Court Opinion

ID: 6929948
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:53:29.681166+00
Date Added: 2024-06-11T09:11:08.419671
License: Public Domain

HUTCHINSON, Circuit Judge,
dissenting.
I respectfully dissent from the Court’s mandate insofar as it affirms the district court’s dismissal of Holbrook’s federal actions. I concur with the Court’s holding that Grimes and other members of the non-opt-out plaintiff class, over whom the Delaware Court of Chancery had personal jurisdiction, are bound by the class representatives’ general release of all of the class members’ claims that arise out of the merger of Vital-ink with Network, including claims under federal securities law, for material misrepresentations which the defendants may have made in connection with the merger and the stock subject to the tender offer. I think Holbrook is not bound because the courts of Delaware lacked personal jurisdiction over him. I reason as follows.
I.
A.
Holbrook is not a Delaware resident, he has not consented to jurisdiction and he was *1565not given a chance to opt out. Nevertheless, in Part III.B. of its opinion, the Court holds that his tender of shares of stock he owned in a Delaware corporation meets International Shoe’s due process test of minimum contacts. It concludes these tenuous contacts with Delaware permit a court of that state, sitting in equity, to exercise in personam jurisdiction over Holbrook as a member of a Rule 23(b)(1) or (b)(2) non-opt-out class. Because of its conclusion that the state court had personal jurisdiction over Holbrook, the Court goes on to hold that the class representatives’ settlement of a state suit to enjoin the merger of Vitalink and Network on the theory that Vitalink’s officers and directors deceitfully or fraudulently breached their common law fiduciary duties to the corporation or its shareholders binds Holbrook.
Finally, the Court holds that a non-resident who never consented to class representation in a state court is not only precluded from further equitable relief by a release of claims incorporated into the settlement decree but also from all legal actions for money damages, including actions Congress has entrusted to the exclusive jurisdiction of federal courts. -
In doing so, the Court recognizes that due process prohibits the courts of any particular state from exercising personal jurisdiction over a non-resident absent minimum contacts. See International Shoe v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). I think it errs, however, in concluding that Holbrook’s stock ownership, when, coupled with his tender of stock in accord with the tender offer that he claims violated federal law, gives Delaware the “minimum contacts” which are necessary before a state court can exercise personal jurisdiction over non-resident, non-consenting members of a class that otherwise purports to include all the stockholders of one of that state’s domestic corporations.
Under the Supreme Court’s jurisprudence placing due process limitations on a court’s exercise of jurisdiction, it is clear that the exercise of such jurisdiction must comport with “traditional notions of fair play and substantial justice.” See International Shoe, 326 U.S. at 320, 66 S.Ct. at 160. Specifically, the Supreme Court has stated:
The Due Process Clause protects an individual’s liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful “contacts, ties, or relations.” [] By requiring that individuals have “fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign,” [ ] the Due Process Clause “gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit....”
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72, 105 S.Ct. 2174, 2181-82, 85 L.Ed.2d 528 (1985) (citations and footnote omitted). I believe that the Delaware court’s exercise of jurisdiction over Holbrook does not comport with this standard.
In Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), the Supreme Court extended International Shoe to all exercises of state court jurisdiction, including exercises of quasi in rem jurisdiction. Shaffer involved a shareholder’s derivative action, filed in Delaware state court against officers and directors of a Delaware corporation, including some officers and directors who were non-residents of Delaware. Shaffer, 433 U.S. at 189-96, 97 S.Ct. at 2572-75. The Delaware court exercised quasi in rem jurisdiction over these nonresident defendants by sequestering their stock in a Delaware corporation. Id. at 196, 97 S.Ct. at 2575. The United States Supreme Court held that the non-resident officers’ and directors’ ownership of stock in a Delaware corporation did not give Delaware the minimum contacts due process required. Id. at 213-14, 97 S.Ct. at 2584-85. Accordingly, the Supreme Court decided Delaware’s Chancery Court could not subject non-resident officers and directors who owned shares in a Delaware corporation to a sequestration procedure. Id. at 216-17, 97 S.Ct. at 2586-87. Justice Stevens specifically noted that “[o]ne who purchases shares of stock on the open market can hardly be expected to know *1566that he has thereby become subject to suit in a forum remote from his residence and unrelated to the transaction.” Id. at 218, 97 S.Ct. at 2587 (Stevens, J., concurring).
