Due Process and in rem Jurisdiction

The Ninth Circuit Court of Appeals recently held in United States v. Nasri that Fifth Amendment due process is violated if a federal court exercises in rem jurisdiction but lacks custody or constructive control over the property. The district court, Judge Hayes (S.D. Cal.), had held to the contrary, and Judge Bennett dissented from the panel decision. The panel decision includes concurring opinions by each of the two judges in the majority (Bybee and Desai). The case, which seems likely to be reheard en banc, raises a host of questions about whether the claimant forfeited or waived his argument about in rem jurisdiction, the proper interpretation of Ninth Circuit precedent, Article III standing, constitutionally sufficient notice, and statutory interpretation. I briefly describe the opinions and then offer a few observations on due process and in rem jurisdiction.

Background

Younes Nasri, a Canadian citizen living in Dubai, allegedly distributed products for a company called Phantom Secure, which sold encrypted phones to criminal organizations. Nasri and four other people were indicted in the United States on RICO and drug-trafficking conspiracy charges for conduct arising out of Phantom Secure’s sales and operations. The government also brought a civil forfeiture action in the United States against about $1.2 million in accounts at a bank in Liechtenstein. The accounts are held by Nasri and a shell company he created. Nasri filed a claim of innocent ownership, and he also argued that the district court lacked jurisdiction over the assets because neither he nor the money has any ties to the United States. The district court sided with the U.S. Government. Nasri appealed.

The Four Opinions from the Three Court of Appeals Judges

The majority opinion held that the Fifth Amendment’s Due Process Clause requires a district court to establish actual or constructive control over property before it can exercise in rem jurisdiction in a civil forfeiture action. Written by Judge Desai and joined by Judge Bybee, the opinion rejected the claim that Nasri had forfeited his argument about in rem jurisdiction by not raising it below. They reasoned in part that in rem jurisdiction affects the rights of the whole world to the property, so that even if Nasri failed to present the argument, he cannot waive it on behalf of unknown third-party claimants who might have an interest in the property. The majority opinion also traced the historical pedigree of in rem jurisdiction, reasoning that, historically, seizure or constructive possession of property has been treated as an essential prerequisite for the exercise of in rem jurisdiction. Prior cases, the majority explained, have focused on statutory interpretation without addressing the due process issue. The court ultimately vacated and remanded, instructing the district court to determine whether the U.S. has “constructive control” over the money in Liechtenstein—for example, through Liechtenstein’s cooperation in restraining the funds.

Judge Bybee joined the majority opinion but also argued that the case is nonjusticiable under Article III. Without seizure or control of the property, he reasoned, the case is not ripe, and any judgment would be advisory, because the court has no way to enforce a ruling. His opinion proposed that Congress could fix this by converting these actions into “quasi in rem” proceedings, which would not purport to bind the whole world in terms of title to the property. Judge Bybee also argued that the civil forfeiture statute, 28 U.S.C. § 1355(b)(2), should not be interpreted as abolishing the traditional requirement of control over the property. Judge Desai’s separate concurrence responds specifically to Bybee’s analysis of Article III standing.

Judge Bennett dissented. He argued that Nasri had forfeited his argument about control over the property because he had not raised it earlier in the litigation and that in any event, due process was satisfied in this case. He disagreed with both concurrences on their Article III analysis and concluded by warning that the majority has stripped the political branches of an important foreign-affairs tool, and would allow people to move stolen or drug money offshore and escape forfeiture simply because a U.S. court could not physically seize the funds.

Minimum Contacts and In Rem Jurisdiction

In my view, the majority opinion incorrectly describes the relevance of International Shoe v. Washington (1945)’s minimum contacts test to in rem jurisdiction. The court reasoned that “in Shaffer v. Heitner (1977), the Supreme Court expanded that rationale [minimum contacts] to quasi in rem cases, holding that quasi in rem jurisdiction—which really amounts to an exercise of jurisdiction over a person’s interest in property—also requires a showing of minimum contacts.” The statement erroneously suggests that pursuant to Shaffer, the minimum contacts test applies to quasi in rem jurisdiction but not to exercises of pure in rem jurisdiction. The Nasri court is not the source of this error, however—it was following Ninth Circuit precedent. A civil forfeiture case from 2020, United States v. Obaid, had held that the minimum contacts test does not apply to in rem suits.

