Phillips Petroleum Co. v. Shutts case brief summary

Phillips Petroleum Co. v. Shutts case brief

1985 SCOTUS

Posture: Started in Kansas state which was affirmed by Kansas Supreme and SCOTUS affirms jurisdiction but reverses the idea that Kansas state law should be used for all transactions. 

Facts: Phillips produced or purchased gas from leased land in 11 states. Shutts and other royalty owners possessing rights to leases from which Phillips produced gas brought a class action in Kansas State, wanting interest that had been delayed. Trial ct certified 33,000 royalty owners. Class rep provided each member with a notice describing the action and informing each member they can appear and that otherwise they would be represented by named royalty owners and that class members would be included and bound by the judgment unless they opted out through a request for exclusion. 

The final class had more than 28,000 members who resided in all 50 states. 97% of plaintiffs had no connection to Kansas besides lawsuit. Trial ct applied Kansas contract and equity to every claim and all class members. Kansas Supreme affirmed despite the contention that due process was violated by Kansas deciding all the claims and that full faith and credit prohibited application of Kansas law to all transactions between it and class members. 

Reasoning: Defendant claims that IS should apply not only to defendants but also to plaintiffs. Main idea is that if defendants need to meet IS requirements then so doesthe plaintiff. SCOTUS thinks the premise is in error. Defendants must be haled into court to DEFEND against a judgment; it’s a whole different ballgame than from plaintiff’s being bound by a certain judgment. Hansberry said that one cannot be bound by the judgment unless one is made fully a party to the judgment. One huge difference is that the plaintiff is not fending for himself, the plaintiff actually has a representative looking out for his interest. 

Then defendants tried saying plaintiffs must OPT IN to the suit instead of opt out. If the state wants to bind a plaintiff to judgment, the plaintiff must get minimal procedural due process protection. Plaintiff needs notice plus an opportunity to be heard and participate in litigation. Notice must also be practicable and reasonably calculated to tell all parties about the action. Also requires the option to opt out from the proceedings, that the notice describe action and plaintiffs rights AND, finally, named plaintiff must ADEQUATELY represent the interests of the whole class. Thinks personal jurisdiction by the state court was proper. 

However, found that application of Kansas state law was improper. Looked at whether Kansas law conflicts with other jurisdictions and found that it does. Thought that because parties did not expect that Kansas law would apply, it would not be completely fair to allow Kansas law. Also found that Kansas really did not have a significant interest in litigating claims unrelated to the state. Do not say which courts law is needed, just not Kansas. 

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