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5. Constitutional Limitations on Choice of Law
  • 1 Allstate Ins. Co. v. Hague

    1
    449 U.S. 302 (1981)
    2
    ALLSTATE INSURANCE CO.
    v.
    HAGUE, PERSONAL REPRESENTATIVE OF HAGUE'S ESTATE.
    3
    No. 79-938.
    4

    Supreme Court of United States.

    5
    Argued October 6, 1980.
    6
    Decided January 13, 1981.
    7

    CERTIORARI TO THE SUPREME COURT OF MINNESOTA.

    8

    [304] Mark M. Nolan argued the cause and filed a brief for petitioner.

    9

    Andreas F. Lowenfeld argued the cause for respondent. With him on the brief were Samuel H. Hertogs and Bruce J. Douglas.

    10
    JUSTICE BRENNAN announced the judgment of the Court and delivered an opinion, in which JUSTICE WHITE, JUSTICE MARSHALL, and JUSTICE BLACKMUN joined.
    11

    This Court granted certiorari to determine whether the Due Process Clause of the Fourteenth Amendment[1] or the Full Faith and Credit Clause of Art. IV, § 1,[2] of the United States Constitution bars the Minnesota Supreme Court's choice of substantive Minnesota law to govern the effect of a provision in an insurance policy issued to respondent's decedent. 444 U. S. 1070 (1980).

    12

    [305]

    13
    I
    14

    Respondent's late husband, Ralph Hague, died of injuries suffered when a motorcycle on which he was a passenger was struck from behind by an automobile. The accident occurred in Pierce County, Wis., which is immediately across the Minnesota border from Red Wing, Minn. The operators of both vehicles were Wisconsin residents, as was the decedent, who, at the time of the accident, resided with respondent in Hager City, Wis., which is one and one-half miles from Red Wing. Mr. Hague had been employed in Red Wing for the 15 years immediately preceding his death and had commuted daily from Wisconsin to his place of employment.

    15

    Neither the operator of the motorcycle nor the operator of the automobile carried valid insurance. However, the decedent held a policy issued by petitioner Allstate Insurance Co. covering three automobiles owned by him and containing an uninsured motorist clause insuring him against loss incurred from accidents with uninsured motorists. The uninsured motorist coverage was limited to $15,000 for each automobile.[3]

    16

    After the accident, but prior to the initiation of this lawsuit, respondent moved to Red Wing. Subsequently, she married a Minnesota resident and established residence with her new husband in Savage, Minn. At approximately the same time, a Minnesota Registrar of Probate appointed respondent personal representative of her deceased husband's estate. Following her appointment, she brought this action in Minnesota District Court seeking a declaration under Minnesota law that the $15,000 uninsured motorist coverage on each of her late husband's three automobiles could be "stacked" to provide total coverage of $45,000. Petitioner defended on the ground that whether the three uninsured motorist [306] coverages could be stacked should be determined by Wisconsin law, since the insurance policy was delivered in Wisconsin, the accident occurred in Wisconsin, and all persons involved were Wisconsin residents at the time of the accident.

    17

    The Minnesota District Court disagreed. Interpreting Wisconsin law to disallow stacking, the court concluded that Minnesota's choice-of-law rules required the application of Minnesota law permitting stacking. The court refused to apply Wisconsin law as "inimical to the public policy of Minnesota" and granted summary judgment for respondent.[4]

    18

    The Minnesota Supreme Court, sitting en banc, affirmed the District Court.[5] The court, also interpreting Wisconsin law to prohibit stacking,[6] applied Minnesota law after analyzing the relevant Minnesota contacts and interests within the analytical framework developed by Professor Leflar.[7] See Leflar, Choice-Influencing Considerations in Conflicts Law, 41 N. Y. U. L. Rev. 267 (1966). The state court, therefore, examined the conflict-of-laws issue in terms of (1) predictability of result, (2) maintenance of interstate order, (3) simplification of the judicial task, (4) advancement of the forum's governmental interests, and (5) application of the better rule of law. Although stating that the Minnesota contacts might not be, "in themselves, sufficient to mandate application of [Minnesota] law,"[8] 289 N. W. 2d 43, 49 [307] (1978), under the first four factors, the court concluded that the fifth factor—application of the better rule of law—favored selection of Minnesota law. The court emphasized that a majority of States allow stacking and that legal decisions allowing stacking "are fairly recent and well considered in light of current uses of automobiles." Ibid. In addition, the court found the Minnesota rule superior to Wisconsin's "because it requires the cost of accidents with uninsured motorists to be spread more broadly through insurance premiums than does the Wisconsin rule." Ibid. Finally, after rehearing en banc,[9] the court buttressed its initial opinion by indicating "that contracts of insurance on motor vehicles are in a class by themselves" since an insurance company "knows the automobile is a movable item which will be driven from state to state." 289 N. W. 2d, at 50 (1979). From this premise the court concluded that application of Minnesota law was "not so arbitrary and unreasonable as to violate due process." Ibid.

    19
    II
    20

    It is not for this Court to say whether the choice-of-law analysis suggested by Professor Leflar is to be preferred or whether we would make the same choice-of-law decision if sitting as the Minnesota Supreme Court. Our sole function is to determine whether the Minnesota Supreme Court's choice of its own substantive law in this case exceeded federal constitutional limitations. Implicit in this inquiry is the recognition, long accepted by this Court, that a set of facts giving rise to a lawsuit, or a particular issue within a lawsuit, may justify, in constitutional terms, application of the law of more than one jurisdiction. See, e. g., Watson v. Employers Liability Assurance Corp., 348 U. S. 66, 72-73 (1954); n. 11, infra. See generally Clay v. Sun Insurance Office, Ltd., 377 U. S. [308] 179, 181-182 (1964) (hereinafter cited as Clay II). As a result, the forum State may have to select one law from among the laws of several jurisdictions having some contact with the controversy.

    21

    In deciding constitutional choice-of-law questions, whether under the Due Process Clause or the Full Faith and Credit Clause,[10] this Court has traditionally examined the contacts of the State, whose law was applied, with the parties and with the occurrence or transaction giving rise to the litigation. See Clay II, supra, at 183. In order to ensure that the choice of law is neither arbitrary nor fundamentally unfair, see Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532, 542 (1935), the Court has invalidated the choice of law of a State which has had no significant contact or significant aggregation of contacts, creating state interests, with the parties and the occurrence or transaction.[11]

    22

    [309] Two instructive examples of such invalidation are Home Ins. Co. v. Dick, 281 U. S. 397 (1930), and John Hancock Mutual Life Ins. Co. v. Yates, 299 U. S. 178 (1936). In both cases, the selection of forum law rested exclusively on the presence of one nonsignificant forum contact.

    23

    Home Ins. Co. v. Dick involved interpretation of an insurance policy which had been issued in Mexico, by a Mexican insurer, to a Mexican citizen, covering a Mexican risk. The policy was subsequently assigned to Mr. Dick, who was domiciled in Mexico and "physically present and acting in Mexico," 281 U. S., at 408, although he remained a nominal, permanent resident of Texas. The policy restricted coverage to losses occurring in certain Mexican waters and, indeed, the loss occurred in those waters. Dick brought suit [310] in Texas against a New York reinsurer. Neither the Mexican insurer nor the New York reinsurer had any connection to Texas.[12] The Court held that application of Texas law to void the insurance contract's limitation-of-actions clause violated due process.[13]

    24

    The relationship of the forum State to the parties and the transaction was similarly attenuated in John Hancock Mutual Life Ins. Co. v. Yates. There, the insurer, a Massachusetts corporation, issued a contract of insurance on the life of a New York resident. The contract was applied for, issued, and delivered in New York where the insured and his spouse resided. After the insured died in New York, his spouse moved to Georgia and brought suit on the policy in Georgia. Under Georgia law, the jury was permitted to take into account oral modifications when deciding whether an insurance policy application contained material misrepresentations. Under New York law, however, such misrepresentations were to be evaluated solely on the basis of the written application. The Georgia court applied Georgia law. This Court reversed, finding application of Georgia law to be unconstitutional.

    25

    Dick and Yates stand for the proposition that if a State has only an insignificant contact with the parties and the [311] occurrence or transaction, application of its law is unconstitutional.[14] Dick concluded that nominal residence—standing alone—was inadequate; Yates held that a postoccurrence change of residence to the forum State—standing alone—was insufficient to justify application of forum law. Although instructive as extreme examples of selection of forum law, neither Dick nor Yates governs this case. For in contrast to those decisions, here the Minnesota contacts with the parties and the occurrence are obviously significant. Thus, this case is like Alaska Packers, Cardillo v. Liberty Mutual Ins. Co., 330 U. S. 469 (1947), and Clay II—cases where this Court sustained choice-of-law decisions based on the contacts of the State, whose law was applied, with the parties and occurrence.

    26

    In Alaska Packers, the Court upheld California's application of its Workmen's Compensation Act, where the most significant contact of the worker with California was his execution of an employment contract in California. The worker, a nonresident alien from Mexico, was hired in California for seasonal work in a salmon canning factory in Alaska. As part of the employment contract, the employer, who was doing business in California, agreed to transport the worker to Alaska and to return him to California when the work was completed. Even though the employee contracted to be bound by the Alaska Workmen's Compensation Law and was injured in Alaska, he sought an award under the California Workmen's Compensation Act. The Court held that the choice of California law was not "so arbitrary or unreasonable as to amount to a denial of due process," 294 U. S., at 542, because "[w]ithout a remedy in California, [he] would be remediless," ibid., and because of California's interest that the worker not become a public charge, ibid.[15]

    27

    [312] In Cardillo v. Liberty Mutual Ins. Co., supra, a District of Columbia resident, employed by a District of Columbia employer and assigned by the employer for the three years prior to his death to work in Virginia, was killed in an automobile crash in Virginia in the course of his daily commute home from work. The Court found the District's contacts with the parties and the occurrence sufficient to satisfy constitutional requirements, based on the employee's residence in the District, his commute between home and the Virginia workplace, and his status as an employee of a company "engaged in electrical construction work in the District of Columbia and surrounding areas." Id., at 471.[16]

    28

    Similarly, Clay II upheld the constitutionality of the application of forum law. There, a policy of insurance had issued in Illinois to an Illinois resident. Subsequently the insured moved to Florida and suffered a property loss in Florida. Relying explicitly on the nationwide coverage of the policy and the presence of the insurance company in Florida and implicitly on the plaintiff's Florida residence and the occurrence of the property loss in Florida, the Court sustained the Florida court's choice of Florida law.

    29

    The lesson from Dick and Yates, which found insufficient forum contacts to apply forum law, and from Alaska Packers, Cardillo, and Clay II, which found adequate contacts to sustain the choice of forum law,[17] is that for a State's substantive [313] law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair. Application of this principle to the facts of this case persuades us that the Minnesota Supreme Court's choice of its own law did not offend the Federal Constitution.

    30
    III
    31

    Minnesota has three contacts with the parties and the occurrence giving rise to the litigation. In the aggregate, these contacts permit selection by the Minnesota Supreme Court of Minnesota law allowing the stacking of Mr. Hague's uninsured motorist coverages.

    32

    First, and for our purposes a very important contact, Mr. Hague was a member of Minnesota's work force, having been employed by a Red Wing, Minn., enterprise for the 15 [314] years preceding his death. While employment status may implicate a state interest less substantial than does resident status, that interest is nevertheless important. The State of employment has police power responsibilities towards the nonresident employee that are analogous, if somewhat less profound, than towards residents. Thus, such employees use state services and amenities and may call upon state facilities in appropriate circumstances.

    33

    In addition, Mr. Hague commuted to work in Minnesota, a contact which was important in Cardillo v. Liberty Mutual Ins. Co., 330 U. S., at 475-476 (daily commute between residence in District of Columbia and workplace in Virginia), and was presumably covered by his uninsured motorist coverage during the commute.[18] The State's interest in its commuting nonresident employees reflects a state concern for the safety and well-being of its work force and the concomitant effect on Minnesota employers.

    34

    That Mr. Hague was not killed while commuting to work or while in Minnesota does not dictate a different result. To hold that the Minnesota Supreme Court's choice of Minnesota law violated the Constitution for that reason would require too narrow a view of Minnesota's relationship with the parties and the occurrence giving rise to the litigation. An automobile accident need not occur within a particular jurisdiction for that jurisdiction to be connected to the occurrence.[19] [315] Similarly, the occurrence of a crash fatal to a Minnesota employee in another State is a Minnesota contact.[20] If Mr. Hague had only been injured and missed work for a few weeks, the effect on the Minnesota employer would have been palpable and Minnesota's interest in having its employee made whole would be evident. Mr. Hague's death affects Minnesota's interest still more acutely, even though Mr. Hague will not return to the Minnesota work force. Minnesota's work force is surely affected by the level of protection the State extends to it, either directly or indirectly. Vindication of the rights of the estate of a Minnesota employee, therefore, is an important state concern.

    35

    Mr. Hague's residence in Wisconsin does not—as Allstate seems to argue—constitutionally mandate application of Wisconsin law to the exclusion of forum law.[21] If, in the instant [316] case, the accident had occurred in Minnesota between Mr. Hague and an uninsured Minnesota motorist, if the insurance contract had been executed in Minnesota covering a Minnesota registered company automobile which Mr. Hague was permitted to drive, and if a Wisconsin court sought to apply Wisconsin law, certainly Mr. Hague's residence in Wisconsin, his commute between Wisconsin and Minnesota, and the insurer's presence in Wisconsin should be adequate to apply Wisconsin's law.[22] See generally Cardillo v. Liberty [317] Mutual Ins. Co., supra; Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532 (1935); Home Ins. Co. v. Dick, 281 U. S., at 408, n. 5. Employment status is not a sufficiently less important status than residence, see generally Carroll v. Lanza, 349 U. S. 408 (1955); Alaska Packers Assn. v. Industrial Accident Comm'n, supra, when combined with Mr. Hague's daily commute across state lines and the other Minnesota contacts present, to prohibit the choice-of-law result in this case on constitutional grounds.

    36

    Second, Allstate was at all times present and doing business in Minnesota.[23] By virtue of its presence, Allstate can hardly claim unfamiliarity with the laws of the host jurisdiction and surprise that the state courts might apply forum law to litigation [318] in which the company is involved. "Particularly since the company was licensed to do business in [the forum], it must have known it might be sued there, and that [the forum] courts would feel bound by [forum] law."[24] Clay v. Sun Insurance Office Ltd., 363 U. S. 207, 221 (1960) (Black, J., dissenting).[25] Moreover, Allstate's presence in Minnesota gave Minnesota an interest in regulating the company's insurance obligations insofar as they affected both a Minnesota resident and court-appointed representative—respondent—and a longstanding member of Minnesota's work force— Mr. Hague. See Hoopeston Canning Co. v. Cullen, 318 U. S. 313, 316 (1943).

    37

    Third, respondent became a Minnesota resident prior to institution of this litigation. The stipulated facts reveal that she first settled in Red Wing, Minn., the town in which [319] her late husband had worked.[26] She subsequently moved to Savage, Minn., after marrying a Minnesota resident who operated an automobile service station in Bloomington, Minn. Her move to Savage occurred "almost concurrently," 289 N. W. 2d, at 45, with the initiation of the instant case.[27] There is no suggestion that Mrs. Hague moved to Minnesota in anticipation of this litigation or for the purpose of finding a legal climate especially hospitable to her claim.[28] The stipulated facts, sparse as they are, negate any such inference.

    38

    While John Hancock Mutual Life Ins. Co. v. Yates, 299 U. S. 178 (1936), held that a postoccurrence change of residence to the forum State was insufficient in and of itself to confer power on the forum State to choose its law, that case did not hold that such a change of residence was irrelevant. Here, of course, respondent's bona fide residence in Minnesota was not the sole contact Minnesota had with this litigation. And in connection with her residence in Minnesota, respondent was appointed personal representative of Mr. Hague's estate by the Registrar of Probate for the County of Goodhue, Minn. Respondent's residence and subsequent appointment in Minnesota as personal representative of her late husband's estate constitute a Minnesota contact which gives Minnesota an interest in respondent's recovery, an interest which the court below identified as full compensation for "resident accident victims" to keep them "off welfare rolls" and able "to meet financial obligations." 289 N. W. 2d, at 49.

    39

    [320] In sum, Minnesota had a significant aggregation[29] of contacts with the parties and the occurrence, creating state interests, such that application of its law was neither arbitrary nor fundamentally unfair. Accordingly, the choice of Minnesota law by the Minnesota Supreme Court did not violate the Due Process Clause or the Full Faith and Credit Clause.

    40

    Affirmed.

    41
    JUSTICE STEWART took no part in the consideration or decision of this case.
    42
    JUSTICE STEVENS, concurring in the judgment.
    43

    As I view this unusual case—in which neither precedent nor constitutional language provides sure guidance—two separate questions must be answered. First, does the Full Faith and Credit Clause[30] require Minnesota, the forum State, to apply Wisconsin law? Second, does the Due Process Clause[31] of the Fourteenth Amendment prevent Minnesota from applying its own law? The first inquiry implicates the federal interest in ensuring that Minnesota respect the sovereignty of the State of Wisconsin; the second implicates the litigants' interest in a fair adjudication of their rights.[32]

    44

    [321] I realize that both this Court's analysis of choice-of-law questions[33] and scholarly criticism of those decisions[34] have treated these two inquiries as though they were indistinguishable.[35] [322] Nevertheless, I am persuaded that the two constitutional provisions protect different interests and that proper analysis requires separate consideration of each.

    45
    I
    46

    The Full Faith and Credit Clause is one of several provisions in the Federal Constitution designed to transform the several States from independent sovereignties into a single, unified Nation. See Thomas v. Washington Gas Light Co., 448 U. S. 261, 271-272 (1980) (plurality opinion); Milwaukee County v. M. E. White Co., 296 U. S. 268, 276-277 (1935).[36] The Full Faith and Credit Clause implements this design by directing that a State, when acting as the forum for litigation having multistate aspects or implications, respect the legitimate interests of other States and avoid infringement upon their sovereignty. The Clause does not, however, rigidly [323] require the forum State to apply foreign law whenever another State has a valid interest in the litigation. See Nevada v. Hall, 440 U. S. 410, 424 (1979); Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532, 546-548 (1935); Pacific Employers Ins. Co. v. Industrial Accident Comm'n, 306 U. S. 493, 501-502 (1939).[37] On the contrary, in view of the fact that the forum State is also a sovereign in its own right, in appropriate cases it may attach paramount importance to its own legitimate interests.[38] Accordingly, the fact that a choice-of-law decision may be unsound as a matter of conflicts law does not necessarily implicate the federal concerns embodied in the Full Faith and Credit Clause. Rather, in my opinion, the Clause should not invalidate a state court's choice of forum law unless that choice threatens the federal interest in national unity by unjustifiably infringing upon the legitimate interests of another State.[39]

    47

    [324] In this case, I think the Minnesota courts' decision to apply Minnesota law was plainly unsound as a matter of normal conflicts law. Both the execution of the insurance contract and the accident giving rise to the litigation took place in Wisconsin. Moreover, when both of those events occurred, the plaintiff, the decedent, and the operators of both vehicles were all residents of Wisconsin. Nevertheless, I do not believe that any threat to national unity or Wisconsin's sovereignty ensues from allowing the substantive question presented by this case to be determined by the law of another State.

