United States v. Tarek Obaid

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 18-56657

Plaintiff-Appellee,

D.C. No.

v. 2:17-cv-04446-

DSF-PLA

TAREK OBAID,

Claimant-Appellant,

OPINION

CERTAIN RIGHTS TO AND INTERESTS

IN SHARES OF SERIES D PREFERRED

STOCK IN PALANTIR TECHNOLOGIES,

Defendant.

Appeal from the United States District Court

for the Central District of California

Dale S. Fischer, District Judge, Presiding

Argued and Submitted September 11, 2019

Pasadena, California

Filed August 24, 2020

Before: Johnnie B. Rawlinson, Sandra S. Ikuta, and

Mark J. Bennett, Circuit Judges.

Opinion by Judge Rawlinson;

Dissent by Judge Ikuta

2 UNITED STATES V. OBAID

SUMMARY*

Personal Jurisdiction / In Rem Civil Forfeiture / Venue

The panel affirmed the district court’s order denying

Tarek Obaid’s motion to dismiss for lack of personal

jurisdiction and for lack of proper venue a civil forfeiture

case involving Obaid’s shares of stock in Palantir

Technologies, a corporation with its principal place of

business in California.

Obaid is a citizen of Saudi Arabia who wired $2 million

from his account in Switzerland to a bank in California to

purchase stock in Palantir. The government filed this in rem

civil forfeiture action against Obaid’s Palantir shares. Obaid

moved to dismiss the forfeiture action, contending that in

personam jurisdiction over him was necessary to adjudicate

this in rem action, and the district court was required to apply

the minimum contacts standard to determine whether he had

sufficient contacts with the forum.

The panel held that the United States Supreme Court’s

decision in Shaffer v. Heitner, 433 U.S. 186 (1977) (requiring

the application of a minimum contacts framework to each

person who claims ownership 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 (2004), provided more direct guidance

for the issues before the panel. The panel concluded that

Hood supported its view that Shaffer was limited to quasi in

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

UNITED STATES V. OBAID 3

rem actions and did extend to in rem actions, such as this one.

The panel held that the district court did not err when it

determined that the constitutional due process requirements

set forth in International Shoe Co. v. Washington, 326 U.S.

310 (1945), were inapplicable to this in rem action. In 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.

The panel held that venue was proper because sufficient

acts giving rise to the civil forfeiture occurred in the Central

District of California. The panel concluded that the

conspiratorial activity in the Central District was sufficient to

support venue given the relatively low standard set forth in

28 U.S.C. § 1355. The panel also held that whether Obaid

was involved in the conspiracy was immaterial to the venue

analysis.

Dissenting, Judge Ikuta wrote that the majority erred in

not applying Shaffer v. Heitner, and created a split with two

circuits that applied Shaffer and seven circuits that expressly

construed it to cover ordinary in rem proceedings. Judge

Ikuta would remand to the district court to conduct the

required minimum contacts analysis.

4 UNITED STATES V. OBAID

COUNSEL

David B. Rivkin (argued), Jonathan R. Barr, Lee A. Casey,

Mark W. DeLaquil, Elizabeth Price Foley, and Andrew M.

Grossman, Baker Hostetler LLP, Washington, D.C.; Jonathan

B. New, Baker Hostetler LLP, New York, New York; for

Claimant-Appellant.

Joshua L. Sohn (argued), Trial Attorney; Woo S. Lee, Deputy

Chief; Deborah Connor, Chief; Money Laundering and Asset

Recovery Section, United States Department of Justice,

Washington, D.C.; L. Ashley Aull, Chief, Criminal Appeals

Section; Nicola T. Hanna, United States Attorney; United

States Attorney’s Office, Los Angeles, California; for

Plaintiff-Appellee.

David L. Zifkin, Boies Schiller Flexner LLP, Santa Monica,

California; Matthew L. Schwartz, Boies Schiller Flexner

LLP, New York, New York; for Amicus Curiae Qentas

Holdings.

UNITED STATES V. OBAID 5

OPINION

RAWLINSON, Circuit Judge:

Appellant-claimant Tarek Obaid (Obaid) appeals the

district court’s order denying his motion to dismiss for lack

of personal jurisdiction and for lack of proper venue in this

civil forfeiture case involving his shares of stock in Palantir

Technologies (Palantir), a corporation with its principal place

of business in California. Reviewing de novo, we affirm the

judgment of the district court.

I. BACKGROUND

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

executive officer of PetroSaudi International (PSI), an oil and

gas exploration company. In 2009, PSI entered into a joint

venture with 1Malaysia Development Berhad (1MDB), an

investment company wholly-owned by the government of

Malaysia. 1MDB was created to pursue economic

development for the benefit of the Malaysian people.

According to the government, 1MDB was riddled with fraud

from its inception, as multiple individuals conspired to divert

and launder billions of dollars from the fund. From 2009 to

2011, 1MDB and PSI arranged for the fraudulent transfer of

more than $1 billion from 1MDB to a Swiss bank account in

the name of Good Star Limited (Good Star Account). Jho

Low, a Malaysian national, was involved in the creation of

1MDB, and laundered more than $400 million through the

Good Star Account into the United States. Low then used the

laundered funds to, among other things, purchase luxury

items and real estate.

6 UNITED STATES V. OBAID

As the chief executive of PSI, Obaid allegedly facilitated

the 1MDB and PSI joint venture, including by signing various

documents to effectuate the transfers of money into the Good

Star Account. Additionally, Obaid personally received $153

million from the Good Star Account that was processed

through a bank account in New York and ultimately sent to

Obaid’s personal account in Switzerland. Relevant to this

appeal, Obaid wired $2 million from his account in

Switzerland to a bank in California to purchase 2,500,000

shares of Series D preferred stock in Palantir.1

As part of its efforts to recoup money fraudulently

obtained in the scheme, the government filed this in rem civil

forfeiture action against Obaid’s Palantir shares. In a lengthy

complaint, the government alleged that the Palantir shares

were forfeitable because they were derived from proceeds

traceable to the wire fraud and money laundering scheme

involving 1MDB and PSI. Contemporaneous with the action

brought against Obaid’s Palantir shares, the government filed

multiple civil forfeiture suits seeking to reclaim assets such

as luxury hotels, yachts, certain movies rights, and expensive

real estate in Beverly Hills, connected to the fraudulent

scheme. However, it is unclear from the complaint

whether—and to what extent—Obaid maintains an ownership

interest in the additional assets being sought by the

government in the related civil forfeiture actions.

Obaid confirmed his ownership of the Palantir shares and

subsequently moved to dismiss the forfeiture action,

1

Because this is an in rem action, the defendant in this appeal is

property—the Series D Palantir shares. See United States v. 2,164

Watches, More or Less Bearing a Registered Trademark of Guess?, Inc.,

366 F.3d 767, 771 (9th Cir. 2004).

UNITED STATES V. OBAID 7

contending that the district court lacked personal jurisdiction

over him as the property owner. Obaid also maintained that

venue was improper because the disputed res, i.e., the Palantir

shares, was not alleged to be located in the Central District of

California. The district court rejected Obaid’s argument that

personal jurisdiction over him was required to adjudicate

rights to the named property. And the district court

concluded that venue was proper in the Central District,

reasoning that civil forfeiture actions may be brought in the

district “in which any of the acts or omissions giving rise to

the forfeiture occurred.” In the district court’s view, venue

was proper because multiple acts giving rise to the alleged

conspiracy occurred in the Central District.

Obaid moved for reconsideration of the district court’s

rulings and, in the alternative, to certify the rulings for

interlocutory appeal. The district court denied the motion for

reconsideration, but granted the motion to certify its ruling

for interlocutory appeal.

II. STANDARD OF REVIEW

A district court’s rulings on personal jurisdiction and

venue are reviewed de novo. See Myers v. Bennett Law

Offices, 238 F.3d 1068, 1071 (9th Cir. 2001).

III. DISCUSSION

Obaid contends that the district court erred when it denied

his motion to dismiss for lack of personal jurisdiction.

According to Obaid, in personam jurisdiction over him was

necessary to adjudicate this in rem forfeiture action, and the

district court was required to apply the minimum contacts

standard established by United States Supreme Court

8 UNITED STATES V. OBAID

precedent to determine whether he had sufficient contacts

with the forum. Applying that standard, Obaid asserts that he

lacked sufficient contacts with the forum to satisfy due

process requirements. Obaid also challenges the district

court’s determination that venue was proper in the Central

District.

