forfeiture a ction, contendi n g t h a t in
personam jurisdiction over him was necessary to adjudicate this in rem action, a

nd the district court was required to a pply the minimum contacts standard to determine w hether he h ad sufficient contacts with the forum.

The p anel held that the United States Suprem e C o urt’s decision in Shaffer v

. H

eitner
, 433 U.S. 1 86 (1977) (requiring the application of a min i m u m contacts framework to e ach
person who claims o wnership of property ), addressed a quasi in rem proceeding rather than a true in rem proceeding . The panel held further that Tennessee Student Assistance Corp. v

. Hood

, 541 U.S. 440 ( 2 0 0 4 )

, provided more direct g uidance for the issues before the panel. Th e p anel concluded that Hood supported its view that Shaffer was limited to quasi in

* T h is su m m ary co n stitu

tes n o p art o f th e o pin io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.U N I T E D S T A T E S V

. O B A I D 3

rem actions a

nd did ex tend to in rem actions, such as this one. The panel held that the district court did not err when i t determined that the constitutio n al due p rocess requirements
set f orth in International S

h o e Co. v. W

ashington

, 326 U.S. 310 (1945), were inapplicable to this in rem action. I n an in

rem action, the focus f

or the jurisdictional inquiry is the res, in this case Obaid’s Palan tir shares, rather than Obaid’s personal contacts with the forum.

T he p anel held that venue was proper because suffici e n t acts g iving rise to the civil forfeiture occurred in the Central District o f California. The panel concluded t h a t the conspiratorial activity in the Central District was sufficient to support venu e given the relatively low standard set forth in 28 U.S.C. § 1355. The panel also h e l d that w hether Obaid

was involved in the c onspiracy w as immater i a l t o the venue analy sis.

Dissenting

, J udg e I kuta w rote that the m a j o rity e rred in
not a pply ing Shaffer v. Heitner
, and created a s plit with two circuits that applied S

haffer a nd seven circuits that ex pressly construed it to cover ordinary in rem pro c ee d i n gs. J udg e I kuta w o u l d re mand to the district court to conduct the required minimum contacts analy sis.U N I T E D S T A T E S V

. O B A I D 4

COUNSEL

David B

. Rivkin (arg

ue d ), J onathan R. B arr, L ee A. Casey
, M ark W

. DeL aquil, Eliz abeth Price F oley

, and Andre w M

. Grossman, B aker Hostetle r L L P, W ashing ton, D.C.; J onathan B

. New, B aker H ostetler L L P
, New York, New York; for Claimant-Appellant.

J oshua L

. Sohn (arg

ued), Trial Attorney ; W oo S. L ee, Deputy Chief; Deborah Connor, Chief; Money L aundering and Asset Recovery Section, U nited States Department of J ustice, W a shing ton, D.C.; L . Ashley Aull, Chief, Criminal Appeals Section; N icola T. Ha n n a , United States Attorney ; United States Attor n e y ’s Office, L os Ang eles, California; for Plaintiff-Appellee.

David L

. Z ifkin, B oies Schiller F lex ner L L P, Santa Monica, California; Matthew L

. Schwartz

, B oies Schiller F lex ner L L P, New York, New York; f or Amicus Curiae Qentas Holding s.U N I T E D S T A T E S V

. O B A I D 5

OP INION

RAW L I NSON, Circuit J udg e:

Appellant-claimant Tarek Ob a id (Obaid) appeals the district court’s order d eny ing his motion to dismiss for lack of personal juri s d iction and f or lack of proper venue in this civil forfeiture case involving his shares of stock in Palantir Technolog ies (Palantir), a c orporation with its principal place of business in California. Reviewing de novo , we affirm the judg ment of the district court.

I. BACKGROUND

Obaid is a citiz en of Saudi Arabia, who serves as the chief

ex e c utive o fficer of PetroSaudi I nternational ( PSI ), an oil a nd
g as ex ploration c ompany

. I n 2009, PSI entered i n t o a j oint
venture with 1 Malay sia Development B erhad (1MDB ), an investment company w holly -owned by the g overnment o f Malay sia. 1MDB was c r eated to pursue econom ic development for the benefit of th e M a lay sian people. According to the g overnment, 1MDB w as riddled with fraud from its inception, as multiple individuals conspired to d ivert and launder b illions of dollars from the fund. F rom 2009 to 2011, 1 MDB and PSI arrang ed for the fraudulent transfer o f

more than $1 billion from 1MDB to a Swiss bank account in the name of G ood Star L imited (Good Star Account)

. J h o L ow, a Malay sian national, was involved in the creation o f 1MDB
, and l a u n dered more than $400 million throug h the Good Star Account into the United States. L ow then used the laundered funds to, among other thing s, purchas e lux ury items and real estate.U N I T E D S T A T E S V

. O B A I D 6

As the chief ex ecutive o f PSI
, Obaid alleg edly facilitated the 1MDB and PSI joint venture, including by sig ning v arious documents to e ffectuate the transfers of money into the Good Star Account. Additionally

, O baid personally received $153 million from the Good Star Account t h a t was processed throug h a bank account in N e w York and ultimately sent to Obaid’s personal account in Switz e rland. Relevant t o t his appeal, Obaid wired $2 m illion f rom his a ccount in Switz e rland to a bank in Cal i f ornia to purchase 2,500,000 shares of Series D preferred stock in Palantir. 1

As part of its e fforts to recoup m o n ey fraudulently obtained in the scheme, the g overnment filed this in rem civil forfeiture action ag a inst Obaid’s Palantir shares. I n a leng thy complaint, the g overnment alleg ed that the P a l a n tir shares

were forfeitable because they w ere d erived from proceeds traceable to the wire fraud and m o n ey laundering scheme involving 1MDB and PSI

. Contemporaneous with the action broug ht ag ainst Obaid’s Palantir shares, the g overnment filed multiple civil forfeiture suits seeking to reclaim ass e t s s u ch

as lux ury hotels, y achts, c ertain movies r ig hts, and ex pensive real estate in B everly Hills, connected to the fraudulent scheme. However, it is u nclear from the compla i nt whether—and t o w h a

t e xt e n t

— O b a id maintains an ownership in t e r e s t in the additional assets b eing soug ht by the
g overnment in the related civil forfeiture actions.

Obaid c onfirmed his ownership o f the Palantir shares a nd subsequently move d to dismiss the forfeiture action,

1 B ecau s e th is is an in rem actio n , th e d e f en d an t in th is ap p eal is
p ro p erty

— t h e Series D P alan tir sh ares. S ee Un ited S t

a tes v. 2 ,1 6 4 W a tch es, M o re o r Less Bea rin g a Reg i stered T ra d ema rk o f Gu ess?

, In c ., 3 6 6 F.3 d 7 6 7 , 7 71 (9 th

Cir. 2 0 0 4 ).U N I T E D S T A T E S V

. O B A I D 7

contending that the district court lacked personal jurisdiction over him as the property owner. Obaid also maintained that

venue was improper b ecause the d isputed res, i.e
., the Palantir shares, was not alleg ed to be located in the Central District o f California. The district court r ejected Obaid’s arg ument that personal jurisdiction ove r h im was r equired to adjudicate

r i g hts to the named property

. A nd the district cour t concluded that v enue was proper in the Central District,

re asoning that civil forfeiture actions may be broug ht in the district “ in which a n y o f t h e acts or omissions g iving rise to the forfeiture occurred.” I n the district court’s view, venue

was p r o p e r because multiple acts g iving rise to the alleg ed conspiracy

occurred in the Central District.

Obaid moved f

or r econs i d e r ation of the district court’s

ru l i n gs a nd, in the alternative, to certify the ruling s for interlocutory appeal. The district court denied the motion for

r e c onsideration, but g r anted the motion to certify its ruling for interlocutory

appeal.

II. STANDARD OF REV IEW

A district court’s ruling s on personal jurisdiction a nd

v e nue are reviewed de novo

. See Myers v. Benn e t t L a w Offices , 238 F

. 3d 1068, 1071 (9th Cir. 2001).

III. DISCUSSION

Obaid contends that the district court erred when it denied his motion to di s m i ss for lack o f personal jurisdiction. According to Obaid, in personam jurisdiction over him was

necessar y t o adjudicate this in rem forfeiture action, and the d istrict court was required to apply the minimum c on t ac t s standard estab lished by United States Supreme CourtU N I T E D S T A T E S V

. O B A I D 8

precedent to determine whether he had sufficient contacts with the f orum. Apply ing that standard, Obaid asserts that he lacked sufficient contacts with the forum to sa t i s fy d ue process requirements. Obaid a lso challeng es the district

c o urt’s determination that venue was proper in the Ce n t ra l District.

A. In Personam J urisdiction in an In Rem Action

Obaid urg es u s t o conclude that the district court erred when it held that the United States Supreme Court’s decision in S h a f f e r v. H eitner
, 433 U.S. 186 (1977) does not control the outcome of the jurisdiction issue in this i n r e m civil forfeiture action. Obaid maintai n s t hat Shaffer squarely

s t a n d s f or the proposition that al l a s s e r t i o n s o f jurisdiction— in rem , quasi i n rem , a n d in personam

—

must be evaluated according

to a minimum contacts standard.

B e fore delving into the issues in this case, it is helpful to disting uish a mong the ty pes o f potential j urisdiction in federal cases. “

In personam jurisdiction, simply stated, is the
power o f a court to enter judg ment ag ainst a person.” SEC v

. Ross
, 504 F .3d 1130, 1138 ( 9th C i r

. 2 007). B y c ontrast, in

rem jurisdiction is the court’s p ower to adjudicate rig hts over property

. S

e e i d

. “ J urisdiction in rem is predicated on the fiction of convenienc e that an item of property is a person ag ainst whom suits can be filed and judg ments entered. . . .” United States v. Approximately $1.67 Million ( US) in Cash, Stock & Other Valuable Assets
, 513 F .3d 991, 996 (9th Cir. 2008) (citation and internal q uotation marks omitted). More nebulous is the concept of quasi in rem jurisdiction:

A quasi in rem action is basically a halfway house between in rem and inU N I T E D S T A T E S V

. O B A I D 9

personam jurisdiction. The action is n ot really
ag ainst the property ; rather, the action involves the assertion of a personal claim
ag ainst the defen dant o f the ty pe usually advanced i n an in personam action and the demand ordinarily is for a money j u d g ment, althoug h in so m e contex ts the objective may be to determine rig hts in certain property

. The basis for transforming the su i t f r om one in
personam to an action ag ainst the defendant’s property is the attachment o r g arnishment o f

some or a ll of the property the d efendant may have in the jurisdiction.