Despite the Supreme Court’s holding in Shaffer, the Delaware Chancery Court, in Hynson v. Drummond Coal Co., 601 A.2d 570, 579 (Del.Ch.1991), concluded that ownership of stock in a Delaware corporation is a sufficient basis for a Delaware court to exercise jurisdiction over the corporation’s stockholders. I believe that Hynson is inconsistent with Shaffer and that the Delaware Chancery Court’s position that it could exercise, in this case, personal jurisdiction over absent class members who have not been given an opportunity to opt out solely because they own stock in a Delaware corporation runs afoul of the Due Process Clause of the Fourteenth Amendment to the Constitution. Because Hynson was not appealed, we do not have the benefit of the Delaware Supreme Court’s view on this issue.
Shaffer is not the only case which has held, or implied, that ownership of stock in a domestic corporation is not enough of a contact to give the courts of the state of incorporation personal jurisdiction over the corporation’s stockholders. Even when that ownership is coupled with other local contacts connected with the acquisition or disposition of a domestic corporation’s stock, courts have held that they have no personal jurisdiction over nonresident stockholders. See Edwards v. Geosource, Inc., 473 So.2d 36, 37 (Fla.Dist.Ct.App.1985) (mere ownership of stock in Florida corporation, coupled with execution of promissory note to purchase the stock, insufficient contacts to confer personal jurisdiction); cf. Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 336-38, 45 S.Ct. 250, 251-52, 69 L.Ed. 634 (1925) (activities of subsidiary corporation did not subject parent holding stock in subsidiary to local court’s jurisdiction absent parent’s control of subsidiary or other facts permitting corporate veil to be pierced). But see Gaudio v. Gaudio, 23 Conn.App. 287, 580 A.2d 1212, 1220 (1990) (dictum) (noting plaintiffs argument that mere ownership in stock was an insufficient contact “might be persuasive if the transaction at issue involved the relatively routine and anonymous purchase of publicly traded stock through a broker or agent” but that an express agreement to purchase stock could supply the necessary contact).
Shaffer shows this Court’s decision not to rely solely on Holbrook’s ownership of stock is wise. While I agree with the Court that in this case we are concerned with specific jurisdiction, I am unable to see how Holbrook’s response to the tender offer he claims was misleading under the federal disclosure laws adds any material contact with Delaware or, alternately, supplies sufficient evidence of consent to personal jurisdiction to satisfy due process. Whether stock ownership coupled with a tender under the offer a plaintiff claims is misleading as a matter of federal law provides the minimum contacts due process requires seems to be a question of first impression on which I have uncovered no specific authority. The Court cites Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958) and Carteret Savings Bank, FA v. Shushan, 954 F.2d 141, 146-48 (3d Cir.), cert. denied, — U.S. -, 113 S.Ct. 61, 121 L.Ed.2d 29 (1992), in support of its proposition that the tender was a sufficient contact. I do not think these cases answer the question. Neither have anything to do with tender offers. See Hanson, 357 U.S. at 251-52, 78 S.Ct. at 1238-39 (Florida had no personal jurisdiction over Delaware trust when trustee later became domiciled in Florida because the trust company did not transact business there and none of the trust assets were held there); Carteret, 954 F.2d at 149-50 (when Louisiana attorney not only telephoned and corresponded with client’s management in New Jersey but also traveled to New Jersey to meet with management concerning transaction in question, lawyer and his law firm had minimum contacts courts in New Jersey needed to exercise personal jurisdiction over defendant in claim for breach of duty in preparing contract). I do not think these cases support the Court’s position. Though I am equally unable to cite authority directly on point, I believe the effect of depriving Holbrook of his exclusively federal securities claims which the Court’s holding has done does not square with the federalism component I believe to be inter*1567twined in the due process requirements concerning personal jurisdiction.1
B.
The question thus becomes whether a lack of minimum contacts deprives a court-approved consent decree settling a Rule 23(b)(1) or (2) class action of any binding effect on non-resident, non-consenting members of a non-opt-out class. The Supreme Court has stated generally that International Shoe’s test of “traditional notions of fair play and substantial justice” applies to all exercises of state court jurisdiction, and it has never explicitly held a court can exercise personal jurisdiction over absent unconsent-ing members of a plaintiff class if minimum contacts are lacking.
This general principle, however, is set out in cases involving jurisdiction over individual, as opposed to class, defendants. See, e.g., Burger King Corp., 471 U.S. at 471-72, 105 S.Ct. at 2181-82; World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295, 100 S.Ct. 559, 566, 62 L.Ed.2d 490 (1980). Thus, some courts have relied on Hansberry v. Lee, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22 (1940), to indicate that a court may bind unnamed members of a plaintiff class without personal jurisdiction over all of them. See Miner v. Gillette Co., 87 Ill.2d 7, 56 Ill.Dec. 886, 889, 428 N.E.2d 478, 481 (1981), cert. dismissed, 459 U.S. 86, 103 S.Ct. 484, 74 L.Ed.2d 249 (1982); Katz v. NVF Co., 119 Misc.2d 48, 462 N.Y.S.2d 975, 977 (1983), rev’d on other grounds, 100 A.D.2d 470, 473 N.Y.S.2d 786 (1984). These courts base this conclusion on dictum in Hansberry which says that a class action may be appropriate for “causes in which the number of those interested in the litigation is so great as to make difficult or impossible the joinder of all because some are not within the jurisdiction_” Hansberry, 311 U.S. at 41, 61 S.Ct. at 118. I think they overlook the teaching of International Shoe, decided after Hansberry.