    48

    The question on the merits is one of interpreting the meaning of the insurance contract. Neither the contract itself, nor anything else in the record, reflects any express understanding of the parties with respect to what law would be applied or with respect to whether the separate uninsured motorist coverage for each of the decedent's three cars could be "stacked." Since the policy provided coverage for accidents that might occur in other States, it was obvious to the parties at the time of contracting that it might give rise to the application of the law of States other than Wisconsin. Therefore, while Wisconsin may have an interest in ensuring that contracts formed in Wisconsin in reliance upon Wisconsin law are interpreted in accordance with that law, that interest is not implicated in this case.[40]

    49

    [325] Petitioner has failed to establish that Minnesota's refusal to apply Wisconsin law poses any direct[41] or indirect threat to Wisconsin's sovereignty.[42] In the absence of any such [326] threat, I find it unnecessary to evaluate the forum State's interest in the litigation in order to reach the conclusion that the Full Faith and Credit Clause does not require the Minnesota courts to apply Wisconsin law to the question of contract interpretation presented in this case.

    50
    II
    51

    It may be assumed that a choice-of-law decision would violate the Due Process Clause if it were totally arbitrary or if it were fundamentally unfair to either litigant. I question whether a judge's decision to apply the law of his own State could ever be described as wholly irrational. For judges are presumably familiar with their own state law and may find it difficult and time consuming to discover and apply correctly the law of another State.[43] The forum State's interest in the fair and efficient administration of justice is therefore sufficient, in my judgment, to attach a presumption of validity to a forum State's decision to apply its own law to a dispute over which it has jurisdiction.

    52

    The forum State's interest in the efficient operation of its judicial system is clearly not sufficient, however, to justify the application of a rule of law that is fundamentally unfair to one of the litigants. Arguably, a litigant could demonstrate such unfairness in a variety of ways. Concern about the fairness of the forum's choice of its own rule might arise [327] if that rule favored residents over nonresident, if it represented a dramatic departure from the rule that obtains in most American jurisdictions, or if the rule itself was unfair on its face or as applied.[44]

    53

    The application of an otherwise acceptable rule of law may result in unfairness to the litigants if, in engaging in the activity which is the subject of the litigation, they could not reasonably have anticipated that their actions would later be judged by this rule of law. A choice-of-law decision that frustrates the justifiable expectations of the parties can be fundamentally unfair. This desire to prevent unfair surprise to a litigant has been the central concern in this Court's review of choice-of-law decisions under the Due Process Clause.[45]

    54

    Neither the "stacking" rule itself, nor Minnesota's application of that rule to these litigants, raises any serious question of fairness. As the plurality observes, "[s]tacking was [328] the rule in most States at the time the policy was issued." Ante, at 316, n. 22.[46] Moreover, the rule is consistent with the economics of a contractual relationship in which the policyholder paid three separate premiums for insurance coverage for three automobiles, including a separate premium for each uninsured motorist coverage.[47] Nor am I persuaded that the decision of the Minnesota courts to apply the "stacking" rule in this case can be said to violate due process because that decision frustrates the reasonable expectations of the contracting parties.

    55

    Contracting parties can, of course, make their expectations explicit by providing in their contract either that the law of a particular jurisdiction shall govern questions of contract interpretation,[48] or that a particular substantive rule, for instance "stacking," shall or shall not apply.[49] In the absence [329] of such express provisions, the contract nonetheless may implicitly reveal the expectations of the parties. For example, if a liability insurance policy issued by a resident of a particular State provides coverage only with respect to accidents within that State, it is reasonable to infer that the contracting parties expected that their obligations under the policy would be governed by that State's law.[50]

    56

    In this case, no express indication of the parties' expectations is available. The insurance policy provided coverage for accidents throughout the United States; thus, at the time of contracting, the parties certainly could have anticipated that the law of States other than Wisconsin would govern particular claims arising under the policy.[51] By virtue of doing business [330] in Minnesota, Allstate was aware that it could be sued in the Minnesota courts; Allstate also presumably was aware that Minnesota law, as well as the law of most States, permitted "stacking." Nothing in the record requires that a different inference be drawn. Therefore, the decision of the Minnesota courts to apply the law of the forum in this case does not frustrate the reasonable expectations of the contracting parties, and I can find no fundamental unfairness in that decision requiring the attention of this Court.[52]

    57

    [331] In terms of fundamental fairness, it seems to me that two factors relied upon by the plurality—the plaintiff's post-accident move to Minnesota and the decedent's Minnesota employment—are either irrelevant to or possibly even tend to undermine the plurality's conclusion. When the expectations of the parties at the time of contracting are the central due process concern, as they are in this case, an unanticipated postaccident occurrence is clearly irrelevant for due process purposes. The fact that the plaintiff became a resident of the forum State after the accident surely cannot justify a ruling in her favor that would not be made if the plaintiff were a nonresident. Similarly, while the fact that the decedent regularly drove into Minnesota might be relevant to the expectations of the contracting parties,[53] the fact that he did so because he was employed in Minnesota adds nothing to the due process analysis. The choice-of-law decision of the Minnesota courts is consistent with due process because it does not result in unfairness to either litigant, not because Minnesota now has an interest in the plaintiff as resident or formerly had an interest in the decedent as employee.

    58
    III
    59

    Although I regard the Minnesota courts' decision to apply forum law as unsound as a matter of conflicts law, and there [332] is little in this record other than the presumption in favor of the forum's own law to support that decision, I concur in the plurality's judgment. It is not this Court's function to establish and impose upon state courts a federal choice-of-law rule, nor is it our function to ensure that state courts correctly apply whatever choice-of-law rules they have themselves adopted.[54] Our authority may be exercised in the choice-of-law area only to prevent a violation of the Full Faith and Credit or the Due Process Clause. For the reasons stated above, I find no such violation in this case.

    60
    JUSTICE POWELL, with whom THE CHIEF JUSTICE and JUSTICE REHNQUIST join, dissenting.
    61

    My disagreement with the plurality is narrow. I accept with few reservations Part II of the plurality opinion, which sets forth the basic principles that guide us in reviewing state choice-of-law decisions under the Constitution. The Court should invalidate a forum State's decision to apply its own law only when there are no significant contacts between the State and the litigation. This modest check on state power is mandated by the Due Process Clause of the Fourteenth Amendment and the Full Faith and Credit Clause of Art. IV, § 1. I do not believe, however, that the plurality adequately analyzes the policies such review must serve. In consequence, it has found significant what appear to me to be trivial contacts between the forum State and the litigation.

    62

    [333]

    63
    I
    64

    At least since Carroll v. Lanza, 349 U. S. 408 (1955), the Court has recognized that both the Due Process and the Full Faith and Credit Clauses are satisfied if the forum has such significant contacts with the litigation that it has a legitimate state interest in applying its own law. The significance of asserted contacts must be evaluated in light of the constitutional policies that oversight by this Court should serve. Two enduring policies emerge from our cases.

    65

    First, the contacts between the forum State and the litigation should not be so "slight and casual" that it would be fundamentally unfair to a litigant for the forum to apply its own State's law. Clay v. Sun Ins. Office, Ltd., 377 U. S. 179. 182 (1964). The touchstone here is the reasonable expectation of the parties. See Weintraub, Due Process and Full Faith and Credit Limitations on a State's Choice of Law, 44 Iowa L. Rev. 449, 445-457 (1959) (Weintraub). Thus, in Clay, the insurer sold a policy to Clay "`with knowledge that he could take his property anywhere in the world he saw fit without losing the protection of his insurance.'" 377 U. S., at 182. quoting Clay v. Sun Ins. Office Ltd., 363 U. S. 207, 221 (1960) (Black, J., dissenting). When the insured moved to Florida with the knowledge of the insurer, and a loss occurred in that State, this Court found no unfairness in Florida's applying its own rule of decision to permit recovery on the policy. The insurer "must have known it might be sued there." Ibid. See also Watson v. Employers Liability Assurance Corp., 348 U. S. 66 (1954).[55]

    66

    [334] Second, the forum State must have a legitimate interest in the outcome of the litigation before it. Pacific Ins. Co. v. Industrial Accident Comm'n, 306 U. S. 493 (1939). The Full Faith and Credit Clause addresses the accommodation of sovereign power among the various States. Under limited circumstances, it requires one State to give effect to the statutory law of another State. Nevada v. Hall, 440 U. S. 410, 423 (1979). To be sure, a forum State need not give effect to another State's law if that law is in "violation of its own legitimate public policy." Id., at 422. Nonetheless, for a forum State to further its legitimate public policy by applying its own law to a controversy, there must be some connection between the facts giving rise to the litigation and the scope of the State's lawmaking jurisdiction.

    67

    Both the Due Process and Full Faith and Credit Clauses ensure that the States do not "reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system." World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 292 (1980) (addressing Fourteenth Amendment limitation on state-court jurisdiction). As the Court stated in Pacific Ins. Co., supra: "[T]he full faith and credit clause does not require one state to substitute for its own statute, applicable to persons and events within it, the conflicting statute of another state." Id., at 502 (emphasis added). The State has a legitimate interest in applying a rule of decision to the litigation only if the facts to which the rule will be applied have created effects within the State, toward which the State's public policy is directed. To assess the sufficiency of asserted contacts between the forum and the litigation, the court must determine if the contacts form a reasonable link between the litigation and a state policy. In short, examination of contacts addresses whether "the state [335] has an interest in the application of its policy in this instance." Currie, The Constitution and the Choice of Law: Governmental Interests and the Judicial Function, in B. Currie, Selected Essays on the Conflict of Laws 188, 189 (1963) (Currie). If it does, the Constitution is satisfied.

    68

    John Hancock Mut. Life Ins. Co. v. Yates, 299 U. S. 178 (1936), illustrates this principle. A life insurance policy was executed in New York, on a New York insured with a New York beneficiary. The insured died in New York; his beneficiary moved to Georgia and sued to recover on the policy. The insurance company defended on the ground that the insured, in the application for the policy, had made materially false statements that rendered it void under New York law. This Court reversed the Georgia court's application of its contrary rule that all questions of the policy's validity must be determined by the jury. The Court found a violation of the Full Faith and Credit Clause, because "[i]n respect to the accrual of the right asserted under the contract . . . there was no occurrence, nothing done, to which the law of Georgia could apply." Id., at 182. In other words, the Court determined that Georgia had no legitimate interest in applying its own law to the legal issue of liability. Georgia's contacts with the contract of insurance were nonexistent.[56] See Home Ins. Co. v. Dick, 281 U. S. 397, 408 (1930).

    69

    In summary, the significance of the contacts between a forum State and the litigation must be assessed in light of [336] these two important constitutional policies.[57] A contact, or a pattern of contacts, satisfies the Constitution when it protects the litigants from being unfairly surprised if the forum State applies its own law, and when the application of the forum's law reasonably can be understood to further a legitimate public policy of the forum State.

    70
    II
    71

    Recognition of the complexity of the constitutional inquiry requires that this Court apply these principles with restraint. Applying these principles to the facts of this case, I do not believe, however, that Minnesota had sufficient contacts with the "persons and events" in this litigation to apply its rule permitting stacking. I would agree that no reasonable expectations of the parties were frustrated. The risk insured by petitioner was not geographically limited. See Clay v. Sun Ins. Office, Ltd., 377 U. S., at 182. The close proximity of Hager City, Wis., to Minnesota, and the fact that Hague commuted daily to Red Wing, Minn., for many years should have led the insurer to realize that there was a reasonable probability that the risk would materialize in Minnesota. Under our precedents, it is plain that Minnesota could have applied its own law to an accident occurring within its borders. See ante, at 318, n. 24. The fact that the accident did not, in fact, occur in Minnesota is not controlling because the expectations of the litigants before the cause of [337] action accrues provide the pertinent perspective. See Weintraub 455; n. 1, supra.

    72

    The more doubtful question in this case is whether application of Minnesota's substantive law reasonably furthers a legitimate state interest. The plurality attempts to give substance to the tenuous contacts between Minnesota and this litigation. Upon examination, however, these contacts are either trivial or irrelevant to the furthering of any public policy of Minnesota.

    73

    First, the post accident residence of the plaintiff-beneficiary is constitutionally irrelevant to the choice-of-law question. John Hancock Mut. Life Ins. Co. v. Yates, supra. The plurality today insists that Yates only held that a postoccurrence move to the forum State could not "in and of itself" confer power on the forum to apply its own law, but did not establish that such a change of residence was irrelevant. Ante, at 319. What the Yates Court held, however, was that "there was no occurrence, nothing done, to which the law of Georgia could apply." 299 U. S., at 182 (emphasis added). Any possible ambiguity in the Court's view of the significance of a postoccurrence change of residence is dispelled by Home Ins. Co. v. Dick, supra, cited by the Yates Court, where it was held squarely that Dick's post accident move to the forum State was "without significance." 281 U. S., at 408.

    74

    This rule is sound. If a plaintiff could choose the substantive rules to be applied to an action by moving to a hospitable forum, the invitation to forum shopping would be irresistible. Moreover, it would permit the defendant's reasonable expectations at the time the cause of action accrues to be frustrated, because it would permit the choice-of-law question to turn on a postaccrual circumstance. Finally, postaccrual residence has nothing to do with facts to which the forum State proposes to apply its rule; it is unrelated to the substantive legal issues presented by the litigation.

    75

    Second, the plurality finds it significant that the insurer does business in the forum State. Ante, at 317-318. The State [338] does have a legitimate interest in regulating the practices of such an insurer. But this argument proves too much. The insurer here does business in all 50 States. The forum State has no interest in regulating that conduct of the insurer unrelated to property, persons, or contracts executed within the forum State.[58] See Hoopeston Canning Co. v. Cullen, 318 U. S. 313, 319 (1943). The plurality recognizes this flaw and attempts to bolster the significance of the local presence of the insurer by combining it with the other factors deemed significant: the presence of the plaintiff and the fact that the deceased worked in the forum State. This merely restates the basic question in the case.

    76

    Third, the plurality emphasizes particularly that the insured worked in the forum State.[59] Ante, at 313-317. The fact that the insured was a nonresident employee in the forum [339] State provides a significant contact for the furtherance of some local policies. See, e. g., Pacific Ins. Co. v. Industrial Accident Comm'n, 306 U. S. 493 (1939) (forum State's interest in compensating workers for employment-related injuries occurring within the State); Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532, 549 (1935) (forum State's interest in compensating the employment-related injuries of a worker hired in the State). The insured's place of employment is not, however, significant in this case. Neither the nature of the insurance policy, the events related to the accident, nor the immediate question of stacking coverage is in any way affected or implicated by the insured's employment status. The plurality's opinion is understandably vague in explaining how trebling the benefits to be paid to the estate of a nonresident employee furthers any substantial state interest relating to employment. Minnesota does not wish its workers to die in automobile accidents, but permitting stacking will not further this interest. The substantive issue here is solely one of compensation, and whether the compensation provided by this policy is increased or not will have no relation to the State's employment policies or police power. See n. 5, supra.

    77

    Neither taken separately nor in the aggregate do the contacts asserted by the plurality today indicate that Minnesota's application of its substantive rule in this case will further any legitimate state interest.[60] The plurality focuses [340] only on physical contacts vel non, and in doing so pays scant attention to the more fundamental reasons why our precedents require reasonable policy-related contacts in choice-of-law cases. Therefore, I dissent.

    78

    [1] The Due Process Clause of the Fourteenth Amendment provides that no State "shall . . . deprive any person of life, liberty, or property, without due process of law . . . ."

    79

    [2]The Full Faith and Credit Clause, Art. IV, § 1, provides:

    80

    "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records, and Proceedings shall be proved, and the Effect thereof."

    81

    [3] Ralph Hague paid a separate premium for each automobile including an additional separate premium for each uninsured motorist coverage.

    82

    [4] App. C to Pet. for Cert. A-29.

    83

    [5] 289 N. W. 2d 43 (1978).

    84

    [6] Respondent has suggested that this case presents a "false conflict." The court below rejected this contention and applied Minnesota law. Even though the Minnesota Supreme Court's choice of Minnesota law followed a discussion of whether this case presents a false conflict, the fact is that the court chose to apply Minnesota law. Thus, the only question before this Court is whether that choice was constitutional.

    85

    [7] Minnesota had previously adopted the conceptual model developed by Professor Leflar in Milkovich v. Saari, 295 Minn. 155, 203 N. W. 2d 408 (1973).

    86

    [8] The court apparently was referring to sufficiency as a matter of choice of law and not as a matter of constitutional limitation on its choice-of-law decision.

    87

    [9] 289 N. W. 2d, at 50 (1979).

    88

    [10] This Court has taken a similar approach in deciding choice-of-law cases under both the Due Process Clause and the Full Faith and Credit Clause. In each instance, the Court has examined the relevant contacts and resulting interests of the State whose law was applied. See, e. g., Nevada v. Hall, 440 U. S. 410, 424 (1979). Although at one time the Court required a more exacting standard under the Full Faith and Credit Clause than under the Due Process Clause for evaluating the constitutionality of choice-of-law decisions, see Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532, 549-550 (1935) (interest of State whose law was applied was no less than interest of State whose law was rejected), the Court has since abandoned the weighing-of-interests requirement. Carroll v. Lanza, 349 U. S. 408 (1955); see Nevada v. Hall, supra; Weintraub, Due Process and Full Faith and Credit Limitations on a State's Choice of Law, 44 Iowa L. Rev. 449 (1959). Different considerations are of course at issue when full faith and credit is to be accorded to acts, records, and proceedings outside the choice-of-law area, such as in the case of sister state-court judgments.

    89

    [11] Prior to the advent of interest analysis in the state courts as the "dominant mode of analysis in modern choice of law theory," Silberman, Shaffer v. Heitner: The End of an Era, 53 N. Y. U. L. Rev. 33, 80, n. 259 (1978); cf. Richards v. United States, 369 U. S. 1, 11-13, and nn. 26-27 (1962) (discussing trend toward interest analysis in state courts), the prevailing choice-of-law methodology focused on the jurisdiction where a particular event occurred. See, e. g., Restatement of Conflict of Laws (1934). For example, in cases characterized as contract cases, the law of the place of contracting controlled the determination of such issues as capacity, fraud, consideration, duty, performance, and the like. Id., § 332; see Beale, What Law Governs the Validity of a Contract, 23 Harv. L. Rev. 260, 270-271 (1910). In the tort context, the law of the place of the wrong usually governed traditional choice-of-law analysis. Restatement, supra, § 378; see Richards v. United States, supra,at 11-12.