Ventura Packers, Inc. v

. F

/ V J E A N INE KATHLEEN

, 4 2 4 F .3d 852, 860 n.4 (9th Cir. 2005 )

, a s a m ended (citations a nd alteration omitted).

F ortunately

, there is no dispute that the underly ing action is in rem because “[ a] forfeiture actio n i s i n rem .” $1.67 Million

, 513 F .3d at 996 (citation omitt e d )

. The Supreme Court recog n iz es a “sharp distinctio n b etween in rem civil forfeitures a

nd in personam ci v i l penalties such a s fines.” United S tates v

. Ursery
, 518 U.S. 267, 275 (1996). W h ile a civil action to recover penalties i s s imilar to a criminal prosecution in that “ it is the wrong d oer in p e r son who is proceeded ag ainst, in an in rem forfeiture proceeding

, it is the property which is proceeded ag ainst.” Id. at 283 (citation, alteration, and internal quotation marks omit t ed )

. Thus in a civil fo r f e iture proceeding in rem , “jurisdiction [ is] dependent
upon seiz ure of a p hy sical object.” Id. at 277 (c i t a tion omitted). Here, the focus is on the d istrict court’s jurisdiction

over the property in dispute, i.e
., Obaid’s Palantir shares. See Ross
, 504 F .3d at 1138.U N I T E D S T A T E S V

. O B A I D 10

To resolve this case we must d ec i d e which of two cases is the more pertinent p r ecedent. The first is S haf f er , w h ich involved a Delawa re shareholder derivative suit ag ainst Grey hound Corporation, as well as its officers and directors. See 433 U.S. at 1 89–90. I n c o njunction with his action, the plaintiff moved to sequester the Delaware property

— stock in Gre y h ound Corporation—of the individual defendants. See id

. at 190–91. Under Delaware law, the primary pu r p o s e o f “sequestration” was to use the property as a basis to “compel the personal appearance o f a nonresident defendant to answer and defend a suit broug h t a ga inst him in a court of equity

. ” Id. at 193 (citation omitted). T h e individual defendants challeng ed the suit on personal jurisdiction g rounds, contending that they lacked sufficient contacts with Delaware
to satisfy the jurisdictional requirements o f International Shoe Co. v. W

ashington

, 326 U.S. 310 (1945 )

. See Shaffer

, 433 U.S. at 192–93. The Delaware Supreme Court rejected the d efendants’ arg u ment, holding tha t the quasi in rem jurisdiction was predicated “on the presence of capital stock [ in Delaware]

, not on prior contact by d e f e n d ants with this forum.” Id

. at 195 ( quoting G reyhound Corp. v

. H e i tner , 361 A.2d 225, 229 (Del. 1976)).

The U nited States Supreme Co u r t reversed the ruling o f the Delaware c ourts See id

. I n t h e Supreme Court’s v iew, the same p recepts that g overn in personam jurisdiction, “ fair play and substantial justice,” also applied in Shaffer because “judicial jurisdiction over a thing

, is a cu s t omary elliptical
way of referring to jurisdiction ov er the interests of persons in a thin g

. ” Id

. at 207 ( citation, footnote reference, a nd internal quotation marks omitted). L og ically

, this means that “in order to justify an ex ercise of jurisdiction in rem , the basis for jurisdiction must be sufficient to justify e x erc ising jurisdiction over the interests of persons in a thing

. ” Id

.U N I T E D S T A T E S V

. O B A I D 11

( footnote reference and internal quotation marks omitted)

. “The standard for determining wh e t h e r an ex ercise o f jurisdiction over the interests of p ersons is consistent with the Due Process Clause is the minimu m -contacts standard elucidated in International Shoe .” Id

. The Supreme C o u r t thus concluded that “all assertions of state-court jurisdiction
must be evaluated accordin g t o t h e standards set forth in International Shoe and its prog eny

. ” Id

. at 212 (footnote reference omitted).

L eft with this conclusion from Shaffer

, one mig ht deduce that Obaid’s p osit i o n c a r ries the day

. B ut not so fast. A nother Supreme Court decision, Tennessee Student Assistance Corp. v. Hood

, 541 U .S. 4 4 0 (2004), decided some twenty -five y ears after Shaffer

, h a s something to say about in

rem jurisdiction and it does n o t s a y the same thing that Shaffer seeming ly say s.

The Tennessee Student A s sistance Corporation ( TSAC) is a g overnment ag ency that administer s s t udent assistance
prog r ams in the state of Tennessee. S e e i d

. at 443. Among other thing s, TSAC g uarantees stu d e n t loans to residents o f Tennessee. S

ee id. at 444. Hood was one such resident, a nd she sig ned promissory notes for loans g u aranteed by TSAC. See id

. Years after receiving th e l o ans, H ood filed a “ no asset” b ankr

uptcy petition. She did not mention her student loans and those debts were n ot included in her discharg e. See id

. H ood then reopened her bank r u p t c y petition f or the limited purp o s e o f seeking a d ischarg e of her student loans pursuant to the “undue hardship” provision of the B ankruptcy Code. See id

. T SAC was n amed as a defendant. S e e id

. at 445.U N I T E D S T A T E S V

. O B A I D 12

TSAC f

iled a motion to dismiss Hood’s compla i n t f o r lack of jurisdiction, on the basis o f the state’s sovereig n immunity under the E leventh Amendment. S e e i d

. The bankruptcy court, Six th Circuit B ankruptcy A ppellate Panel, and the Six th Circuit all ag reed that states have no immunity from suit in the bankruptcy contex t. See id

. The Supreme Court g ranted certiorari and affirmed. See id . at 443. Rather than addressing the “broader question” of whether states have no immunity f rom suit in the bankruptcy
contex t, the Court addressed the narrower question o f whether discharg e of a student loan debt implicated Eleventh Amendment immunity

. S e e i d

. at 445. The Court’s answer to this question was “no.” See id

.

To r esolve this question, the C o u r t first clarified that “[ t] he discharg e of a debt by a b a nkruptcy court is

. . . an in

rem proceeding and that [ b] ankruptcy cou r t s have ex clusive j u risdiction over a debtor’s property .” Id

. a t 447 (citations omitted). The Court noted that its pr e c e d e n t “has drawn a distinction between in rem and in personam jurisdiction, even wh en the underly ing p roceeding s are, for the most part, identical.” Id

. at 4 53. Fo r t he p urpose of adjudicating the discharg e c laim, the bankruptcy court’s “jurisdiction is premised on the res, not o n the persona.” Id

. at 450. The Court concluded that the case d id not implicate the Eleventh Amendment because the ba n k ruptcy court’s in rem ju r i s d i ction “allows it to adjudicate the debtor’s discharg e claim without in personam jurisdiction over the State.” Id

. at 453 (citation omitted). “The bankruptcy c o u r t ’ s in rem jurisdiction permits it to d etermine all claims that any one, whether named in the actio n o r n o t, has to the property o r t h i ng in q

uestion.

. . . Id. at 448 (citation, alteration, a n d internal quotation marks omitted). This conclusion foll o w sU N I T E D S T A T E S V

. O B A I D 13

b e c a u s e in an in rem action, “jurisdiction over the person i s irrelevant if the c ourt has jurisdiction over the property

. ” Id

. (citation omitted). The Court emphasiz ed that Hood did not ask the bankruptcy court to ex ercise personal jurisdiction; she simply wanted “a determination of the discharg eability of her debt.” Id

. F or that r eason, the Eleventh A mendment was not implicated a

nd the denial o f T SAC’s motion to d ismiss was upheld. See id . at 455.

Neither of these two c a ses is precisely on point. Shaffer addressed a quasi in rem proceeding rather than a true in rem proceeding

. See Ventura Packers

, 424 F .3d at 860 n.4 (describing a quasi in rem p roce e d i n g as “a h alfway h ouse between i n rem and in personam jurisdiction” with the “action not really ag ainst the property ” but more “a personal claim

. . . of the ty

pe usually advanced i n an in personam action”). As noted in S haffer

, the p rimary purpose o f sequestration was “not to secure possession of p r operty ” but
to “compel the personal appearance of a nonresident defendant to answer and defend a suit b roug ht ag ainst him in

a court of equity .” 433 U.S. at 193 ( c i tation omitted). I n other words, “the only role play e d b y the property [was] to provide the basis for bringi n g t h e d efendant into c ourt.” Id.
at 209 (footnote r eference o m i tted). I ndeed, o nce the defendant made a g eneral appearance b efore the court, the res

was released. See id. at 1 93. Unlike in a true in rem proceeding

, the seiz ed property “ [ was] not the subject matter of [ the] litig ation, nor [ was] the underly ing cause o f ac t ion related to the property .” Id. at 213. Thus, despite the Court’s reference to in rem p roceeding s, it is apparent from itsU N I T E D S T A T E S V

. O B A I D 14

analy sis that Shaffer is limited to q uasi in rem proceeding s. 2 There is no dispute that civil f o r feiture does not involve the quasi in rem proceeding s contemplated by Shaffer

, in which the “action is not really ag ainst the property ; rather, the action inv o l v e s the assertion of a personal claim ag ainst the d e fendant of the ty

pe usually advanced in an in personam act i o n

. ” 4 A C. W rig ht & A. Miller, F ederal Practice a nd Procedure § 1070 (4th ed. 2020).

This conclusion is supported by the failure of the Court to

ex p ressly overrule its long standing precedent a n ch oring in

rem jurisdiction t o the presence of the res. See
, e.g ., Republic Nat. Bank of Miami v. United States
, 5 0 6 U.S. 80, 84 (1992) ( “Certainly

, it long has been understood that a valid seiz ure of the r es is a p rerequisite to the initiation of an in rem civil forfeiture proceeding

. . . .”) (citations omitted); see also Kline v. Burke Constr. Co
., 2 60 U.S. 226, 2 2 9 (1922) (“W here the action is in rem the effe c t i s to draw to the federal court the possession or control, actual or potential, o f the res

. . .”); Overby v. G ordon

, 177 U

. S

. 214, 221 (1900) (“An essential characteristic of a pr oceeding in rem is that there must b e a res or subject-matter upon w hich the c ourt is
to ex ercise its jurisdiction. . . .”).