Indeed, in Hansberry, the Court repeated the principle that “one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process.” Hansberry, 311 U.S. at 40, 61 S.Ct. at 117 (citing Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1878)).2 The Supreme Court went on to state that the considerations which induce a court to certify a class differ from those it must consider in deciding whether absent members of the class will be bound by the decree. Id., 311 U.S. at 42, 61 S.Ct. at 118. Perhaps foreshadowing International Shoe, it then said: “[Tjhere has been a failure of due process only in those cases where it cannot be said that the procedure adopted, fairly insures the protection of the interests of absent parties who are bound by it.” Id.
No issue of personal jurisdiction was before the Court in Hansberry, and it seems to me a conclusion that a court may bind unnamed class members ignores Hansberry’s distinction between the requirements for valid class actions and the limitations due process puts on their preclusive effect on absent, non-consenting class members. It is also in stark conflict with the Supreme Court’s holding in Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985), that due process requires non-resident, non-consenting class members be given notice, an opportunity to be heard, and a chance to opt out. 472 U.S. at 812, 105 S.Ct. at 2974. Therefore, it does not seem to me that Hansberry’s dictum stating a class suit “may bind members of the class or those represented who were not made parties to it” announces an exception to the general principle that a party is not bound by a court’s order unless it has personal jurisdiction over him. Hansberry, 311 U.S. at 41, 61 S.Ct. at 118.
Many cases which state or seem to imply that personal jurisdiction can be exercised over absent members of a plaintiff “class” without minimum contacts are “common *1568fund” cases in which the court entertaining the action had jurisdiction over nonresident members. Jurisdiction there is present because the plaintiffs have a property interest in the fund or alternately because the court had in rem or quasi in rem jurisdiction over the fund. See, e.g., Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950); Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 41 S.Ct. 338, 65 L.Ed. 673 (1921), overruled on other grounds, Toucey v. New York Life Ins. Co., 314 U.S. 118, 62 S.Ct. 139, 86 L.Ed. 100 (1941); Hartford Life Ins. Co. v. Ibs, 237 U.S. 662, 35 S.Ct. 692, 59 L.Ed. 1165 (1915). See also generally Barbara A. Winters, Jurisdiction Over Unnamed Plaintiffs in Multi-state Class Actions, 73 Calif.L.Rev. 181 (1985). The case now before us is not a typical limited fund or common interest case. It has its genesis in its state, as well as federal, version of what Holbrook alleges is the defendants’ fraud or deceit in connection with a merger the state court plaintiffs unsuccessfully sought to enjoin. In any event, I believe the procedural rules governing class actions in all courts, state and federal, are subject to due process under either the Fifth Amendment or the Fourteenth Amendment, as it applies to the states.3
The Shutts case arose when a class of leaseholders brought suit over royalty payments in Kansas state court. Almost all of the plaintiffs and leases lacked any relationship to Kansas. The class notification informed all members of the pendency of a class action that could affect them and provided them with the opportunity to opt out of the class. Shutts, 472 U.S. at 799-801, 105 S.Ct. at 2967-69. In upholding the class action, the Supreme Court specifically stated that an absent member of a plaintiff class who lacks minimum contacts with the state whose court is entertaining a class action cannot be bound by a judgment entered in it unless the plaintiff has received “at a minimum ... an opportunity to remove himself from the class by executing and returning an ‘opt out’ or ‘request for exclusion’ form to the court.” Id. at 812, 105 S.Ct. at 2974.
In In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285 (2d Cir.1992), cert. dismissed sub nom. Hart Holding Co. v. Drexel Burnham Lambert Group, — U.S. -, 113 S.Ct. 1070, 122 L.Ed.2d 497 (1993), the court of appeals decided that members of a plaintiff class who had filed federal securities claims before Drexel filed for bankruptcy could be denied an opportunity to opt out of a settlement only because all of the class members had consented to the bankruptcy court’s jurisdiction when they filed proofs of claim in the defendant’s bankruptcy proceeding. Id. at 292.4 In reaching this conclusion, the court of appeals noted:
We are not unaware of the Supreme Court’s statement in Phillips Petroleum Co. v. Shutts, 472 U.S. 797 [105 S.Ct. 2965, 86 L.Ed.2d 628] (1985), that “due process requires at a minimum that an absent plaintiff be provided with an opportunity to remove himself from the class by executing and returning an ‘opt out’ or ‘request for exclusion’ form to the court.” Id. at 812 [105 S.Ct. at 2974]. Shutts mandates that a plaintiff be permitted to opt out of a proposed class when the court does not *1569have personal jurisdiction over the plaintiff. Id. at 811-12 [105 S.Ct. at 2974-75].