    90

    Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 U. S. 143 (1934), can, perhaps, best be explained as an example of that period. In that case, the Court struck down application by the Mississippi courts of Mississippi law which voided the limitations provision in a fidelity bond written in Tennessee between a Connecticut insurer and Delta, both of which were doing business in Tennessee and Mississippi. By its terms, the bond covered misapplication of funds "by any employee `in any position, anywhere . . . .'" Id., at 145. After Delta discovered defalcations by one of its Mississippi-based employees, a lawsuit was commenced in Mississippi.

    91

    That case, however, has scant relevance for today. It implied a choice-of-law analysis which, for all intents and purposes, gave an isolated event— the writing of the bond in Tennessee—controlling constitutional significance, even though there might have been contacts with another State (there Mississippi) which would make application of its law neither unfair nor unexpected. See Martin, Personal Jurisdiction and Choice of Law, 78 Mich. L. Rev. 872, 874, and n. 11 (1980).

    92

    [12] Dick sought to obtain quasi-in-rem jurisdiction by garnishing the reinsurance obligation of the New York reinsurer. The reinsurer had never transacted business in Texas, but it "was cited by publication, in accordance with a Texas statute; attorneys were appointed for it by the trial court; and they filed on its behalf an answer which denied liability." 281 U. S., at 402. There would be no jurisdiction in the Texas courts to entertain such a lawsuit today. See Rush v. Savchuk, 444 U. S. 320 (1980); Shaffer v. Heitner, 433 U. S. 186 (1977); Silberman, supra, at 62-65.

    93

    [13] The Court noted that the result might have been different if there had been some connection to Texas upon "which the State could properly lay hold as the basis of the regulations there imposed." 281 U. S., at 408, n. 5; see Watson v. Employers Liability Assurance Corp., 348 U. S. 66, 71 (1954).

    94

    [14] See generally, Weintraub, supra n. 10, at 455-457.

    95

    [15] The Court found no violation of the Full Faith and Credit Clause, since California's interest was considered to be no less than Alaska's, 294 U. S., at 547-548, 549-550, even though the injury occurred in Alaska while the employee was performing his contract obligations there. While Alaska Packers balanced the interests of California and Alaska to determine the full faith and credit issue, such balancing is no longer required. See Nevada v. Hall, 440 U. S., at 424; n. 10, supra.

    96

    [16] The precise question raised was whether the Virginia Compensation Commission "had sole jurisdiction over the claim." 330 U. S., at 472-473. In finding that application of the District's law did not violate either due process or full faith and credit requirements, the Court in effect treated the question as a constitutional choice-of-law issue.

    97

    [17] The Court has upheld choice-of-law decisions challenged on constitutional grounds in numerous other decisions. See Nevada v. Hall, supra (upholding California's application of California law to automobile accident in California between two California residents and a Nevada official driving car owned by State of Nevada while engaged in official business in California); Carroll v. Lanza, 349 U. S. 408 (1955) (upholding Arkansas' choice of Arkansas law where Missouri employee executed employment contract with Missouri employer and was injured on job in Arkansas but was removed immediately to a Missouri hospital); Watson v. Employers Liability Assurance Corp., 348 U. S. 66 (1954) (allowing application of Louisiana direct action statute by Louisiana resident against insurer even though policy was written and delivered in another State, where plaintiff was injured in Louisiana); Pacific Employers Ins. Co. v. Industrial Accident Comm'n, 306 U. S. 493 (1939) (holding Full Faith and Credit Clause not violated where California applied own Workmen's Compensation Act in case of injury suffered by Massachusetts employee temporarily in California in course of employment). Thus, Nevada v. Hall, supra, and Watson v. Employers Liability Assurance Corp., supra, upheld application of forum law where the relevant contacts consisted of plaintiff's residence and the place of the injury. Pacific Employers Ins. Co. v. Industrial Accident Comm'n, supra, and Carroll v. Lanza, supra, relied on the place of the injury arising from the respective employee's temporary presence in the forum State in connection with his employment.

    98

    [18] The policy issued to Mr. Hague provided that Allstate would pay to the insured, or his legal representative, damages "sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of [an] uninsured automobile. . . ." No suggestion has been made that Mr. Hague's uninsured motorist protection is unavailable because he was not killed while driving one of his insured automobiles.

    99

    [19] Numerous cases have applied the law of a jurisdiction other than the situs of the injury where there existed some other link between that jurisdiction and the occurrence. See, e. g., Cardillo v. Liberty Mutual Ins. Co., 330 U. S. 469 (1947); Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532 (1935); Rosenthal v. Warren, 475 F. 2d 438 (CA2), cert. denied, 414 U. S. 856 (1973); Clark v. Clark, 107 N. H. 351, 222 A. 2d 205 (1966); Tooker v. Lopez, 24 N. Y. 2d 569, 249 N. E. 2d 394 (1969); Babcock v. Jackson, 12 N. Y. 2d 473, 191 N. E. 2d 279 (1963).

    100

    [20] The injury or death of a resident of State A in State B is a contact of State A with the occurrence in State B. See cases cited in n. 19, supra.

    101

    [21]Petitioner's statement that the instant dispute involves the interpretation of insurance contracts which were "underwritten, applied for, and paid for by Wisconsin residents and issued covering cars garaged in Wisconsin," Brief for Petitioner 6, is simply another way of stating that Mr. Hague was a Wisconsin resident. Respondent could have replied that the insurance contract was underwritten, applied for and paid for by a Minnesota worker, and issued covering cars that were driven to work in Minnesota and garaged there for a substantial portion of the day. The former statement is hardly more significant than the latter since the accident in any event did not involve any of the automobiles which were covered under Mr. Hague's policy. Recovery is sought pursuant to the uninsured motorist coverage.

    102

    In addition, petitioner's statement that the contracts were "underwritten. . . by Wisconsin residents" is not supported by the stipulated facts if petitioner means to include itself within that phrase. Indeed, the policy, which is part of the record, recites that Allstate signed the policy in Northbrook, Ill. Under some versions of the hoary rule of lex loci contractus, and depending on the precise sequence of events, a sequence which is unclear from the record before us, the law of Illinois arguably might apply to govern contract construction, even though Illinois would have less contact with the parties and the occurrence than either Wisconsin or Minnesota. No party sought application of Illinois law on that basis in the court below.

    103

    [22] Of course Allstate could not be certain that Wisconsin law would necessarily govern any accident which occurred in Wisconsin, whether brought in the Wisconsin courts or elsewhere. Such an expectation would give controlling significance to the wooden lex loci delicti doctrine. While the place of the accident is a factor to be considered in choice-of-law analysis, to apply blindly the traditional, but now largely abandoned, doctrine, Silberman, supra n. 11, at 80, n. 259; see n. 11, supra, would fail to distinguish between the relative importance of various legal issues involved in a lawsuit as well as the relationship of other jurisdictions to the parties and the occurrence or transaction. If, for example, Mr. Hague had been a Wisconsin resident and employee who was injured in Wisconsin and was then taken by ambulance to a hospital in Red Wing, Minn., where he languished for several weeks before dying, Minnesota's interest in ensuring that its medical creditors were paid would be obvious. Moreover, under such circumstances, the accident itself might be reasonably characterized as a bistate occurrence beginning in Wisconsin and ending in Minnesota. Thus, reliance by the insurer that Wisconsin law would necessarily govern any accident that occurred in Wisconsin, or that the law of another jurisdiction would necessarily govern any accident that did not occur in Wisconsin, would be unwarranted. See n. 11, supra; cf. Rosenthal v. Warren, supra(Massachusetts hospital could not have purchased insurance with expectation that Massachusetts law would govern damages recovery as to New York patient who died in hospital and whose widow brought suit in New York).

    104

    If the law of a jurisdiction other than Wisconsin did govern, there was a substantial likelihood, with respect to uninsured motorist coverage, that stacking would be allowed. Stacking was the rule in most States at the time the policy was issued. Indeed, the Wisconsin Supreme Court, in Nelson v. Employers Mutual Casualty Co., 63 Wis. 2d 558, 563-566, and nn. 2, 3, 217 N. W. 2d 670, 672, 674, and nn. 2, 3 (1974), identified 29 States, including Minnesota, whose law it interpreted to allow stacking, and only 9 States whose law it interpreted to prohibit stacking. Clearly then, Allstate could not have expected that an antistacking rule would govern any particular accident in which the insured might be involved and thus cannot claim unfair surprise from the Minnesota Supreme Court's choice of forum law.

    105

    [23] The Court has recognized that examination of a State's contacts may result in divergent conclusions for jurisdiction and choice-of-law purposes. See Kulko v. California Superior Court, 436 U. S. 84, 98 (1978) (no jurisdiction in California but California law "arguably might" apply); Shaffer v. Heitner, 433 U. S., at 215 (no jurisdiction in Delaware, although Delaware interest "may support the application of Delaware law"); cf. Hanson v. Denckla, 357 U. S. 235, 254, and n. 27 (1958) (no jurisdiction in Florida; the "issue is personal jurisdiction, not choice of law," an issue which the Court found no need to decide). Nevertheless, "both inquiries `are often closely related and to a substantial degree depend upon similar considerations.'" Shaffer, 433 U. S., at 224-225 (BRENNAN, J., concurring in part and dissenting in part). Here, of course, jurisdiction in the Minnesota courts is unquestioned, a factor not without significance in assessing the constitutionality of Minnesota's choice of its own substantive law. Cf. id., at 225 ("the decision that it is fair to bind a defendant by a State's laws and rules should prove to be highly relevant to the fairness of permitting that same State to accept jurisdiction for adjudicating the controversy").

    106

    [24] There is no element of unfair surprise or frustration of legitimate expectations as a result of Minnesota's choice of its law. Because Allstate was doing business in Minnesota and was undoubtedly aware that Mr. Hague was a Minnesota employee, it had to have anticipated that Minnesota law might apply to an accident in which Mr. Hague was involved. See Clay II, 377 U. S. 179, 182 (1964); Watson v. Employers Liability Assurance Corp., 348 U. S., at 72-73; Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S., at 538-543; cf. Home Ins. Co. v. Dick, 281 U. S., at 404 (neither insurer nor reinsurer present in forum State). Indeed, Allstate specifically anticipated that Mr. Hague might suffer an accident either in Minnesota or elsewhere in the United States, outside of Wisconsin, since the policy it issued offered continental coverage. Cf. id., at 403 (coverage limited to losses occurring in certain Mexican waters which were outside of jurisdiction whose law was applied). At the same time, Allstate did not seek to control construction of the contract since the policy contained no choice-of-law clause dictating application of Wisconsin law. See Clay II, supra, at 182 (nationwide coverage of policy and lack of choice-of-law clause).

    107

    [25] Justice Black's dissent in the first Clay decision, a decision which vacated and remanded a lower-court determination to obtain an authoritative construction of state law that might moot the constitutional question, subsequently commanded majority support in the second Clay decision. Clay II, supra, at 180-183.

    108

    [26] The stipulated facts do not reveal the date on which Mrs. Hague first moved to Red Wing.

    109

    [27] These proceedings began on May 28, 1976. Mrs. Hague was remarried on June 19, 1976.

    110

    [28] The dissent suggests that considering respondent's postoccurrence change of residence as one of the Minnesota contacts will encourage forum shopping. Post, at 337. This overlooks the fact that her change of residence was bona fide and not motivated by litigation considerations.

    111

    [29] We express no view whether the first two contacts, either together or separately, would have sufficed to sustain the choice of Minnesota law made by the Minnesota Supreme Court.

    112

    [30]Article IV, § 1, provides:

    113

    "Full Faith and Credit shall be given in each State to the public Acts, Records, and Judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof."

    114

    [31]Section 1 of the Fourteenth Amendment provides, in part:

    115

    "No State shall . . . deprive any person of life, liberty, or property, without due process of law . . . ."

    116

    [32] The two questions presented by the choice-of-law issue arise only after it is assumed or established that the defendant's contacts with the forum State are sufficient to support personal jurisdiction. Although the choice-of-law concerns—respect for another sovereign and fairness to the litigants —are similar to the two functions performed by the jurisdictional inquiry, they are not identical. In World-Wide Volkswagen Corp. v. Woodson,444 U. S. 286, 291-292 (1980), we stated:

    117

    "The concept of minimum contacts, in turn, can be seen to perform two related, but distinguishable, functions. It protects the defendant against the burdens of litigating in a distant or inconvenient forum. And it acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system."

    118

    See also Reese, Legislative Jurisdiction, 78 Column. L. Rev. 1587, 1589-1590 (1978). While it has been suggested that this same minimum-contacts analysis be used to define the constitutional limitations on choice of law, see, e. g., Martin, Personal Jurisdiction and Choice of Law, 78 Mich. L. Rev. 872 (1980), the Court has made it clear over the years that the personal jurisdiction and choice-of-law inquiries are not the same. See Kulko v. California Superior Court, 436 U. S. 84, 98 (1978); Shaffer v. Heitner, 433 U. S. 186, 215 (1977); id., at 224-226 (BRENNAN, J., dissenting in part); Hanson v. Denckla, 357 U. S. 235, 253-254 (1958); id., at 258 (Black, J., dissenting).

    119

    [33] Although the Court has struck down a state court's choice of forum law on both due process, see, e. g., Home Ins. Co. v. Dick, 281 U. S. 397 (1930), and full faith and credit grounds, see, e. g., John Hancock Mutual Life Ins. Co. v. Yates, 299 U. S. 178 (1936), no clear analytical distinction between the two constitutional provisions has emerged. The Full Faith and Credit Clause, of course, was inapplicable in Home Ins. Co. because the law of a foreign nation, rather than of a sister State, was at issue; a similarly clear explanation for the Court's reliance upon the Full Faith and Credit Clause in John Hancock Mutual Life Ins. cannot be found. Indeed, John Hancock Mutual Life Ins. is probably best understood as a due process case. See Reese, supra, at 1589, and n. 17; Weintraub, Due Process and Full Faith and Credit Limitations on a State's Choice of Law, 44 Iowa L. Rev. 449, 457-458 (1959).

    120

    [34] See R. Leflar, American Conflicts Law § 5, p. 7, § 55, pp. 106-107 (3d ed. 1977). The Court's frequent failure to distinguish between the two Clauses in the choice-of-law context may underlie the suggestions of various commentators that either the Full Faith and Credit Clause or the Due Process Clause be recognized as the single appropriate source for constitutional limitations on choice of law. Compare Martin, Constitutional Limitations on Choice of Law, 61 Cornell L. Rev. 185 (1976) (full faith and credit), with Reese, supra (due process); see also Kirgis, The Roles of Due Process and Full Faith and Credit in Choice of Law, 62 Cornell L. Rev. 94 (1976).

    121

    [35] Even when the Court has explicitly considered both provisions in a single case, the requirements of the Due Process and Full Faith and Credit Clauses have been measured by essentially the same standard. For example, in Watson v. Employers Liability Assurance Corp., 348 U. S. 66 (1954), the Court separately considered the due process and full faith and credit questions. See id., at 70-73. However, in concluding that the Full Faith and Credit Clause did not bar the Louisiana courts from applying Louisiana law in that case, the Court substantially relied upon its preceding analysis of the requirements of due process. Id., at 73. By way of contrast, in Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532, 544-550 (1935), the Court's full faith and credit analysis differed significantly from its due process analysis. However, as noted in the plurality opinion, ante, at 308, n. 10, the Court has since abandoned the full faith and credit standard represented by Alaska Packers.

    122

    [36] See also Sumner, The Full-Faith-and-Credit-Clause—Its History and Purpose, 34 Or. L. Rev. 224, 242 (1955); Weintraub, supra, at 477; R. Leflar, supra, § 73, p. 143.

    123

    [37] As the Court observed in Alaska Packers, supra,an overly rigid application of the Full Faith and Credit Clause would produce anomalous results:

    124

    "A rigid and literal enforcement of the full faith and credit clause, without regard to the statute of the forum, would lead to the absurd result that, wherever the conflict arises, the statute of each state must be enforced in the courts of the other, but cannot be in its own." 294 U. S., at 547.

    125

    [38] For example, it is well established that "the Full Faith and Credit Clause does not require a State to apply another State's law in violation of its own legitimate public policy." Nevada v. Hall, 440 U. S. 410, 422 (1979) (footnote omitted).

    126

    [39] The kind of state action the Full Faith and Credit Clause was designed to prevent has been described in a variety of ways by this Court. In Carroll v. Lanza, 349 U. S. 408, 413 (1955), the Court indicated that the Clause would be invoked to restrain "any policy of hostility to the public Acts" of another State. In Nevada v. Hall, supra, at 424, n. 24, we approved action which "pose[d] no substantial threat to our constitutional system of cooperative federalism." And in Thomas v. Washington Gas Light Co., 448 U. S. 261, 272 (1980), the plurality opinion described the purpose of the Full Faith and Credit Clause as the prevention of "parochial entrenchment on the interests of other States."

    127

    [40] While the justifiable expectations of the litigants are a major concern for purposes of due process scrutiny of choice-of-law decisions, see Part II, infra, the decision in John Hancock Mutual Life Ins. Co. v. Yates, 299 U. S. 178 (1936), suggests that this concern may also implicate state interests cognizable under the Full Faith and Credit Clause. In John Hancock Mutual Life Ins., the Court struck down on full faith and credit grounds a Georgia court's choice of Georgia law over a conflicting New York statute in a suit on a New York life insurance contract brought after the insured's death in New York. Central to the decision in that case was the Court's apparent concern that application of Georgia law would result in unfair surprise to one of the contracting parties. The Court found that the New York statute was "a rule of substantive law which became a term of the contract, as much so as the amount of the premium to be paid or the time for its payment." Id., at 182 (footnote omitted). This statute "determine[d] the substantive rights of the parties as fully as if a provision to that effect had been embodied in writing in the policy." Id.,at 182-183. The insurer had no reason to expect that the New York statute would not control all claims arising under the life insurance policy. The parties to a life insurance contract normally would not expect the place of death to have any bearing upon the proper construction of the policy; by way of contrast, in the case of a liability policy, the place of the tort might well be relevant. For that reason, in a life insurance contract relationship, it is likely that neither party would expect the law of any State other than the place of contracting to have any relevance in possible subsequent litigation. See generally C. Carnahan, Conflict of Laws and Life Insurance Contracts § 15, pp. 51-52, § 47, pp. 264-265, 267-268, § 60, pp. 325-327 (2d ed. 1958).