2 S ee a lso J am es W ein stein

, T h e Fed era l C o m m o n L a w Orig in s o

f J u d icia l Ju risd ictio n , 9 0 Va. L

. Rev

. 16 9
, 2 4 6 & n .2 8 (2 0 0 4 ) (“I n

co n tin u in g th e co m

m o n law pro cess th at g av e rise to th e i n r e m r u les in th e f irst p lace, th e C o u rt h as, f o r a v ariety o f reaso n s (in clu d in g f o ru m state in terest, h isto ry , an d co n sid eratio n s o f in d i v id u al f airn ess), d ecid ed th at m o st o f th e trad itio n al in r em ru l es co n t in u e to sq u are w i th its v isio n

o f h o w state j u d icial au th o rity sh ou ld b e allo cated in o u r f ed eral sy stem

. On l y w h ere ch an g ed circu m stan ces h av e ren dered a trad itio n al p ractice

o u tm o d ed an d d y sf

u n ctio n al, as w as th e case w ith attach m en t j u risd ictio n [in S h a ffer ], h as th e Co u

rt, in th e b est co m

m o n law trad itio n , d eclared th e p ractice in v alid .”).U N I T E D S T A T E S V

. O B A I D 15

I t would be “ex ceeding strang e” 3 if the Supreme Court intended to eliminate the historic a l d i stinction between in
personam and in rem jurisdiction without ex p licitly say ing so. See United States v. Te n T h o u s and D ollars

, 860 F .2d 1511, 1513 (9th Cir. 1988) (apply ing “traditional in rem principles” in a f orfeiture action). 4 We should not assume that the Supreme Court has implicitly overruled its preceden t

. S ee Shalala v. Ill. Council on Long Term Care, Inc

., 529 U.S. 1, 18 (2000) ( “ This Court does not normally overturn, or so dramatically limit, e arlier authority sub silentio

. . . .”). I n our view, the more reasonable interpretation of Shaffer limits it to the scenario presented to the Court—a q u asi in rem statutory scheme.

The Supreme Court evi d e n tly did not sweep away traditional in rem principles in Shaffer

, as i t relied on those

same principles almost thirty y e a rs later in Hood to conclude that “the bankruptcy court’s jurisdiction is premise d on the
res, not on the persona.” Hood

, 541 U

. S

. at 450. We a re persuaded that Hood provides more direc t g uidance for the issue we are called upon to decide. Unlike in Shaffer

, Hood involved a true in rem case. I n this c ase and in Hood

, the res is the subject of the action, not a substitute for the person w ho is the subject of the actio n

. S e e Shaffer

, 433 U.S. at 213 (ex plaining that t h e p r operty was “not the subject matter o f this litig ation”).

3 William Sh ak esp eare, T h e Merch an t o f Ven ice, A ct 1
, Scen e 1

. T h e d issen t m ain tain s th at th e S u p rem e Co u rt “ ex p licitly said ” th at it w as

o v erru l in g d ecad es of preced en t g o v ern in g in rem j u risd ictio n

. Dissen tin g Op in io n , p .3 8

– 3 9 . Ho w ev er, it is n otab le th at th e d issen t d o es n ot p o i n t to o n e in rem case th at th e Su p rem e Co u rt o v erru led in S h a ffer

.

4 T h e d issen t ig n o r e s t h is lan g u ag e in its citatio n o f th is case. S ee Dissen tin g

Op in io n , p .4 0

.U N I T E D S T A T E S V

. O B A I D 16

The dis s e nt’s a ttempt to restrict H ood’s application o f traditional in rem principles to b an k r u p tcy cases w here the absent party is the creditor, rather than the d e b t o r, is

un p e r s u asive. The Court w as clear that its jurisdiction was

“ p r e m ised on the r es,” see Hood

, 541 U.S. at 448, and t h at “jurisdiction over the person is irrelevant if the co u r t has jurisdiction over the property .” Id. at 453 (citation omitted). Contrary to the characte r i z a tion in the dissent of our “misunderstanding of the nature of bankruptcy proceeding s” and our misreading of H

ood

, D issenting Opinion
, 34, we f ully understand and f

aithfully apply the statutory bankruptcy scheme a s interpreted b y the Supreme Court in Hood

. Under 28 U. S

. C. § 1334(e), bankruptcy courts have “ex clusive jurisdiction of all the property , wherever l o c at e d

, of the debtor as of the commencement of such case, and of property of the e state.” Thus, in r e m bankruptcy jurisdiction “essentially creates a fiction that the property —reg a rdless o f actual location—is legally located within the jurisd i c tional boundaries of the district in which the court sits.” B eck v

. Fort James Corp. (

In re Crown Vantage, Inc. ), 421 F .3d 963, 971 (9th Cir. 2005) (citation omitted) (emphasis in t he orig inal). 5 T he jurisdictional statute here c reates a similar leg al fiction, p roviding that a “forfeiture action or proceeding
may be broug ht in t h e d i s t rict court for the district in which
any of the acts or omissions g ivi ng rise to the forfeiture occurred,” even if the property is located in a foreig n country

. 28 U.S.C. § 1355(b).

5 T h e d issen t elid es o u r relian ce o n th is p r e c ed en t, p ref errin g to ref eren ce o n ly a treatise cited in Ho o d

. S ee Dissen tin g Op in io n , p .3 6

. T h e d issen t’ s o n ly attem

p ted resp o n se to th e ex p ress lan g u ag e in Ho o d is
to seek to b lu n t its im

p act th ro u g h

reso rtin g to “ co n tex t.” Id

.U N I T E D S T A T E S V

. O B A I D 17

The dis c h a r ge o f a debt by a b ankruptcy court is “an in

rem proceeding .” Hood

, 541 U.S. at 4 4 7. Althoug h the bankruptcy c ourt’s d ischarg e order “operat[ e s ] as an injunction to prohibit creditors from attempting to collect or
to r e c o v er the debt,” the court need not have personal jurisdiction over the creditor. I d

. 6

I f we adopt the broad reasoning of Shaffer a d v o cated b y Obaid and the dissent, we would be discarding a long standing body of Supreme Court authority . W e hasten to add that we do not read Hoo d a s o verruling or p urporting to o verrule Shaffer

. Rather, we conclude that each survives in its respective sphere: S

h a f f e r i n the realm of quasi in rem jurisdiction and Hood

in the realm of in rem jurisdiction. 7

6 T h e dissen t states th at “ [n ]o th in g in Ho o d s u g g ests th at a co u rt m ay

ex ercise in rem j u risd ictio n w ith o u t p erso n al j u risd i ctio n o v er th e o w

n er

o f th e res.” Dissen t i n g O p i n i o n , p

. 3 6

. B u t Ho o d is clear th at in rem j u risd ictio n i s “ p rem ised on th e res, n o t o n th e perso n a”—th is statem en t

w o u ld m ak e n o sen se if t h e p erso n al j u

risd ictio n is also n ecessary

. 5 4 1 U.S at 4 5 0

. T h e “ o w n e r o f t h e r e s” is “ p erso n a” n o t “ res.” In rem j u risd ictio n do es n o t in clu d e an ad d i t i o n al p erso n al j u risd ictio n req u irem en t o v er th e deb to r: th e deb to r f iled th e p etitio n an d 28 U.S.C. § 13 3 4 (e) pro v id es th e b an k ru ptcy co u rt w ith “ ex clu s iv e j u risd i ctio n o f all th e p ro p erty

. . . o f th e deb to r

. . . a nd o f pro p erty o f th e estate.” In

acco rd an ce w ith trad itio n al in rem p rin cip l es, j u risd ictio n o v er p ro p erty i s a l l t h at is req u ired

. S

ee a l so Un ited S ta tes v. Gu rley

, 4 3 4 F.3 d 1 0 6 4
, 1 0 6 8 (8 th Cir. 2 0 0 6 ) (h o l d in g th at w h en th e “ g ov ern m en t, as a cred ito r, asserted a rig h t to p ay

m en t” t h ro u g h f ilin g a p ro o f o f claim in d eb to r’ s b an k ru p tcy p ro ceed in g , “ th ere w a s n o n eed to estab lish p erso n al j u risd ictio n

o v er” th e d eb to r “ [b ]ecau se it w as an in rem p ro ceed in g ”).

7 Co n trary to th e d issen t’ s u n p ersu asi v e r e a d in g o f Ho o d

, see Dissen tin g O

p in io n , p .3 6, ev ery t

h in g in Ho o d p o in ts to th e co u rt’ s in rem j u risd ictio n

w ith ou t reg ard to p erso n al j u risd ictio n o v er th e o w

n er o f th e

res. S ee 5 41 U.S. at 4 4 7

.U N I T E D S T A T E S V

. O B A I D 18

The dis s e n t concedes that in the forty -plus y ears since Shaffer was decided, no court h as dismissed a civil forfeiture action for lack of personal jurisdiction ove r a c l a imant. See Dissenting Opinion
, p. 4 3 n.12. The dissent attempts to minimiz e this fact by say ing that “this is to be ex pected.” See id. W e b eg to differ. G e n e rally

, when the Supreme Court makes a sweeping chang e in a fundamental leg al theory

, there is a tsunami of reversals in the lower courts apply ing the new precedent. O ne need only compare the leg al aftermath of the Supreme Court’s decision in Ashcroft v. Iqbal

, 556 U.S. 662 (2009), to make t h e point. Iqbal redefined the pleading standards under Rule 8 of the F ederal R ules of Civil Procedure, s e e i d

. at 678–80, and prompted a barrag e o f dismissal s. See Daniel W. Robertson, In Defense of Plausibility: Ashcroft v. Iqbal and W hat t h e P l a usibility Standard Really Means
, 38 P e p p

. L

. Rev. 111, 140 (2010) (“In the few months since the decision in Iqbal came d own, it has resulted in the dismissal of 1 500 district court and 100 appellate court cases, many if not most of whic h w o u ld
p r obably have survived; more dismissals are pending .”) (citation omitted).

Nevertheless, we acknowl e d ge that two of our sister circuits have noted in passi n g that Shaffer requires a minimum contacts a

naly sis in an in r e m p roceeding

. I n United States v. Batato
, 833 F .3d 413 (4th Ci r

. 2 0 1 6), on which the dissent relies to support its reading of Shaffer

, the F ourth Circuit acknowledg ed that “ Shaffer provides only limited g uidance as to how to proceed.” Id. at 4 23. Contrary
to the dissent’s contention that the Court “applied” S haffer to require satisfaction of International Shoe in an in rem action, the Batato p anel “assume[ d] without dec i d i n g that a traditional, state-ba s ed minimum contacts approach isU N I T E D S T A T E S V

. O B A I D 19

a ppropriate” in a forfeiture action. I d

. (footnote refere n c e omitted). 8

Obaid also cites a Second Circuit case, LiButti v. United States
, 178 F .3d 114 (2d Cir. 1 9 9 9 )

, for the p roposition that

“ in rem jurisdiction cannot lie to adjudicate owners h ip o f sha r e s owned by a n on-resident

. . . when the shareowner lacks minimum contacts with the forum.” Bu t t h e Second Circuit’s holding was not as sweeping as Obaid contends.