A. In Personam Jurisdiction in an In Rem Action

Obaid urges us to conclude that the district court erred

when it held that the United States Supreme Court’s decision

in Shaffer v. Heitner, 433 U.S. 186 (1977) does not control

the outcome of the jurisdiction issue in this in rem civil

forfeiture action. Obaid maintains that Shaffer squarely

stands for the proposition that all assertions of

jurisdiction—in rem, quasi in rem, and in personam—must

be evaluated according to a minimum contacts standard.

Before delving into the issues in this case, it is helpful to

distinguish among the types of potential jurisdiction in

federal cases. “In personam jurisdiction, simply stated, is the

power of a court to enter judgment against a person.” SEC v.

Ross, 504 F.3d 1130, 1138 (9th Cir. 2007). By contrast, in

rem jurisdiction is the court’s power to adjudicate rights over

property. See id. “Jurisdiction in rem is predicated on the

fiction of convenience that an item of property is a person

against whom suits can be filed and judgments 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 quotation 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 in

UNITED STATES V. OBAID 9

personam jurisdiction. The action is not really

against the property; rather, the action

involves the assertion of a personal claim

against the defendant of the type usually

advanced in an in personam action and the

demand ordinarily is for a money judgment,

although in some contexts the objective may

be to determine rights in certain property. The

basis for transforming the suit from one in

personam to an action against the defendant’s

property is the attachment or garnishment of

some or all of the property the defendant may

have in the jurisdiction.

Ventura Packers, Inc. v. F/V JEANINE KATHLEEN, 424 F.3d

852, 860 n.4 (9th Cir. 2005), as amended (citations and

alteration omitted).

Fortunately, there is no dispute that the underlying action

is in rem because “[a] forfeiture action is in rem.” $1.67

Million, 513 F.3d at 996 (citation omitted). The Supreme

Court recognizes a “sharp distinction between in rem civil

forfeitures and in personam civil penalties such as fines.”

United States v. Ursery, 518 U.S. 267, 275 (1996). While a

civil action to recover penalties is similar to a criminal

prosecution in that “it is the wrongdoer in person who is

proceeded against, in an in rem forfeiture proceeding, it is the

property which is proceeded against.” Id. at 283 (citation,

alteration, and internal quotation marks omitted). Thus in a

civil forfeiture proceeding in rem, “jurisdiction [is] dependent

upon seizure of a physical object.” Id. at 277 (citation

omitted). Here, the focus is on the district court’s jurisdiction

over the property in dispute, i.e., Obaid’s Palantir shares. See

Ross, 504 F.3d at 1138.

10 UNITED STATES V. OBAID

To resolve this case we must decide which of two cases

is the more pertinent precedent. The first is Shaffer, which

involved a Delaware shareholder derivative suit against

Greyhound Corporation, as well as its officers and directors.

See 433 U.S. at 189–90. In conjunction with his action, the

plaintiff moved to sequester the Delaware property—stock in

Greyhound Corporation—of the individual defendants. See

id. at 190–91. Under Delaware law, the primary purpose of

“sequestration” was to use the property as a basis to “compel

the personal appearance of a nonresident defendant to answer

and defend a suit brought against him in a court of equity.”

Id. at 193 (citation omitted). The individual defendants

challenged the suit on personal jurisdiction grounds,

contending that they lacked sufficient contacts with Delaware

to satisfy the jurisdictional requirements of International

Shoe Co. v. Washington, 326 U.S. 310 (1945). See Shaffer,

433 U.S. at 192–93. The Delaware Supreme Court rejected

the defendants’ argument, holding that the quasi in rem

jurisdiction was predicated “on the presence of capital stock

[in Delaware], not on prior contact by defendants with this

forum.” Id. at 195 (quoting Greyhound Corp. v. Heitner,

361 A.2d 225, 229 (Del. 1976)).

The United States Supreme Court reversed the ruling of

the Delaware courts See id. In the Supreme Court’s view,

the same precepts that govern in personam jurisdiction, “fair

play and substantial justice,” also applied in Shaffer because

“judicial jurisdiction over a thing, is a customary elliptical

way of referring to jurisdiction over the interests of persons

in a thing.” Id. at 207 (citation, footnote reference, and

internal quotation marks omitted). Logically, this means 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.

UNITED STATES V. OBAID 11

(footnote reference and internal quotation marks omitted).

“The standard for determining whether an exercise of

jurisdiction over the interests of persons is consistent with the

Due Process Clause is the minimum-contacts standard

elucidated in International Shoe.” Id. The Supreme Court

thus concluded that “all assertions of state-court jurisdiction

must be evaluated according to the standards set forth in

International Shoe and its progeny.” Id. at 212 (footnote

reference omitted).

Left with this conclusion from Shaffer, one might deduce

that Obaid’s position carries the day. But not so fast.

Another Supreme Court decision, Tennessee Student

Assistance Corp. v. Hood, 541 U.S. 440 (2004), decided some

twenty-five years after Shaffer, has something to say about in

rem jurisdiction and it does not say the same thing that

Shaffer seemingly says.

The Tennessee Student Assistance Corporation (TSAC)

is a government agency that administers student assistance

programs in the state of Tennessee. See id. at 443. Among

other things, TSAC guarantees student loans to residents of

Tennessee. See id. at 444. Hood was one such resident, and

she signed promissory notes for loans guaranteed by TSAC.

See id. Years after receiving the loans, Hood filed a “no

asset” bankruptcy petition. She did not mention her student

loans and those debts were not included in her discharge. See

id. Hood then reopened her bankruptcy petition for the

limited purpose of seeking a discharge of her student loans

pursuant to the “undue hardship” provision of the Bankruptcy

Code. See id. TSAC was named as a defendant. See id.

at 445.

12 UNITED STATES V. OBAID

TSAC filed a motion to dismiss Hood’s complaint for

lack of jurisdiction, on the basis of the state’s sovereign

immunity under the Eleventh Amendment. See id. The

bankruptcy court, Sixth Circuit Bankruptcy Appellate Panel,

and the Sixth Circuit all agreed that states have no immunity

from suit in the bankruptcy context. See id.

The Supreme Court granted certiorari and affirmed. See

id. at 443. Rather than addressing the “broader question” of

whether states have no immunity from suit in the bankruptcy

context, the Court addressed the narrower question of

whether discharge of a student loan debt implicated Eleventh

Amendment immunity. See id. at 445. The Court’s answer

to this question was “no.” See id.

To resolve this question, the Court first clarified that

“[t]he discharge of a debt by a bankruptcy court is . . . an in

rem proceeding and that [b]ankruptcy courts have exclusive

jurisdiction over a debtor’s property.” Id. at 447 (citations

omitted). The Court noted that its precedent “has drawn a

distinction between in rem and in personam jurisdiction, even

when the underlying proceedings are, for the most part,

identical.” Id. at 453. For the purpose of adjudicating the

discharge claim, the bankruptcy court’s “jurisdiction is

premised on the res, not on the persona.” Id. at 450. The

Court concluded that the case did not implicate the Eleventh

Amendment because the bankruptcy court’s in rem

jurisdiction “allows it to adjudicate the debtor’s discharge

claim without in personam jurisdiction over the State.” Id. at

453 (citation omitted). “The bankruptcy court’s in rem

jurisdiction permits it to determine all claims that anyone,

whether named in the action or not, has to the property or

thing in question. . . . Id. at 448 (citation, alteration, and

internal quotation marks omitted). This conclusion follows

UNITED STATES V. OBAID 13

because in an in rem action, “jurisdiction over the person is

irrelevant if the court has jurisdiction over the property.” Id.

(citation omitted). The Court emphasized that Hood did not

ask the bankruptcy court to exercise personal jurisdiction; she

simply wanted “a determination of the dischargeability of her

debt.” Id. For that reason, the Eleventh Amendment was not

implicated and the denial of TSAC’s motion to dismiss was

upheld. See id. at 455.