    128

    Paul Freund has aptly characterized John Hancock Mutual Life Ins. as perhaps this Court's "most ambitious application of the full faith and credit clause." Freund, Chief Justice Stone and the Conflict of Laws, 59 Harv. L. Rev. 1210, 1233 (1946). Like Bradford Electric Light Co. v. Clapper, 286 U. S. 145 (1932), on which the Court relied, see 299 U. S., at 183, John Hancock Mutual Life Ins. was one of a series of constitutional decisions in the 1930's that have been limited by subsequent cases. See Carroll v. Lanza, 349 U. S., at 412; Thomas v. Washington Gas Light Co., supra, at 272-273, n. 18 (plurality opinion). See also Traynor, Is This Conflict Really Necessary?, 37 Texas L. Rev. 657, 675 (1959).

    129

    [41] Compare Nevada v. Hall, supra, in which the Court permitted a California court to disregard Nevada's statutory limitation on damages available against the State. The Court found this direct intrusion upon Nevada's sovereignty justified because the Nevada statute was "obnoxious" to California's public policy. Id., at 424.

    130

    [42] It is clear that a litigant challenging the forum's application of its own law to a lawsuit properly brought in its courts bears the burden of establishing that this choice of law infringes upon interests protected by the Full Faith and Credit Clause. See Alaska Packers Assn. v. Industrial Accident Comm'n,294 U. S., at 547-548.

    131

    It is equally clear that a state court's decision to apply its own law cannot violate the Full Faith and Credit Clause where the application of forum law does not impinge at all upon the interests of other States. Cf. Reese, supra n. 3, at 1601.

    132

    [43] This task can be particularly difficult for a trial judge who does not have ready access to a law library containing the statutes and decisions of all 50 States. If that judge is able to apply law with which he is thoroughly familiar or can easily discover, substantial savings can accrue to the State's judicial system. Moreover, an erroneous interpretation of the governing rule is less likely when the judge is applying a familiar rule. Cf. Shaffer v. Heitner, 433 U. S., at 225-226 (BRENNAN, J., dissenting in part) (such concerns indicate that a State's ability to apply its own law to a transaction should be relevant for purposes of evaluating its power to exercise jurisdiction over the parties to that transaction).

    133

    [44] Discrimination against nonresident would be constitutionally suspect even if the Due Process Clause were not a check upon a State's choice-of-law decisions. See Currie & Schreter, Unconstitutional Discrimination in the Conflict of Laws: Equal Protection, 28 U. Chi. L. Rev. 1 (1960); Currie & Schreter, Unconstitutional Discrimination in the Conflict of Laws: Privileges and Immunities, 69 Yale L. J. 1323 (1960); Note, Unconstitutional Discrimination in Choice of Law, 77 Colum. L. Rev. 272 (1977). Moreover, both discriminatory and substantively unfair rules of law may be detected and remedied without any special choice-of-law analysis; familiar constitutional principles are available to deal with both varieties of unfairness. See, e. g., Martin, supra n. 5, at 199.

    134

    [45] Upon careful analysis, most of the decisions of this Court that struck down on due process grounds a state court's choice of forum law can be explained as attempts to prevent a State with a minimal contact with the litigation from materially enlarging the contractual obligations of one of the parties where that party had no reason to anticipate the possibility of such enlargement. See, e. g., Home Ins. Co. v. Dick, 281 U. S. 397 (1930); Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 U. S. 143 (1934); cf. John Hancock Mutual Life Ins. Co. v. Yates, 299 U. S. 178 (1936) (similar concern under Full Faith and Credit Clause, see n. 11, supra). See generally Weintraub, supra n. 4, at 457-460.

    135

    [46] See also Nelson v. Employers Mutual Casualty Co., 63 Wis. 2d 558, 563-566, and nn. 2, 3, 217 N. W. 2d 670, 672-674, and nn. 2, 3 (1974), discussed ante, at 316-317, n. 22.

    136

    [47] The "stacking" rule provides that all of the uninsured motorist coverage purchased by an insured party may be aggregated, or "stacked," to create a fund available to provide a recovery for a single accident.

    137

    [48] For example, in Home Ins. Co. v. Dick, supra, at 403, and n. 1, the insurance policy was subject, by its express terms, to Mexican law.

    138

    [49] Home Ins. Co., supra, again provides a useful example. In that case, the insurance policy expressly provided a 1-year limitations period for claims arising thereunder. Id., at 403. Similarly, the insurance policy at issue in Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., supra,at 146, also prescribed a specific limitations period.

    139

    While such express provisions are obviously relevant, they are not always dispositive. In Clay v. Sun Insurance Office, Ltd., 377 U. S. 179 (1964), the Court allowed the lower court's choice of forum law to override an express contractual limitations period. The Court emphasized the fact that the insurer had issued the insurance policy with the knowledge that it would cover the insured property wherever it was taken. Id., at 181-182. The Court also noted that the insurer had not attempted to provide in the policy that the law of another State would control. Id., at 182.

    140

    In Watson v. Employers Liability Assurance Corp., 348 U. S., at 68, the insurance policy expressly provided that an injured party could not maintain a direct action against the insurer until after the insured's liability had been determined. The Court found that neither the Due Process Clause nor the Full Faith and Credit Clause prevented the Louisiana courts from applying forum law to permit a direct action against the insurer prior to determination of the insured's liability. As in Clay, the Court noted that the policy provided coverage for injuries anywhere in the United States. 348 U. S., at 71-72. An additional, although unarticulated, factor in Watson was the fact that the litigant urging that forum law be applied was not a party to the insurance contract. While contracting parties may be able to provide in advance that a particular rule of law will govern disputes between them, their expectations are clearly entitled to less weight when the rights of third-party litigants are at issue.

    141

    [50] In Home Ins. Co., supra, the insurance policy was issued in Mexico by a Mexican corporation and covered the insured vessel only in certain Mexican waters. Id., at 403.

    142

    [51] In Clay v. Sun Insurance Office, Ltd., supra, at 182, and Watson v. Employers Liability Assurance Corp., supra, at 71-72, the Court considered it significant, in upholding the lower courts' choice of forum law, that the insurance policies provided coverage throughout the United States. See n. 20, supra. Of course, in both Clay and Watson the loss to which the insurance applied actually occurred in the forum State, whereas the accident in this case occurred in Wisconsin not Minnesota. However, as the dissent recognizes, post,at 336-337, because the question on the merits is one of contract interpretation rather than tort liability, the actual site of the accident is not dispositive with respect to the due process inquiry. More relevant is the fact that the parties, at the time of contracting, anticipated that an accident covered by the policy could occur in a "stacking" State. The fact that this particular accident did not occur in Minnesota does not undercut the expectations formed by the parties at the time of contracting.

    143

    In Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., supra, the Court struck down a state court's choice of forum law despite the fact that the insurance contract's coverage was not limited by state boundaries. While Hartford Accident may indeed have "scant relevance for today," ante, at 309, n. 11, it is nonetheless consistent with a due process analysis based upon fundamental fairness to the parties. One of the statutes applied by the Mississippi courts in Hartford Accident was offensively broad, providing that "[a]ll contracts of insurance on property, lives or interests in this state shall be deemed to be made therein." 292 U. S., at 148. No similar statute is involved in this case. In addition, the Mississippi courts applied the law of the forum to override an express contractual provision, and thus frustrated the expectations of the contracting parties. In the present case, the insurance contract contains no similar declaration of the intent of the parties.

    144

    [52] Comparison of this case with Home Ins. Co. v. Dick, 281 U. S. 397 (1930), confirms my conclusion that the application of Minnesota law in this case does not offend the Due Process Clause. In Home Ins. Co., the contract expressly provided that a particular limitations period would govern claims arising under the insurance contract and that Mexican law was to be applied in interpreting the contract; in addition, the contract was limited in effect to certain Mexican waters. The parties could hardly have made their expectations with respect to the applicable law more plain. In this case, by way of contrast, nothing in the contract suggests that Wisconsin law should be applied or that Minnesota's "stacking" rule should not be applied. In this case, unlike Home Ins. Co., the court's choice of forum law results in no unfair surprise to the insurer.

    145

    [53] Even this factor may not be of substantial significance. At the time of contracting, the parties were aware that the insurance policy was effective throughout the United States and that the law of any State, including Minnesota, might be applicable to particular claims. The fact that the decedent regularly drove to Minnesota, for whatever purpose, is relevant only to the extent that it affected the parties' evaluation, at the time of contracting, of the likelihood that Minnesota law would actually be applied at some point in the future. However, because the applicability of Minnesota law was perceived as possible at the time of contracting, it does not seem especially significant for due process purposes that the parties may also have considered it likely that Minnesota law would be applied. This factor merely reinforces the expectation revealed by the policy's national coverage.

    146

    [54] In Kryger v. Wilson,242 U. S. 171, 176 (1916), after rejecting a due process challenge to a state court's choice of law, the Court stated:

    147

    "The most that the plaintiff in error can say is that the state court made a mistaken application of doctrines of the conflict of laws in deciding that the cancellation of a land contract is governed by the law of the situs instead of the place of making and performance. But that, being purely a question of local common law, is a matter with which this court is not concerned."

    148

    [55] Home Ins. Co. v. Dick, 281 U. S. 397 (1930), is a case where the reasonable expectations of a litigant were frustrated. The insurance contract confined the risk to Mexico, where the loss occurred and where both the insurer and the insured resided until the claim accrued. This Court found a violation of the Due Process Clause when Texas, the forum State, applied a local rule to allow the insured to gain a recovery unavailable under Mexican law. Because of the geographic limitation on the risk, and because there were no contacts with the forum State until the claim accrued, the insurer could have had no reasonable expectation that Texas law would be applied to interpret its obligations under the contract. See Weintraub 455.

    149

    [56] "It is manifest that Georgia had no interest in the application to this case of any policy to be found in its laws. When the contract was entered into, and at all times until the insured died, the parties and the transaction were beyond the legitimate reach of whatever policy Georgia may have had. Any interest asserted by Georgia must relate to the circumstance that the action is tried there, and must arise not from any policy directed to the business of life insurance but from some policy having to do with the business of the courts. This was apparently recognized even by the Georgia court; hence the disingenuous characterization of the matter as one of `procedure' rather than of `substance.'" Currie 236. See also id., at 232-233.

    150

    [57] The plurality today apparently recognizes that the significance of the contacts must be evaluated in light of the policies our review serves. It acknowledges that the sufficiency of the same contacts sometimes will differ in jurisdiction and choice-of-law questions. Ante, at 317, n. 23. The plurality, however, pursues the rationale for the requirement of sufficient contacts in choice-of-law cases no further than to observe that the forum's application of its own law must be "neither arbitrary nor fundamentally unfair." Ante, at 313. But this general prohibition does not distinguish questions of choice of law from those of jurisdiction, or from much of the jurisprudence of the Fourteenth Amendment.

    151

    [58] The petitioner in John Hancock Mut. Life Ins. Co. v. Yates, 299 U. S. 178 (1936), did business in Georgia, the forum State, at the time of that case. See The Insurance Almanac 715 (1935). Also, Georgia extensively regulated insurance practices within the State at that time. See Ga. Code § 56-101 et seq. (1933). This Court did not hint in Yates that this fact was of the slightest significance to the choice-of-law question, although it would have been crucial for the exercise of in personam jurisdiction.

    152

    [59] The plurality exacts double service from this fact, by finding a separate contact in that the insured commuted daily to his job. Ante,at 314-315. This is merely a repetition of the facts that the insured lived in Wisconsin and worked in Minnesota. The State does have an interest in the safety of motorists who use its roads. This interest is not limited to employees, but extends to all nonresident motorists on its highways. This safety interest, however, cannot encompass, either in logic or in any practical sense, the determination whether a nonresident's estate can stack benefit coverage in a policy written in another State regarding an accident that occurred on another State's roads.

    153

    Cardillo v. Liberty Mutual Ins. Co., 330 U. S. 469 (1947), hardly establishes commutation as an independent contact; the case merely approved the application of a forum State's law to an industrial accident occurring in a neighboring State when the employer and the employee both resided in the forum State.

    154

    [60] The opinion of JUSTICE STEVENS concurring in the judgment supports my view that the forum State's application of its own law to this case cannot be justified by the existence of relevant minimum contacts. As JUSTICE STEVENS observes, the principal factors relied on by the plurality are "either irrelevant to or possibly even tend to undermine the [plurality's] conclusion." Ante. at 331. The interesting analysis he proposes to uphold the State's judgment is, however, difficult to reconcile with our prior decisions and may create more problems than it solves. For example, it seems questionable to measure the interest of a State in a controversy by the degree of conscious reliance on that State's law by private parties to a contract Ante, at 324. Moreover, scrutinizing the strength of the interests of a nonforum State may draw this Court back into the discredited practice of weighing the relative interests of various States in a particular controversy. See ante, at 308, n. 10 (plurality opinion).

  • 2 Phillips Petroleum Co. v. Shutts

    1
    472 U.S. 797 (1985)
    2
    PHILLIPS PETROLEUM CO.
    v.
    SHUTTS ET AL.
    3
    No. 84-233.
    4

    Supreme Court of United States.

    5
    Argued February 25, 1985
    6
    Decided June 26, 1985
    7
    CERTIORARI TO THE SUPREME COURT OF KANSAS
    8

    [798] Arthur R. Miller argued the cause for petitioner. With him on the briefs were Joseph W. Kennedy, Robert W. Coykendall, Kenneth Heady, William G. Paul, and T. L. Cubbage II.

    9

    Joel I. Klein argued the cause for respondents. With him on the brief were W. Luke Chapin, Ed Moore, and Harold Greenleaf.[1]

    10
    [799] JUSTICE REHNQUIST delivered the opinion of the Court.
    11

    Petitioner is a Delaware corporation which has its principal place of business in Oklahoma. During the 1970's it produced or purchased natural gas from leased land located in 11 different States, and sold most of the gas in interstate commerce. Respondents are some 28,000 of the royalty owners possessing rights to the leases from which petitioner produced the gas; they reside in all 50 States, the District of Columbia, and several foreign countries. Respondents brought a class action against petitioner in the Kansas state court, seeking to recover interest on royalty payments which had been delayed by petitioner. They recovered judgment in the trial court, and the Supreme Court of Kansas affirmed the judgment over petitioner's contentions that the Due Process Clause of the Fourteenth Amendment prevented Kansas from adjudicating the claims of all the respondents, and that the Due Process Clause and the Full Faith and Credit Clause of Article IV of the Constitution prohibited the application of Kansas law to all of the transactions between petitioner and respondents. 235 Kan. 195, 679 P. 2d 1159 (1984). We granted certiorari to consider these claims. 469 U. S. 879 (1984). We reject petitioner's jurisdictional claim, but sustain its claim regarding the choice of law.

    12

    Because petitioner sold the gas to its customers in interstate commerce, it was required to secure approval for price increases from what was then the Federal Power Commission, and is now the Federal Energy Regulatory Commission. Under its regulations the Federal Power Commission permitted petitioner to propose and collect tentative higher gas prices, subject to final approval by the Commission. If the Commission eventually denied petitioner's proposed price increase or reduced the proposed increase, petitioner would [800] have to refund to its customers the difference between the approved price and the higher price charged, plus interest at a rate set by statute. See 18 CFR § 154.102 (1984).

    13

    Although petitioner received higher gas prices pending review by the Commission, petitioner suspended any increase in royalties paid to the royalty owners because the higher price could be subject to recoupment by petitioner's customers. Petitioner agreed to pay the higher royalty only if the royalty owners would provide petitioner with a bond or indemnity for the increase, plus interest, in case the price increase was not ultimately approved and a refund was due to the customers. Petitioner set the interest rate on the indemnity agreements at the same interest rate the Commission would have required petitioner to refund to its customers. A small percentage of the royalty owners provided this indemnity and received royalties immediately from the interim price increases; these royalty owners are unimportant to this case.

    14

    The remaining royalty owners received no royalty on the unapproved portion of the prices until the Federal Power Commission approval of those prices became final. Royalties on the unapproved portion of the gas price were suspended three times by petitioner, corresponding to its three proposed price increases in the mid-1970's. In three written opinions the Commission approved all of petitioner's tentative price increases, so petitioner paid to its royalty owners the suspended royalties of $3.7 million in 1976, $4.7 million in 1977, and $2.9 million in 1978. Petitioner paid no interest to the royalty owners although it had the use of the suspended royalty money for a number of years.

    15

    Respondents Irl Shutts, Robert Anderson, and Betty Anderson filed suit against petitioner in Kansas state court, seeking interest payments on their suspended royalties which petitioner had possessed pending the Commission's approval of the price increases. Shutts is a resident of Kansas, and the Andersons live in Oklahoma. Shutts and the Andersons [801] own gas leases in Oklahoma and Texas. Over petitioner's objection the Kansas trial court granted respondents' motion to certify the suit as a class action under Kansas law. Kan. Stat. Ann. § 60-223 et seq. (1983). The class as certified was comprised of 33,000 royalty owners who had royalties suspended by petitioner. The average claim of each royalty owner for interest on the suspended royalties was $100.

    16

    After the class was certified respondents provided each class member with notice through first-class mail. The notice described the action and informed each class member that he could appear in person or by counsel; otherwise each member would be represented by Shutts and the Andersons, the named plaintiffs. The notices also stated that class members would be included in the class and bound by the judgment unless they "opted out" of the lawsuit by executing and returning a "request for exclusion" that was included with the notice. The final class as certified contained 28,100 members; 3,400 had "opted out" of the class by returning the request for exclusion, and notice could not be delivered to another 1,500 members, who were also excluded. Less than 1,000 of the class members resided in Kansas. Only a minuscule amount, approximately one quarter of one percent, of the gas leases involved in the lawsuit were on Kansas land.

    17

    After petitioner's mandamus petition to decertify the class was denied, Phillips Petroleum v. Duckworth, No. 82-54608 (Kan., June 28, 1982), cert. denied, 459 U. S. 1103 (1983), the case was tried to the court. The court found petitioner liable under Kansas law for interest on the suspended royalties to all class members. The trial court relied heavily on an earlier, unrelated class action involving the same nominal plaintiff and the same defendant, Shutts, Executor v. Phillips Petroleum Co., 222 Kan. 527, 567 P. 2d 1292 (1977), cert. denied, 434 U. S. 1068 (1978). The Kansas Supreme Court had held in Shutts, Executor that a gas company owed interest to royalty owners for royalties suspended pending final Commission approval of a price increase. No federal statutes [802] touched on the liability for suspended royalties, and the court in Shutts, Executor held as a matter of Kansas equity law that the applicable interest rates for computation of interest on suspended royalties were the interest rates at which the gas company would have had to reimburse its customers had its interim price increase been rejected by the Commission. The court in Shutts, Executor viewed these as the fairest interest rates because they were also the rates that petitioner required the royalty owners to meet in their indemnity agreements in order to avoid suspended royalties.