LiButti involved liti ga t i on over the ownership o f a racehorse, “Devil His Due.” Id. a t 116. When the I RS issued

a levy ag ainst the horse, contending that L iB utti owned it, his d a u ghter broug ht a wrong ful levy action, claiming that sh e, not her father, was the owner. S e e id

. at 116–17. W hile the

case w as pending on appeal, the daug hter e ntered into a sy ndicate a g reement dividing owne r s h i p of the horse into

s h a res, half of which were sold to a third party

. See id

. a t 117. W hen the I RS ultimately prevailed on appeal, it soug ht restitution for the f

ull value o f “Dev i l H i s Due” from the daug hter a

nd the third party

. Id. at 1 18. The Second Circuit determined that the third party could not be compelled to pay restitu t i o n because the court h ad no personal or in rem jurisdiction u nder a minimu m -contacts analy sis. See id

. at 122–23. Contrary to Obaid’s cont ention, the court did not dismiss the i n r e m action for lack of jurisdiction—it upheld the d e termination about t h e o w nership of the horse, notwithstanding any lack o f jurisdiction over the th i r d party claimant. S

ee id

. at 1 2 0. The court simply held that the third

8 Faced w ith th ese ex p l icit s tatem en t s f ro m th e Ba ta to d ecisio n , th e d issen t ag ain f

al l s b a ck o n “ co n tex t” to sp i n its an aly sis. Dissen tin g Op in io n , p .4 0 n .9

.U N I T E D S T A T E S V

. O B A I D 20

party could not be o r dered to r eimburse the I RS. See id. at 122–23. 9

W e are not p er s uaded b y the lukewarm discussion o f Shaffer by the F ourth Circuit and the Second Circuit. Neither

are the o t h e r c ases cited by the dissent of sufficient persuasive value to undermine our analy sis of the Shaffer decision. F or starters, not one of the cases c ite d b y t he di s s ent involves a c ivil forfeiture action, which is g overned by a statute ex pressly a llowi n g a forfeiture action to be broug ht in any district “in w hich any of the acts or omissions
g iving rise to the forfeiture occurred,” even if the property “ is located in a foreig n country .” 2 8 U.S.C. § 1 3 55(b)(1)(A), (b)(2). Consequently none of the cases, or the dissent for that matter, g rapples with the a p p licat i o n of Shaffer to civil forfeiture proceeding s broug ht unde r a statute conferring

ex c lusive jurisdiction. A brief discussion of each of the cases confirms this observation.

• Inland Credit Corp. v

. M/T Bow Egret
, 556 F .2d 756, 757 (5th Cir. 1977) - admiralty c ase broug h t i n rem ag ainst the vessel and in personam ag ainst the owner

o f the vessel. Cites Shaffer for its “philosop h y ” wi t h o ut analy sis and notes that it was decided “in a quite different contex t”—but did not a pply S h a ffer

. Id. The dissent quotes an order deny ing a petition for rehearing

. The u nderly ing opinion ex pressly declined
to address the question: “W e need not decide i n t he present case whether the philosophical u nderpinning s of the sy stem of in r em jurisdiction in admiralty have

9 T h e d i ssen t o n ce m o re reso rts to an aly tic g y ratio n s in an effo r t to tw ist t h e Seco n d C i r c u i t d ecisio n to m o re clo sely m irro r S h a ffer

. S ee Dissen tin g

Op in io n , p .4 0 n .9

.U N I T E D S T A T E S V

. O B A I D 21

been critically shaken.

. . .” 5 52 F .2d 1148, 1152 (5th Cir. 1977).

• Pickens v. Hess
, 5 73 F .2 d 3 8 0
, 387 ( 6th Cir. 1978)

-
a case addressing in person a m j u risdiction. Cites Shaffer in a s e e also citation, without analy sis, to

s u pport the p roposition that the modern view o f jurisdiction does not “herald[ ] the eventual d emise o f all res trictions on the personal jurisdiction of state courts.” Id. (citation omitted).

• Lakeside Bridge & Steel Co. v

. M ountain State Const. Co., Inc.
, 597 F .2d 5 96, 600–02 (7th Cir. 1 9 7 9 ) - a

cas e addressing in personam jurisdiction. Restates the hol d i ng of Shaffer

, without analy sis, to support application of International Shoe to the question of in
personam jurisdiction over a non-resident defendant,
not jurisdiction over a res. Characteriz e s t h e D el aw are court’s ex ercise of jurisdiction a s “ in re m jurisdiction to sequester shar e s of stock a nd stock options” even thoug h the action was quasi in rem

. Id. at 601.

• Salazar v. A tlantic Sun
, 8 8 1 F. 2 d 73, 76, 80 ( 3d Cir. 1989) - admiralty

case. Disting uishes Shaffer o n the basis that Shaffer did not a r ise “in the a dmiralty
contex t,” and rejected a d ue proces s claim raised b y the owner. Id. at 76.

• P i ttsburgh Terminal Corp. v

. Mid Allegheny Corp.
, 831 F .2d 522, 525 (4th Cir. 1987) - a case addressing i n p e r s o n a m j u r i s d i c t i o n

. R e co gn i z e s that Inte r n a t i onal Shoe addresses in personam jurisdiction and ag rees with our interpretation that in Shaffer

, “theU N I T E D S T A T E S V

. O B A I D 22

litiga t i o n there was n ot related to the property [ and] the o nly role play ed b y the p r operty was t o b r i n g the defendants before the court.” Id. at 526.

As stated previously

, not one of the c ited cases purported
to address civil forfei t ure p roceeding s. Thus, the dissent’s declaration of a circuit conflict is much ex ag g erated, particula rly in view of the lack of any mention in Shaffer o f overruling the leg ion of cases embody ing principles of in rem jurisdiction. And the Sup r em e Court has continued to recog niz e in rem jurisdiction predicated on presence o f the

res in civil forfeiture p roceeding s post- S h a f f er

. See, e.g. , Republic Nat. Bank of Miami v. United States
, 5 0 6 U.S. 80, 84–85 (1992). W e are persuaded that Hood supports our view that Shaffer

is limited to quasi in rem actions and does
not ex tend to in rem actions. S e e H ood

, 541 U.S. at 453 (noting the distinction in Supreme Court p r e c edent b etween in rem and in personam jurisdiction). 1 0

10 T h e law rev iew articles cited by t h e d issen t—all o f th em p u b lish ed b ef o re th e Su p rem e Co u rt’ s decisio n in Ho o d —are sim ilarly u n

p ersu asiv e

o n t h e issu e of j u risd ictio n in f o rf eitu re p ro ceed in g s. A t b est,

co m m en tato r s a t t h e tim e co n f irm ed th at th e ef

f ect o f S h a ffer o n in rem f o rf eitu re p ro ceed in g s is u n certain

. S ee, e.g

. , A n d reas L o w en f eld

, In S ea rch o f th e In ta n g ib l e: A Co mmen t o n S h a ffer v. Heitn er , 5 3 N.Y.U.L

. Rev

. 1 0 2 (1 97 8 ) (“ T h e d eb ate g o es on w h eth er S h a ffer v. Heitn er really

o v erru l ed Pen n o

yer v. Neff [9 5 U.S. 7 1 4 (1 8 7 8)], w h eth er S eid er v. Ro th [2 1 6 N.E.2 d 3 1 2 (N.Y. 1 9 6 6 )] can su rv i v e af ter S ha ffer

, [an d ] w

h eth er on e

can b u i ld an ef

f ectiv e s tru ctu re to en f

o rce j u d g m en ts o b tain ed i n f o ru m 1
ag ain st assets m ain tain ed in (o r rem o v ed t o ) f o ru m 2

. . . .”); A n g ela M. B oh m an n , Ap

p lica b ility o

f Sh af f er to Ad mira lty in Rem Ju risd ictio n , 5 3 T u l. L

. Rev

. 1 3 5
, 1 4 1 (1 9 78 –7 9 ); K e n n eth G. W h y b u rn , Atta ch m en t Ju risd ictio n After Sh af

f er v

. Heitn er, 3 2 Stan

. L

. Rev

. 1 6 7
, 1 6 7 n .1 (1 9 7 9 ).U N I T E D S T A T E S V

. O B A I D 23

B

. Venue

Under 28 U.S.C. § 1 355(b)(1)(A), in a civil f o rf eiture action v enue is appropriate in “the district court for the district in which any of the ac t s o r o missions g iving rise to the forfeiture occurred.” The g o vernment emphasiz es that the words “any acts” encompass acts committed in furtherance o f the conspiracy

. Obaid r esponds that this interpretation is too broad. I n contrast, he f ocuses on the “g iving ri s e t o the forfeiture” lang uag e of section 1355. Under his interpretation, only a specific criminal act that took place in the Central D istrict, dir e c t l y implicating the Palantir shares, would establish venue.

W e c onclude that Obaid’s preferred i n t e r p r e t a tion is much
too narrow and ig nores the antecede n t l a ng uag e in section 1355 permitting venue in the district where “ any acts” of the conspiracy occurred. 28 U.S.C. § 1 355(b)(1)( A )

. His interpretation is also inconsistent with the leg islative history of section 1355. The Cong ressional analy sis o f s ec t ion 1355(b)(1) ex p lained that its enactment “ w o u l d be a g reat improvement over current law,” because the g overnment would n o long er b e compelled “to f ile sepa rate forfeiture actions in each district in which the subject property is found.” 137 Cong

. Rec. 31538 (Nov. 13, 1991). Contrary to Obaid’s assertion, section 1355(b)(1 ) broadened, not narrowed, the scope of civil forfeiture suits “by providing that the court in th e d istrict where the acts g iving rise to the forfeiture occurr e d h a s jurisdiction over the forfeiture action.” Id.

The threshold inquiry u nder section 135 5 is whether “sufficient acts

. . . g iving rise to the forfeiture” took place in the Central District. $ 1

. 6 7 M i llion

, 513 F .3d at 996. A sU N I T E D S T A T E S V

. O B A I D 24

alleg ed, the Palantir shares were purchased using funds traceable to a $700 million transfer to the Good Star Account

as part o f the 1MDB scheme. Some of the alleg e d ac t s in furtherance of the conspiracy were conducted in the Central District, including ex pensive real estate purchases in B everly Hills, the financing of a m o tion picture, and the purchase o f the Palantir sha res. Purchasing real estate in B everly H ills and share s o f stock in Palantir are n ot p er se criminal acts. However, if the p u r c h a ses were a mechanism to launder proceeds in furtherance of the 1MDB scheme, “suffici ent acts” gi v i n g rise to the forfeiture occurred in the Central District, thus making venue proper. See id. W e t h u s conclude that the conspiratorial activity in the Central District

was sufficie nt to support venue in that district, g iven “the relativ e l y low standard set f orth in section 1355.” Batato
, 833 F .3d at 420.