In re Drexel Burnham Lambert, 960 F.2d at 292 (parallel citations omitted).
Shutts has been the subject of much discussion by both courts and commentators. In In re A.H. Robins Co., 880 F.2d 709, 744 (4th Cir.), cert. denied sub nom., Anderson v. Aetna Cas. & Sur. Co., 493 U.S. 959, 110 S.Ct. 377, 107 L.Ed.2d 362 (1989), another court of appeals, analyzing Shutts’ effect on mandatory non-opt-out class certification (ie., Rule 23(b)(1) and (2) classes), noted that some commentators view Shutts as holding “‘that a state court can bind absent class plaintiffs to a judgment for money damages (only) if it provides the absent parties the minimal procedural protections of adequate representation, notice of the action, and an opportunity to opt out of the litigation.’” Id.5 The court also noted a commentary which concludes ‘“[t]here is no neat and logical means of resolving the question whether mandatory actions survive Shutts.’ ” In re A.H. Robins Co., 880 F.2d at 744 (quoting Arthur R. Miller & David Crump, Jurisdiction and Choice of Law in Multistate Class Actions After Phillips Petroleum Co. v. Shutts, 96 Yale L.J. 1, 52 (1986)).
In re A.H. Robins Co. was a Rule 23(b)(1) action. There, the court referred to commentary concerning the binding effect of Rule 23(b)(2) class actions on non-residents who were not given a chance to opt out. Quoting this commentary, the court of appeals said:
The problem of the Rule 23(b)(2) class action is that binding absent class members without giving them notice and the right to opt out violates due process. The problem is clear under the apparently applicable standards of Phillips Petroleum Co. v. Shutts. Indeed, the only way in which the binding Rule 23(b)(2) class action might be seen not to be a violation of due process is if one follows Matthews v. Eldridge [424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) ] and weighs the harm to the interests of absentees with the cost of the alternative safeguard of notice and the right to opt out.
In re A.H. Robins Co., 880 F.2d at 744-456 (quoting Mark Weber, Preclusion and Procedural Due Process in Rule 23(b)(2) Class Actions, 21 U.Mich.J.L.Ref. 347, 394 (1988) (footnote omitted in original)).7
Shutts, on its facts, was a plaintiff class’s action for money damages, and the Supreme Court expressly reserved the question whether its holding applied to cases in which a plaintiff class sought equitable relief. Shutts, 472 U.S. at 811 n. 3,105 S.Ct. at 2974 n. 3. Accordingly, some commentators and courts have concluded that Shutts has no application to cases in which a plaintiff class seeks relief that is primarily equitable in nature. See, e.g., White v. National Football League, 822 F.Supp. 1389, 1410-11 (D.Minn.1993) (reading Shutts to require a chance to opt out only in actions that concern claims “wholly or predominantly for money judgments” and not claims in which injunctive relief is the predominate relief sought) (citing Shutts, 472 U.S. at 811-12 & n. 3, 105 S.Ct. at 2974-75 & n. 3); see also In re Jackson *1570Lockdown/MCO Cases, 107 F.R.D. 703, 713-14 (E.D.Mich.1985).
If this conclusion is correct in its broad sense, a chance to opt out is not required when a class is properly certified as a Rule 23(b)(1) or (2) class. A brief excursion into the genesis of class actions and their present division among Rule 23(b)(1), (2) and (3) may help explain, but not necessarily justify, this conclusion.8 Our class actions originated in the English bill of peace. They were originally cognizable only in equity, see Charles A. Wright et al., 7A Federal Practice & Procedure Civil 2d (hereinafter “Federal Practice & Procedure ”), § 1751, at 7-10, because the procedural tools available in the law courts were not adequate to protect the rights of unknown parties. See id § 1751, at 11. Because of its utility, the class suit in equity came to this country with the common law and was eventually incorporated into numerous state procedural codes. “The obvious advantage of the representative suit was that it was far cheaper and more convenient to maintain a single proceeding in equity than to adjudicate the controversy in piecemeal fashion by multiple actions at law.” Id. § 1751, at 8.