Neither of these two cases 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 proceeding as “a halfway house

between in rem and in personam jurisdiction” with the

“action not really against the property” but more “a personal

claim . . . of the type usually advanced in an in personam

action”). As noted in Shaffer, the primary purpose of

sequestration was “not to secure possession of property” but

to “compel the personal appearance of a nonresident

defendant to answer and defend a suit brought against him in

a court of equity.” 433 U.S. at 193 (citation omitted). In

other words, “the only role played by the property [was] to

provide the basis for bringing the defendant into court.” Id.

at 209 (footnote reference omitted). Indeed, once the

defendant made a general appearance before the court, the res

was released. See id. at 193. Unlike in a true in rem

proceeding, the seized property “[was] not the subject matter

of [the] litigation, nor [was] the underlying cause of action

related to the property.” Id. at 213. Thus, despite the Court’s

reference to in rem proceedings, it is apparent from its

14 UNITED STATES V. OBAID

analysis that Shaffer is limited to quasi in rem proceedings.2

There is no dispute that civil forfeiture does not involve the

quasi in rem proceedings contemplated by Shaffer, in which

the “action is not really against the property; rather, the action

involves the assertion of a personal claim against the

defendant of the type usually advanced in an in personam

action.” 4A C. Wright & A. Miller, Federal Practice and

Procedure § 1070 (4th ed. 2020).

This conclusion is supported by the failure of the Court to

expressly overrule its longstanding precedent anchoring in

rem jurisdiction to the presence of the res. See, e.g.,

Republic Nat. Bank of Miami v. United States, 506 U.S. 80,

84 (1992) (“Certainly, it long has been understood that a valid

seizure of the res is a prerequisite to the initiation of an in rem

civil forfeiture proceeding. . . .”) (citations omitted); see also

Kline v. Burke Constr. Co., 260 U.S. 226, 229 (1922)

(“Where the action is in rem the effect is to draw to the

federal court the possession or control, actual or potential, of

the res . . .”); Overby v. Gordon, 177 U.S. 214, 221 (1900)

(“An essential characteristic of a proceeding in rem is that

there must be a res or subject-matter upon which the court is

to exercise its jurisdiction. . . .”).

2

See also James Weinstein, The Federal Common Law Origins of

Judicial Jurisdiction, 90 Va. L. Rev. 169, 246 & n.28 (2004) (“In

continuing the common law process that gave rise to the in rem rules in

the first place, the Court has, for a variety of reasons (including forum

state interest, history, and considerations of individual fairness), decided

that most of the traditional in rem rules continue to square with its vision

of how state judicial authority should be allocated in our federal system.

Only where changed circumstances have rendered a traditional practice

outmoded and dysfunctional, as was the case with attachment jurisdiction

[in Shaffer], has the Court, in the best common law tradition, declared the

practice invalid.”).

UNITED STATES V. OBAID 15

It would be “exceeding strange”3 if the Supreme Court

intended to eliminate the historical distinction between in

personam and in rem jurisdiction without explicitly saying so.

See United States v. Ten Thousand Dollars, 860 F.2d 1511,

1513 (9th Cir. 1988) (applying “traditional in rem principles”

in a forfeiture action).4 We should not assume that the

Supreme Court has implicitly overruled its precedent. See

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, earlier authority sub silentio. . . .”). In our

view, the more reasonable interpretation of Shaffer limits it to

the scenario presented to the Court—a quasi in rem statutory

scheme.

The Supreme Court evidently did not sweep away

traditional in rem principles in Shaffer, as it relied on those

same principles almost thirty years later in Hood to conclude

that “the bankruptcy court’s jurisdiction is premised on the

res, not on the persona.” Hood, 541 U.S. at 450. We are

persuaded that Hood provides more direct guidance for the

issue we are called upon to decide. Unlike in Shaffer, Hood

involved a true in rem case. In this case and in Hood, the res

is the subject of the action, not a substitute for the person who

is the subject of the action. See Shaffer, 433 U.S. at 213

(explaining that the property was “not the subject matter of

this litigation”).

3

William Shakespeare, The Merchant of Venice, Act 1, Scene 1. The

dissent maintains that the Supreme Court “explicitly said” that it was

overruling decades of precedent governing in rem jurisdiction. Dissenting

Opinion, p.38–39. However, it is notable that the dissent does not point

to one in rem case that the Supreme Court overruled in Shaffer.

4

The dissent ignores this language in its citation of this case. See

Dissenting Opinion, p.40.

16 UNITED STATES V. OBAID

The dissent’s attempt to restrict Hood’s application of

traditional in rem principles to bankruptcy cases where the

absent party is the creditor, rather than the debtor, is

unpersuasive. The Court was clear that its jurisdiction was

“premised on the res,” see Hood, 541 U.S. at 448, and that

“jurisdiction over the person is irrelevant if the court has

jurisdiction over the property.” Id. at 453 (citation omitted).

Contrary to the characterization in the dissent of our

“misunderstanding of the nature of bankruptcy proceedings”

and our misreading of Hood, Dissenting Opinion, 34, we fully

understand and faithfully apply the statutory bankruptcy

scheme as interpreted by the Supreme Court in Hood. Under

28 U.S.C. § 1334(e), bankruptcy courts have “exclusive

jurisdiction of all the property, wherever located, of the

debtor as of the commencement of such case, and of property

of the estate.” Thus, in rem bankruptcy jurisdiction

“essentially creates a fiction that the property—regardless of

actual location—is legally located within the jurisdictional

boundaries of the district in which the court sits.” Beck v.

Fort James Corp. (In re Crown Vantage, Inc.), 421 F.3d 963,

971 (9th Cir. 2005) (citation omitted) (emphasis in the

original).5 The jurisdictional statute here creates a similar

legal fiction, providing that a “forfeiture action or proceeding

may be brought in the district court for the district in which

any of the acts or omissions giving rise to the forfeiture

occurred,” even if the property is located in a foreign country.

28 U.S.C. § 1355(b).

5

The dissent elides our reliance on this precedent, preferring to

reference only a treatise cited in Hood. See Dissenting Opinion, p.36.

The dissent’s only attempted response to the express language in Hood is

to seek to blunt its impact through resorting to “context.” Id.

UNITED STATES V. OBAID 17

The discharge of a debt by a bankruptcy court is “an in

rem proceeding.” Hood, 541 U.S. at 447. Although the

bankruptcy court’s discharge order “operat[es] as an

injunction to prohibit creditors from attempting to collect or

to recover the debt,” the court need not have personal

jurisdiction over the creditor. Id.6

If we adopt the broad reasoning of Shaffer advocated by

Obaid and the dissent, we would be discarding a longstanding

body of Supreme Court authority. We hasten to add that we

do not read Hood as overruling or purporting to overrule

Shaffer. Rather, we conclude that each survives in its

respective sphere: Shaffer in the realm of quasi in rem

jurisdiction and Hood in the realm of in rem jurisdiction.7

6

The dissent states that “[n]othing in Hood suggests that a court may

exercise in rem jurisdiction without personal jurisdiction over the owner

of the res.” Dissenting Opinion, p. 36. But Hood is clear that in rem

jurisdiction is “premised on the res, not on the persona”—this statement

would make no sense if the personal jurisdiction is also necessary.

541 U.S at 450. The “owner of the res” is “persona” not “res.” In rem

jurisdiction does not include an additional personal jurisdiction

requirement over the debtor: the debtor filed the petition and 28 U.S.C.

§ 1334(e) provides the bankruptcy court with “exclusive jurisdiction of all

the property . . . of the debtor . . . and of property of the estate.” In

accordance with traditional in rem principles, jurisdiction over property

is all that is required. See also United States v. Gurley, 434 F.3d 1064,

1068 (8th Cir. 2006) (holding that when the “government, as a creditor,

asserted a right to payment” through filing a proof of claim in debtor’s

bankruptcy proceeding, “there was no need to establish personal

jurisdiction over” the debtor “[b]ecause it was an in rem proceeding”).

7

Contrary to the dissent’s unpersuasive reading of Hood, see

Dissenting Opinion, p.36, everything in Hood points to the court’s in rem

jurisdiction without regard to personal jurisdiction over the owner of the

res. See 541 U.S. at 447.