F inally

, Obaid’s assertion that the actions of third parties in the Central District (co-conspirators) c annot serve as a prox y to establish venue based on h is c o n d u ct , misses the point. This civil forfeiture action is not p remised on Obaid’s conduct; r ather, the action is predicated on w hether the Palantir shares, i.e
., the res, are traceable to the proceeds of a crime. See Ross
, 504 F

. 3d a t 1138. Accord i n gl y , whether Obaid was involved in the conspiracy is imma t e ri a l to the venue analy sis.

IV

. CONCLUSION

The Supreme Court decision in Hood suppo rts our conclusion that the d is t r i c t court did not e rr when it det e rmined that the c onstitutional due p rocess requirements
set forth in International Shoe were i n ap p l icable to this in

rem action. The Court’s decision in Shaffer addressed quasi-U N I T E D S T A T E S V

. O B A I D 25

in-rem actions rathe r t h a n in rem actions directed solely toward a res instead of property seiz ed as a substitute for the defendant. I n an in rem action, the focus for the jurisdictional inquiry is the res, in this case Obaid’s Palantir shares, rather than Obaid’s personal contacts with the forum. 1 1 F inal ly

, venue was proper becau s e s ufficient a c ts g iving rise to the civil forfeiture occurred in the Central District.

AF F IRMED.

I KUTA, Circuit J udg e, dissenting :

W ith one stroke, the majority has swe p t away Shaffer v

. Heitner
, the Supr e m e C o u r t ’ s l a n d mark decision e nsuring that “traditional notions o f fair play and substantial justice” a pply
to all persons w ith property subject to adjudication, reg ardless of the L a t i n label attached to the proceeding

. 433 U.S. 186, 212 (1977). Shaffer held that a court cannot ex ting u i sh a person’s property rig hts unless it f irst obtains personal jurisdiction over that person, and eliminated a 100-y ear-old rule to the contrary as “fundamentally unfair.” Id

. I n stead o f apply ing Shaffer

, the majority applies the principles of in rem jurisdiction that Shaffer rejected as lacking “substantial modern justific a t i o n .” I

d. I n doing so, the majority creates

a spli t with two circuits that have faithfully applied Shaffer and seven circuits that have ex pressly c onstrued it to cover ordinary in rem proceeding s. The majority ’s attempt to

11 B ecau se w e co n clu d e th at t h e d istric t c o u r t co rrectly determ in ed
t h a t S h a ffer d i d n o t ex ten d to th is in rem actio n , w e d o n o t ad d r e s s

w h eth er Ob aid h ad su f

f icien t co n tacts w ith th e f o ru m as to s atisf

y th e

co n stitu tio n al d u e p ro cess req u i rem en ts set f orth in In tern a tio n a l S

h o e

.U N I T E D S T A T E S V

. O B A I D 26

bolster i t s opinion with an irrelevant bankruptcy c ase, Tennessee Student Assistance Corp. v. Hood

, 5 4 1 U.S. 440 (2004), is unavailing

. B ecause Shaffer adopted a principle o f fairness and equity that the majority now ig nores, I d issent.

I

Obaid, a resident of Saudi Arabia and Switz erland, purchased 2.5 million shares o f s t ock in Palantir Technolog ies I nc. by wiring funds to Palantir’s bank in Northern California. Obaid states that the Pal a n t i r stock certifi c ate is currently held b y a b ank in Switz erland. Althoug h the g overnment a rg ues t h a t t he shares a

re deemed
to be present in Delaware as a matter o f Delaware law, there is no dispute that the shares are not in California. 1

The g overnment commenced a forfeiture a ction to g ain possession of the Palantir shares on the g rounds that Obaid had been eng ag ed in a criminal conspira c y a n d the Palantir shares were traceable to funds indirectly linke d t o the conspiracy

. The g overnment broug ht this suit in the Central District of California based on a statute allowing a forfeiture action to be broug ht where “any of the acts or omis s ions
g iving rise to the f

o r fe i ture occurred,” even when the a ssets subject to f

o rfei t u r e are located in a foreig n country

. 2 8 U.S.C. § 1355(b)(1)(A), ( b)(2). I n this case, the specific
acts “g iving rise to the f

orfeiture” that alleg edly took p lace in

1 Fo r th is reaso n , th e m aj o rity ’ s su g g estio n th at it is m erely h o n o rin g

“ t h e h isto rical d istin ctio n b etw een in p erso n am an d in rem j u risd i ctio n ,” Maj

. at 1 5
, is in co rrect. W h ereas trad itio n al in rem p rin cip les g av e co u rts j u risd ictio n “ b ased o n th e co u rt’ s p o w er o v er p ro p erty w ith in i ts territo ry ,” S h a ffer

, 4 33 U.S. at 1 9 9 , th ere is n o d isp u te th at Ob aid ’ s P alan tir sh ares

are n eith er w ith in

th e co u rt’ s territo ry

n o r its co n tro l.U N I T E D S T A T E S V

. O B A I D 27

the Central D istrict of California are vag ue. A ccording to the
g overnment, certain conspirators n ot including Obaid, while
eng ag ed in a p hase of t h e a lleg ed criminal conspiracy not involving Obaid, used proceeds g enerated by the conspiracy
to purchase property in B everly H ills and then sent e m a i ls abroad. Over Obaid’s o b j e c t i o ns, the district court ruled it had in r em jurisdiction over the Palantir shares, even thoug h it lacked personal jurisdiction over Obaid. This interlocutory appeal followed.

I I

Does a distr i c t court have jurisdiction over a person’s property solely because alleg ed c o-conspirators took some actions w ithin the court’s territorial jurisdiction? F orty y ears ag o, the Supreme Court decisively said n o—that jurisdiction

ov er O b a i d ’ s p r o p e r t y i n s u ch c i r c u m stances “ is fundamentally unfair t o t he defendant” and offends “[ t] raditional n otions of fair p lay and substantial ju s t ice.” Shaffer

, 433 U.S. at 212. Contrary to the majority ’s efforts to minimiz e Shaffer v. H

eitner
, this d ecision co nstituted a dramatic shift in the Supreme Court’s jurisprudence.

A

I n Shaffer

, a plaintiff f

iled a shareholder derivative suit in Delaware ag ainst a c o r p o ration a

nd various individual defendants, and at the s am e time obtained an order sequestering the individual d e f endants’ Delaware property

. Id

. at 190–91. The d e f

endants arg ued that the seque s t r a tion order v i o l a t ed their d

ue process rig h ts b ecause they lacked sufficient contacts with Delaware. Id. at 193. The Delaware
court rejected th i s arg ument, r ely ing on a state statute that authoriz ed courts to sequester property in order to c ompel theU N I T E D S T A T E S V

. O B A I D 28

p e r s o nal appearance of a n onresident defendant; under thi s statute, the Delaware court had q uasi in rem jurisdiction. Id. at 193–94.

The Supreme Court reversed, an d u sed the case as a vehicle for radically reformulating the law of in rem jurisdiction.

The C o u r t f

irst ex plained the h istorical roots of in
personam and in r em jurisdict i on. Under “ the c entury -old

case of P ennoyer v. Neff

,” a court’s authority was based on its “power over either persons or p r o p e r ty .” Id. at 196, 199 (citing 9 5 U.S. 714 (1878)). I f th e c o urt’s jurisdiction was based o n its a

uthority o ver the p e rs o n , the c ourt had “in personam” jurisdiction; if “based on the court’s p o wer o ver property within its territory ,” the court had “in rem” or “quasi in rem” jurisdiction. Id. at 199. Althoug h the Court
recog niz ed the difference between judg me n t s in rem a nd quasi in rem, 2 that distinction did not a ffect its analy sis. The Court ex p lained that it w ould “for convenience g enerally use

2 T h e Co u rt ex p lain ed :

A j u dg m en t in rem af

f ects th e in terests o f all p erso n s in d esig n ated p ro perty

. A j u d g m en t q u asi in rem af f ects th e in terests o f p articu lar p erso n s in d esig n ated
p ro p erty

. T h e latter is o f t w o ty p es. In o n e th e p lain tif

f is seek in g t o secu re a p re- ex istin g claim in th e su b j ect p ro p erty an d to ex tin g u ish or estab lish th e n o n ex isten ce

o f s i m i l ar i n terests of p articu l ar p erso n s. In th e o th er th e p lain tif

f seek s to ap p ly w

h at h e co n ced es to b e th e p ro p erty o f th e d ef en d an t to th e satisf

actio n o f a claim
ag ain st h im

.

S h a ffer , 4 3 3 U.S. at 1 9 9 n .1 7

.U N I T E D S T A T E S V

. O B A I D 29

the term ‘in rem’ in place of ‘in rem and quasi in rem.’” Id. at 199 n.17.

Shaffer then described th e development of in personam jurisdiction. After P ennoy er , c o urts asserted personal j u r isdiction over a defendant when the defendant was not present within the state only in certain limited circumstances. Id

. at 200–02. B ut International Shoe Co. v

. W ashington dramatically ex panded jurisdiction o ver absent de fendants. See id

. at 2 0 3

– 0 4 (citing International Shoe

, 326 U .S. 310, 317–19 ( 1945)). Under International Shoe

, due process did
not req uire the defendant’s p resence. A defendant “ not present within the territory of the f orum” could be subject to

a judg ment in personam so long as he had “certain minimum
contacts with [ the forum] such that the maintenance of the suit does not offend traditional no t i ons of fair play a nd substan t i al justice.” Id. at 203 (quoting International S hoe

, 326 U .S. at 316). According ly

, “the relation s h i p among the defendant, the forum, and the litig ati o n , rather than the mutually ex clusive sovereig nty of the S tates on which the rules of Pennoyer rest, became the centr a l concern of the inquiry into personal jurisdiction.” Id. at 204. 3

Shaffer then turned to the law of in rem jurisdiction. The Court recog n iz ed that “[ n] o equally dramatic chang e [ had]

3 In tern atio n a l S

h o e ’ s co n clu sio n t h a t p erso n al j u risd ictio n m u st b e b ased o n th e relatio n sh i p am on g th e d ef en d an t, f o ru m , an d litig atio n led
to th e d ev elo pm en t o f t

w o categ o ries o f p erso n al j u risd ictio n : (1 ) g en eral j u risd ictio n , w

h ere d ef en d an ts’ “ af

f iliatio n s w it h t h e S tate are so

co n tin u o u s a n d s y stem atic as to ren d er th em essen tially at h o m e in th e f o ru m State,” an d (2 ) sp ecif i c j u risd ictio n , w

h ere d ef en d an ts’ “ in

- state

a c t i v ities” are “ en o u g h to su b j ect [th em ] to j u risd ictio n in th at State’ s trib u n als w ith resp ect to su its relatin g to th at in

- state a c t i v ity .” Da imler AG v. Ba uma n , 5 7 1 U.S. 1 1 7 , 1 26

– 27 (2 0 1 4 ).U N I T E D S T A T E S V

. O B A I D 30

occurred in the law g overning jurisdiction in rem.” Id

. at 205. B ut the Court stated i t i n tended to effect such a chang e , announcing that “the time is ripe to consider whether the standard of fairness an d s u bstantial justice set forth in International Shoe should b e held to g overn actions in r em a s well as in personam.” I

d. at 206.