The Shaffer case is clear, however, that the minimum contacts test applies to both quasi in rem and pure in rem cases, as Judge Ikuta argued in dissent in Obaid. To be sure, the outcome of most pure in rem cases generally does not change under a minimum contacts test. The ownership of property in the forum state is a significant contact, and in pure in rem cases the litigation is about the ownership of the property, satisfying the minimum contacts test. The effect of the minimum contacts test is thus largely felt in quasi in rem cases. But the Court was clear in Shaffer that minimum contacts is the appropriate test for both quasi in rem and pure in rem cases:

The case for applying to jurisdiction in rem the same test of “fair play and substantial justice” as governs assertions of jurisdiction in personam is simple and straightforward. It is premised on recognition that “(t)he phrase, ‘judicial jurisdiction over a thing’, is a customary elliptical way of referring to jurisdiction over the interests of persons in a thing.” Restatement (Second) of Conflict of Laws s 56, Introductory Note (1971) (hereafter Restatement). This recognition leads to the 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.” 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. (footnotes omitted).

In one sense, all of this does not matter much in Nasri because it is a Fifth Amendment due process case. After Fuld v. PLO (2025), the minimum contacts test is inapplicable to Fifth Amendment cases generally. But Shaffer’s core insight—that bringing a case against the property is actually a fiction—is compelling in all in rem cases. What is ultimately adjudicated is the interests of people in that property. In that sense, whatever test is used for in rem jurisdiction should protect the same basic interests as the test used for in personam jurisdiction. Finally, to the extent that concerns about the applicability of minimum contacts to in rem cases were driven specifically by a concern about the federal government’s power to assert its civil forfeiture authority abroad, then Fuld should alleviate them. After Fuld, applying minimum contacts to all forms of in rem cases—as Shaffer directs—imposes no limitations on the federal government’s power, which is not governed by the minimum contacts test at all.

Fuld and Civil Forfeitures under Federal Law

The dissent and the majority disagreed about the application of Fuld to jurisdiction exercised pursuant to the civil forfeiture statute. Here, I explore two ways of distinguishing Nasri from Fuld that did not emerge clearly from the various opinions in Nasri.

Specific Foreign Policy Goals

In Fuld, the Supreme Court considered the constitutionality of personal jurisdiction exercised pursuant to the Promoting Security and Justice for Victims of Terrorism Act (“PSJVTA”). The Act deemed the Palestine Liberation Organization and Palestinian Authority to have consented to personal jurisdiction if either makes payments to imprisoned terrorists or their families, or if either maintains an office in the United States (other than at the United Nations). The Court described the PSJVTA as “suitably limited” to achieving the federal government’s specific foreign policy goals. “Far from an anything-goes approach,” the Court reasoned, “the PSJVTA ties jurisdiction to specific and narrow conduct that directly implicates issues of sensitive and ongoing concern in respondents’ relationships with the United States.”

The majority in Nasri distinguished the civil forfeiture statute from the PSJVTA, reasoning that it is “not similarly limited or focused.” It instead confers jurisdiction over actions involving “any fine, penalty, or forfeiture, pecuniary or otherwise, incurred under any Act of Congress.” 28 U.S.C. § 1355(a). Judge Bennett argued that the civil forfeiture statute is adequately limited, relying in part on other language in the statute, which provides that if “property subject to forfeiture under the laws of the United States is located in a foreign country” then “an action or proceeding for forfeiture may be brought as provided in paragraph (1), or in the United States District court for the District of Columbia.” 28 U.S.C. 1355(b)(2). As an aside, one might note that neither section of the statute refers specifically to personal jurisdiction, a point that Judge Bybee highlights in his concurrence, in which he argues that as a matter of statutory interpretation, § 1355 should not be read as displacing the custody or control requirements for in rem jurisdiction.

