Phillips Petroleum Company v. Shutts

PETITIONER: Phillips Petroleum Company
RESPONDENT: Shutts
LOCATION: New Mexico State Police Headquarters

DOCKET NO.: 84-233
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: Kansas Supreme Court

CITATION: 472 US 797 (1985)
ARGUED: Feb 25, 1985
DECIDED: Jun 26, 1985

ADVOCATES:
Arthur R. Miller - on behalf of the petitioner
Joel I. Klein - on behalf of the respondent

Facts of the case

Question

Media for Phillips Petroleum Company v. Shutts

Audio Transcription for Oral Argument - February 25, 1985 in Phillips Petroleum Company v. Shutts

Warren E. Burger:

We will hear arguments next in Phillips Petroleum Company against Shutts, et al.--

Mr. Miller.

Arthur R. Miller:

Thank you, Mr. Chief Justice, and may it please the Court.

The two issues in this case are, first, whether the state of Kansas, consistent with the notions of individual liberty and interstate federalism imbedded in the due process clause and the full faith and credit clause may assert jurisdiction and enter a binding judgment affecting thousands of non-residents of Kansas who have had no contacts with Kansas and whose oil and gas royalty interest claims have absolutely nothing to do with Kansas and when there is no legitimate public policy of Kansas implicated in the action, and second, whether Kansas can indiscriminately apply Kansas law to each and every one of these claims.

The petitioner asserts that the answer to both of these questions is in the negative.

In an unbroken line of cases starting with International Shoe and moving through Hanson and Denckla, and most recently further articulated in the Woodson case, for 40 years this Court has established a constitutional requirement that minimum contacts must exist between a party and a state before that state can assert jurisdiction over that party, that there must be a relationship among the defendant, the forum, and the litigation, to use language from those cases.

As fully articulated in Justice White's opinion in the Woodson case, that minimum contact standard serves as a principal, realistic, and flexible instrument protecting two values.

First is the liberty interest of the individual not to be subjected to litigation in a forum with which he or she has not voluntarily affiliated.

The second objective of the minimum contacts test is to limit the authority of each state within the context of the federal system.

That means that I as a citizen of Massachusetts, and Mr. Kubbich of Phillips Petroleum as a citizen of Oklahoma, has an individual liberty interest not to be burdened, not to be affected, not to have his property rights or personal rights affected by a state that he has not affiliated with.

Byron R. White:

So this would just... your submission is that that is just a limit on plaintiff class actions?

Arthur R. Miller:

Our position, Justice White, is that although those cases which I have described do speak in terms of the defendant, because the party to be affected in those cases were defendants, that that same principle must be applied to non-resident class members.

Byron R. White:

And it isn't enough just to give them an option to opt-out?

Arthur R. Miller:

Absolutely not.

This Court has said several times that a cause of action is a property right.

It has said that in the Zimmerman case.

It has said it in effect in the Mullane case.

It has said it in Boddie.

It has said it in Rogers.

In a sense it has said it in the Dunleavy case many, many years ago, that there really is no difference between my being held liable for $10 and my claim of $10 being foreclosed by the judicial action of the state of Kansas, that I have an individual liberty interest unless I have affiliated with Kansas.

I have a constitutional right to have my property, my claims, my liabilities adjudicated by the sovereignty of my state--

So a plaintiff class has... the Constitution requires the plaintiff's class to be limited to those who have some realistic connection with the forum state?

Arthur R. Miller:

--Well, those members of the plaintiff's class who have voluntarily affiliated by some affirmative act.

Right, like the named plaintiffs.

Arthur R. Miller:

Like the named plaintiffs or anyone from any state who would wish to join the named plaintiffs in that action.

Sandra Day O'Connor:

You would require an opt-in procedure in effect?

Arthur R. Miller:

We would require, and I believe the constitution requires that there be an affirmative act taken by the non-resident to show a willingness to subject himself to the forum.

Sandra Day O'Connor:

Even if you are right, I am concerned about the standing of your client to raise that question for one of the 28,000 some odd people who apparently have not come forward to object.

Arthur R. Miller:

We base our standing on cases going back to Hansen and Denckla in which a defendant from Florida was permitted by this Court to assert on behalf of an absent trustee the non-jurisdiction of the state of Florida over that Delaware trustee.

In that situation, this Court said that those Floridians had a direct, substantial personal interest in the outcome of that jurisdictional question, in part, of course, because the Delaware trustee was declared by Florida law to be indispensable.