Shaffer had no difficulty concluding that the answer to this question was y es. A ccording to the Court, “the same test of ‘fair play an d s ubstantial justice’” discussed in In ternational Shoe should apply to ex ercises of both in
personam and in rem jurisdiction. Id

. a t 207. This is because “[ a] ll proceeding s, like all rig hts, are really ag ainst persons.” Id. at 207 n.22 (quoting T y ler v. Court of R egistration
, 175 Mass. 7 1
, 76 (1900) (Holmes, C.J .)). The only functional difference between an in rem and in personam proceeding is “the number of persons affected.” I d. 4 There f

ore, g oing forward, any “ex ercise of jurisdiction o ver the inte r e s t s o f
pers o n s ” would have to meet “ the minimum-contacts standard elucidated in International Sh o e ” in order to be “consistent with the Due Process Clau s e

. ” Id. at 207. A s with in personam jurisdiction, “the r el a t ionship among the defendant, the forum, and the litig ation, ra t h er than the mutually ex clusive sovereig nty of the State s on which the rules of Pennoyer rest,” would determine whether a court has in rem jurisdiction “over the interests of persons in a thing

. ” Id. at 204, 207 (internal quotation marks omitted).

Having announced the n e w rule g overning in rem jurisdict i o n , Shaffer c o nsidered and r e jected the arg uments

4 A s d iscu ss e d a b o v e, in p erso n am pro ceed in g s im p o se p erso n al

o b lig atio n s o n d ef

en d an ts, b u t in

rem p ro ceed in g s m ay af

f ect all p erso n s

w ith an in terest in th e p ro p erty

. Id

. at 1 9 9 n .1 7

.U N I T E D S T A T E S V

. O B A I D 31

raised a g ainst such a chang e. M o s t important, Shaffer brushed aside “ the long history of [in rem] jurisdiction based solely on the presence of property in a State.” Id

. at 2 11. The Court declared it was not bound by precedent “supporting the proposition that jurisdiction b a s e d solely on the presence o f property satisfies the demands of due process.” Id

. a t 2 12. That obsolete idea h ad to be rejected, because “‘[ t] r aditional notions of fair play and substantial justice’ can be a s readily offended by the perpetuation of ancient forms that are no long er justified as b y the adoption of new procedures that a re inconsistent wi t h the basic values of our constitutional heritag e.” Id. As to in rem jurisdiction in part i c u l a r, “[ t] he fiction that an assertion of jurisdiction ove r p r o perty is
any thing but an assertion of

jurisdiction o ver the owner of the property supports an ancient form without substantial modern justification,” and “[ i] ts continued acceptance wou l d serve

o n ly to allow state-court jurisdiction that is fundamenta l l y unfair to the defendant.” Id

. Shaffer also rejected the arg ument that its departure from precedent would eliminate jurisdiction in too many cases. A s the Court ex plained, “

jurisdiction over many ty

pes of actions which now are or mig ht be broug ht in r e m w o u l d n ot be affected by a h olding that any a ssertion of state-court jurisdiction must satisfy the International Shoe standard,” id

. at 208, b ecause “the presence of property in a State may bear

on the ex istence of jurisdiction by providing contacts a mong the forum State, the d efendant, and the litig ation,” id. a t 207. W h ere “ claims to the property i t s e lf a re the source of the underly ing controversy betwe e n t he plaintiff and the defendant, it would be unusual for the State where the property is located not to have jurisdiction.” Id.U N I T E D S T A T E S V

. O B A I D 32

Encapsulating its rejection of 1 00 y ears of p recedent, the Court stated : “ W e therefore conclude that all assertions o f
state-court jurisdiction must b e e valuated according to the standards set f

orth in International Shoe and its prog eny .” Id.
at 212 (emphasis added). A pply ing its new rule to the fa c ts before it, the Court concluded that “ Delaware’s asse r t i on o f jurisdiction” w as “inconsistent” with the Due Process Clause. Id. at 216–17.

B

Shaffer is directly o n point here. Th e g overnment’s forfeiture action ag ainst Obaid’s Palantir stock under the civil forfeiture statut e , 18 U.S.C. § 981(a)(1), is an in rem proceeding

. Under the stat u te, the g overnment “beg ins a judicial civil forfeiture ac tion b y filing an in rem complaint
ag ainst the property .” United States v. $133,420.00 in U .S. Currency
, 672 F .3d 629, 6 34 (9th Cir. 20 1 2 ). T he district
court then adjudicates the interests of any persons claiming an ownership interest in the property

. 18 U.S.C. § 983(a)(4). I f the g overnment prevails, title to th e property v ests in the
g overnment. See United States v. Sp a h i
, 177 F .3d 748, 754 (9th Cir. 1999) (citing United States v. 92 Buena Vista Ave.
, 507 U.S. 111, 125 ( 1993)) (“under the forfeiture statutes,” the United States “is requir e d t o perfect title by leg al action before title may

vest.”). 5

5 A lth o u g h a f

o rf eitu re j u d g m en t u n d er § 9 8 1 “ relates b ack ” t o w h en th e o f f en s e w as c o m m i t ted

, see 1 8 U.S.C. § 9 8 1(f ), “ [w ]h ere th ere is n o

su ch j u dg m en t t

h e g o v ern m en t acq u ires n o title o r i n t e rest in th e p ro p erty ,” 1 Dav id B

. Sm i th

, P ro secu tio n an d Def en s e o f Fo rf

eitu re Cases ¶ 3 .0 5 [2 ] (Matth ew B en d er). In o th er w o rd s, a § 9 8 1 f o rf eitu re pro ceed in g ad j u d icates p ro p erty

n o t y et o w

n ed b y th e g o v ern m en t.U N I T E D S T A T E S V

. O B A I D 33

Under Shaffer

, the d i s trict court’s jurisdiction over the property subject to an in rem compla i n t c o nstitutes an “assertion of jurisdiction over the owner of the property

. ” 433 U.S. at 212 (emphasis added). 6 Therefore, S h a f f e r requires the district co u rt to apply the minimum contacts framework to each person w h o c laims ownership of the property

. Id

. Here, it is undisputed that Oba i d i s t h e owner of the se i z ed Palantir shares. Under Shaffer

, therefore, the district court must consider whether Obaid has “ minimum contacts” w ith the forum such that “ the maintena n c e o f the suit does not offend ‘ traditional notions of fa i r p l ay a nd substantial justice.’” I

n t e rnational Shoe

, 326 U.S. at 316. T h e d i s trict court did not address this question of minimum contacts, and the answer is not obvious: the g overnment arg ues that Obaid has sufficient c o ntacts with the United States as a whole to confirm the court’s jurisdicti o n u n d e r 28 U.S.C. § 1355(b), while Obaid arg ues that the court must find that h e has sufficient c o ntacts w i t h California. W e should r emand to the district court to address t h at question and conduct the required minimum contacts analy sis.

I I I

The majority acknowledg es th a t “ one mig ht deduce” from Shaffer that “ O b a i d ’s p osition carries the day .” Maj. at 11. B ut the majority then concludes that the S u p r eme Court undermined ( or overturned ) Shaffer ’s g roundbreaking

ex p ansion o f “fair play and substantial justice” when it decided a subsequent bankruptcy case, T e nnessee Student

6 T h e co n clu sio n th at th e co u rt is assertin g j u risd ictio n ov er Ob aid is
p articu larly

co m pellin g w h ere, as h ere, th e co u rt’ s au th o rity o v er th e res is m erely a l eg al f

icti o n : th e P alan tir sh ares are n o t w ith in eith er th e territo ry o r co n tro l o f

th e d istrict co u

rt.U N I T E D S T A T E S V

. O B A I D 34

Assistance Corp. v. H

o o d

, 5 41 U .S. 440 (2004). A ccording
to the majority

, Hood stands for the proposition th a t a court may c ontinue to assert jurisdiction over the property rig h ts o f

an absent o wner so long as it has in r em jurisdiction o ver the property itself. Maj. at 12–13, 15.

The majority ’s reading

of H ood is incorrect because it is based on a misunderstanding of the nature o f bankruptcy proceeding s. I n Hood

, a debtor soug h t a determination that her student loan s were discharg e able under 11 U .S.C. § 523(a)(8), which provides that a b ankruptcy c o urt cannot discharg e a student loan g u aranteed by a g over nmental unit unless the court determines that allowing the debt to survive would imp ose a

n “undue hardship” on the debtor. A s required by the F ederal Rules of B ankruptcy P rocedure, the debtor filed a proceeding (sty led as an “adversary ” action)
ag ainst various g overnment g uarantors, in c l u ding the Tennessee Student Assistance Corpora t i on (TSAC), a state entity

. Hood

, 5 41 U.S. at 4 44–45, 451–52. TSAC moved to dismiss the a ction, asserting sovereig n immunity under the Eleventh Amendment. Id. at 445. The Supreme Cou rt rejected TSAC’s arg u ment, holding that a bankruptcy court’s discharg e of g o vernment-g uaranteed student loan d ebt under § 523(a)(8) does not implicate a state’s Eleventh A mendment immunity

. Id. at 450.

The Supreme Court based this conclusion on the nature o f bankruptcy proc e eding s. I n a “ty pical voluntary bankruptcy proceeding

, ” t h e debtor invokes the court’s jurisdiction b y filing a peti t i o n f

or bankruptcy

. Id. at 447. The
commencement of the proceeding c reates a bankruptcy estate consisting of the debtor’s property interests. 1 1 U .S.C. § 541(a); see a lso 1 Collier on B ankruptcy ¶ 3.01[ 4] (Richard L evin & Henry J

. Sommer eds.

, 16th ed.). The bankruptcyU N I T E D S T A T E S V

. O B A I D 35

court has jurisdiction over the d ebtor and the debtor’s estate, Hood

, 541 U.S. at 447, and credito r s c a n participate in the bankruptcy by filing a proof of claim, 1 1 U.S.C. §§ 501, 726. B ut the court does not adjudicate the creditors’ property rig hts, see Hood

, 541 U.S. at 447, and need not have jurisdiction over the creditors, see id. at 453. At the c lose o f the bankruptcy proceeding

, the b ankruptcy court issues a discharg e o rder that “releases a debtor from personal liability with resp e c t t o a n y discharg ed debt.” Id. at 4 47. This proceeding is in rem, because it d et e rm ines “all claims that
any one, whether named in the action or not, has to the property or thing in question.” I

d. at 448.