As the modern class action evolved from this background, its efficiency in disposing of claims involving common issues affecting many persons resulted in an expansion of its use that took it beyond the confines of the old bill of peace. Ultimately, it was extended to actions at law. See id. § 1751, at 11. Since then, class actions have been divided into three parts. They were originally referred to as “spurious,” “hybrid” and “true.” Under the Federal Rules of Civil Procedure, these terms were abandoned in the 1966 amendments to our rules. See generally 7A Federal Practice & Procedure § 1752 at 16. The “spurious” class action covered separate claims with common questions of law or fact. It loosely resembled today’s Rule 21(b)(3) action. In a spurious class action, the class remedy was dependent solely on multiplicity or numerosity of parties. “True” class actions involved joint or common interests. They arose naturally out of the old bill of peace. “Hybrid” actions involved claims against limited pools of property or cash that bear some analogy to estates or trusts of all kinds.9 There, equity’s long experience with the administration of estates commonly requiring resolution of competing claims to a res among various kinds of creditors and classes of beneficiaries provided an additional underpinning for the remedy of class relief with its origin in equity.
Members of true classes were wholly bound by res judicata, but hybrid class members were bound only to the extent that their claims concerned the fund before the court. See Miller & Crump, supra, at 39-40 & n. 276. The 1966 amendments to Federal Rule 23(b)(1) and 23(b)(2) brought most of the actions that would have been labelled true or hybrid under the Rule’s original terminology within Rule 23(b)(1) or (2). Id. at 40 & n. 277. As I have stated, others involving only common issues affecting many persons, generally fall under Rule 23(b)(3).
Both Federal Rule of Civil Procedure 23, and Delaware’s Rule governing class actions provide in a class action maintained under subdivision (b)(3) that notice advising class members of their right to opt out of the class must be given. See Fed.R.Civ.P. 23(c)(2); *1571Del.Chanc.R.P. 23(c)(2). By negative implication, however, this right to notice and a chance to opt out has been thought not to apply to class actions maintained under subdivisions (b)(1) and (b)(2). Thus, Rule 23(b)(1) & (2) class actions are often referred to as mandatory class actions.
Though Shutts was not a mandatory class action, i.e., one certified under Rule 23(b)(1) or (b)(2) and thus left the due process concerns implicated by mandatory classes unresolved, it did not limit its discussion of due process and its requirement of personal jurisdiction to Rule 23(b)(3) classes. Accordingly, Miller and Crump in their commentary have concluded that the right to opt out is a fundamental due process requirement which conflicts with the notion of a mandatory non-opt-out class that has developed, somewhat insensibly, under Rule 23(b)(1) & (2). In what may perhaps appear to be a bit of semantic overstatement, they say: “There can be no ‘mandatory class’ if the members have the constitutional right to opt out.” Miller & Crump, supra, at 39 (single quotes added). Of course, it is clear, even under Shutts, that a court can deny a class member a right to opt out if either the member or the object of the action has sufficient contact with the forum, just as any absent person can be joined involuntarily as a defendant and later discover that his interest in a particular res has been affected by orders issued in actions in rem or quasi in rem. With these exceptions, Miller and Crump suggest that Shutts “prohibitfs] mandatory class certification completely [because that] result seems supported by the unconditional statement of the right to opt out in Shutts.” Id. at 54. Where a member of a plaintiff class lacks the minimum contacts that are necessary to give the courts of a particular state personal jurisdiction over him, I too believe Shutts implies his involuntary inclusion in a mandatory class certified under Rule 23(b)(1) or (b)(2) should be prohibited unless he is given notice and a chance to opt out.
Recently, in Carlough v. Amchem Products, Inc., 10 F.3d 189, 199 (3d Cir.1993), we stated “it would offend the Fifth Amendment’s guarantee of due process for a federal court to enjoin an absentee class member whose minimum contacts with the forum have not been established or, in lieu of minimum contacts, who has not consented to the court’s jurisdiction, explicitly or inferentially.”
Moreover, In re Real Estate Title & Settlement Services Antitrust Litigation, 869 F.2d 760, 769 (3d Cir.), cert. denied sub worn. Chicago Title Insurance Co. v. Tucson Unified School District, 493 U.S. 821, 110 S.Ct. 77, 107 L.Ed.2d 44 (1989), also contains dicta supporting my conclusion that any class member lacking minimum contacts with the forum entertaining the class action must be given a chance to opt out. It involved a federal injunction of a state action for violations of state antitrust law on the basis of a prior class action settlement in the district court. We referred to the fact that the classes were certified pursuant to Federal Rule 23(b)(1) and (b)(2) making them “types of class actions that do not provide the right to opt out.” Id. at 763. We went on to hold that a federal district court could not enjoin a state court action for damages. We stated that a member of a plaintiff class who lacks minimum contacts must have a chance to opt out before a court can exercise personal jurisdiction over him:
[I]f the member has not been given the opportunity to opt out in a class action involving both important injunctive relief and damage claims, the member must either have minimum contacts with the forum or consent to jurisdiction in order to be enjoined by the district court that entertained the class action.