    18

    The trial court in the present case applied the rule from Shutts, Executor, and held petitioner liable for prejudgment and postjudgment interest on the suspended royalties, computed at the Commission rates governing petitioner's three price increases. See 18 CFR § 154.102 (1984). The applicable interest rates were: 7% for royalties retained until October 1974; 9% for royalties retained between October 1974 and September 1979; and thereafter at the average prime rate. The trial court did not determine whether any difference existed between the laws of Kansas and other States, or whether another State's laws should be applied to non-Kansas plaintiffs or to royalties from leases in States other than Kansas. 235 Kan., at 221, 679 P. 2d, at 1180.

    19

    Petitioner raised two principal claims in its appeal to the Supreme Court of Kansas. It first asserted that the Kansas trial court did not possess personal jurisdiction over absent plaintiff class members as required by International Shoe Co. v. Washington, 326 U. S. 310 (1945), and similar cases. Related to this first claim was petitioner's contention that the "opt-out" notice to absent class members, which forced them to return the request for exclusion in order to avoid the suit, was insufficient to bind class members who were not residents of Kansas or who did not possess "minimum contacts" with Kansas. Second, petitioner claimed that Kansas courts could not apply Kansas law to every claim in the dispute. The trial court should have looked to the laws of each State [803] where the leases were located to determine, on the basis of conflict of laws principles, whether interest on the suspended royalties was recoverable, and at what rate.

    20

    The Supreme Court of Kansas held that the entire cause of action was maintainable under the Kansas class-action statute, and the court rejected both of petitioner's claims. 235 Kan. 195, 679 P. 2d 1159 (1984). First, it held that the absent class members were plaintiffs, not defendants, and thus the traditional minimum contacts test of International Shoe did not apply. The court held that nonresident class-action plaintiffs were only entitled to adequate notice, an opportunity to be heard, an opportunity to opt out of the case, and adequate representation by the named plaintiffs. If these procedural due process minima were met, according to the court, Kansas could assert jurisdiction over the plaintiff class and bind each class member with a judgment on his claim. The court surveyed the course of the litigation and concluded that all of these minima had been met.

    21

    The court also rejected petitioner's contention that Kansas law could not be applied to plaintiffs and royalty arrangements having no connection with Kansas. The court stated that generally the law of the forum controlled all claims unless "compelling reasons" existed to apply a different law. The court found no compelling reasons, and noted that "[t]he plaintiff class members have indicated their desire to have this action determined under the laws of Kansas." 235 Kan., at 222, 679 P. 2d, at 1181. The court affirmed as a matter of Kansas equity law the award of interest on the suspended royalties, at the rates imposed by the trial court. The court set the postjudgment interest rate on all claims at the Kansas statutory rate of 15%. Id., at 224, 679 P. 2d, at 1183.

    22
    I
    23

    As a threshold matter we must determine whether petitioner has standing to assert the claim that Kansas did not possess proper jurisdiction over the many plaintiffs in the [804] class who were not Kansas residents and had no connection to Kansas. Respondents claim that a party generally may assert only his own rights, and that petitioner has no standing to assert the rights of its adversary, the plaintiff class, in order to defeat the judgment in favor of the class.

    24

    Standing to sue in any Article III court is, of course, a federal question which does not depend on the party's prior standing in state court. Doremus v. Board of Education, 342 U. S. 429, 434 (1952); Baker v. Carr, 369 U. S. 186, 204 (1962). Generally stated, federal standing requires an allegation of a present or immediate injury in fact, where the party requesting standing has "alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues." Ibid. There must be some causal connection between the asserted injury and the challenged action, and the injury must be of the type "likely to be redressed by a favorable decision." Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U. S. 464, 472 (1982). See Simon v. Eastern Kentucky Welfare Rights Org., 426 U. S. 26, 41-42 (1976); Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U. S. 252, 261 (1977).

    25

    Additional prudential limitations on standing may exist even though the Article III requirements are met because "the judiciary seeks to avoid deciding questions of broad social import where no individual rights would be vindicated and to limit access to the federal courts to those litigants best suited to assert a particular claim." Gladstone, Realtors v. Village of Bellwood, 441 U. S. 91, 99-100 (1979). One of these prudential limits on standing is that a litigant must normally assert his own legal interests rather than those of third parties. See Singleton v. Wulff, 428 U. S. 106 (1976); Craig v. Boren, 429 U. S. 190 (1976).

    26

    Respondents claim that petitioner is barred by the rule requiring that a party assert only his own rights; they point out that respondents and petitioner are adversaries and do [805] not have allied interests such that petitioner would be a good proponent of class members' interests. They further urge that petitioner's interference is unneeded because the class members have had opportunity to complain about Kansas' assertion of jurisdiction over their claim, but none have done so. See Singleton, supra, at 113-114.

    27

    Respondents may be correct that petitioner does not possess standing jus tertii, but this is not the issue. Petitioner seeks to vindicate its own interests. As a class-action defendant petitioner is in a unique predicament. If Kansas does not possess jurisdiction over this plaintiff class, petitioner will be bound to 28,100 judgment holders scattered across the globe, but none of these will be bound by the Kansas decree. Petitioner could be subject to numerous later individual suits by these class members because a judgment issued without proper personal jurisdiction over an absent party is not entitled to full faith and credit elsewhere and thus has no res judicata effect as to that party. 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 a class-action defendant like petitioner can assure itself of this binding effect of the judgment is to ascertain that the forum court has jurisdiction over every plaintiff whose claim it seeks to adjudicate, sufficient to support a defense of res judicata in a later suit for damages by class members.

    28

    While it is true that a court adjudicating a dispute may not be able to predetermine the res judicata effect of its own judgment, petitioner has alleged that it would be obviously and immediately injured if this class-action judgment against it became final without binding the plaintiff class. We think that such an injury is sufficient to give petitioner standing on its own right to raise the jurisdiction claim in this Court.

    29

    Petitioner's posture is somewhat similar to the trust settlor defendant in Hanson v. Denckla, 357 U. S. 235 (1958), who we found to have standing to challenge the forum's personal [806] jurisdiction over an out-of-state trust company which was an indispensable party under the forum State's law. Because the court could not proceed with the action without jurisdiction over the trust company, we observed that "any defendant affected by the court's judgment ha[d] that `direct and substantial personal interest in the outcome' that is necessary to challenge whether that jurisdiction was in fact acquired." Id., at 245, quoting Chicago v. Atchison, T. & S. F. R. Co., 357 U. S. 77 (1958).

    30
    II
    31

    Reduced to its essentials, petitioner's argument is that unless out-of-state plaintiffs affirmatively consent, the Kansas courts may not exert jurisdiction over their claims. Petitioner claims that failure to execute and return the "request for exclusion" provided with the class notice cannot constitute consent of the out-of-state plaintiffs; thus Kansas courts may exercise jurisdiction over these plaintiffs only if the plaintiffs possess the sufficient "minimum contacts" with Kansas as that term is used in cases involving personal jurisdiction over out-of-state defendants. E. g., International Shoe Co. v. Washington, 326 U. S. 310 (1945); Shaffer v. Heitner, 433 U. S. 186 (1977); World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286 (1980). Since Kansas had no prelitigation contact with many of the plaintiffs and leases involved, petitioner claims that Kansas has exceeded its jurisdictional reach and thereby violated the due process rights of the absent plaintiffs.

    32

    In International Shoe we were faced with an out-of-state corporation which sought to avoid the exercise of personal jurisdiction over it as a defendant by a Washington state court. We held that the extent of the defendant's due process protection would depend "upon the quality and nature of the activity in relation to the fair and orderly administration of the laws . . . ." 326 U. S., at 319. We noted that the Due Process Clause did not permit a State to make a binding judgment against a person with whom the State had no contacts, [807] ties, or relations. Ibid. If the defendant possessed certain minimum contacts with the State, so that it was "reasonable and just, according to our traditional conception of fair play and substantial justice" for a State to exercise personal jurisdiction, the State could force the defendant to defend himself in the forum, upon pain of default, and could bind him to a judgment. Id., at 320.

    33

    The purpose of this test, of course, is to protect a defendant from the travail of defending in a distant forum, unless the defendant's contacts with the forum make it just to force him to defend there. As we explained in Woodson, supra, the defendant's contacts should be such that "he should reasonably anticipate being haled" into the forum. 444 U. S., at 297. In Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U. S. 694, 702-703, and n. 10 (1982), we explained that the requirement that a court have personal jurisdiction comes from the Due Process Clause's protection of the defendant's personal liberty interest, and said that the requirement "represents a restriction on judicial power not as a matter of sovereignty, but as a matter of individual liberty." (Footnote omitted.)

    34

    Although the cases like Shaffer and Woodson which petitioner relies on for a minimum contacts requirement all dealt with out-of-state defendants or parties in the procedural posture of a defendant, cf. New York Life Ins. Co. v. Dunlevy, 241 U. S. 518 (1916); Estin v. Estin, 334 U. S. 541 (1948), petitioner claims that the same analysis must apply to absent class-action plaintiffs. In this regard petitioner correctly points out that a chose in action is a constitutionally recognized property interest possessed by each of the plaintiffs. Mullane v. Central Hanover Bank & Trust Co., 339 U. S. 306 (1950). An adverse judgment by Kansas courts in this case may extinguish the chose in action forever through res judicata. Such an adverse judgment, petitioner claims, would be every bit as onerous to an absent plaintiff as an adverse judgment on the merits would be to a defendant. [808] Thus, the same due process protections should apply to absent plaintiffs: Kansas should not be able to exert jurisdiction over the plaintiffs' claims unless the plaintiffs have sufficient minimum contacts with Kansas.

    35

    We think petitioner's premise is in error. The burdens placed by a State upon an absent class-action plaintiff are not of the same order or magnitude as those it places upon an absent defendant. An out-of-state defendant summoned by a plaintiff is faced with the full powers of the forum State to render judgment against it. The defendant must generally hire counsel and travel to the forum to defend itself from the plaintiff's claim, or suffer a default judgment. The defendant may be forced to participate in extended and often costly discovery, and will be forced to respond in damages or to comply with some other form of remedy imposed by the court should it lose the suit. The defendant may also face liability for court costs and attorney's fees. These burdens are substantial, and the minimum contacts requirement of the Due Process Clause prevents the forum State from unfairly imposing them upon the defendant.

    36

    A class-action plaintiff, however, is in quite a different posture. The Court noted this difference in Hansberry v. Lee, 311 U. S. 32, 40-41 (1940), which explained that a "class" or "representative" suit was an exception to the rule that one could not be bound by judgment in personam unless one was made fully a party in the traditional sense. Ibid., citing Pennoyer v. Neff, 95 U. S. 714 (1878). As the Court pointed out in Hansberry, the class action was an invention of equity to enable it to proceed to a decree in suits where the number of those interested in the litigation was too great to permit joinder. The absent parties would be bound by the decree so long as the named parties adequately represented the absent class and the prosecution of the litigation was within the common interest.[2] 311 U. S., at 41.

    37

    [809] Modern plaintiff class actions follow the same goals, permitting litigation of a suit involving common questions when there are too many plaintiffs for proper joinder. Class actions also may permit the plaintiffs to pool claims which would be uneconomical to litigate individually. For example, this lawsuit involves claims averaging about $100 per plaintiff; most of the plaintiffs would have no realistic day in court if a class action were not available.

    38

    In sharp contrast to the predicament of a defendant haled into an out-of-state forum, the plaintiffs in this suit were not haled anywhere to defend themselves upon pain of a default judgment. As commentators have noted, from the plaintiffs' point of view a class action resembles a "quasi-administrative proceeding, conducted by the judge." 3B J. Moore & J. Kennedy, Moore's Federal Practice ¶ 23.45 [4.-5] (1984); Kaplan, Continuing Work of the Civil Committee: 1966 Amendments to the Federal Rules of Civil Procedure (I), 81 Harv. L. Rev. 356, 398 (1967).

    39

    A plaintiff class in Kansas and numerous other jurisdictions cannot first be certified unless the judge, with the aid of the named plaintiffs and defendant, conducts an inquiry into the common nature of the named plaintiffs' and the absent plaintiffs' claims, the adequacy of representation, the jurisdiction possessed over the class, and any other matters that will bear upon proper representation of the absent plaintiffs' interest. See, e. g., Kan. Stat. Ann. § 60-223 (1983); Fed. Rule Civ. Proc. 23. Unlike a defendant in a civil suit, a class-action plaintiff is not required to fend for himself. See Kan. Stat. Ann. § 60-223(d) (1983). The court and named plaintiffs protect his interests. Indeed, the class-action defendant itself has a great interest in ensuring that the absent plaintiffs' claims are properly before the forum. In this case, for [810] example, the defendant sought to avoid class certification by alleging that the absent plaintiffs would not be adequately represented and were not amendable to jurisdiction. See Phillips Petroleum v. Duckworth, No. 82-54608 (Kan., June 28, 1982).

    40

    The concern of the typical class-action rules for the absent plaintiffs is manifested in other ways. Most jurisdictions, including Kansas, require that a class action, once certified, may not be dismissed or compromised without the approval of the court. In many jurisdictions such as Kansas the court may amend the pleadings to ensure that all sections of the class are represented adequately. Kan. Stat. Ann. § 60-223(d) (1983); see also, e. g., Fed. Rule Civ. Proc. 23(d).

    41

    Besides this continuing solicitude for their rights, absent plaintiff class members are not subject to other burdens imposed upon defendants. They need not hire counsel or appear. They are almost never subject to counter claims or cross-claims, or liability for fees or costs.[3] Absent plaintiff class members are not subject to coercive or punitive remedies. Nor will an adverse judgment typically bind an absent plaintiff for any damages, although a valid adverse judgment may extinguish any of the plaintiff's claims which were litigated.

    42

    Unlike a defendant in a normal civil suit, an absent class-action plaintiff is not required to do anything. He may sit back and allow the litigation to run its course, content in knowing that there are safeguards provided for his protection. In most class actions an absent plaintiff is provided at least with an opportunity to "opt out" of the class, and if he takes advantage of that opportunity he is removed from the [811] litigation entirely. This was true of the Kansas proceedings in this case. The Kansas procedure provided for the mailing of a notice to each class member by first-class mail. The notice, as we have previously indicated, described the action and informed the class member that he could appear in person or by counsel, in default of which he would be represented by the named plaintiffs and their attorneys. The notice further stated that class members would be included in the class and bound by the judgment unless they "opted out" by executing and returning a "request for exclusion" that was included in the notice.

    43

    Petitioner contends, however, that the "opt out" procedure provided by Kansas is not good enough, and that an "opt in" procedure is required to satisfy the Due Process Clause of the Fourteenth Amendment. Insofar as plaintiffs who have no minimum contacts with the forum State are concerned, an "opt in" provision would require that each class member affirmatively consent to his inclusion within the class.

    44

    Because States place fewer burdens upon absent class plaintiffs than they do upon absent defendants in nonclass suits, the Due Process Clause need not and does not afford the former as much protection from state-court jurisdiction as it does the latter. The Fourteenth Amendment does protect "persons," not "defendants," however, so absent plaintiffs as well as absent defendants are entitled to some protection from the jurisdiction of a forum State which seeks to adjudicate their claims. In this case we hold that a forum State may exercise jurisdiction over the claim of an absent class-action plaintiff, even though that plaintiff may not possess the minimum contacts with the forum which would support personal jurisdiction over a defendant. If the forum State wishes to bind an absent plaintiff concerning a claim for money damages or similar relief at law,[4] it must provide minimal [812] procedural due process protection. The plaintiff must receive notice plus an opportunity to be heard and participate in the litigation, whether in person or through counsel. The notice must be the best practicable, "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane, 339 U. S., at 314-315; cf. Eisen v. Carlisle & Jacquelin, 417 U. S. 156, 174-175 (1974). The notice should describe the action and the plaintiffs' rights in it. Additionally, we hold that due process requires at a minimum that an absent plaintiff be provided with an opportunity to remove himself from the class by executing and returning an "opt out" or "request for exclusion" form to the court. Finally, the Due Process Clause of course requires that the named plaintiff at all times adequately represent the interests of the absent class members. Hansberry, 311 U. S., at 42-43, 45.

    45

    We reject petitioner's contention that the Due Process Clause of the Fourteenth Amendment requires that absent plaintiffs affirmatively "opt in" to the class, rather than be deemed members of the class if they do not "opt out." We think that such a contention is supported by little, if any precedent, and that it ignores the differences between class-action plaintiffs, on the one hand, and defendants in nonclass civil suits on the other. Any plaintiff may consent to jurisdiction. Keeton v. Hustler Magazine, Inc., 465 U. S. 770 (1984). The essential question, then, is how stringent the requirement for a showing of consent will be.

    46

    We think that the procedure followed by Kansas, where a fully descriptive notice is sent first-class mail to each class member, with an explanation of the right to "opt out," satisfies due process. Requiring a plaintiff to affirmatively [813] request inclusion would probably impede the prosecution of those class actions involving an aggregation of small individual claims, where a large number of claims are required to make it economical to bring suit. See, e. g., Eisen, supra, at 161. The plaintiff's claim may be so small, or the plaintiff so unfamiliar with the law, that he would not file suit individually, nor would he affirmatively request inclusion in the class if such a request were required by the Constitution.[5] If, on the other hand, the plaintiff's claim is sufficiently large or important that he wishes to litigate it on his own, he will likely have retained an attorney or have thought about filing suit, and should be fully capable of exercising his right to "opt out."

    47

    In this case over 3,400 members of the potential class did "opt out," which belies the contention that "opt out" procedures result in guaranteed jurisdiction by inertia. Another 1,500 were excluded because the notice and "opt out" form was undeliverable. We think that such results show that the "opt out" procedure provided by Kansas is by no means pro forma, and that the Constitution does not require more to protect what must be the somewhat rare species of class member who is unwilling to execute an "opt out" form, but whose claim is nonetheless so important that he cannot be presumed to consent to being a member of the class by his failure to do so. Petitioner's "opt in" requirement would require the invalidation of scores of state statutes and of the class-action provision of the Federal Rules of Civil Procedure,[6] [814] and for the reasons stated we do not think that the Constitution requires the State to sacrifice the obvious advantages in judicial efficiency resulting form the "opt out" approach for the protection of the rara avis portrayed by petitioner.