Althoug h a b a n k r u ptcy c ourt does not ex ercise personal jurisdiction over creditors, id. at 453, it is able to provide the debtor with a fresh start from all debts because “[ a] federal

c o u r t ’s jurisdiction o ver the discharg eability of debt

. . . derives not from jurisdiction over the state or other creditors, but rather from jurisdiction over debtors and their e s tates.” Id. at 447–48 ( quoting In re Collins

, 173 F .3d 924, 929 (4th Cir. 1999)). Of course, a bankruptcy co u rt’s ruling s may affect creditors’ interests in the d e btor’s property

. F o r

ex a mple, a creditor’s debt may become uncollectible after a bankruptcy court discharg e s a debtors’ debts. See 11 U .S.C. § 524(a). B ut this does not mean t h a t t h e c ourt ex e rcises j urisdiction over the creditor or the creditor’s property

. “A debtor d o e s not seek monetary damag es or any affirmative

re l i e f f rom a [ creditor] by seeking to discharg e a debt; nor does he subject an unwilling [ c r editor] to a coercive judicial
p r ocess. He seeks only a discharg e of his debts. ” H o o d

, 541 U.S. at 450.

Hood a pplied these p rinciples underg irding bankruptcy jurisdiction to the q

uestion whether bankruptcy p roceedi ng sU N I T E D S T A T E S V

. O B A I D 36

could infring e a state’s sovereig n immunity when the state is

a creditor. The Court first n oted that a state is treated like any other creditor in bankruptcy

, see, e.g. , Gardner v. State of New Jersey
, 329 U.S. 565, 571, 573–75 ( 1947); Van Huffel v

. Harkelrode

, 2 84 U.S. 225
, 227–28 (1931), a nd is therefore “bound b y a bankruptcy court’s discharg e order no less than other creditors.” H

ood

, 541 U.S. at 4 48. Nex t, the Court concluded that because b ankruptcy proceeding s d o not ad j udicate c reditors’ property rig hts, the bankruptcy court’s “ex e rcise o f its in rem jurisdiction to discharg e a debt d o e s not inf r i n g e a State’s sovereig nty ,” and the court does not

ex e r cise “jurisdiction over the State.” Id. at 448, 453.

I g noring the difference between a creditor in a bankruptcy

case and a property owner in a forfeiture action, the majority reads Hood as supporting application of all “traditional in rem principles.” Maj. a t 16. The majority ’ s sole support for this conclusion is Hood ’s cite to a civil procedure treatise and an accompany

ing parenthetical stating that “ jurisdiction over the
person is irrelevant if the court has j u r i sdiction over the property .” Hood

, 541 U.S. a t 453 (quoti ng 4A C. W rig ht & A. Miller, F ederal Practice and Procedure § 1070, pp. 280–81 (3d ed. 2 002))

. I n contex t, the parenthetical merely supports Hood ’ s holding that a bankruptcy court’s in rem jurisdiction

over the d e btor’s property is sufficient to resolve the c laims

o f all creditors (including a state) to that property , and the court need not have jurisdiction over the state to accomplish this g oal. Id. Nothing in Ho o d s u gge s t s that a court may

ex e r cise in rem jurisdiction without personal jurisdiction over the owner of the res.

I n sum, Hood did not resurrect t h e i n rem jurisdiction theory

, rejected in Shaffer

, that a court may assert jurisdiction

over an absent property owner so l o n g as it has jurisdictionU N I T E D S T A T E S V

. O B A I D 37

over the property itself. To the c o n trar y , H o od did not mention or cite Shaffer and held only that a bankruptcy court does n ot assert j u risdiction over creditors because a bankruptcy proceeding d oes not adjudicate their pr o p erty int e r e s t s. Id

. at 447. B e c ause the debtor, not the creditor,

owns the property before a bankruptcy court, and the bankruptcy court does n ot adjudicate the creditor’s property rig hts, Hood had no occasion to address the question whether a court with in rem jurisdiction over property can adjudicate the rig h ts of that property ’s absent owner.

As this d escription makes clear, H o o d provides no g uidance h ere. Obaid is not a mere creditor. His rig hts to the property he owns—the Palantir shares—are at stake in the forfeiture proceed ing

. Nor is Obaid a debtor w ho has voluntarily submitted himself and his property to the district court, obviating the need for due process protections. Obaid is the person described in Shaffer ; the subject of a proceeding
ag ainst his property , a

nd therefore ag ainst Obaid himself. 433 U.S. a t 207 n.22. Therefore, Hood g ives the majority no g rounds for ig n oring Shaffer.

I V

Althoug h the majority recog niz es that Hood is not “precisely on point,” Maj. a t 13, it provides other reasons for ig noring Shaffer ’s clear directive. These reasons are equally misg uided.

A

F irst, the majority tries to confine Shaffer to its facts. D i s r e g a r d i n g S

h a f f e r ’ s s t a t e m e n t t h a t i t w a s n o t disting uishing between in rem and quasi in rem jurisdiction,U N I T E D S T A T E S V

. O B A I D 38

see 433 U.S. at 199 n.17, the majority c ontends that Shaffer ’s holding applies only to quasi in rem p r o c e eding s, Maj.
at 13–14, 15. Accordi n g t o the majority

, this reading is “supported by the failure of the Court to e x pressly o verrule its long standing p recedent an choring in rem jurisdiction to the
presence of the res .” Maj. at 14. Apply ing traditional in rem principles, the majority c ontends that the defe ndant h ere is the Palan t ir shares, n ot Obaid, and therefore Shaffer ’s “ fair play a nd substantial justice” requirements do not apply

. Maj. at 15. 7

This reinterpretation of Shaffer contradicts Shaffer ’s actual lang uag e. The Court clearly established a new rule for both in r em and quasi in rem jurisdiction, concluding that “ all assertions of state-court j u r isdiction must be evaluated according to the standards set forth in I nternational Shoe a

nd its prog eny .” Shaffer

, 433 U.S. at 2 1 2 ( emphasis added). Moreover, Shaffer did not ig nore longs t a n ding p recedent
g overning in rem jurisdiction. Rather, the Court made clear that it was sweeping away “the perpetuation of ancient f orms that are no long er justified.” Id

. I ndeed, the majority is rig ht that the Supre m e Court has n ot overruled its p recedent

7 T h e m aj o rity also tries to distin g u ish S h a f f er o n th e g ro u n d th at i t d o es n o t ap p ly to a civ il f

o rf eitu re pro ceed in g s u ch as th is o n e. Maj

. at 1 4
, 2 0

. B u t a civ il f

o rf eitu re p ro ceed in g is an in rem p ro ceed in g , an d S h a ffer stated th at “ all” assertio n s o f i n rem j u risd ictio n are su

b j ect to In tern a tio n a l S

h o e ’ s m in im

u m

- co n t acts t est. 4 3 3 U.S. at 2 1 2

. T h e

m aj o rity h as n o t ex plain ed w h y civ il f o rf eitu re p ro ceed in g s are ex em p t f ro m Sh a ffer

. N o r h as th e g o v ern m en t arg u ed t h at civ il f o rf eitu res h a v e

u n iq u e ch aracteristics th at place th em o u tsid e S h a ffer ’ s am b it. In deed

, at least o n e circu it h as ap p lied S h a ffer to a civ il f

o rf eitu re p ro ceed i n g

. S

ee Un ited S ta tes v. Ba ta to , 8 3 3 F.3 d 41 3
, 42 3 (4 th C ir. 2 0 1 6 ); in fra f o o tn o te 9 ; cf. Maj

. at 2 2 ( a s sertin g t h at t h e cases cited b y th e d i s sen t do n o t in clu d e cases ap p ly in g S

h a ffer to civ il f o rf eitu re p ro ceed in g s.).U N I T E D S T A T E S V

. O B A I D 39

g overning in rem jurisdiction “without ex plicitly say ing so”—but only because the Supreme Court ex p licitly said that is w h at it was doing

. M a j

. a t 15. 8 Shaffer ’s lang uag e also refutes the majority ’s claim that the s u i t is ag ainst Obaid’s shares of stock, not Obai d h i m self. Maj. at 15. Shaffer ’s basic premise was that “[ a] ll proceeding s, like all rig hts, are really ag a inst persons.” 433 U .S. at 207 n.22 (quoting Tyler

, 175 Mass. at 76). And “[ a] n adverse judg ment i n rem directly affe c ts the property owner by d ivesting him of his rig hts in the property before the cour t

. ” Id

. at 206. Therefore, this proceeding o v e r Obaid’s stock is effectively

a proceeding ag a in st O baid, and International Shoe ’s d ue process requirements apply

.

B

Se co n d

, the majority makes strenuous e fforts to disting uish its narrow construction o f Shaffer f rom the decisions of other circuits that have f a i t h f ully r ecited Shaffer ’s h olding

. B ut e v e n a b rief re v i e w o f the relevant

8 S h a ffer co u ld n o t b e m o re clear:

“ W e are lef

t, th e n , to co n sid er th e sig n if ican ce of th e lo n g h isto ry o f

j u risd ictio n based so lely o n th e p resen ce

o f p ro p erty in a State.

. . . T h is histo ry m u st b e

co n s id ered as s u

p p ortin g th e p ro p o sitio n th at j u risd ictio n b ased so lely o n th e p resen ce o f p ro p e r t y satisf ies th e d e m a n d s o f du e p ro cess, b u t it is n o t d ecisiv e.

. . . W e th eref

o re co n clu d e th at all assertio n s

o f state- co u rt j u risd ictio n m u st b e ev alu ated acco rd in g t o th e stan d ard s set f

o rth in In tern a t io n a l S

h o e an d its
p ro g en y .”

4 3 3 U.S. at 2 1 1 –1 2 (citatio n s o m itted ).U N I T E D S T A T E S V

. O B A I D 40

cases establishes that the majority ’s interpretation of Shaffer is contrary

to our own precedent and creates a circuit split.

W e have long acknowledg ed that as s e r t i o ns of in rem jurisdiction must satisfy International Shoe

, “even when the court’s jurisdiction is predicated on its control over an item o f
pro p e r t y or res.” United States v. Ten Thousand Dollars ( $10,000.00) in U.S. Currency
, 8 6 0 F .2d 1511, 1513 ( 9th Cir. 1988). F u rther, we have rec o gn i z ed S haffer ’s ruling that “‘judicial jurisdiction over a thing ’ is a cust o mary elliptical
way of refe rring to jurisdiction over the interests of persons in a thing .” Id . (quoting Shaffer , 433 U.S. at 207).