Id. at 769 (emphasis added and footnote omitted).
Despite these dictum, the question whether due process requires either minimum contacts or an opportunity to opt out in a case like this has heretofore been an open question in this Court. See In re Real Estate Title & Settlement Servs. Antitrust Litig., 869 F.2d at 768-69 (“We need not reach the issue, left open by Shutts ... whether an absent plaintiff can be bound to the judgment in a hybrid (damage and injunctive) class action if it was not afforded the opportunity to opt out.”) (emphasis added & citation omitted).
In this case, I think the issue is squarely presented. Here, the plaintiff class settled a state case in which it had sought equitable relief in the form of an order enjoining the *1572proposed merger. Alternately, it sought compensatory and rescissionary damages if injunctive relief proved inappropriate or untimely.
I do not think the distinction between cases seeking equitable relief as opposed to money damages has any logical relation either to Fourteenth Amendment or Fifth Amendment concepts of due process’s requirement of personal jurisdiction. Rather, it seems to me only a vestigial reminder of the different ways in which the law relating to joinder of parties evolved in courts of equity as opposed to courts of law. See supra at 1568.
Accordingly, I am unable to conclude that the arcane distinction between equitable jurisdiction based on multiplicity of parties (Rule 23(b)(3)) and equitable jurisdiction in cases involving multiple parties where multiplicity was coupled with an independent basis of equitable jurisdiction, e.g., injunction, in-terpleader, etc. (Rule 23(b)(1) & (2)) affects the restrictions due process places on a court’s exercise of jurisdiction in personam,.
Thus, if a decision on money damages is to bind a non-resident, non-consenting member of a class, I think the Constitution requires an opportunity to opt out in the absence of minimum contacts whether the class action has as its basis only a common question involving many parties or an independent basis for equitable intervention.
Some courts and scholars contend, however, that giving non-consenting, non-resident class members who lack minimum contacts with the forum in which the class action is brought a right to opt out is likely to deprive class actions of their efficiency. The magnitude of that concern has been seriously questioned, however. See Miller & Crump, supra, at 37. In many multistate class actions, contacts will be adequate to establish jurisdiction over the person of all class members. They will almost always be so when the action concerns a joint interest in property or a common fund, or where the class members have engaged in activities in the forum. See id. Moreover, the efficiency of class actions should be weighed against the equitable and due process concerns implicated by the potential res judicata effect on non-resident and absent plaintiffs. See supra n. 5. Professors Miller & Crump illustrate this problem as follows: “The rights of nonresident class members can be appreciated by considering ... a class action ... that is settled for much less than some class members think is reasonable.” Miller & Crump, supra, at 16-17. In the case now before us, it is not too hard to understand how a non-consenting class member could think a settlement that puts no money in his pocket but takes away his right to seek damages under federal laws entrusting his non-disclosure claims exclusively to federal courts is unfair.
II.
Thus, here the state court’s attempt to release federal claims that Congress has placed in the exclusive jurisdiction of federal courts under the interstate commerce power Article I, Section 8, Clause 3 of the Constitution grants Congress, compounds the difficulties that arise if the Delaware decree binds Holbrook. It has been noted that the requirement of minimum contacts has as one of its elements a respect for the individual sovereignty of the various states and their dual sovereignty with the national government. That mutual respect is said to be inherent in our federalism. See World-Wide Volkswagen, 444 U.S. 286, 293-94, 100 S.Ct. 559, 565-66, 62 L.Ed.2d 490 (1980); see also Miller & Crump, supra, at 32. Thus, in WorldWide Volkswagen, 444 U.S. at 291-94, 100 S.Ct. at 564-66, the Supreme Court, concerned with upholding shared state interests, reaffirmed its commitment to the minimum contacts and fair play and substantial justice test of International Shoe. The restriction the Fourteenth Amendment imposes on state courts’ exercise of personal jurisdiction serves not only the interest of the absent plaintiff but also acts in the interest of federalism. It ensures that states do not reach out beyond the limits of their power. World-Wide Volkswagen, 444 U.S. at 292-93, 100 S.Ct. at 564-65; but see Shutts, 472 U.S. at 807, 105 S.Ct. at 2972 (endorsing approach of Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702-03 & n. 10, 102 S.Ct. 2099, 2104-05 & n. 10, 72 L.Ed.2d 492 (1982), and stating “the requirement that a court have personal jurisdiction comes from the Due Process Clause’s protection of the defendant’s personal liberty interest and ... the requirement ‘represents a *1573restriction on judicial power not as a matter of sovereignty, but as a matter of individual liberty.’ ”) (footnote omitted in original)); cf. Miller & Crump, supra, at 33 (indicating that approach of Shutts adopting limited role for federalism leaves open the question whether there are valid interests that will be left unprotected by the abandonment of the World-Wide Volkswagen approach). I do not think those concerns are present here and, in any event, it would be my view that the liberty interest the due process clause protects is complemented by the common federal interest that is the concern of the commerce clause.