18 UNITED STATES V. OBAID

The dissent concedes that in the forty-plus years since

Shaffer was decided, no court has dismissed a civil forfeiture

action for lack of personal jurisdiction over a claimant. See

Dissenting Opinion, p.43 n.12. The dissent attempts to

minimize this fact by saying that “this is to be expected.” See

id. We beg to differ. Generally, when the Supreme Court

makes a sweeping change in a fundamental legal theory, there

is a tsunami of reversals in the lower courts applying the new

precedent. One need only compare the legal aftermath of the

Supreme Court’s decision in Ashcroft v. Iqbal, 556 U.S. 662

(2009), to make the point. Iqbal redefined the pleading

standards under Rule 8 of the Federal Rules of Civil

Procedure, see id. at 678–80, and prompted a barrage of

dismissals. See Daniel W. Robertson, In Defense of

Plausibility: Ashcroft v. Iqbal and What the Plausibility

Standard Really Means, 38 Pepp. L. Rev. 111, 140 (2010)

(“In the few months since the decision in Iqbal came down,

it has resulted in the dismissal of 1500 district court and 100

appellate court cases, many if not most of which would

probably have survived; more dismissals are pending.”)

(citation omitted).

Nevertheless, we acknowledge that two of our sister

circuits have noted in passing that Shaffer requires a

minimum contacts analysis in an in rem proceeding. In

United States v. Batato, 833 F.3d 413 (4th Cir. 2016), on

which the dissent relies to support its reading of Shaffer, the

Fourth Circuit acknowledged that “Shaffer provides only

limited guidance as to how to proceed.” Id. at 423. Contrary

to the dissent’s contention that the Court “applied” Shaffer to

require satisfaction of International Shoe in an in rem action,

the Batato panel “assume[d] without deciding that a

traditional, state-based minimum contacts approach is

UNITED STATES V. OBAID 19

appropriate” in a forfeiture action. Id. (footnote reference

omitted).8

Obaid also cites a Second Circuit case, LiButti v. United

States, 178 F.3d 114 (2d Cir. 1999), for the proposition that

“in rem jurisdiction cannot lie to adjudicate ownership of

shares owned by a non-resident . . . when the shareowner

lacks minimum contacts with the forum.” But the Second

Circuit’s holding was not as sweeping as Obaid contends.

LiButti involved litigation over the ownership of a

racehorse, “Devil His Due.” Id. at 116. When the IRS issued

a levy against the horse, contending that LiButti owned it, his

daughter brought a wrongful levy action, claiming that she,

not her father, was the owner. See id. at 116–17. While the

case was pending on appeal, the daughter entered into a

syndicate agreement dividing ownership of the horse into

shares, half of which were sold to a third party. See id. at

117. When the IRS ultimately prevailed on appeal, it sought

restitution for the full value of “Devil His Due” from the

daughter and the third party. Id. at 118. The Second Circuit

determined that the third party could not be compelled to pay

restitution because the court had no personal or in rem

jurisdiction under a minimum-contacts analysis. See id. at

122–23. Contrary to Obaid’s contention, the court did not

dismiss the in rem action for lack of jurisdiction—it upheld

the determination about the ownership of the horse,

notwithstanding any lack of jurisdiction over the third party

claimant. See id. at 120. The court simply held that the third

8

Faced with these explicit statements from the Batato decision, the

dissent again falls back on “context” to spin its analysis. Dissenting

Opinion, p.40 n.9.

20 UNITED STATES V. OBAID

party could not be ordered to reimburse the IRS. See id.

at 122–23.9

We are not persuaded by the lukewarm discussion of

Shaffer by the Fourth Circuit and the Second Circuit. Neither

are the other cases cited by the dissent of sufficient

persuasive value to undermine our analysis of the Shaffer

decision. For starters, not one of the cases cited by the

dissent involves a civil forfeiture action, which is governed

by a statute expressly allowing a forfeiture action to be

brought in any district “in which any of the acts or omissions

giving rise to the forfeiture occurred,” even if the property “is

located in a foreign country.” 28 U.S.C. § 1355(b)(1)(A),

(b)(2). Consequently none of the cases, or the dissent for that

matter, grapples with the application of Shaffer to civil

forfeiture proceedings brought under a statute conferring

exclusive 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 case brought in rem

against the vessel and in personam against the owner

of the vessel. Cites Shaffer for its “philosophy”

without analysis and notes that it was decided “in a

quite different context”—but did not apply Shaffer.

Id. The dissent quotes an order denying a petition for

rehearing. The underlying opinion expressly declined

to address the question: “We need not decide in the

present case whether the philosophical underpinnings

of the system of in rem jurisdiction in admiralty have

9

The dissent once more resorts to analytic gyrations in an effort to

twist the Second Circuit decision to more closely mirror Shaffer. See

Dissenting Opinion, p.40 n.9.

UNITED STATES V. OBAID 21

been critically shaken. . . .” 552 F.2d 1148, 1152 (5th

Cir. 1977).

• Pickens v. Hess, 573 F.2d 380, 387 (6th Cir. 1978) -

a case addressing in personam jurisdiction. Cites

Shaffer in a see also citation, without analysis, to

support the proposition that the modern view of

jurisdiction does not “herald[] the eventual demise of

all restrictions on the personal jurisdiction of state

courts.” Id. (citation omitted).

• Lakeside Bridge & Steel Co. v. Mountain State Const.

Co., Inc., 597 F.2d 596, 600–02 (7th Cir. 1979) - a

case addressing in personam jurisdiction. Restates

the holding of Shaffer, without analysis, to support

application of International Shoe to the question of in

personam jurisdiction over a non-resident defendant,

not jurisdiction over a res. Characterizes the

Delaware court’s exercise of jurisdiction as “in rem

jurisdiction to sequester shares of stock and stock

options” even though the action was quasi in rem. Id.

at 601.

• Salazar v. Atlantic Sun, 881 F.2d 73, 76, 80 (3d Cir.

1989) - admiralty case. Distinguishes Shaffer on the

basis that Shaffer did not arise “in the admiralty

context,” and rejected a due process claim raised by

the owner. Id. at 76.

• Pittsburgh Terminal Corp. v. Mid Allegheny Corp.,

831 F.2d 522, 525 (4th Cir. 1987) - a case addressing

in personam jurisdiction. Recognizes that

International Shoe addresses in personam jurisdiction

and agrees with our interpretation that in Shaffer, “the

22 UNITED STATES V. OBAID

litigation there was not related to the property [and]

the only role played by the property was to bring the

defendants before the court.” Id. at 526.

As stated previously, not one of the cited cases purported

to address civil forfeiture proceedings. Thus, the dissent’s

declaration of a circuit conflict is much exaggerated,

particularly in view of the lack of any mention in Shaffer of

overruling the legion of cases embodying principles of in rem

jurisdiction. And the Supreme Court has continued to

recognize in rem jurisdiction predicated on presence of the

res in civil forfeiture proceedings post-Shaffer. See, e.g.,

Republic Nat. Bank of Miami v. United States, 506 U.S. 80,

84–85 (1992). We are persuaded that Hood supports our

view that Shaffer is limited to quasi in rem actions and does

not extend to in rem actions. See Hood, 541 U.S. at 453

(noting the distinction in Supreme Court precedent between

in rem and in personam jurisdiction).10

10

The law review articles cited by the dissent—all of them published

before the Supreme Court’s decision in Hood—are similarly unpersuasive

on the issue of jurisdiction in forfeiture proceedings. At best,

commentators at the time confirmed that the effect of Shaffer on in rem

forfeiture proceedings is uncertain. See, e.g., Andreas Lowenfeld, In

Search of the Intangible: A Comment on Shaffer v. Heitner, 53 N.Y.U.L.

Rev. 102 (1978) (“The debate goes on whether Shaffer v. Heitner really

overruled Pennoyer v. Neff [95 U.S. 714 (1878)], whether Seider v. Roth

[216 N.E.2d 312 (N.Y. 1966)] can survive after Shaffer, [and] whether one

can build an effective structure to enforce judgments obtained in forum 1

against assets maintained in (or removed to) forum 2. . . .”); Angela M.

Bohmann, Applicability of Shaffer to Admiralty in Rem Jurisdiction,

53 Tul. L. Rev. 135, 141 (1978–79); Kenneth G. Whyburn, Attachment

Jurisdiction After Shaffer v. Heitner, 32 Stan. L. Rev. 167, 167 n.1 (1979).

