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Phillips Petroleum v. Shutts

United States Supreme Court
472 U.S. 797 (1985)


Phillips (defendant), a producer and seller of natural gas, extracted some of its gas from leased real property on which it paid royalties. Shutts (plaintiff), a royalty owner to the gas, brought a class action suit in a Kansas state court, alleging that Phillips had delayed royalty payments and was due interest payments on those delayed payments. The trial court certified a class consisting of 33,000 royalty owners. Shutts sent a letter via first-class mail to each class member. The letter advised each class member that he could appear in person or by counsel; otherwise each member would be represented by Shutts. The letter also advised each class member he could "opt out" of the class if he returned a document included with the notice entitled "request for exclusion.” The final class as certified contained 28,100 members. However, approximately 97 percent of those persons had no ties to Kansas with the exception of their interest in the royalty payments. Further, approximately 99 percent of the gas leases at issue had no connection to Kansas outside of the lawsuit. At trial, the Kansas court found Phillips liable for interest on the delayed royalty payments. Phillips appealed to the Supreme Court of Kansas, arguing that unless out-of-state plaintiffs affirmatively consent, Kansas courts may not exercise jurisdiction over their claims. The Supreme Court of Kansas affirmed the decision of the trial court. Phillips appealed to the United States Supreme Court.

Rule of Law


Holding and Reasoning (Rehnquist, J.)

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