If the residual sovereignty of the individual states is part of the rationale behind the restrictions minimum contacts place on the state courts’ exercise of personal jurisdiction over each other’s citizens or residents, then it also seems to me that respect for the sovereignty of the federal government in areas in which the Constitution grants it power should also affect the power of a state to preclude the exclusively federal actions of persons who lack minimum contacts with that state or the cause it is hearing.10
Use of a state’s mandatory class action to bar later actions by non-consenting, non-residents under the Securities Exchange Act of 1934 and the Williams Act thus seems to me to infringe on the mutual respect of the states and the federal government for each others’ sovereignty that our federalism requires. See Radzanower v. Touche Ross & Co., 426 U.S. 148, 157-59 & n. 15, 96 S.Ct. 1989, 1994-96 & n. 15,48 L.Ed.2d 540 (1976); see also 15 U.S.C.A. § 78aa (West Supp.1993). Balkanization of the national system regulating interstate commerce in corporate securities is foreseeable if each state can subject any non-resident stockholder of one of its domestic corporations to decrees which settle disputes about state corporate law by taking from non-consenting, non-resident shareholders remedies they may have under federal securities law against those who control the corporation.11
III.
For all these reasons, I think that state courts have no power to bind non-resident shareholders, who do not consent to state jurisdiction, to state court settlements of disputes over local corporate law which include waivers of their federal claims. I would conclude that Holbrook’s ownership of stock in a Delaware corporation arid his tender pursuant to the tender offer that he claims failed to meet federal disclosure standards did not, consistent with due process, give the Delaware Court of Chancery in personam jurisdiction over him as a non-resident, non-con*1574senting member of a non-opt-out class certified under Delaware Chancery Rule 23(b)(1) and (b)(2). That being the case, I do not think he is bound by the class representative’s release of his federal securities law claims. I would therefore reverse the district court’s order granting Vitalink’s motion for summary judgment based on claim or issue preclusion arising out of the release of the parties the state court included in the consent decree insofar as that order concerns Holbrook.12 I would hold instead that Hol-brook was not subject to the in personam jurisdiction of Delaware’s Court of Chancery and that its attempt to bind him without his consent was a denial of due process. I would then enter an order remanding this case to the district court for further proceedings on Holbrook’s claims under the federal law that regulates the sale and transfer of corporate securities.

. See infra pp. 1572-73 for a discussion of the impact of federalism.

. Pennoyer's so-called iron fence theory of territorial jurisdiction was expressly superseded by International Shoe's more flexible due process test. See International Shoe, 326 U.S. at 316, 66 S.Ct. at 158.

. Similar problems of personal jurisdiction arose as interpleader evolved in the United States. There,, in an effort to avoid the problem of personal jurisdiction that accompanies a federal system of dual state and national sovereignty, parties to claims against insurance companies, entities that commonly face conflicting claims to a single fund, sought from the one side to attach the obligation or from the other to pay it into court in order to create a res whose ownership could be litigated without a need for personal jurisdiction. In one of these cases, on appeal from this Court, the Supreme Court rejected such efforts to avoid the requirement of in per-sonam jurisdiction. New York Life Ins. Co. v. Dunlevy, 241 U.S. 518, 522, 36 S.Ct. 613, 614, 60 L.Ed. 1140 (1916). Congress then attempted to solve the problem of personal jurisdiction by enacting the Federal Interpleader Act, now codified at 28 U.S.C.A. §§ 1335, 1397, 2361 (West 1993). It permits nationwide service of process in actions in interpleader. 28 U.S.C.A. § 2361.

. Cf. Doumani v. Casino Control Comm’n, 614 F.Supp. 1465, 1471-73 (D.N.J.1985) (New Jersey Casino Commission had in personam jurisdiction over nonresident shareholders of New Jersey casino corporation only because shareholders' substantial stock interest gave them ability to significantly affect casino operation in New Jersey. Jurisdictional objection arguably waived.).

. Quoting Note, Phillips Petroleum Company v. Shutts: Procedural Due Process and Absent Class Members: Minimum Contacts Is Out — Is Individual Notice In?, 13 Hastings Const. L.Q. 817, 821 (1986); Note, Phillips Petroleum Company v. Shutts: Multistate Plaintiff Class Actions: A Definite Forum, But Is It Proper?, 19 John Marshall L.Rev. 483, 485 (1986).