UNITED STATES V. OBAID 23

B. Venue

Under 28 U.S.C. § 1355(b)(1)(A), in a civil forfeiture

action venue is appropriate in “the district court for the

district in which any of the acts or omissions giving rise to

the forfeiture occurred.” The government emphasizes that the

words “any acts” encompass acts committed in furtherance of

the conspiracy. Obaid responds that this interpretation is too

broad. In contrast, he focuses on the “giving rise to the

forfeiture” language of section 1355. Under his

interpretation, only a specific criminal act that took place in

the Central District, directly implicating the Palantir shares,

would establish venue.

We conclude that Obaid’s preferred interpretation is much

too narrow and ignores the antecedent language in section

1355 permitting venue in the district where “any acts” of the

conspiracy occurred. 28 U.S.C. § 1355(b)(1)(A). His

interpretation is also inconsistent with the legislative history

of section 1355. The Congressional analysis of section

1355(b)(1) explained that its enactment “would be a great

improvement over current law,” because the government

would no longer be compelled “to file separate 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 the district where the acts giving rise to the

forfeiture occurred has jurisdiction over the forfeiture action.”

Id.

The threshold inquiry under section 1355 is whether

“sufficient acts . . . giving rise to the forfeiture” took place in

the Central District. $1.67 Million, 513 F.3d at 996. As

24 UNITED STATES V. OBAID

alleged, the Palantir shares were purchased using funds

traceable to a $700 million transfer to the Good Star Account

as part of the 1MDB scheme. Some of the alleged acts in

furtherance of the conspiracy were conducted in the Central

District, including expensive real estate purchases in Beverly

Hills, the financing of a motion picture, and the purchase of

the Palantir shares. Purchasing real estate in Beverly Hills

and shares of stock in Palantir are not per se criminal acts.

However, if the purchases were a mechanism to launder

proceeds in furtherance of the 1MDB scheme, “sufficient

acts” giving rise to the forfeiture occurred in the Central

District, thus making venue proper. See id. We thus

conclude that the conspiratorial activity in the Central District

was sufficient to support venue in that district, given “the

relatively low standard set forth in section 1355.” Batato,

833 F.3d at 420.

Finally, Obaid’s assertion that the actions of third parties

in the Central District (co-conspirators) cannot serve as a

proxy to establish venue based on his conduct, misses the

point. This civil forfeiture action is not premised on Obaid’s

conduct; rather, the action is predicated on whether the

Palantir shares, i.e., the res, are traceable to the proceeds of a

crime. See Ross, 504 F.3d at 1138. Accordingly, whether

Obaid was involved in the conspiracy is immaterial to the

venue analysis.

IV. CONCLUSION

The Supreme Court decision in Hood supports our

conclusion that the district court did not err when it

determined that the constitutional due process requirements

set forth in International Shoe were inapplicable to this in

rem action. The Court’s decision in Shaffer addressed quasi-

UNITED STATES V. OBAID 25

in-rem actions rather than in rem actions directed solely

toward a res instead of property seized as a substitute for the

defendant. In 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.11 Finally,

venue was proper because sufficient acts giving rise to the

civil forfeiture occurred in the Central District.

AFFIRMED.

IKUTA, Circuit Judge, dissenting:

With one stroke, the majority has swept away Shaffer v.

Heitner, the Supreme Court’s landmark decision ensuring that

“traditional notions of fair play and substantial justice” apply

to all persons with property subject to adjudication, regardless

of the Latin label attached to the proceeding. 433 U.S. 186,

212 (1977). Shaffer held that a court cannot extinguish a

person’s property rights unless it first obtains personal

jurisdiction over that person, and eliminated a 100-year-old

rule to the contrary as “fundamentally unfair.” Id. Instead of

applying Shaffer, the majority applies the principles of in rem

jurisdiction that Shaffer rejected as lacking “substantial

modern justification.” Id. In doing so, the majority creates

a split with two circuits that have faithfully applied Shaffer

and seven circuits that have expressly construed it to cover

ordinary in rem proceedings. The majority’s attempt to

11

Because we conclude that the district court correctly determined

that Shaffer did not extend to this in rem action, we do not address

whether Obaid had sufficient contacts with the forum as to satisfy the

constitutional due process requirements set forth in International Shoe.

26 UNITED STATES V. OBAID

bolster its opinion with an irrelevant bankruptcy case,

Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440

(2004), is unavailing. Because Shaffer adopted a principle of

fairness and equity that the majority now ignores, I dissent.

I

Obaid, a resident of Saudi Arabia and Switzerland,

purchased 2.5 million shares of stock in Palantir

Technologies Inc. by wiring funds to Palantir’s bank in

Northern California. Obaid states that the Palantir stock

certificate is currently held by a bank in Switzerland.

Although the government argues that the shares are deemed

to be present in Delaware as a matter of Delaware law, there

is no dispute that the shares are not in California.1

The government commenced a forfeiture action to gain

possession of the Palantir shares on the grounds that Obaid

had been engaged in a criminal conspiracy and the Palantir

shares were traceable to funds indirectly linked to the

conspiracy. The government brought this suit in the Central

District of California based on a statute allowing a forfeiture

action to be brought where “any of the acts or omissions

giving rise to the forfeiture occurred,” even when the assets

subject to forfeiture are located in a foreign country.

28 U.S.C. § 1355(b)(1)(A), (b)(2). In this case, the specific

acts “giving rise to the forfeiture” that allegedly took place in

1

For this reason, the majority’s suggestion that it is merely honoring

“the historical distinction between in personam and in rem jurisdiction,”

Maj. at 15, is incorrect. Whereas traditional in rem principles gave courts

jurisdiction “based on the court’s power over property within its territory,”

Shaffer, 433 U.S. at 199, there is no dispute that Obaid’s Palantir shares

are neither within the court’s territory nor its control.

UNITED STATES V. OBAID 27

the Central District of California are vague. According to the

government, certain conspirators not including Obaid, while

engaged in a phase of the alleged criminal conspiracy not

involving Obaid, used proceeds generated by the conspiracy

to purchase property in Beverly Hills and then sent emails

abroad. Over Obaid’s objections, the district court ruled it

had in rem jurisdiction over the Palantir shares, even though

it lacked personal jurisdiction over Obaid. This interlocutory

appeal followed.

II

Does a district court have jurisdiction over a person’s

property solely because alleged co-conspirators took some

actions within the court’s territorial jurisdiction? Forty years

ago, the Supreme Court decisively said no—that jurisdiction

over Obaid’s property in such circumstances “is

fundamentally unfair to the defendant” and offends

“[t]raditional notions of fair play and substantial justice.”

Shaffer, 433 U.S. at 212. Contrary to the majority’s efforts to

minimize Shaffer v. Heitner, this decision constituted a

dramatic shift in the Supreme Court’s jurisprudence.

A

In Shaffer, a plaintiff filed a shareholder derivative suit in

Delaware against a corporation and various individual

defendants, and at the same time obtained an order

sequestering the individual defendants’ Delaware property.

Id. at 190–91. The defendants argued that the sequestration

order violated their due process rights because they lacked

sufficient contacts with Delaware. Id. at 193. The Delaware

court rejected this argument, relying on a state statute that

authorized courts to sequester property in order to compel the

28 UNITED STATES V. OBAID

personal appearance of a nonresident defendant; under this

statute, the Delaware court had quasi in rem jurisdiction. Id.

at 193–94.

The Supreme Court reversed, and used the case as a

vehicle for radically reformulating the law of in rem

jurisdiction.

The Court first explained the historical roots of in

personam and in rem jurisdiction. Under “the century-old

case of Pennoyer v. Neff,” a court’s authority was based on its

“power over either persons or property.” Id. at 196, 199

(citing 95 U.S. 714 (1878)). If the court’s jurisdiction was

based on its authority over the person, the court had “in

personam” jurisdiction; if “based on the court’s power over

property within its territory,” the court had “in rem” or “quasi

in rem” jurisdiction. Id. at 199. Although the Court

recognized the difference between judgments in rem and

quasi in rem,2 that distinction did not affect its analysis. The

Court explained that it would “for convenience generally use

2

The Court explained:

A judgment in rem affects the interests of all persons in

designated property. A judgment quasi in rem affects

the interests of particular persons in designated

property. The latter is of two types. In one the plaintiff

is seeking to secure a pre-existing claim in the subject

property and to extinguish or establish the nonexistence

of similar interests of particular persons. In the other

the plaintiff seeks to apply what he concedes to be the

property of the defendant to the satisfaction of a claim

against him.

