Opinion
00 Civ. 5725 (LAK)
October 18, 2000
ORDER
This case involves a dispute over ownership of a copy of an August 2-14, 1776 issue of the South Carolina American General Gazette, which contains what is believed to be the sole extant copy of the first printing in South Carolina of the Declaration of Independence. Defendant Christie's Inc. has filed a cross-claim for interpleader. The Court previously granted its motion for a preliminary injunction restraining prosecution of a South Carolina action brought by the Charleston Library Society (the "Society") in an opinion familiarity with which is assumed. Mark E. Mitchell, Inc. v. Charleston Library Society, No. 00 Civ. 5725 (LAK), 2000 WL 1349250 (S.D.N.Y. Sept. 20, 2000). The Society has filed separate motions to (1) dismiss the cross-claim for lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue, and failure to join an indispensable party or, alternatively, to stay this action pending the resolution of the South Carolina action, and (2) dismiss the complaint for lack of personal jurisdiction and failure to join an indispensable party or, alternatively, to stay this action pending the resolution of the South Carolina action.
The Interpleader Action
Each of the arguments advanced by the Society with respect to the interpleader claim was rejected in the Court's opinion granting Christie's' motion for a preliminary injunction save the challenge to personal jurisdiction and the contention that the action should be stayed pending the South Carolina action. Neither contention requires much discussion.
The Society bases its objection to personal jurisdiction on the contention that it lacks contacts with New York sufficient to justify the exercise of jurisdiction over it by this Court consistent with the Due Process Clause of the Fourteenth Amendment. It argues that Shaffer v. Heitner, 433 U.S. 186 (1977), requires such contacts even in an in rem proceeding such as this. But its position is not well founded.
To begin with, it is far from clear that Shaffer goes nearly as far as the Society suggests. While the decision does contain the categorical statement "that in order to justify an exercise of jurisdiction in rem, the basis for jurisdiction must be sufficient to justify exercising `jurisdiction over the interests of persons in a thing,'" id. at 207, this begs the question of precisely what that basis must be. Moreover, the Court took pains to point out that "the presence of property in a State may bear on the existence of jurisdiction," id., and "that jurisdiction over many types of actions which now are or might be brought in rem would not be affected by a holding that any assertion of state-court jurisdiction must satisfy the International Shoe standard." Id. at 208.
This has led to a lively debate as to the impact of Shaffer on the assertion of jurisdiction in rem. See generally 4 Wright Miller, Federal Practice and Procedure: Civil 2d § 1073 (1987 Supp. 2000). In our Circuit, however, the debate appears to have been resolved. In Johnston v. Arbitrium (Cayman Islands) Handels AG, 198 F.3d 342 (2d Cir. 1999), the Court of Appeals wrote as follows:
"If an in rem action is brought involving an out-of-state party's rights with respect to property in the forum state, . . . the forum court ordinarily has the power to decide the case insofar as it affects those rights, irrespective of whether there are sufficient contacts to confer on the court in personam jurisdiction over the party. [citation omitted] But, if such contacts are absent, the existence of in rem jurisdiction alone does not permit the forum court to require such a party to appear in the forum or actively defend his or her interest in the proper. Forcing this burden upon a party without minimum contacts with the forum state is precisely what is forbidden by International Shoe as `offen[sive] to traditional notions of fair play and substantial justice.' 326 U.S. at 316 . . . Such a party has the due process right simply to decline to appear, although he or she may default on, or have to suffer a defense provided by others on, the in rem claim as a result . . . [and thus] be bound by the outcome of the litigation as to his or her interest in the property in question . . ." 198 F.3d at 349 (emphasis added).
Even had the Circuit not so construed Shaffer, the result would be the same. As the Court pointed out in the preliminary injunction opinion, the Fourteenth Amendment "minimum contacts" approach does not apply here given the existence of the nationwide service of process provision of the interpleader statute. 2000 WL 1349250, *3. If Shaffer were construed as the Society suggests, the question would be whether the assertion of in rem jurisdiction to adjudicate the Society's claim to the property would violate the Fifth Amendment, which affords greater scope for the assertion of jurisdiction than the Fourteenth in view of the lack of concerns regarding state sovereignty and the independent federal interest in adjudicating the conflicting claims to the res. See id.
For all of the foregoing reasons, the Court holds that it has jurisdiction to adjudicate the Society's claim to the res and that the exercise of that jurisdiction does not violate the Constitution. The motion to dismiss for lack of jurisdiction is denied.
The Society's request to stay the interpleader action in deference to the South Carolina action also is denied. There simply is no serious case for doing so.
The Plaintiff's Action
The only aspect of the Society's motion to dismiss the complaint filed by plaintiff Mark E. Mitchell, Inc. that remains unresolved is its contention that it is not subject to personal jurisdiction here with respect to the plaintiff's claim. Plaintiff responds that the Court has pendent personal jurisdiction over its complaint based on its jurisdiction over the res and, in any case, that it has made a prima facie showing of personal jurisdiction over the Society.
The resolution of the personal jurisdiction question would be premature. Even assuming that pendent personal jurisdiction does not apply, a point that the Court does not now decide, plaintiff has adduced sufficient indications of connections between the Society and this District to warrant exploration in discovery.
Conclusion Plaintiff's motions to dismiss the complaint and Christie's' cross-claim or for other relief are denied in all respects. Insofar as it seeks dismissal of the complaint for lack of personal jurisdiction, the denial is without prejudice to renewal upon completion of discovery.
SO ORDERED.