. For an analogous solution proposing factors for a balancing test, see Miller & Crump, supra, at 55-56. They propose a four factor balancing test to determine the propriety of mandatory class certification after Shutts. The factors they would consider are: (1) efficiency, i.e., the economies of scale that can be achieved in a class action; (2) equity concerns, i.e., whether some plaintiffs will be unfairly harmed if other plaintiffs litigate first and whether defendants may be subjected to multiple liability, such as is present in the mass tort cases by virtue of punitive damages; (3) the concern about distant forum abuse; and (4) the interest in individualized control. Id.

. The court of appeals in In re A.H. Robins Co., after extensively discussing Shutts' impact on actions for money damages and recognizing that even “if [Shutts is] taken as requiring an opt-out provision in any class certification," did not reach or decide the issue of jurisdiction because the Trust Plan did include an implied chance to opt out. In re A.H. Robins Co., 880 F.2d at 745 (emphasis added).

. The text of Delaware Chancery Rule 23 is the same as that of Federal Rule of Civil Procedure 23. Both jurisdictions recognize non-opt-out classes under (b)(1) and (b)(2). Cf. Fed.R.Civ.P. 23(b)(1), (b)(2); In re Joint Eastern & Southern District Asbestos Litig., 982 F.2d 721, 739 (2d Cir.1992) (mandatory non-opt-out class under Rule 23(b)(1)(B) in action seeking equitable distribution of res of trust established pursuant to confirmed Chapter 11 Plan), opinion modified on reh'g, 993 F.2d 7 (2d Cir.1993). I note that Wright and Miller, in discussing antitrust and securities fraud actions including those for misrepresentation, generally refer only to Federal Rule 23(b)(3), not (b)(1) or (b)(2), as a vehicle for the class action suit. See Charles A. Wright et al., 7B Federal Practice & Procedure Civil 2d (hereinafter "Federal Practice & Procedure") § 1781 at 4-5, 33; id. § 1778 at 529-33 & n. 14. Thus, it is not clear to me that this case involves a non-opt out class.

. Cf. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct 652, 94 L.Ed. 865 (1950) (involving question of due process notice requirement in judicial settlement of trust fund, where trust company sought binding settlement over all beneficiaries of the trust on the sole basis of notice by publication).

. Conventional notions of express or implied preemption were never presented here either in the district court or this Court. Therefore, I do not believe it would be appropriate to consider directly any actual or potential conflict between Delaware Rule 23(b)(2) and the Securities Exchange Act or the Williams Act.

. The parties have cited only two courts of appeals’ cases that have addressed a state court’s power to relinquish federal rights through approval of a class action settlement. See Nottingham Partners v. Trans-Lux Corp., 925 F.2d 29, 33-34 (1st Cir.1991); Abramson v. Pennwood Investment Corp., 392 F.2d 759, 762 (2d Cir.1968). Abramson was a federal stockholders derivative action that was barred because the corporation had released all related claims in a state court settlement. 392 F.2d at 760. Because Abramson was a derivative action, as opposed to a representative suit, the claims released belonged to the corporation and there should be little doubt about a corporation’s ability to release its own claims. See National Super Spuds, Inc. v. New York Mercantile Exch., 660 F.2d 9, 18-19 (2d Cir.1981). This case is a representative action, not a derivative action. As such, it is distinguishable.
TBK Partners, Ltd. v. Western Union Corp., 675 F.2d 456 (2d Cir.1982), the other case cited by the parties, is also distinguishable. It concerned a settlement of a federal action that released defendants from all claims the plaintiff class might assert in a state appraisal proceeding. The objectors in TBK Partners never challenged the district court's certification of the class as a non-opt-out class. Thus, the court expressly reserved that question, stating ”[w]e therefore do not consider the case of a release of claims of members of a class that had been improperly certified as a non-opt-out class.” Id. at 460 n. 4; see also In re Real Estate Title & Settlement Servs. Litig., 869 F.2d 760, 770 (3d Cir.), cert. denied, 493 U.S. 821, 110 S.Ct. 77, 107 L.Ed.2d 44 (1989) (assuming that federal court in properly certified Rule 23(b)(1) and (2) class action could validly approve release of state claims). Cf. Nottingham Partners, 925 F.2d at 31, 34 (Delaware court had approved settlement of a class action including release of federal claims, but Nottingham had already unsuccessfully litigated its inclusion in a non-opt-out class in the Delaware proceedings).

. Though our opinions in the case concern the rights of an absent plaintiff, we should not ignore the problems a defendant or defendants could face if a judgment or decree favorable to the plaintiffs binds the defendants but also permits non-consenting, non-resident plaintiffs to seek additional relief. One way to reduce that problem is to refuse to give non-consenting members of a plaintiff class the benefit of issue preclusion.