Shaffer, 433 U.S. at 199 n.17.

UNITED STATES V. OBAID 29

the term ‘in rem’ in place of ‘in rem and quasi in rem.’” Id.

at 199 n.17.

Shaffer then described the development of in personam

jurisdiction. After Pennoyer, courts asserted personal

jurisdiction over a defendant when the defendant was not

present within the state only in certain limited circumstances.

Id. at 200–02. But International Shoe Co. v. Washington

dramatically expanded jurisdiction over absent defendants.

See id. at 203–04 (citing International Shoe, 326 U.S. 310,

317–19 (1945)). Under International Shoe, due process did

not require the defendant’s presence. A defendant “not

present within the territory of the forum” could be subject to

a judgment in personam so long as he had “certain minimum

contacts with [the forum] such that the maintenance of the

suit does not offend traditional notions of fair play and

substantial justice.” Id. at 203 (quoting International Shoe,

326 U.S. at 316). Accordingly, “the relationship among the

defendant, the forum, and the litigation, rather than the

mutually exclusive sovereignty of the States on which the

rules of Pennoyer rest, became the central concern of the

inquiry into personal jurisdiction.” Id. at 204.3

Shaffer then turned to the law of in rem jurisdiction. The

Court recognized that “[n]o equally dramatic change [had]

3

International Shoe’s conclusion that personal jurisdiction must be

based on the relationship among the defendant, forum, and litigation led

to the development of two categories of personal jurisdiction: (1) general

jurisdiction, where defendants’ “affiliations with the State are so

continuous and systematic as to render them essentially at home in the

forum State,” and (2) specific jurisdiction, where defendants’ “in-state

activities” are “enough to subject [them] to jurisdiction in that State’s

tribunals with respect to suits relating to that in-state activity.” Daimler

AG v. Bauman, 571 U.S. 117, 126–27 (2014).

30 UNITED STATES V. OBAID

occurred in the law governing jurisdiction in rem.” Id. at 205.

But the Court stated it intended to effect such a change,

announcing that “the time is ripe to consider whether the

standard of fairness and substantial justice set forth in

International Shoe should be held to govern actions in rem as

well as in personam.” Id. at 206.

Shaffer had no difficulty concluding that the answer to

this question was yes. According to the Court, “the same test

of ‘fair play and substantial justice’” discussed in

International Shoe should apply to exercises of both in

personam and in rem jurisdiction. Id. at 207. This is because

“[a]ll proceedings, like all rights, are really against persons.”

Id. at 207 n.22 (quoting Tyler v. Court of Registration,

175 Mass. 71, 76 (1900) (Holmes, C.J.)). The only functional

difference between an in rem and in personam proceeding is

“the number of persons affected.” Id.4 Therefore, going

forward, any “exercise of jurisdiction over the interests of

persons” would have to meet “the minimum-contacts

standard elucidated in International Shoe” in order to be

“consistent with the Due Process Clause.” Id. at 207. As

with in personam jurisdiction, “the relationship among the

defendant, the forum, and the litigation, rather than the

mutually exclusive sovereignty of the States 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 new rule governing in rem

jurisdiction, Shaffer considered and rejected the arguments

4

As discussed above, in personam proceedings impose personal

obligations on defendants, but in rem proceedings may affect all persons

with an interest in the property. Id. at 199 n.17.

UNITED STATES V. OBAID 31

raised against such a change. Most important, Shaffer

brushed aside “the long history of [in rem] jurisdiction based

solely on the presence of property in a State.” Id. at 211. The

Court declared it was not bound by precedent “supporting the

proposition that jurisdiction based solely on the presence of

property satisfies the demands of due process.” Id. at 212.

That obsolete idea had to be rejected, because “‘[t]raditional

notions of fair play and substantial justice’ can be as readily

offended by the perpetuation of ancient forms that are no

longer justified as by the adoption of new procedures that are

inconsistent with the basic values of our constitutional

heritage.” Id. As to in rem jurisdiction in particular, “[t]he

fiction that an assertion of jurisdiction over property is

anything but an assertion of jurisdiction over the owner of the

property supports an ancient form without substantial modern

justification,” and “[i]ts continued acceptance would serve

only to allow state-court jurisdiction that is fundamentally

unfair to the defendant.” Id.

Shaffer also rejected the argument that its departure from

precedent would eliminate jurisdiction in too many cases. As

the Court explained, “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, because “the presence of property in a State may bear

on the existence of jurisdiction by providing contacts among

the forum State, the defendant, and the litigation,” id. at 207.

Where “claims to the property itself are the source of the

underlying controversy between the plaintiff and the

defendant, it would be unusual for the State where the

property is located not to have jurisdiction.” Id.

32 UNITED STATES V. OBAID

Encapsulating its rejection of 100 years of precedent, the

Court stated: “We therefore conclude that all assertions of

state-court jurisdiction must be evaluated according to the

standards set forth in International Shoe and its progeny.” Id.

at 212 (emphasis added). Applying its new rule to the facts

before it, the Court concluded that “Delaware’s assertion of

jurisdiction” was “inconsistent” with the Due Process Clause.

Id. at 216–17.

B

Shaffer is directly on point here. The government’s

forfeiture action against Obaid’s Palantir stock under the civil

forfeiture statute, 18 U.S.C. § 981(a)(1), is an in rem

proceeding. Under the statute, the government “begins a

judicial civil forfeiture action by filing an in rem complaint

against the property.” United States v. $133,420.00 in U.S.

Currency, 672 F.3d 629, 634 (9th Cir. 2012). The district

court then adjudicates the interests of any persons claiming an

ownership interest in the property. 18 U.S.C. § 983(a)(4). If

the government prevails, title to the property vests in the

government. See United States v. Spahi, 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 required to perfect title by legal action

before title may vest.”).5

5

Although a forfeiture judgment under § 981 “relates back” to when

the offense was committed, see 18 U.S.C. § 981(f), “[w]here there is no

such judgment the government acquires no title or interest in the

property,” 1 David B. Smith, Prosecution and Defense of Forfeiture Cases

¶ 3.05[2] (Matthew Bender). In other words, a § 981 forfeiture proceeding

adjudicates property not yet owned by the government.

UNITED STATES V. OBAID 33

Under Shaffer, the district court’s jurisdiction over the

property subject to an in rem complaint constitutes an

“assertion of jurisdiction over the owner of the property.”

433 U.S. at 212 (emphasis added).6 Therefore, Shaffer

requires the district court to apply the minimum contacts

framework to each person who claims ownership of the

property. Id. Here, it is undisputed that Obaid is the owner

of the seized Palantir shares. Under Shaffer, therefore, the

district court must consider whether Obaid has “minimum

contacts” with the forum such that “the maintenance of the

suit does not offend ‘traditional notions of fair play and

substantial justice.’” International Shoe, 326 U.S. at 316.

The district court did not address this question of minimum

contacts, and the answer is not obvious: the government

argues that Obaid has sufficient contacts with the United

States as a whole to confirm the court’s jurisdiction under

28 U.S.C. § 1355(b), while Obaid argues that the court must

find that he has sufficient contacts with California. We

should remand to the district court to address that question

and conduct the required minimum contacts analysis.

III

The majority acknowledges that “one might deduce” from

Shaffer that “Obaid’s position carries the day.” Maj. at 11.

But the majority then concludes that the Supreme Court

undermined (or overturned) Shaffer’s groundbreaking

expansion of “fair play and substantial justice” when it

decided a subsequent bankruptcy case, Tennessee Student

6

The conclusion that the court is asserting jurisdiction over Obaid is

particularly compelling where, as here, the court’s authority over the res

is merely a legal fiction: the Palantir shares are not within either the

territory or control of the district court.

34 UNITED STATES V. OBAID

Assistance Corp. v. Hood, 541 U.S. 440 (2004). According

to the majority, Hood stands for the proposition that a court

may continue to assert jurisdiction over the property rights of

an absent owner so long as it has in rem jurisdiction over the

property itself. Maj. at 12–13, 15.

The majority’s reading of Hood is incorrect because it is

based on a misunderstanding of the nature of bankruptcy

proceedings. In Hood, a debtor sought a determination that

her student loans were dischargeable under 11 U.S.C.