    48

    We therefore hold that the protection afforded the plaintiff class members by the Kansas statute satisfies the Due Process Clause. The interest of the absent plaintiffs 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 court. See Insurance Corp. of Ireland, 456 U. S., at 702-703, and n. 10. Both the Kansas trial court and the Supreme Court of Kansas held that the class received adequate representation, and no party disputes that conclusion here. We conclude that the Kansas court properly asserted personal jurisdiction over the absent plaintiffs and their claims against petitioner.

    49
    III
    50

    The Kansas courts applied Kansas contract and Kansas equity law to every claim in this case, notwithstanding that [815] over 99% of the gas leases and some 97% of the plaintiffs in the case had no apparent connection to the State of Kansas except for this lawsuit.[7] Petitioner protested that the Kansas [816] courts should apply the laws of the States where the leases were located, or at least apply Texas and Oklahoma law because so many of the leases came from those States. The Kansas courts disregarded this contention and found petitioner liable for interest on the suspended royalties as a matter of Kansas law, and set the interest rates under Kansas equity principles.

    51

    Petitioner contends that total application of Kansas substantive law violated the constitutional limitations on choice of law mandated by the Due Process Clause of the Fourteenth Amendment and the Full Faith and Credit Clause of Article IV, § 1. We must first determine whether Kansas law conflicts in any material way with any other law which could apply. There can be no injury in applying Kansas law if it is not in conflict with that of any other jurisdiction connected to this suit.

    52

    Petitioner claims that Kansas law conflicts with that of a number of States connected to this litigation, especially Texas and Oklahoma. These putative conflicts range from the direct to the tangential, and may be addressed by the Supreme Court of Kansas on remand under the correct constitutional standard. For example, there is no recorded [817] Oklahoma decision dealing with interest liability for suspended royalties: whether Oklahoma is likely to impose liability would require a survey of Oklahoma oil and gas law. Even if Oklahoma found such liability, petitioner shows that Oklahoma would most likely apply its constitutional and statutory 6% interest rate rather than the much higher Kansas rates applied in this litigation. Okla. Const., Art XIV, § 2; Okla. Stat., Tit. 15, § 266 (Supp. 1984-1985); Rendezvous Trails of America, Inc. v. Ayers, 612 P. 2d 1384, 1385 (Okla. App. 1980); Smith v. Robinson, 594 P. 2d 364 (Okla. 1979); West Edmond Hunton Lime Unit v. Young, 325 P. 2d 1047 (Okla. 1958).

    53

    Additionally, petitioner points to an Oklahoma statute which excuses liability for interest if a creditor accepts payment of the full principal without a claim for interest, Okla. Stat., Tit. 23, § 8 (1951). Cf. Webster Drilling Co. v. Sterling Oil of Oklahoma, Inc., 376 P. 2d 236 (Okla. 1962). Petitioner contends that by ignoring this statute the Kansas courts created liability that does not exist in Oklahoma.

    54

    Petitioner also points out several conflicts between Kansas and Texas law. Although Texas recognizes interest liability for suspended royalties, Texas has never awarded any such interest at a rate greater than 6%, which corresponds with the Texas constitutional and statutory rate.[8] Tex. Const., Art. 16, § 11; Tex. Rev. Civ. Stat. Ann., Art. 5069-1.03 (Vernon 1971). See Phillips Petroleum Co. v. Stahl Petroleum Co., 569 S. W. 2d 480 (Tex. 1978); Phillips Petroleum Co. v. Adams, 513 F. 2d 355 (CA5), cert. denied, 423 U. S. 930 (1975); cf. Maxey v. Texas Commerce Bank, 580 S. W. 2d 340, 341 (Tex. 1979). Moreover, at least one court interpreting Texas law appears to have held that Texas excuses interest [818] liability once the gas company offers to take an indemnity from the royalty owner and pay him the suspended royalty while the price increase is still tentative. Phillips Petroleum Co. v. Riverside Gas Compression Co., 409 F. Supp. 486, 495-496 (ND Tex. 1976). Such a rule is contrary to Kansas law as applied below, but if applied to the Texas plaintiffs or leases in this case, would vastly reduce petitioner's liability.

    55

    The conflicts on the applicable interest rates, alone — which we do not think can be labeled "false conflicts" without a more thoroughgoing treatment than was accorded them by the Supreme Court of Kansas — certainly amounted to millions of dollars in liability. We think that the Supreme Court of Kansas erred in deciding on the basis that it did that the application of its laws to all claims would be constitutional.

    56

    Four Terms ago we addressed a similar situation in Allstate Ins. Co. v. Hague, 449 U. S. 302 (1981). In that case we were confronted with two conflicting rules of state insurance law. Minnesota permitted the "stacking" of separate uninsured motorist policies while Wisconsin did not. Although the decedent lived in Wisconsin, took out insurance policies and was killed there, he was employed in Minnesota, and after his death his widow moved to Minnesota for reasons unrelated to the litigation, and was appointed personal representative of his estate. She filed suit in Minnesota courts, which applied the Minnesota stacking rule.

    57

    The plurality in Allstate noted that a particular set of facts giving rise to litigation could justify, constitutionally, the application of more than one jurisdiction's laws. The plurality recognized, however, that the Due Process Clause and the Full Faith and Credit Clause provided modest restrictions on the application of forum law. These restrictions required "that for a State's substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair." Id., at 312-313. The [819] dissenting Justices were in substantial agreement with this principle. Id., at 332 (opinion of POWELL, J., joined by BURGER, C. J., and REHNQUIST, J.). The dissent stressed that the Due Process Clause prohibited the application of law which was only casually or slightly related to the litigation, while the Full Faith and Credit Clause required the forum to respect the laws and judgments of other States, subject to the forum's own interests in furthering its public policy. Id., at 335-336.

    58

    The plurality in Allstate affirmed the application of Minnesota law because of the forum's significant contacts to the litigation which supported the State's interest in applying its law. See id., at 313-329. Kansas' contacts to this litigation, as explained by the Kansas Supreme Court, can be gleaned from the opinion below.

    59

    Petitioner owns property and conducts substantial business in the State, so Kansas certainly has an interest in regulating petitioner's conduct in Kansas. 235 Kan., at 210, 679 P. 2d, at 1174. Moreover, oil and gas extraction is an important business to Kansas, and although only a few leases in issue are located in Kansas, hundreds of Kansas plaintiffs were affected by petitioner's suspension of royalties; thus the court held that the State has a real interest in protecting "the rights of these royalty owners both as individual residents of [Kansas] and as members of this particular class of plaintiffs." Id., at 211-212, 679 P. 2d, at 1174. The Kansas Supreme Court pointed out that Kansas courts are quite familiar with this type of lawsuit, and "[t]he plaintiff class members have indicated their desire to have this action determined under the laws of Kansas." Id., at 211, 222, 679 P. 2d, at 1174, 1181. Finally, the Kansas court buttressed its use of Kansas law by stating that this lawsuit was analogous to a suit against a "common fund" located in Kansas. Id., at 201, 211-212, 679 P. 2d, at 1168, 1174.

    60

    We do not lightly discount this description of Kansas' contacts with this litigation and its interest in applying its law. There is, however, no "common fund" located in Kansas that [820] would require or support the application of only Kansas law to all these claims. See, e. g., Hartford Life Ins. Co. v. Ibs, 237 U. S. 662 (1915). As the Kansas court noted, petitioner commingled the suspended royalties with its general corporate accounts. 235 Kan., at 201, 679 P. 2d, at 1168. There is no specific identifiable res in Kansas, nor is there any limited amount which may be depleted before every plaintiff is compensated. Only by somehow aggregating all the separate claims in this case could a "common fund" in any sense be created, and the term becomes all but meaningless when used in such an expansive sense.

    61

    We also give little credence to the idea that Kansas law should apply to all claims because the plaintiffs, by failing to opt out, evinced their desire to be bound by Kansas law. Even if one could say that the plaintiffs "consented" to the application of Kansas law by not opting out, plaintiff's desire for forum law is rarely, if ever controlling. In most cases the plaintiff shows his obvious wish for forum law by filing there. "If a plaintiff could choose the substantive rules to be applied to an action . . . the invitation to forum shopping would be irresistible." Allstate, supra, at 337 (opinion of POWELL, J.). Even if a plaintiff evidences his desire for forum law by moving to the forum, we have generally accorded such a move little or no significance. John Hancock Mut. Life Ins. Co. v. Yates, 299 U. S. 178, 182 (1936); Home Ins. Co. v. Dick, 281 U. S. 397, 408 (1930). In Allstate the plaintiff's move to the forum was only relevant because it was unrelated and prior to the litigation. 449 U. S., at 318-319. Thus the plaintiffs' desire for Kansas law, manifested by their participation in this Kansas lawsuit, bears little relevance.

    62

    The Supreme Court of Kansas in its opinion in this case expressed the view that by reason of the fact that it was adjudicating a nationwide class action, it had much greater latitude in applying its own law to the transactions in question than might otherwise be the case:

    63
    [821] "The general rule is that the law of the forum applies unless it is expressly shown that a different law governs, and in case of doubt, the law of the forum is preferred.. . . Where a state court determines it has jurisdiction over a nationwide class action and procedural due process guarantees of notice and adequate representation are present, we believe the law of the forum should be applied unless compelling reasons exist for applying a different law. . . . Compelling reasons do not exist to require this court to look to other state laws to determine the rights of the parties involved in this lawsuit." 235 Kan., at 221-222, 679 P. 2d, at 1181.
    64

    We think that this is something of a "bootstrap" argument. The Kansas class-action statute, like those of most other jurisdictions, requires that there be "common issues of law or fact." But while a State may, for the reasons we have previously stated, assume jurisdiction over the claims of plaintiffs whose principal contacts are with other States, it may not use this assumption of jurisdiction as an added weight in the scale when considering the permissible constitutional limits on choice of substantive law. It may not take a transaction with little or no relationship to the forum and apply the law of the forum in order to satisfy the procedural requirement that there be a "common question of law." The issue of personal jurisdiction over plaintiffs in a class action is entirely distinct from the question of the constitutional limitations on choice of law; the latter calculus is not altered by the fact that it may be more difficult or more burdensome to comply with the constitutional limitations because of the large number of transactions which the State proposes to adjudicate and which have little connection with the forum.

    65

    Kansas must have a "significant contact or significant aggregation of contacts" to the claims asserted by each member of the plaintiff class, contacts "creating state interests," in order to ensure that the choice of Kansas law is not arbitrary [822] or unfair. Allstate, 449 U. S., at 312-313. Given Kansas' lack of "interest" in claims unrelated to that State, and the substantive conflict with jurisdictions such as Texas, we conclude that application of Kansas law to every claim in this case is sufficiently arbitrary and unfair as to exceed constitutional limits.[9]

    66

    When considering fairness in this context, an important element is the expectation of the parties. See Allstate, supra, at 333 (opinion of POWELL, J.). There is no indication that when the leases involving land and royalty owners outside of Kansas were executed, the parties had any idea that Kansas law would control. Neither the Due Process Clause nor the Full Faith and Credit Clause requires Kansas "to substitute for its own [laws], applicable to persons and events within it, the conflicting statute of another state," Pacific Employees Ins. Co. v. Industrial Accident Comm'n, 306 U. S. 493, 502 (1939), but Kansas "may not abrogate the rights of parties beyond its borders having no relation to anything done or to be done within them." Home Ins. Co. v. Dick, supra, at 410.

    67

    Here the Supreme Court of Kansas took the view that in a nationwide class action where procedural due process guarantees [823A] of notice and adequate representation were met, "the law of the forum should be applied unless compelling reasons exist for applying a different law." 235 Kan., at 221, 679 P. 2d, at 1181. Whatever practical reasons may have commended this rule to the Supreme Court of Kansas, for the reasons already stated we do not believe that it is consistent with the decisions of this Court. We make no effort to determine for ourselves which law must apply to the various transactions involved in this lawsuit, and we reaffirm our observation in Allstate that in many situations a state court may be free to apply one of several choices of law. But the constitutional limitations laid down in cases such as Allstate and Home Ins. Co. v. Dick, supra, must be respected even in a nationwide class action.

    68

    We therefore affirm the judgment of the Supreme Court of Kansas insofar as it upheld the jurisdiction of the Kansas courts over the plaintiff class members in this case, and reverse its judgment insofar as it held that Kansas law was applicable to all of the transactions which it sought to adjudicate. We remand the case to that court for further proceedings not inconsistent with this opinion.

    69

    It is so ordered.

    70

    JUSTICE POWELL took no part in the decision of this case.

    71
    [823B] JUSTICE STEVENS, concurring in part and dissenting in part.
    72

    For the reasons stated in Parts I and II of the Court's opinion, I agree that the Kansas courts properly exercised jurisdiction over this class action. I also recognize that the use of the word "compelling" in a portion of the Kansas Supreme Court's opinion, when read out of context, may create an inaccurate impression of that court's choice-of-law holding. See ante, at 821. Our job, however, is to review judgments, not to edit opinions, and I am firmly convinced that there is no constitutional defect in the judgment under review.

    73

    As the Court recognizes, there "can be no [constitutional] injury in applying Kansas law if it is not in conflict with that [824] of any other jurisdiction connected to this suit." Ante, at 816. A fair reading of the Kansas Supreme Court's opinion in light of its earlier opinion in Shutts v. Phillips Petroleum Co., 222 Kan. 527, 567 P. 2d 1292 (1977) (hereinafter Shutts I), cert. denied, 434 U. S. 1068 (1978), reveals that the Kansas court has examined the laws of connected jurisdictions and has correctly concluded that there is no "direct" or "substantive" conflict between the law applied by Kansas and the laws of those other States. Cf. ante, at 816, 821-822. Kansas has merely developed general common-law principles to accommodate the novel facts of this litigation — other state courts either agree with Kansas or have not yet addressed precisely similar claims. Consequently, I conclude that the Full Faith and Credit Clause of the Constitution[10] did not require Kansas to apply the law of any other State, and the Fourteenth Amendment's Due Process Clause[11] did not prevent Kansas from applying its own law in this case.

    74

    The Court errs today because it applies a loose definition of the sort of "conflict" of laws required to state a constitutional claim, allowing Phillips a tactical victory here merely on allegations of "putative" or "likely" conflicts. Ante, at 816, 817. The Court's choice-of-law analysis also treats the two relevant constitutional provisions as though they imposed the same constraints on the forum court. In my view, however, the potential impact of the Kansas choice on the interests of other sovereign States and the fairness of its decision to the litigants should be separately considered. See Allstate Insurance Co. v. Hague, 449 U. S. 302, 320 (1981) (STEVENS, J., concurring in judgment). For both inquiries, it [825] is essential to have a better understanding of the merits of the underlying dispute than can be gleaned from the Court's opinion. I therefore begin with an explanation of the background of this litigation.

    75
    I
    76

    Petitioner (Phillips) is a large independent producer, purchaser, and seller of natural gas. Beginning in 1954, the prices at which it sold natural gas to interstate pipeline companies were regulated by the Federal Power Commission (Commission).[12] Phillips Petroleum Co. v. Wisconsin, 347 U. S. 672 (1954). As a party to a large number of producing oil and gas leases, Phillips is obligated to pay a percentage of the value of the production, usually one-eighth, to persons owning an interest in the leased areas, so-called "royalty owners." Some royalty owners are due monthly royalties by contractual agreements made directly with Phillips. See Shutts I, supra, at 532, 567 P. 2d, at 1298. Others are due royalties under contracts made with other gas producers who then sell their gas to Phillips — by separate contract with those producers, Phillips has "assumed the producer's responsibility to distribute the royalties . . . to the royalty owners." 235 Kan. 195, 218, 679 P. 2d 1159, 1178 (1984). The relationship between Phillips and the royalty owners is not regulated by the Commission although it is, of course, materially affected by the Commission's control over the pricing relationship between Phillips and its customers.

    77

    In a series of orders entered after 1954, the Commission established a practice of suspending price increases proposed by Phillips until approved by the Commission, but allowing Phillips to collect the higher proposed prices upon the filing by Phillips with the Commission of a corporate undertaking to refund to its customers any portion of an increase [826] that is ultimately disapproved by the Commission. Pursuant to Commission regulation, Phillips agrees that unapproved prices it collects are subject to refund "with interest at seven percent (7%) per annum from the date of receipt until September 18, 1970, and eight percent (8%) per annum thereafter until paid out, if the FPC [does] not approve the sales price." Shutts I, supra, at 533, 567 P. 2d, at 1299 (emphasis deleted) (citing 18 CFR § 154.102(c) (1977) and Commission opinion No. 586, 44 F. P. C. 761, 791 (1970)). Phillips' receipts during periods when its proposed price increases have not yet received final approval therefore include two components — the "firm" proceeds and the "FPC suspense money." For example, while an increase in price from 11 cents per Mcf (thousand cubic feet) to 13 cents is under consideration, the collection of the higher price would include firm proceeds of 11 cents and 2 cents of FPC suspense money.

    78

    In July 1961, while a price increase applicable to the tristate Hugoton-Anadarko area (Kansas, Oklahoma, and Texas) was pending, Phillips sent a notice to the royalty owners for that area advising them that "until further notice" they would be paid royalties on the basis of firm proceeds only and that royalties based on suspense money would be paid only after it was "determined that the sums collected are no longer subject to refund." The notice also advised the royalty owners that they could receive ongoing payment of royalties on the suspense money as well if they furnished Phillips with an "acceptable indemnity to cover their proportionate part of any required refunds, plus the required interest." Shutts I, 222 Kan., at 534, 567 P. 2d, at 1299 (emphasis added).[13] The indemnity which Phillips required was a corporate [827] security bond covering a principal amount based on estimated production for a 2-year period, plus the 7% interest rate Phillips would be required to pay to its customers if the price increase were not approved. Only 17 royalty owners provided Phillips with such an indemnity; approximately 6,400 royalty owners who did not do so did not receive royalties on the suspense proceeds until 11 years later, after the price increase was finally approved. The situation was succinctly summarized by the Kansas Supreme Court in Shutts I:

    79
    "From June 1, 1961, to October 1, 1970, Phillips deposited the increased rate monies collected in its general account and commingled it with its other funds, without ever giving notice of this fact to royalty owners during the time it was holding money. It is important to note that during this period of time Phillips had no entitlement to the gas royalty owners' share of the `suspense royalties,' whether or not the rates were approved by the FPC. Phillips never owned this money. While Phillips collected eight-eighths (8/8) of the increased rates, under no condition was the one-eighth (1/8) of the increase attributable to the royalty owners ever to go to Phillips. That royalty share, according to eventual FPC ruling, was either to go to Phillips' royalty owners, or back to Phillips' gas purchasers with interest, or part to one and part to the other." Id., at 535, 567 P. 2d, at 1300 (emphasis in original).
    80

    [828] In 1970, the Commission entered an order approving Phillips' Hugoton-Anadarko price increases to the extent of approximately $153,000,000 and disapproving them to the extent of approximately $29,000,000. Thus, over 18% of the suspense money had to be refunded to Phillips' customers, with interest at the rates to which Phillips had agreed under Commission regulation. Having no jurisdiction over the relationship between Phillips and the royalty owners, however, the Commission's order was silent on the subject of royalties on the $153 million of suspense money that did not have to be refunded. After the Commission's order was finally affirmed by the Ninth Circuit in 1972, In re Hugoton-Anadarko Area Rate Case, 466 F. 2d 974, Phillips mailed checks to the royalty owners for their share of the suspense moneys based on the approved higher prices that had been collected since 1961. However, "Phillips neither paid nor offered to pay any interest for the use of the money, nor did Phillips say anything about interest or how long the money had been held or used by Phillips." Shutts I, supra, at 537, 567 P. 2d, at 1301.

