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.