§ 523(a)(8), which provides that a bankruptcy court cannot

discharge a student loan guaranteed by a governmental unit

unless the court determines that allowing the debt to survive

would impose an “undue hardship” on the debtor. As

required by the Federal Rules of Bankruptcy Procedure, the

debtor filed a proceeding (styled as an “adversary” action)

against various government guarantors, including the

Tennessee Student Assistance Corporation (TSAC), a state

entity. Hood, 541 U.S. at 444–45, 451–52. TSAC moved to

dismiss the action, asserting sovereign immunity under the

Eleventh Amendment. Id. at 445. The Supreme Court

rejected TSAC’s argument, holding that a bankruptcy court’s

discharge of government-guaranteed student loan debt under

§ 523(a)(8) does not implicate a state’s Eleventh Amendment

immunity. Id. at 450.

The Supreme Court based this conclusion on the nature of

bankruptcy proceedings. In a “typical voluntary bankruptcy

proceeding,” the debtor invokes the court’s jurisdiction by

filing a petition for bankruptcy. Id. at 447. The

commencement of the proceeding creates a bankruptcy estate

consisting of the debtor’s property interests. 11 U.S.C.

§ 541(a); see also 1 Collier on Bankruptcy ¶ 3.01[4] (Richard

Levin & Henry J. Sommer eds., 16th ed.). The bankruptcy

UNITED STATES V. OBAID 35

court has jurisdiction over the debtor and the debtor’s estate,

Hood, 541 U.S. at 447, and creditors can participate in the

bankruptcy by filing a proof of claim, 11 U.S.C. §§ 501, 726.

But the court does not adjudicate the creditors’ property

rights, see Hood, 541 U.S. at 447, and need not have

jurisdiction over the creditors, see id. at 453. At the close of

the bankruptcy proceeding, the bankruptcy court issues a

discharge order that “releases a debtor from personal liability

with respect to any discharged debt.” Id. at 447. This

proceeding is in rem, because it determines “all claims that

anyone, whether named in the action or not, has to the

property or thing in question.” Id. at 448.

Although a bankruptcy court does not exercise personal

jurisdiction over creditors, id. at 453, it is able to provide the

debtor with a fresh start from all debts because “[a] federal

court’s jurisdiction over the dischargeability of debt . . .

derives not from jurisdiction over the state or other creditors,

but rather from jurisdiction over debtors and their estates.”

Id. at 447–48 (quoting In re Collins, 173 F.3d 924, 929 (4th

Cir. 1999)). Of course, a bankruptcy court’s rulings may

affect creditors’ interests in the debtor’s property. For

example, a creditor’s debt may become uncollectible after a

bankruptcy court discharges a debtors’ debts. See 11 U.S.C.

§ 524(a). But this does not mean that the court exercises

jurisdiction over the creditor or the creditor’s property. “A

debtor does not seek monetary damages or any affirmative

relief from a [creditor] by seeking to discharge a debt; nor

does he subject an unwilling [creditor] to a coercive judicial

process. He seeks only a discharge of his debts.” Hood,

541 U.S. at 450.

Hood applied these principles undergirding bankruptcy

jurisdiction to the question whether bankruptcy proceedings

36 UNITED STATES V. OBAID

could infringe a state’s sovereign immunity when the state is

a creditor. The Court first noted 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, 284 U.S. 225, 227–28 (1931), and is therefore

“bound by a bankruptcy court’s discharge order no less than

other creditors.” Hood, 541 U.S. at 448. Next, the Court

concluded that because bankruptcy proceedings do not

adjudicate creditors’ property rights, the bankruptcy court’s

“exercise of its in rem jurisdiction to discharge a debt does

not infringe a State’s sovereignty,” and the court does not

exercise “jurisdiction over the State.” Id. at 448, 453.

Ignoring 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. at 16. The majority’s sole support for this

conclusion is Hood’s cite to a civil procedure treatise and an

accompanying parenthetical stating that “jurisdiction over the

person is irrelevant if the court has jurisdiction over the

property.” Hood, 541 U.S. at 453 (quoting 4A C. Wright &

A. Miller, Federal Practice and Procedure § 1070, pp. 280–81

(3d ed. 2002)). In context, the parenthetical merely supports

Hood’s holding that a bankruptcy court’s in rem jurisdiction

over the debtor’s property is sufficient to resolve the claims

of all creditors (including a state) to that property, and the

court need not have jurisdiction over the state to accomplish

this goal. Id. Nothing in Hood suggests that a court may

exercise in rem jurisdiction without personal jurisdiction over

the owner of the res.

In sum, Hood did not resurrect the in rem jurisdiction

theory, rejected in Shaffer, that a court may assert jurisdiction

over an absent property owner so long as it has jurisdiction

UNITED STATES V. OBAID 37

over the property itself. To the contrary, Hood did not

mention or cite Shaffer and held only that a bankruptcy court

does not assert jurisdiction over creditors because a

bankruptcy proceeding does not adjudicate their property

interests. Id. at 447. Because the debtor, not the creditor,

owns the property before a bankruptcy court, and the

bankruptcy court does not adjudicate the creditor’s property

rights, Hood had no occasion to address the question whether

a court with in rem jurisdiction over property can adjudicate

the rights of that property’s absent owner.

As this description makes clear, Hood provides no

guidance here. Obaid is not a mere creditor. His rights to the

property he owns—the Palantir shares—are at stake in the

forfeiture proceeding. Nor is Obaid a debtor who 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

against his property, and therefore against Obaid himself.

433 U.S. at 207 n.22. Therefore, Hood gives the majority no

grounds for ignoring Shaffer.

IV

Although the majority recognizes that Hood is not

“precisely on point,” Maj. at 13, it provides other reasons for

ignoring Shaffer’s clear directive. These reasons are equally

misguided.

A

First, the majority tries to confine Shaffer to its facts.

Disregarding Shaffer’s statement that it was not

distinguishing between in rem and quasi in rem jurisdiction,

38 UNITED STATES V. OBAID

see 433 U.S. at 199 n.17, the majority contends that Shaffer’s

holding applies only to quasi in rem proceedings, Maj.

at 13–14, 15. According to the majority, this reading is

“supported by the failure of the Court to expressly overrule its

longstanding precedent anchoring in rem jurisdiction to the

presence of the res.” Maj. at 14. Applying traditional in rem

principles, the majority contends that the defendant here is

the Palantir shares, not Obaid, and therefore Shaffer’s “fair

play and substantial justice” requirements do not apply. Maj.

at 15.7

This reinterpretation of Shaffer contradicts Shaffer’s

actual language. The Court clearly established a new rule for

both in rem and quasi in rem jurisdiction, concluding that “all

assertions of state-court jurisdiction must be evaluated

according to the standards set forth in International Shoe and

its progeny.” Shaffer, 433 U.S. at 212 (emphasis added).

Moreover, Shaffer did not ignore longstanding precedent

governing in rem jurisdiction. Rather, the Court made clear

that it was sweeping away “the perpetuation of ancient forms

that are no longer justified.” Id. Indeed, the majority is right

that the Supreme Court has not overruled its precedent

7

The majority also tries to distinguish Shaffer on the ground that it

does not apply to a civil forfeiture proceeding such as this one. Maj. at 14,

20. But a civil forfeiture proceeding is an in rem proceeding, and Shaffer

stated that “all” assertions of in rem jurisdiction are subject to

International Shoe’s minimum-contacts test. 433 U.S. at 212. The

majority has not explained why civil forfeiture proceedings are exempt

from Shaffer. Nor has the government argued that civil forfeitures have

unique characteristics that place them outside Shaffer’s ambit. Indeed, at

least one circuit has applied Shaffer to a civil forfeiture proceeding. See

United States v. Batato, 833 F.3d 413, 423 (4th Cir. 2016); infra footnote

9; cf. Maj. at 22 (asserting that the cases cited by the dissent do not

include cases applying Shaffer to civil forfeiture proceedings.).

UNITED STATES V. OBAID 39

governing in rem jurisdiction “without explicitly saying

so”—but only because the Supreme Court explicitly said that

is what it was doing. Maj. at 15.8 Shaffer’s language also

refutes the majority’s claim that the suit is against Obaid’s

shares of stock, not Obaid himself. Maj. at 15. Shaffer’s

basic premise was that “[a]ll proceedings, like all rights, are

really against persons.” 433 U.S. at 207 n.22 (quoting Tyler,

175 Mass. at 76). And “[a]n adverse judgment in rem

directly affects the property owner by divesting him of his

rights in the property before the court.” Id. at 206.