In my view, the majority has the better of this argument with respect to Fuld. The PSJVTA is narrowly tailored to address a limited and specific personal jurisdiction problem with respect to two specifically identified foreign defendants. The civil forfeiture statute does not share these features (which might also be evaluated under a “reasonableness” standard as Maggie Gardner has argued, although that was not the analysis used by the Supreme Court in Fuld). The dissent focuses on the foreign relations implications of § 1355, reasoning that “the statute effects the political branches’ policy judgment on a foreign relations issue—the complex politics of seeking civil forfeiture of property located abroad but acquired through or involved in crimes against the United States.” In several places the dissent also mentions that the United States is the plaintiff in Nasri, and that the “government seeks forfeiture of the res because he allegedly derived the funds from his federal crimes.” In other words, the application of the statute is narrowly tailored by the executive branch, which weighed the foreign relations implications when it decided to bring the case at all. In Fuld, by contrast, the plaintiffs were private parties.

The distinction between the federal government making limited and specific jurisdictional decisions when it acts as Congress is very different from the executive branch making individualized decisions when it is acting as a party, at least from a separation of powers perspective. Historically, courts were associated with royal power, to which the legislative branch served as an important check. Consider the claim—accepted by some Justices in Fuld—that the Fifth Amendment imposes no substantive limitations on the exercise of in personam jurisdiction and instead requires only that courts must follow the rules that have been enacted. Compared to minimum contacts, this limitation appears almost laughably easy to satisfy. But it reflects the importance of parliamentary supremacy serving as a check on judicial/executive power in the eighteenth century. Invoking the foreign policy decisions made through the executive branch in an ad hoc fashion, rather than by Congress, does not serve separation of powers in the same way. The “procedural” side of due process entailed “the separation of the adjudicatory function, from the King’s personal power.”

Historical Practice

One of the difficulties in the field of personal jurisdiction is the varying ways the Court has treated traditional or historical practices. In Burnham v. Superior Court (1990), a plurality of the Court held that personal service in the forum state confers personal jurisdiction, reasoning that this has been the traditional rule, but in Shaffer v. Heitner (1977), the Court had rejected similar reasoning and effectively eliminated true quasi in rem jurisdiction despite its historical pedigree. These different approaches to history were part of what made Mallory v. Norfolk Southern Railway Co. (2023) a difficult case. But for the same reasons, it was easy for the Court in Fuld to reject a “minimum contacts” test for Fifth Amendment due process because that test has no real historical pedigree at all before International Shoe Co. v. Washington (1945). It may turn out to be more difficult for the Court to reject the requirement of control as the basis for in rem jurisdiction because that requirement appears to have a long history.  To be sure, it is not always clear the extent to which Congress had the power to pass legislation overriding that requirement, as it has arguably done now with respect to civil forfeiture, and to the extent that legislative control is an important value, a clear and controlling statute satisfies it. Nevertheless, the decision in Nasri that due process is not satisfied appears to be on different and firmer historical footing than the lower court’s decision in Fuld holding that due process was not satisfied. Although the category of “in rem” jurisdiction is not especially meaningful for minimum contacts and the Fourteenth Amendment, it could turn out to be important under the Fifth Amendment.

Conclusion

The various opinions from the Ninth Circuit in Nasri make one thing clear: a long series of civil forfeiture cases have given short shrift to potential due process constraints on jurisdiction. That is a shame. It can be difficult for litigants to push back against a long string of cases, even if many of those cases do not address key arguments.  All three judges in Nasri should be commended for grappling with a wide range of important issues related to civil forfeiture, statutory interpretation, in rem jurisdiction, standing, and due process.