    81

    The foregoing facts gave rise to Shutts I. This case (Shutts II) involves suspense royalties due on similar price increases approved in 1976, 1977, and 1978 to a larger number of royalty owners (28,100) with interests in leased areas located in 11 States, including Kansas. Otherwise, however, "[w]ith a few exceptions this case is similar in legal issues and factual situation to that presented in Shutts [I]." 235 Kan., at 198, 679 P. 2d, at 1165. Both cases involve what the Kansas Supreme Court has characterized as a "common fund" consisting of the suspense royalties undeniably owed by Phillips [829] but not paid for periods of several years while Commission approval of rate increases were pending.[14] It is undisputed that Phillips enjoyed the unfettered use of that money. See 222 Kan., at 560, 567 P. 2d, at 1316 (testimony of Phillips' Treasurer). It is also undisputed that when the Commission proceedings ended, none of the money could be retained by Phillips. To the extent that a price increase was disapproved, a refund to the purchasing pipelines, plus interest at the rate set by the Commission, would be required; to the extent that the increases were approved, the money was contractually owned to the royalty owners. As the Kansas court noted: "What is significant is these gas royalty suspense monies never did nor could belong to Phillips." Ibid. (emphasis deleted).[15]

    82

    [830] In Shutts I, the Kansas Supreme Court held that general equitable principles required the award of interest on royalties owned to royalty owners but used by Phillips for a number of years. In support of that conclusion it relied on general statements in two Kansas cases[16] and a long line of federal cases applying Texas law and concluding that equity requires "the award of interest on suspense royalties under similar circumstances." Id., at 561, 567 P. 2d, at 1317.[17] The court noted that Oklahoma had no decisions allowing interest on suspense royalties, but concluded that "several Oklahoma decisions hold that interest may be awarded on equitable grounds where necessary to arrive at a fair compensation. (Smith v. Owens, 397 P. 2d 673 [Okla. 1963]; and First Nat. Bank & T. Co. v. Exchange Nat. Bank and T. Co., 517 P. 2d 805 [Okla. App. 1973])."[18] Finally, the court construed the royalty agreements at issue as containing a "contractual [831] obligation" to pay interest on the royalties "for the period of time the suspense money was held and used by Phillips." Id., at 562, 567 P. 2d, at 1317. Thus the Kansas court also found its result consistent with the only Texas state-court decision on point, Stahl Petroleum Co. v. Phillips Petroleum Co., 550 S. W. 2d 360 (Tex. Civ. App. 1977), which had "awarded interest on suspended royalties" based on "the terms of the royalty agreement . . . rather than unjust enrichment." 222 Kan., at 561, 567 P. 2d, at 1317. Significantly, when the Texas Supreme Court subsequently affirmed the Stahl judgment, it relied on the Kansas Supreme Court's decision in Shutts I to decide that equity as well as contract law requires interest on suspense royalties. Phillips Petroleum Co. v. Stahl Petroleum Co., 569 S. W. 2d 480, 485-488, and n. 5 (1978).

    83

    After determining that Phillips was liable for interest on the suspense royalties, the court reversed the trial court's decision that the rate should be 6% because that was the statutory interest rate in Kansas, Oklahoma, and Texas. The Kansas Supreme Court noted that the statutory rate in all three States expressly applied only when no other rate had been agreed upon,[19] and that in this case Phillips had made an express agreement, evidenced by its corporate undertaking, to pay interest at the rate set by the Commission on suspense moneys found refundable. 222 Kan., at 564, 567 P. 2d, at 1319. The Kansas court therefore declined to apply any State's interest statute, including its own. "[E]quitable principles require, and contractual principles dictate, that the royalty owners receive the same treatment" as refunded purchasers, [832] that is, payment at the same FPC rate of interest.[20] Id., at 563, 567 P. 2d, at 1318.

    84

    Finally, the Kansas Supreme Court rejected Phillips' contention that royalty owners had "waived" their claims to interest by accepting payment of the royalties later or by failing to post an indemnity "acceptable" to Phillips in order to receive contemporaneous payment of suspense royalties. The court noted that the "conditions imposed by Phillips were far more stringent than the corporate undertaking Phillips filed with the FPC," id., at 567, 567 P. 2d, at 1320, and concluded that it was "apparent [that] Phillips' previous imposition of burdensome conditions upon royalty owners . . . was designed to accomplish precisely what the facts disclose. Virtually none of the royalty owners complied with the conditions, thereby leaving the suspense royalties in the hands of Phillips as stakeholder to use at its pleasure . . . ." Id., at 566, 567 P. 2d, at 1320. The court found the rule that "payment of the principal sum is a legal bar to a subsequent action for interest" inapplicable on these facts. Id., at 567, 567 P. 2d, at 1321. Instead, because "payment of [the royalties due] to the plaintiff class members, instead of extinguishing the debt, constituted only a partial payment on an interest-bearing debt[,] [t]his situation invokes application of the so-called `United States Rule,' which provides that in applying partial payments to an interest-bearing debt which is due, in [833] the absence of an agreement or statute to the contrary, the payment should be first applied to the interest due." Ibid.[21]

    85

    In Shutts II, the case now under review, the Kansas Supreme Court adopted its earlier analysis in Shutts I without repeating it. "Although a larger class is involved than in Shutts I, the legal issues presented are substantially the same. While these issues are complex they were thoroughly reviewed in Shutts I." 235 Kan., at 211, 679 P. 2d, at 1174.[22] Noting that "Phillips has not satisfactorily established why this court should not apply the rule enunciated in Shutts I," the Kansas court went on to state that once jurisdiction over [834] a "nationwide class action" is properly asserted, "the law of the forum should be applied unless compelling reasons exist for applying a different law." Id., at 221, 679 P. 2d, at 1181.

    86
    II
    87

    This Court, of course, can have no concern with the substantive merits of common-law decisions reached by state courts faithfully applying their own law or the law of another State. When application of purely state law is at issue, "[t]he power delegated to us is for the restraint of unconstitutional [action] by the States, and not for the correction of alleged errors committed by their judiciary." Commercial Bank of Cincinnati v. Buckingham's Executors, 5 How. 317, 343 (1847). The Constitution does not expressly mandate particular or correct choices of law. Rather, a state court's choice of law can invoke constitutional protections, and hence our jurisdiction, only if it contravenes some explicit constitutional limitation.[23]

    88

    Thus it has long been settled that "a mere misconstruction by the forum of the laws of a sister State is not a violation of the Full Faith and Credit Clause." Carroll v. Lanza, 349 U. S. 408, 414, n. 1 (1955) (Frankfurter, J., dissenting).[24] That Clause requires only that States accord "full faith and credit" to other States' laws — that is, acknowledge the validity and finality of such laws and attempt in good faith to apply them when necessary as they would be applied by home state [835] courts.[25] But as Justice Holmes explained, when there is "nothing to suggest that [one State's court] was not candidly construing [another State's law] to the best of its ability, . . . even if it was wrong something more than an error of construction is necessary" to invoke the Constitution. Pennsylvania Fire Ins. Co. v. Gold Issue Mining & Milling Co., 243 U. S. 93, 96 (1917).

    89

    Merely to state these general principles is to refute any argument that Kansas' decision below violated the Full Faith and Credit Clause. As the opinion in Shutts I indicates, the Kansas court made a careful survey of the relevant laws of Oklahoma and Texas, the only other States whose law is proffered as relevant to this litigation. But, as the Court acknowledges, ante, at 816-818, no other State's laws or judicial decisions were precisely on point, and, in the Kansas court's judgment, roughly analogous Texas and Oklahoma cases supported the results the Kansas court reached. The Kansas court expressly declared that, in a multistate action, a "court should also give careful consideration, as we have attempted to do, to any possible conflict of law problems." 222 Kan., at 557, 567 P. 2d, at 1314.[26] While a common-law judge might disagree with the substantive legal determinations made by the Kansas court (although nothing in its opinion seems erroneous to me), that court's approach to the possible choices of law evinces precisely the "full faith and credit" that the Constitution requires.

    90

    [836] It is imaginable that even a good-faith review of another State's law might still "unjustifiably infring[e] upon the legitimate interests of another State" so as to violate the Full Faith and Credit Clause. Allstate, 449 U. S., at 323 (STEVENS, J., concurring in judgment). If, for example, a Texas oil company or a Texas royalty owner with an interest in a Texas lease were treated directly contrary to a stated policy of the State of Texas by a Kansas court through some honest blunder, the Constitution might bar such "parochial entrenchment" on Texas' interests. Thomas v. Washington Gas Light Co., 448 U. S. 261, 272 (1980) (plurality opinion).[27] But this case is so distant from such a situation that I need not pursue this theoretical possibility. Even Phillips does not contend that any stated policies of other States have been plainly contravened, and the Court's discussion is founded merely on an absence of reported decisions and the Court's speculation of what Oklahoma or Texas courts might "most likely" do in a case like this. Ante, at 817. There is simply no demonstration here that the Kansas Supreme Court's decision has impaired the legitimate interests of any other States or infringed on their sovereignty in the slightest.

    91
    [837] III
    92

    It is nevertheless possible for a State's choice of law to violate the Constitution because it is so "totally arbitrary or. . . fundamentally unfair" to a litigant that it violates the Due Process Clause. Allstate, 449 U. S., at 326 (STEVENS, J., concurring in judgment). If the forum court has no connection to the lawsuit other than its jurisdiction over the parties, a decision to apply the forum State's law might so "frustrat[e] the justifiable expectations of the parties" as to be unconstitutional. Id., at 327.[28]

    93

    Again, however, a constitutional claim of "unfair surprise" cannot be based merely upon an unexpected choice of a particular State's law — it must rest on a persuasive showing of an unexpected result arrived at by application of that law. Thus, absent any conflict of laws, in terms of the results they produce, the Due Process Clause simply has not been violated. This is because the underlying theory of a choice-of-law due process claim must be that parties plan their conduct and contractual relations based upon their legitimate expectations [838] concerning the subsequent legal consequences of their actions. For example, they might base a decision on the belief that the law of a particular State will govern. But a change in that State's law in the interim between the execution and the performance of the contract would not violate the Due Process Clause. Nor would the Constitution be violated simply because a state court made an unanticipated ruling on a previously unanswered question of law — perhaps a choice-of-law question.

    94

    In this case it is perfectly clear that there has been no due process violation because this is a classic "false conflicts" case.[29] Phillips has not demonstrated that any significant conflicts exist merely because Oklahoma and Texas state case law is silent concerning the equitable theories developed by the Kansas courts in this litigation, or even because the language of some Oklahoma and Texas statutes suggests that those States would "most likely" reach different results. Ante, at 816-818. The Court's heavy reliance on the characterization of the law provided by Phillips is not an adequate substitute for a neutral review. Ante, at 816, 817 ("Petitioner claims," "petitioner shows," "petitioner points to," "Petitioner also points out . . ."). As is unmistakable from a review of Shutts I, the Kansas Supreme Court has examined the same laws cited by the Court today as indicative of "direct" conflicts, and construed them as supportive of the [839] Kansas result.[30] Our precedents, to say nothing of the Constitution and our statutory jurisdiction to review state-court judgments, do not permit the Court to second-guess these substantive judgments. Moreover, an independent examination demonstrates solid support for the Kansas court's conclusions.[31]

    95

    [840] The crux of my disagreement with the Court is over the standard applied to evaluate the sufficiency of allegations of choice-of-law conflicts necessary to support a constitutional [841] claim. Rather than potential, "putative," or even "likely" conflicts, I would require demonstration of an unambiguous conflict with the established law of another State as an essential element of a constitutional choice-of-law claim. Arguments that a state court has merely applied general common-law principles in a novel manner, or reconciled arguably [842] conflicting laws erroneously in the face of unprecedented factual circumstances should not suffice to make out a constitutional issue.

    96

    In this case, the Kansas Supreme Court's application of general principles of equity, its interpretation of the agreements, its reliance on the Commission's regulations,[32] and its construction of general statutory terms contravened no established legal principles of other States and consequently cannot be characterized as either arbitrary or fundamentally unfair to Phillips. I therefore can find no due process violation in the Kansas court's decision.[33]

    97
    [843] IV
    98

    In final analysis, the Court today may merely be expressing its disagreement with the Kansas Supreme Court's statement that in a "nationwide class action . . . the law of the forum should be applied unless compelling reasons exist for applying a different law." 235 Kan., at 221, 679 P. 2d, at 1181. Considering this statement against the background of the Kansas Supreme Court's careful analysis in Shutts I, however, I am confident that court would agree that every state court has an obligation under the Full Faith and Credit Clause to "respect the legitimate interests of other States and avoid infringement upon their sovereignty." Allstate, 449 U. S., at 322 (STEVENS, J., concurring in judgment); see Nevada v. Hall, 440 U. S. 410, 421, 424, n. 24 (1979).

    99

    It is also agreed that "the fact that a choice-of-law decision may be unsound . . . does not necessarily implicate the federal concerns embodied in the Full Faith and Credit Clause." Allstate, 449 U. S., at 323 (STEVENS, J., concurring in judgment); see ante, at 823 ("in many situations a state court may be free to apply one of several choices of law"); Allstate, 449 U. S., at 307 (plurality opinion). When a suit involves claims connected to States other than the forum State, the Constitution requires only that the relevant laws of other States that are brought to the attention of the forum court be examined fairly prior to making a choice of law.[34] Because this Court "reviews judgments, not opinions," Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842 (1984), criticism of a portion of the Kansas [844] court's opinion taken out of context provides an insufficient basis for reversing its judgment. Unless the actual choice of Kansas law violated substantial constitutional rights of the parties, see 28 U. S. C. § 2111, our power to review judgments of state law — including the state law of choice of law — does not extend to reversal based on disagreement with the law's application. A review of the record and the underlying litigation here convincingly demonstrates that, despite Phillips' protestations regarding Kansas' development of common-law principles, no disregard for the laws of other States nor unfair application of Kansas law to the litigants has occurred.[35] Phillips has no constitutional right to avoid judgment in Kansas because it might have convinced a court in another State to develop its law differently.

    100

    I do not believe the Court should engage in detailed evaluations of various States' laws. To the contrary, I believe our limited jurisdiction to review state-court judgments should foreclose such review.[36] Accordingly, I trust that today's [845] decision is no more than a momentary aberration, and that the Court's opinion will not be read as a decision to constitutionalize novel state-court developments in the common law whenever a litigant can claim that another State connected to the litigation "most likely" would reach a different result. The Court long ago decided that state-court choices of law are unreviewable here absent demonstration of an unambiguous conflict in the established laws of connected States. See n. 15, supra. "To hold otherwise would render it possible to bring to this court every case wherein the defeated party claimed that the statute of another State had been construed to his detriment." Johnson v. New York Life Ins. Co., 187 U. S. 491, 496 (1903). Having ignored this admonition today, the Court may be forced to renew its turn-of-the-century efforts to convince the bar that state-court judgments based on fair evaluations of other States' laws are final.

    101

    Accordingly, while I join Parts I and II of the Court's opinion, I respectfully dissent from Part III and from the judgment.

    102

    [1] Briefs of amici curiae urging reversal were filed for the Legal Foundation of America by David Crump; and for Amoco Production Co. by Lucas A. Powe, Jr., R. H. Landt, and Glenn D. Young, Jr.

    103

    Alan B. Morrison and David C. Vladeck filed a brief for the Public Citizen as amicus curiae urging affirmance.

    104

    David B. Kahn filed a brief for the Consumer Coalition as amicus curiae.

    105

    [2] The holding in Hansberry, of course, was that petitioners in that case had not a sufficient common interest with the parties to a prior lawsuit such that a decree against those parties in the prior suit would bind the petitioners. But in the present case there is no question that the named plaintiffs adequately represent the class, and that all members of the class have the same interest in enforcing their claims against the defendant.

    106

    [3] Petitioner places emphasis on the fact that absent class members might be subject to discovery, counterclaims, cross-claims, or court costs. Petitioner cites no cases involving any such imposition upon plaintiffs, however. We are convinced that such burdens are rarely imposed upon plaintiff class members, and that the disposition of these issues is best left to a case which presents them in a more concrete way.

    107

    [4] Our holding today is limited to those class actions which seek to bind known plaintiffs concerning claims wholly or predominantly for money judgments. We intimate no view concerning other types of class actions, such as those seeking equitable relief. Nor, of course, does our discussion of personal jurisdiction address class actions where the jurisdiction is asserted against a defendant class.

    108

    [5] In this regard the Reporter for the 1966 amendments to the Federal Rules of Civil Procedure stated:

    109

    "[R]equiring the individuals affirmatively to request inclusion in the lawsuit would result in freezing out the claims of people — especially small claims held by small people — who for one reason or another, ignorance, timidity, unfamiliarity with business or legal matters, will simply not take the affirmative step." Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure (I), 81 Harv. L. Rev. 356, 397-398 (1967).