Therefore, this proceeding over Obaid’s stock is effectively

a proceeding against Obaid, and International Shoe’s due

process requirements apply.

B

Second, the majority makes strenuous efforts to

distinguish its narrow construction of Shaffer from the

decisions of other circuits that have faithfully recited

Shaffer’s holding. But even a brief review of the relevant

8

Shaffer could not be more clear:

“We are left, then, to consider the significance of the

long history of jurisdiction based solely on the presence

of property in a State. . . . This history must be

considered as supporting the proposition that

jurisdiction based solely on the presence of property

satisfies the demands of due process, but it is not

decisive. . . . We therefore conclude that all assertions

of state-court jurisdiction must be evaluated according

to the standards set forth in International Shoe and its

progeny.”

433 U.S. at 211–12 (citations omitted).

40 UNITED STATES V. OBAID

cases establishes that the majority’s interpretation of Shaffer

is contrary to our own precedent and creates a circuit split.

We have long acknowledged that assertions of in rem

jurisdiction must satisfy International Shoe, “even when the

court’s jurisdiction is predicated on its control over an item of

property or res.” United States v. Ten Thousand Dollars

($10,000.00) in U.S. Currency, 860 F.2d 1511, 1513 (9th Cir.

1988). Further, we have recognized Shaffer’s ruling that

“‘judicial jurisdiction over a thing’ is a customary elliptical

way of referring 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. In United States v. Batato, the Fourth Circuit

recited Shaffer’s conclusion 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,” and applied “a traditional,

state-based minimum contacts approach” to determine

whether it had jurisdiction over claimants to property subject

to a civil forfeiture action. 833 F.3d 413, 423 (4th Cir. 2016)

(quoting Shaffer, 433 U.S. at 207).9 Similarly, the Second

9

The majority asserts that Batato did not follow Shaffer because it

“assume[d] without deciding” that Shaffer was applicable, and stated that

“Shaffer “provides only limited guidance as to how to proceed.” Maj.

at 18. This is incorrect, because the majority takes these quotes out of

context. Batato expressly acknowledged the applicability of the minimum

contacts test to in rem proceedings. 833 F.3d at 423. It then stated that

Shaffer “provide[d] only limited guidance as to how to proceed” regarding

one aspect of that minimum contacts test: whether a court must consider

a foreign property owner’s contacts with only the forum state, or with the

United States as a whole. Id. at 423 & n.3. But because the foreign

claimants had sufficient contacts with the forum state, Batato could

UNITED STATES V. OBAID 41

Circuit acknowledged that Shaffer “explained that to have in

rem jurisdiction it is necessary, at the very least, to satisfy the

minimum contacts standard set out in International Shoe” and

upheld the district court’s conclusion that it lacked in rem

jurisdiction over a defendant that “did not have minimum

contacts.” LiButti v. United States, 178 F.3d 114, 123 (2d

Cir. 1999).10 These faithful applications of Shaffer are

decisive holdings, not “lukewarm discussion[s].” Maj. at 20.

Other circuits have acknowledged the breadth of Shaffer’s

rule. Shortly after Shaffer was decided, the Fifth, Sixth and

Seventh Circuits correctly recited its holding. See Inland

Credit Corp. v. M/T Bow Egret, 556 F.2d 756, 757 (5th Cir.

1977) (denying a petition for rehearing en banc and citing

Shaffer’s holding that “states’ assertion of in rem jurisdiction

must satisfy the same ‘minimum contacts standard’ applied

to in personam jurisdiction”); Pickens v. Hess, 573 F.2d 380,

“assume without deciding” that the more demanding “state-based

minimum contacts approach” controlled. Id. at 423. Batato made clear

that the court could not exercise in rem jurisdiction without obtaining

personal jurisdiction over the owner of the property subject to civil

forfeiture. In sum, nothing in Batato suggests any reluctance to apply

Shaffer.

10

The majority’s statement that Libutti “did not dismiss the in rem

action for lack of jurisdiction,” Maj. at 19, mischaracterizes the case. For

our purposes, the pertinent question in Libutti was whether the district

court could exercise jurisdiction over a third party who had an ownership

interest in a race horse. Libutti held that the court did not have in

personam jurisdiction over the third party because the third party lacked

minimum contacts with the forum state, and “[s]ince [the third party] did

not have minimum contacts, the district court did not have in rem

jurisdiction either.” 178 F.3d at 123. While Libutti upheld the trial court’s

rulings with regard to the defendant over which the court had jurisdiction,

Maj. at 19, this is irrelevant to our analysis.

42 UNITED STATES V. OBAID

387 (6th Cir. 1978) (citing Shaffer for the proposition that “all

claims of jurisdiction, both in personam and in rem, must be

evaluated in light of the standards of International Shoe and

its progeny”); Lakeside Bridge & Steel Co. v. Mountain State

Const. Co., Inc., 597 F.2d 596, 600 (7th Cir. 1979) (stating,

in its overview of in rem jurisdiction, that “the principles of

International Shoe were held [in Shaffer] to govern assertion

by a state of In rem as well as In personam jurisdiction”).11

A decade later, the Third and Fourth 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

minimum contacts with the forum”); Pittsburgh Terminal

Corp. v. Mid Allegheny Corp., 831 F.2d 522, 526 (4th Cir.

1987) (explaining that, after Shaffer, “the minimum contacts

rule of International Shoe would henceforth be applied to

11

Scholars writing in Shaffer’s immediate aftermath expressed no

doubt as to whether Shaffer applied to in rem proceedings. See Angela M.

Bohmann, Applicability of Shaffer to Admiralty in Rem Jurisdiction,

53 Tul. L. Rev. 135, 135 (1978–79) (“In its 1977 decision in Shaffer v.

Heitner, the Supreme Court determined that the due process clause of the

Fourteenth Amendment required all assertions of state court jurisdiction

to be tested under the principles established in its earlier decision in

International Shoe Co. v. Washington); see also, John R. Leathers, The

First Two Years After Shaffer v. Heitner, 40 La. L. Rev. 907, 910 (1980);

Stefan A. Riesenfeld, Shaffer v. Heitner: Holding, Implications,

Forebodings, 30 Hast. L.J. 1183, 1204 n.100 (1979); Joseph J. Kalo,

Jurisdiction as an Evolutionary Process: The Development of Quasi in

Rem and In Personam Principles, 1978 Duke L.J. 1147, 1189–90 (1978);

Linda J. Silberman, Shaffer v. Heitner: The End of an Era, 58 N.Y.U. L.

Rev. 33, 62–63 (1978); William R. Slomanson, Real Property Unrelated

to Claim: Due Process for Quasi in Rem Jurisdiction?, 83 Dick. L. Rev.

51, 54 (1978); Joseph P. Zammitt, Reflections on Shaffer v. Heitner,

5 Hast. Const. L.Q. 15, 17 (1978); Donald W. Fyr, Shaffer v. Heitner: The

Supreme Court’s Latest Last Words on State Court Jurisdiction, 26 Emory

L.J. 739, 757–78, 762–64 (1977).

UNITED STATES V. OBAID 43

actions in rem and quasi in rem, as well as to actions in

personam”).

Against this consensus, the majority’s erroneous

interpretation of Shaffer stands alone.12

V

Shaffer effected a transformation of the law of in rem

jurisdiction in order to ensure that “fair play and substantial

justice” prevail. In doing so, the Supreme Court was well

aware that it was sweeping aside a century of jurisprudence

which had allowed courts to adjudicate rights to property

even when doing so ran roughshod over the rights of the

persons who owned the property. By attempting to confine

Shaffer to its facts, the majority turns its back on the Court’s

protection of due process rights and creates a conflict with

every circuit court that has addressed this issue. I dissent

from the majority’s failure to follow the Supreme Court’s

clear instructions.

12

While the majority notes that “no court has dismissed a civil

forfeiture action for lack of personal jurisdiction over a claimant,” Maj.

at 18, this is to be expected because a person with property in a state is

likely to have enough contacts with that state to satisfy Shaffer, see

433 U.S. at 207–08. Shaffer itself predicted “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.