Phillips Petroleum Co. v. Shutts
Citation: 472 U.S. 797 (1985)
Facts
A class action was filed in Kansas state court on behalf of approximately 28,000 royalty owners from many states against Phillips Petroleum for underpayment of interest on suspended royalties. Only a small fraction of the plaintiffs or the leases at issue had any connection to Kansas. The Kansas Supreme Court applied Kansas law to all claims.
Issue
Does the Due Process Clause and the Full Faith and Credit Clause limit a state’s ability to apply its own law to the claims of out-of-state plaintiffs in a class action?
Holding
Yes. The Supreme Court held that Kansas could not constitutionally apply its own law to all claims because most had no significant contact with Kansas. A state must have a “significant contact or significant aggregation of contacts” creating state interests before its law may be applied.
Rule
For a state’s choice of law to satisfy the Due Process and Full Faith and Credit Clauses, there must be a significant contact or aggregation of contacts between the state and the claims at issue. A state cannot apply its law to parties and claims with no meaningful connection to it merely because jurisdiction exists.
Significance
Phillips Petroleum establishes the constitutional floor on choice-of-law: states have discretion in their conflicts methodology, but the Constitution limits how far they can reach. It is a key case on the intersection of personal jurisdiction, class actions, and constitutional conflicts law.