Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)
A court may have jurisdiction over absent class action plaintiffs even if they do not meet the minimum contacts test for personal jurisdiction. A member of a plaintiff class only must have notice, an opportunity to be heard, an opportunity to opt out of the class action, and adequate representation by the named plaintiff.
Phillips bought oil and gas leases from Shutts, among other parties. Shutts sued in the state court of Kansas, where he was a resident, to seek interest on royalties. He brought the claim as a class action and sent notice to all potential class members while informing them that they could opt out of the action. After the trial court ruled in favor of the class, Phillips appealed on the grounds that the state court lacked jurisdiction over the entire claim because some plaintiffs were from outside Kansas and did not have minimum contacts with the state.Opinions
- William Hubbs Rehnquist (Author)
- Warren Earl Burger
- William Joseph Brennan, Jr.
- Byron Raymond White
- Thurgood Marshall
- Harry Andrew Blackmun
- Sandra Day O'Connor
The minimum contacts test was designed to protect the due process rights of defendants who were non-residents of a state, preventing them from being unfairly and inconveniently brought into courts in that state. It does not apply to class action plaintiffs because they will not need to come into the court to litigate the action directly. Jurisdiction over the entire claim was proper in Kansas state court, although Kansas law should not have been applied to every claim, so the case will be remanded on that basis.
- John Paul Stevens (Author)
The lower court acted correctly in applying Kansas law to the entire case, over which it had jurisdiction in its entirety. The Kansas laws in this area contain no unambiguous conflict with the laws of another state.
- Lewis Franklin Powell, Jr. (Author)
A defendant can challenge whether a court has jurisdiction over the plaintiffs, since it will be affected by the outcome of the litigation. Any subsequent raising of a defect would have made the outcome ineffective as to the plaintiffs over whom the court did not have jurisdiction.
U.S. Supreme CourtPhillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)
Phillips Petroleum Co. v. Shutts
Argued February 25, 1985
Decided June 26, 1985
472 U.S. 797
During the 1970's, petitioner produced or purchased natural gas from leased land located in 11 States. Respondents, royalty owners possessing rights to leases from which petitioner produced the gas, brought a class action against petitioner in a Kansas state court, seeking to recover interest on royalty payments that had been delayed by petitioner. The trial court certified a class consisting of 33,000 royalty owners. Respondents provided each class member with a notice by first-class mail describing the action and informing each member that he could appear in person or by counsel, that otherwise he would be represented by respondents, and that class members would be included in the class and bound by the judgment unless they "opted out" of the action by returning a "request for exclusion." The final class consisted of some 28,000 members, who reside in all 50 States, the District of Columbia, and several foreign countries. Notwithstanding that over 99% of the gas leases in question and some 97% of the plaintiff class members had no apparent connection to Kansas except for the lawsuit, the trial court applied Kansas contract and equity law to every claim, and found petitioner liable for interest on the suspended royalties to all class members. The Kansas Supreme Court affirmed over petitioner's contentions that the Due Process Clause of the Fourteenth Amendment prevented Kansas from adjudicating the claims of all the class members, and that that Clause and the Full Faith and Credit Clause prohibited application of Kansas law to all of the transactions between petitioner and the class members.
1. Petitioner has standing to assert the claim that Kansas did not have jurisdiction over the class members who were not Kansas residents and had no connection to Kansas. Whether it wins or loses on the merits, petitioner has a distinct and personal interest in seeing the entire plaintiff class bound by res judicata just as petitioner is bound. The only way petitioner can assure itself of this binding effect is to ascertain that the forum court has jurisdiction over every plaintiff whose claim it seeks to adjudicate, sufficient to support a res judicata defense in a later suit by class members. The alleged injury petitioner would incur if the class action judgment against it became final without binding the plaintiff class is sufficient to give petitioner standing on its own right to raise the jurisdiction claim in this Court. Pp. 472 U. S. 803-806.
2. The Kansas trial court properly asserted personal jurisdiction over the absent plaintiff class members and their claims against petitioner. The Due Process Clause requires notice, an opportunity to appear in person or by counsel, an opportunity to "opt out," and adequate representation. It does not require that absent class members affirmatively "opt in" to the class, rather than be deemed members of the class if they did not "opt out." The procedure followed by Kansas, where a fully descriptive notice is sent by first-class mail to each class member, with an explanation of the right to "opt out," satisfies due process. The interests of the absent plaintiff class members are sufficiently protected by the forum State when those plaintiffs are provided with a request for exclusion that can be returned within a reasonable time to the trial court. Pp. 472 U. S. 806-814.
3. The Kansas Supreme Court erred in deciding that the application of Kansas law to all claims would be constitutional. Kansas must have a "significant contact or aggregation of contacts" to the claims asserted by each plaintiff class member in order to ensure that the choice of Kansas law was not arbitrary or unfair. Given Kansas' lack of "interest" in claims unrelated to that State, and the substantive conflict between Kansas law and the law of other States, such as Texas, where some of the leased land in question is located, application of Kansas law to every claim in this case was sufficiently arbitrary and unfair as to exceed constitutional limits. Pp. 472 U. S. 814-823.
235 Kan.195, 679 P.2d 1159, affirmed in part, reversed in part, and remanded.
REHNQUIST, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, WHITE, MARSHALL, BLACKMUN, and O'CONNOR, JJ., joined, and in Parts I and II of which STEVENS, J., joined. STEVENS, J., filed an opinion concurring in part and dissenting in part, post, p. 472 U. S. 823. POWELL, J., took no part in the decision of the case.