United States v. Obaid, No. 18-56657 (9th Cir. 2020)
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The Ninth Circuit affirmed the district court's order denying claimant's motion to dismiss for lack of personal jurisdiction and for lack of proper venue a civil forfeiture case. This case arose from claimant's shares of stock in Palantir Technologies, a corporation with its principal place of business in California. Petitioner is a citizen of Saudi Arabia who 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. In this case, the government filed an in rem civil forfeiture action against claimant's Palantir shares, alleging that the shares were forfeitable because they were derived from proceeds traceable to a wire fraud and money laundering scheme.
The panel held that the Supreme Court's decision in Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440 (2004), supports the panel's conclusion 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. The Supreme Court's decision in Shaffer v. Heitner, 433 U.S. 186 (1977), addressed quasi-in-rem actions rather than in rem actions directed solely toward a res instead of property seized as a substitute for the defendant. The panel explained that in an in rem action, the focus for the jurisdictional inquiry is the res, in this case claimant's Palantir shares, rather than claimant's personal contacts with the forum. The panel also held that venue was proper because sufficient acts giving rise to the civil forfeiture occurred in the Central District.
Court Description: 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 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
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