Our sister circuits have interpreted and applied Shaffer the

same way

. I n United States v. Bat a t o , t h e F ourth Circuit recited Shaffer ’s conclusion that “ i n order to justify an

ex e r cise of jurisdiction in rem, the basis for jurisdiction must be sufficient to justify e x ercising j u r i s d iction over the interests of persons in a thing ,” a nd applied “a tradi t i o n a l, state-based minimum contacts approac h ” to determine whether it had jurisdiction over claimants to property subject
to a civil forfeiture action. 833 F .3d 413, 423 (4th Cir. 2 016) (quoting Shaffer

, 433 U .S. a t 207). 9 Similarly

, the Second

9 T h e m aj o rity asserts th at Ba ta t o d i d n o t f o llo w S h a ffer b ecau se i t

“ assu m e[d ] w ith o u t d ecid in g ” th at S h a f fer w as ap p licab le, an d s tated th at

“ Sh a ffer “ p ro v id es o n ly lim ited g u id an ce a s t o h o w to p ro ceed .” Maj

. at 1 8

. T h is is in co rrect, b ecau se th e m aj o rity t ak es th ese qu o tes o u t of

co n tex t. Ba ta to ex p ressly ack n o w led g ed th e ap p l icab ility o f th e m in im u m

co n tacts test to in rem p ro cee d i n g s

. 8 33 F.3 d at 4 2 3

. It th en stated th at S h a ffer “ p ro v id e[d ] o n ly lim ited g u id an ce as to h o w to p ro ceed ” reg ard in g

o n e asp ect o f th at m in i m

u m co n t acts test: w

h eth er a co u rt m

u st co n s id er

a f o reig n p ro p erty o w

n er’ s co n tacts w ith o n ly th e f o ru m state, o r w ith th e Un i ted States as a w h o l e

. Id

. at 4 23 & n .3

. B u t b ecau se t h e f o reig n claim an ts h ad su f

f icien t co n tacts w ith th e f o ru m st a te, Ba ta to co u ldU N I T E D S T A T E S V

. O B A I D 41

Circuit acknowledg ed that Shaffer “ex plained that to have in

rem jurisdiction it is n ecessary , at the v ery least, to satisfy the minimum c o ntacts standard set out in International S hoe ” a nd
up h e l d the district court’s conclusion that it lacked in rem j u r isdiction over a defendant that “did not have mini m u m contacts.” LiButti v. United States
, 178 F

. 3d 114, 123 (2d Cir. 1999). 1 0 Th e s e faithful applications of Shaffer a re decisive holding s, not “lukewarm discussion[ s]

. ” Maj. at 20.

Other circuits have acknowled g e d the breadth of Shaffer ’s rule. Shor t l y a f

t e r Shaffer was decided, the F ifth, Six th a nd Seve n t h Circuits correctly recited its holding

. See I nland Credit Corp. v. M

/T Bow Egret
, 556 F .2d 756, 757 (5th Cir. 1977) (deny

ing a petition for rehearing en b a n c a n d citing Shaffer ’s holding that “states’ assertion of in rem jurisdiction
must satisfy the same ‘ minimum cont a cts standard’ a pplied
to in personam jurisdiction”); Pickens v. Hess
, 573 F .2d 380,

“ assu m e w ith o u t d ecid in g ” th at th e m o re dem an d i n g “ s tate- b ased

m in im u m co n tacts ap p ro ach ” co n tro lled

. Id

. at 4 2 3

. B ata to m ad e clear th at t h e co u rt co u ld n o t e x e r c ise in rem j u risd ictio n w ith o u

t o btain in g p erso n al j u risd i c t io n o v er th e o w n er o f th e p ro p erty su

b j ect to civ i l f o r fe i t u re. In su

m , n o th in g in Ba ta t o su g g ests an y relu ctan ce to ap p ly S h a ffer

.

10 T h e m aj o rity ’ s statem en t th at Lib u tti “ d i d n o t d ism i s s t h e i n rem actio n f o r lack of j u risd i ctio n ,” Maj

. at 1 9
, m isch aracterizes th e case. Fo r

o u r p u rp o s es, t

h e p ertin en t qu estio n in Lib u t ti w as w h eth er th e d istric t

co u rt co u ld ex ercise j u risd ictio n o v er a th ird p arty w h o h ad an o w

n ersh ip in terest in a race h o rse. Lib u t ti h eld th at th e co u rt d id n ot h av e in
p erso n am j u risd ictio n o v er th e th ird p arty b ecau se th e th ird p arty lack ed

m in im u m co n tacts w ith th e f

o ru m state, an d “ [s]in ce [th e th ird p arty ] did

n o t h av e m in im

u m co n tacts, th e d istrict co u rt d id n o t h av e in rem j u risd ictio n eith er.” 1 7 8 F .3 d at 12 3. W h ile L ib u tti u p h eld th e trial co u rt’ s

ru lin g s w i th reg ard to th e d ef en d an t o v er w

h ich t h e co u rt h ad j u risd ictio n , Maj . at 1 9 , th i s is irrelev an t to o u r an aly sis.U N I T E D S T A T E S V

. O B A I D 42

387 (6th Cir. 1978) ( citing Shaffer for the proposition that “ all claims of jurisdiction, both in p ersonam and in rem, must be evaluated in lig ht of the standards of I nternational Shoe a

nd its prog e ny ”); Lakeside Bridge & Steel Co. v. Mountain State Const. Co., Inc.
, 597 F .2d 596
, 6 00 (7th Cir. 1979) (stating

, in its overview of in rem ju r i s d i c tion, that “the principles o f International Shoe w ere held [ in Shaffer ] to g overn assertion by a s t a te of I n r em as well a s I n personam jurisdiction”). 1 1 A decade later, the Third and F o urth Circuits cited Shaffer for the same principle. See Salazar v

. Atlantic Sun
, 881 F

. 2d 73, 76 (3d Cir. 1989) (noting that Shaffer affected “traditional in rem procedures” by requiring “the presence of a defendant’s minim u m contacts with the forum”); Pittsburgh Terminal Corp. v. Mid Allegheny Corp.
, 8 31 F. 2 d 522, 526 ( 4 th Cir. 1987) (ex plaining that, after Shaffer

, “the minimum contacts rule of International S

hoe would he n ceforth be applied to

11 S ch o l ars w

ritin g i n S

h a ffer ’ s im m ed iate af

term ath ex p ressed n o d o u b t as to w h eth er S h a ffer ap p lied to in rem p ro ceed in g s. S ee A n g ela M. B o h m an n , Ap

p lica b ility o

f Sh af f er to Ad m ir a lty in Rem Ju risd ictio n , 5 3 T u l. L

. Rev

. 1 3 5
, 1 3 5 (1 9 7 8 –7 9 ) (“ In its 1 9 7 7 d ecisio n i n S h affer v. Heitn er , th e Su

p rem e Co u

rt d eterm in ed th at th e du e p ro cess clau se o f th e Fo u rteen th A m en d m en t req u i red all assertio n s o f state co u rt j u risd ictio n to b e tested u n der th e p r i n c i p l es estab lish ed in its earlier d ecisio n in In tern a tio n a l S

h o e C o

. v. W a sh in gto n ); see a lso

, J o h n R. L eath ers, Th e First Two Y

ea rs After S h af

f er v

. Heitn er, 4 0 L a. L

. Rev

. 9 0 7
, 9 1 0 (1 9 8 0 ); Stef an A

. Riesen f

eld

, Sh af

f er v

. H e i t n er : Ho ld in g , Imp l ica tio n s, Fo r e b o d i n g

s , 3 0 Hast. L .J

. 1 1 8 3
, 1 2 0 4 n .1 0 0 (1 9 7 9 ); J o sep h J

. Kalo

, Ju risd ictio n a s a n Evo l u tio n a ry Pro c e ss : Th e D evelo p men t o f Qu asi in Rem a n d In Perso n a m Prin cip les

, 1 97 8 Du k e L .J

. 1 1 4 7
, 1 1 8 9

– 90 (1 9 7 8 ); L in d a J

. Silb erm an , Sh af

f er v

. Heitn er : Th e En d o

f a n Era
, 5 8 N.Y.U. L

. Rev

. 3 3
, 6 2 –6 3 (1 9 7 8 ); W illiam R. Slo m an so n , Rea l Pro p erty Un rela ted
to Cla im: Du e Pro cess fo r Qu a s i i n Rem Ju risd i ctio n ?
, 8 3 Dick

. L

. Rev

. 5 1
, 5 4 (1 9 78 ); J o sep h P

. Z am m i tt, Re f l e c t i o n s o n Sh af

f er v

. H eitn er, 5 H ast. C o n st. L .Q. 1 5
, 1 7 (1 9 7 8); Do n ald W

. Fy r, Sh af f er v

. Heitn er : Th e S u p reme C o urt’s L a test La st W

o rd s o n Sta te Co urt Ju risd ictio n , 2 6 Em o ry L .J . 7 39 , 7 5 7

– 78 , 7 6 2 –6 4 (1 9 7 7 ).U N I T E D S T A T E S V

. O B A I D 43

actions in rem and q u a s i i n rem , as well as to actions in
personam ”).

Ag ainst this consensus, th e majority ’s erroneous interpretation of Shaffer

stands alone. 1 2

V

Shaffer effected a transformati o n of the law of in rem jurisdiction in order to ensure that “fair play and substantial justice” p revail. I n doing so, the Supreme Cou r t w a s w ell

awar e that it was sweeping aside a century of jurisprudence which had allowed courts to adju d i c ate rig hts to property

even when doing s o ran roug hshod over the rig hts of the
persons who owned the property

. By a t t empting to confine Shaffer to its facts, the majority turns its back on the Court’s
p r o t ection o f due process rig hts and creates a conflict w i t h

e v e r y circuit c ourt that h as addressed this issue. I dissent from the majority ’s failure to follow t h e Supreme Court’s clear instructions.

12 W h ile th e m aj o rity n o t es th at “ n o co u rt h as d ism issed a civ i l fo rf eitu re actio n f

o r lack o f p erso n al j u risd ictio n o v er a claim an t,” M a j

. at 1 8
, th is is to b e ex pected b ecau se a p erso n w ith p ro p erty in a state is lik ely to ha v e en o u g h co n tacts w ith th at state to satisf y S h a ffer

, see 4 3 3 U.S. at 2 0 7 –0 8

. S

h a f fer itself p red icted “ th at j u risd ictio n o v er m an y ty p es o f actio n s w

h i ch n o w are o r m i g h t be b ro u g h t in rem w o u ld n o t b e af f ected b y a h o ld in g t h a t a n y assertio n of state- co u rt j u risd ictio n m

u st satisf y th e In tern a tio n a l S

h oe stan d ard .” Id . at 2 0 8

.