Case: Phillips Petroleum v.

Shutts (1985, US) [CB 813-819]

Parties: Plaintiff - Shutts (respondent)

Defendant - Phillips (petitioner)

Facts: Shutts filed suit against Phillips, claiming an interest on royalties,

on behalf of himself and 33k small royalty owners. The average claim of the class
members was $100. Class action was certified, and respondents sent notice to each
class member via certified mail, in which it stated that they would be included in
the class unless they opted out. Only 1k of those included resided in Kansas.
Lower court found for P, Shutts, and D appealed. Petitioner (D Phillips) appealed
saying no PJ of unnamed class members according to International Shoe (minimum
contacts), and cannot apply Kansas law to every claim.

Issue: Whether Kansas has PJ over absent class members. Whether Kansas courts
could apply Kansas law to every claim in the dispute. Yes, Yes.

Holding: Lower court decision affirmed.

Reasoning: The burdens of lacking PJ is meant for the Ds, not the Ps. The court
and the named plaintiffs are adequately protecting the interests of the unnamed
plaintiffs. Also, the unnamed Ps don’t have the burden of traveling to the forum
state, and defending against Kansas's judgment. Court says this is not
unconstitutional. Kansas court can apply Kansas law to unnamed parties b/c they
were given notice, and an opportunity to opt-out, and court says this satisfies
due process.

Notes: Class Actions in Federal Courts

• Complete diversity requirement for class actions: only look at class reps;
ignore class member (Supreme Tribe of Ben-Hur v Cauble)
• Amount in controversy requirement: cannot aggregate claims of all class members
for purposes of satisfying amount in controversy. (Synder v Harris)
○ Going further, not just named plaintiffs, but all class members have to
satisfy the amt in controversy. (Zahn v International Paper)
§ several courts have reversed this - reasoning is 1367 supplemental
jurisdiction

Notes

• Shutts - brought class action

○ Claim: royalty rights - he wants interest on the royalty but not sending
out the royalty check until after pending request approved, and he wants interest
on the money in the interim - only $100
○ It would cost him more than $100 to litigate, so why would he bring the
action?
§ Therefore, you brings a class action (not worth for anyone to sue for
$100)
○ The litigation costs will be paid out of the total amount awarded and keep
D from its wrongful conduct
§ So the lawyers are the real parties in interest - lawyers being paid
on contingent fee
§ Only economical to bring this suit if it is aggregated
○ So he got jurisdiction over Petroleum in Kansas, and brought suit there
§ Petroleum defense -
□ says unconstitutional to apply Kansas law
□ They couldn’t be subject to suit by a class that lacks minimum
contacts to Kansas
 ® But why does this matter if it’s the P's that lack the
minimum contacts?
◊ b/c of all the unnamed plaintiffs - you are binding
to the judgment of Kansas court all the unnamed, for which there is no personal
jurisdiction
® To which, the court, says: all those royalty holders
outside of Kansas have lots of due process protection:
◊ The fact that the P's are going to representative
of the class, so they will adequately fight on their behalf
◊ There will be a judicial settlement of the claim
◊ We will have to give you notice by means reasonably
calculated as being notice
► That notice will give you opportunity to opt
of the lawsuit
○ This lawsuit could have been brought as a diversity class action
• We do recognize that class actions are (like civil litigation in general) part
of the way by which society is being governed
○ Have to integrate that thought into both sensible judicial roles (as
opposed to legislative), and into a sensible model into still making this look
like a lawsuit