    110

    [6] The following statutes or procedural rules permit "opt out" notice in some types of class actions:

    111

    Fed. Rule Civ. Proc. 23(c)(2)(A); Ala. Rule Civ. Proc. 23(c)(2)(A); Alaska Rule Civ. Proc. 23(c)(2)(A); Ariz. Rule Civ. Proc. 23(c)(2)(A); Cal. Civ. Code Ann. § 1781(e)(1) (West 1973) (consumer class action); Colo. Rule Civ. Proc. 23(c)(2)(A); Del. Ch. Ct. Rule 23(c)(2)(A); D. C. Super. Ct. Rule Civ. Proc. 23(c)(2)(A); Fla. Rule Civ. Proc. 1.220(d)(2)(A); Idaho Rule Civ. Proc. 23(c)(2)(A); Ind. Rule Trial Proc. 23(C)(2)(A); Iowa Rule Civ. Proc. 42.8(b); Kan. Stat. Ann. § 60-223(c)(2) (1983); Ky. Rule Civ. Proc. 23.03(2)(a); Me. Rule Civ. Proc. 23(c)(2)(A); Md. Rule Civ. Proc. 2-231(e)(1); Mich. Ct. Rule 3.501(C)(5)(b); Minn. Rule Civ. Proc. 23.03 (2)(A); Mo. Rule Civ. Proc. 52.08; Mont. Rule Civ. Proc. 23(c)(2)(A); Nev. Rule Civ. Proc. 23(c)(2)(A); N. J. Civ. Prac. Rule 4:32-2; N. Y. Civ. Prac. Law § 904 (McKinney 1976); N. D. Rule Civ. Proc. 23(g)(2)(B); Ohio Rule Civ. Proc. 23(C)(2)(a); Okla. Stat., Tit. 12, § 2023(C)(2)(a) (Supp. 1984-1985); Ore. Rule Civ. Proc. 32F(1)(b)(ii); Pa. Rule Civ. Proc. 1711(a); Tenn. Rule Civ. Proc. 23.03(2)(a); Vt. Rule Civ. Proc. 23(c)(2)(A); Wash. Ct. Rule 23(C)(2)(i); Wyo. Rule Civ. Proc. 23(c)(2)(A).

    112

    OPINION 770_________________________________________________________________________________________________ No. royalty States No. leases Royalties to owners in state state leases in state_________________________________________________________________________________________________Oklahoma ............... 1,430 $ 471,122.53 2,684Texas................... 3,702 2,615,744.46 8,550Kansas.................. 4 115.10 504Arkansas................ 2 552.83 162Louisiana............... 26 516,248.13 361New Mexico.............. 591 194,799.95 469Illinois ............... 1 .01 353Wyloming................ 476 945,441.95 272Mississippi............. ____ ____ 36Utah.................... ____ ____ 18West Virginia........... ____ ____ 22No State Code........... ____ ____ 1,046 _____ __________ 6,232 $4,744,024.10

    113

    [7] The Commission approved petitioner's price increases in Opinion Nos. 699, 749 and 770. Petitioner reimbursed royalty owners $3.7, $2.9, and $4.7 million in suspended royalties, respectively. The States where the leases were located and their resident plaintiffs are as follows.

    114
                                  OPINION 699_________________________________________________________________________________________________                                                                            No. royalty      States          No. leases    Royalties to   owners                                in state     state leases  in state_________________________________________________________________________________________________Oklahoma ...............          1,266                  $   83,711.35           2,653Texas...................          4,414                     839,152.73           9,591Kansas..................              3                         152.88             496Arkansas................              6                       3,228.22             173Louisiana...............             68                   2,187,548.06           1,244New Mexico..............            941                     433,574.85             621Illinois ...............           ____                           ____             397Wyoming................             690                     148,906.93             413Mississippi.............           ____                           ____              67Utah....................           ____                           ____              29West Virginia...........           ____                           ____              20No State Code...........              1                          [.05]           1,025                                  _____                   ____________                                  7,389                  $3,696,274.97
    115
                                OPINION 749_________________________________________________________________________________________________                                                                             No. royalty       States         No. leases     Royalties to   owners                                in state      state leases  in state_________________________________________________________________________________________________Oklahoma ...............         1,948                   $   243,163.49         3,591Texas...................         3,479                     2,171,217.36         7,881Kansas..................            15                         2,619.24           553Arkansas................            32                         1,769.33           171Louisiana...............           178                       352,539.45           740New Mexico..............           350                        22,670.27           339Illinois ...............             1                             1.30           357Wyloming................            68                        67,570.01            37Mississippi.............             3                           694.93            88Utah....................             1                           184.60            18West Virginia...........            32                        10,364.61           246No State Code...........             2                         1,032.59         1,553                                 ______                   _____________                                 6,109                    $2,873,827.18
    116

    [8] The Kansas interest rate also conflicts with the rate which is applicable in Louisiana. At the time this suit was filed that rate was 7%. See La. Civ. Code Ann., Art. 1938 (1977) (amended in 1982); Wurzlow v. Placid Oil Co., 279 So. 2d 749, 772-774 (La. App. 1973) (applying Art. 1938 to oil and gas royalties).

    117

    [9] In this case the Kansas Supreme Court held that "[t]he trial court did not determine whether any difference existed between the laws of Kansas and other states or whether another state's law should be applied." 235 Kan. 195, 221, 679 P. 2d 1159, 1180 (1984). Respondents contend that the trial court and the Supreme Court actually incorporated by reference the opinion in Shutts, Executor, 222 Kan. 527, 567 P. 2d 1292 (1977), where the court looked to the Texas and Oklahoma interest rate statutes and found them inapplicable. We do not think that the Kansas Supreme Court fully adopted the choice-of-law discussion in Shutts, Executor as its holding in this case. But even if we agreed that Shutts, Executor was somehow incorporated below, that would be insufficient. Shutts, Executor was a pre-Allstate case involving only 2 other States, rather than the 10 present here. Moreover, the gas region involved in Shutts, Executor was primarily within Kansas borders. Shutts, Executor only considered the conflict involving interest rate liability and state statutes, and in finding the 6% Texas rate inapplicable it cited but did not follow contrary Texas precedent. 222 Kan., at 562-565, 567 P. 2d, at 1317-1319.

    118

    [10] "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof." U. S. Const., Art. IV, § 1. See also 28 U. S. C. § 1738.

    119

    [11] "No State shall . . . deprive any person of life, liberty, or property, without due process of law . . . ." U. S. Const., Amdt. 14, § 1.

    120

    [12] The responsibilities of the Federal Power Commission were transferred to the Federal Energy Regulatory Commission in 1977. See 91 Stat. 578, 582-584.

    121

    [13]The relevant portion of the 1961 notice provided in full:

    122

    "Effective June 1, 1961, and until further notice, royalties paid you will be computed by excluding that portion of any price being collected subject to refund which exceeds 11 [cents] per Mcf (presently the maximum area price level for increased rates as recently announced by the Federal Power Commission in its Statement of General Policy). Payment of royalty based on the balance of the sums collected will be made at such time as it is determined that the sums collected are no longer subject to refund.

    "Interest owners desiring to receive payments computed currently on the full sums being collected may arrange to do so by furnishing Phillips Petroleum Company acceptable indemnity to cover their proportionate part of any required refunds, plus the required interest." Shutts I, 222 Kan., at 534, 567 P. 2d, at 1299.

    123

    The practice of withholding suspense royalties pending final Commission price approval was sustained in Ashland Oil & Refining Co. v. Staats, Inc., 271 F. Supp. 571, 579 (Kan. 1967), and Boutte v. Chevron Oil Co., 316 F. Supp. 524 (ED La. 1970), aff'd, 442 F. 2d 1337 (CA5 1971) (per curiam).

    124

    [14] "Had Phillips put the `suspense royalties' into a common trust fund, separate from its operating funds, to be used solely to pay either the pipeline companies or the gas royalty owners once the FPC ultimately decided the rate increase question, this case would dovetail nicely into the `common fund' cases." Shutts I, 222 Kan., at 552, 567 P. 2d, at 1311. Accord, 235 Kan., at 201, 212, 679 P. 2d, at 1168, 1174. The Court criticizes Kansas' use of the "common fund" concept as applied to these funds. Ante, at 819-820. Kansas is not alone, however, in applying the common fund concept in a class action to a pool of readily identifiable moneys placed within the court's power by a liability determined by the lawsuit itself. See, e. g., Perlman v. First National Bank of Chicago, 15 Ill. App. 3d 784, 799-802, 305 N. E. 2d 236, 247-250 (1973) (cited in Shutts I, 222 Kan., at 553, 567 P. 2d, at 1311-1312); see also Sprague v. Ticonic National Bank, 307 U. S. 161, 166-167 (1939) (common fund may be "recovered" in litigation); Dawson, Lawyers and Involuntary Clients: Attorney Fees From Funds, 87 Harv. L. Rev. 1597, 1615 (1974) ("Funds can also be created by the litigation itself"). Moreover, it is of course no concern of this Court how Kansas chooses to develop its state common-law doctrines. Absent some constitutional foundation plainly lacking here, the Court's criticism of Kansas' substantive state law is entirely gratuitous.

    125

    [15] Phillips argued below that some distinction should be made for purposes of interest liability between royalties owed on gas sold to pipeline companies who paid the higher "suspense" price and royalties owned on gas used by Phillips itself rather than sold. Yet "Phillips acknowledges . . . that its obligation to pay royalties under the various . . . contracts exists without regard to the actual disposition of the gas." 235 Kan., at 215, 679 P. 2d, at 1177 (emphasis added). Thus, "[b]y choosing to withhold payment Phillips was allowed the use of the suspense monies during the suspense period which rightfully belonged to the royalty owners, and the royalty owners, in turn, were deprived of receiving and using those monies during that time." Id., at 216, 679 P. 2d, at 1177. Applying the same unjust enrichment theory developed in Shutts I, the Kansas Supreme Court accordingly rejected Phillips' proffered distinction. 235 Kan., at 217, 679 P. 2d, at 1178. Significantly, Phillips does not claim here that even a "putative" conflict of laws might turn on this distinction. Phillips pursues the argument only to contend in a footnote that, because it never actually collected higher prices on gas that it used itself, no "fund" actually existed. Brief for Petitioner 21, n. 18. As the Kansas court noted, however, the fund at issue is the "easily computed" amount of royalties that were due the royalty owners in any case, not the moneys collected by Phillips in return for sales. 235 Kan., at 217, 679 P. 2d, at 1178.

    126

    [16] Lightcap v. Mobil Oil Corp., 221 Kan. 448, 562 P. 2d 1, cert. denied, 434 U. S. 876 (1977); Shapiro v. Kansas Public Employees Retirement System, 216 Kan. 353, 357, 532 P. 2d 1081, 1084 (1975).

    127

    [17] The court cited six cases, four from the Fifth Circuit and two from the Northern District of Texas, in all of which Phillips was a named party.

    128

    [18] The Kansas court also pointed out that "the United States Supreme Court has noted the imposition of interest on refunds ordered by the FPC is not an inappropriate means of preventing unjust enrichment. (United Gas v. Callery Properties, 382 U. S. 223)." 222 Kan., at 562, 567 P. 2d, at 1317-1318.

    129

    [19] See Kan. Stat. Ann. § 16-201 (1974) ("Creditors shall be allowed to receive interest at the rate of six percent per annum, when no other rate of interest is agreed upon"); Okla. Stat., Tit. 15, § 266 (1971) ("The legal rate of interest shall be six per cent in the absence of any contract as to the rate of interest"); Tex. Rev. Civ. Stat. Ann., Art. 5069-1.03 (Vernon 1971) ("When no specified rate of interest is agreed upon by the parties, interest at the rate of 6% per annum shall be allowed") (all emphasis added).

    130

    [20] The court also held that interest accruing after the entry of judgment should be determined by Kansas' postjudgment interest statute. Kan. Stat. Ann. § 16-204 (1974). Phillips does not and could not contend that the Constitution bars a Kansas court from applying the Kansas postjudgment interest statute to judgments entered by Kansas courts. Such statutes demonstrate an irrefutable state interest in the force carried by judgments entered by a State's own courts. See also Klaxon Co. v. Stentor Electric Mfg. Co., 313 U. S. 487, 498 (1941) (State interest statutes concern "an incidental item of damages, interest, with respect to which courts at the forum have commonly been free to apply their own or some other law as they see fit").

    131

    [21] The court noted that the " `United States Rule' is also followed in Oklahoma and Texas," and that Phillips had "raised and lost" its contention of waiver in a similar case in Texas. 222 Kan., at 568, 567 P. 2d, at 1321, citing Phillips Petroleum Co. v. Riverview Gas Compression Co., 409 F. Supp. 486 (ND Tex. 1976). Moreover, because the relevant Oklahoma statute expressly stated that payment of a principal sum must be accepted "as such" to support a finding of waiver, Okla. Stat., Tit. 23, § 8 (1971), the statute was inapplicable here inasmuch as the royalty payments were not so accepted. 222 Kan., at 568, 567 P. 2d, at 1321.

    132

    [22] The only apparently new argument raised by Phillips in Shutts II was that it should not be liable for interest to a subclass of the affected royalty owners whose direct contractual agreement for royalties was with other producers who sold their gas to Phillips under a separate agreement. Although Phillips assumed the obligation to pay royalties directly to the royalty owners in these separate agreements, the separate agreements also stated that if a suspended price increase were ultimately approved by the Commission, Phillips would pay the other producers additional money "without interest." Phillips argued that this "without interest" clause barred interest to the royalty owners as well as to the other producers. The Kansas Supreme Court rejected this argument, however, because the royalty owners were not parties to the separate agreements and because no consideration was paid to the royalty owners by Phillips in return for this purported waiver of interest. 235 Kan., at 220, 679 P. 2d, at 1180. "[T]hese provisions, entered into between Phillips and the producers, cannot unilaterally deprive royalty owners of interest which they would otherwise be entitled to receive under casing head gas contracts in which the provisions do not appear." Ibid.

    133

    [23] See 28 U. S. C. § 1257: "Final judgments or decrees rendered by the highest court of a State . . . may be reviewed by the Supreme Court . . . (3) [b]y writ of certiorari . . . where any title, right, privilege or immunity is specially set up or claimed under the Constitution" (emphasis added).

    134

    [24] This principle was settled in a number of cases decided on either side of the turn of this century. See, e. g., Pennsylvania Fire Ins. Co. v. Gold Issue Mining & Milling Co., 243 U. S. 93, 96 (1917); Western Life Indemnity Co. v. Rupp, 235 U. S. 261, 275 (1914); Louisville & Nashville R. Co. v. Melton, 218 U. S. 36, 51, 52 (1910); Allen v. Alleghany Co., 196 U. S. 458, 464-465 (1905); Johnson v. New York Life Ins. Co., 187 U. S. 491, 496 (1903); Glenn v. Garth, 147 U. S. 360, 367-370 (1893).

    135

    [25] Cf. Guaranty Trust Co. v. New York, 326 U. S. 99, 109 (1945) (federal courts should apply state law in furtherance of the goal that "the outcome of the litigation in the federal court should be substantially the same . . . as it would be if tried in a State court").

    136

    [26] The Kansas court also stated that Kansas' statutory class-action requirements would "not be fulfilled" if "liability is to be determined according to varying and inconsistent state laws." 222 Kan., at 557, 567 P. 2d, at 1314. This belies any notion that the Kansas court plans to "boot-strap," ante, at 821, its choice-of-law decisions onto its assertion of jurisdiction over multistate actions; precisely the opposite is suggested.

    137

    [27] As I noted in Allstate, however, the litigant challenging a court's choice of law clearly "bears the burden of establishing" a constitutional infringement. 449 U. S., at 325, n. 13. "Prima facie every state is entitled to enforce in its own courts its own statutes . . . . One who challenges that right . . . assumes the burden of showing, upon some rational basis, that of the conflicting interests involved those of the foreign state are superior to those of the forum." Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U. S. 532, 547 (1935). See Western Life Indemnity Co. v. Rupp, 235 U. S., at 275 ("It does not appear that the court's attention was called to any decision by the courts of Illinois placing a different construction, or indeed any construction, upon the section in question. If such decision existed, it was incumbent upon defendant to prove it"). Thus, if a litigant has failed to call a state court's attention to relevant law in other jurisdictions, it cannot raise that law here to create a constitutional issue.

    138

    [28] I noted in Allstate that choice of forum law might also violate the Due Process Clause in other ways, such as by irrationally favoring residents over nonresidents or representing a "dramatic departure from the rule that obtains in most American jurisdictions." 449 U. S., at 327. The first possibility is not applicable here; all royalty owners were treated exactly alike in the Kansas court's analysis. As for the second possibility, a "dramatic departure" must be distinguished from the application of general equitable principles to address new situations. Phillips may criticize Kansas' allegedly "unique notions of contract and oil and gas law," Brief for Petitioner 33, but such is not a constitutional objection. State courts, like this Court, constantly must apply and develop general legal principles to accommodate novel factual circumstances with the overarching goal of achieving a just result. Today's decision, for example, newly establishes lawful jurisdiction over a multistate plaintiffs' class action that Phillips likely could not have anticipated 15 years ago. Absent some demonstration of a departure from some clear rule obtaining in other States, an argument merely that "[n]o other state ever has hinted" at Kansas' result, id., at 32, is unavailing.

    139

    [29] " `[F]alse conflict' really means `no conflict of laws.' If the laws of both states relevant to the set of facts are the same, or would produce the same decision in the lawsuit, there is no real conflict between them." R. Leflar, American Conflicts Law § 93, p. 188 (3d ed. 1977). See also E. Scoles & P. Hay, Conflict of Laws § 2.6, p. 17 (1982) ("A `false conflict' exists when the potentially applicable laws do not differ"). The absence of any direct conflicts here distinguishes this case from decisions such as Home Ins. Co. v. Dick, 281 U. S. 397 (1930), and John Hancock Mutual Life Ins. Co. v. Yates, 299 U. S. 178 (1936), where the interstate legal conflicts were clear, conceded, and dispositive.

    140

    [30] In Shutts II the Kansas Supreme Court noted that "the legal issues presented are substantially the same" as in Shutts I, and that "[w]hile these issues are complex they were thoroughly reviewed in Shutts I." 235 Kan., at 211, 679 P. 2d, at 1174. The court then addressed the award and rate of interest as "damages to compensate the plaintiffs for the unjust enrichment derived by Phillips from the use of the plaintiffs' money," and concluded that "[i]n the instant case Phillips has not satisfactorily established why this court should not apply the rule enunciated in Shutts I" respecting this claim. Id., at 221, 679 P. 2d, at 1181. Two sentences later in the same paragraph, the court made the broad statement that its forum law should apply absent "compelling reason." The only fair reading of this statement in context is that the Kansas court in Shutts II adopted its multistate choice-of-law survey performed in Shutts I, and properly placed the burden on Phillips, see n. 18, supra, to show why the Shutts I conclusions should be reexamined. Even if this were ambiguous, this Court should give the Kansas Supreme Court the benefit of the doubt when reviewing its judgment. Thus, I frankly do not understand the Court's summary rejection of that court's attempt to incorporate Shutts I. Ante, at 822, n. 8. As for the implication in that same footnote that the choice-of-law discussion in Shutts I may have been erroneous on the merits, the statement that the Kansas court "did not follow contrary Texas precedent" (emphasis added), is simply wrong. See n. 22, infra.

    141

    [31] The Court provides a list of "putative conflicts" ante,at 816-818. The errors and omissions apparent in the Court's discussion demonstrate the dangers of relying on characterizations of state law provided by an interested party.

    142

    1. Although there technically may be "no recorded Oklahoma decision dealing with interest liability for suspended royalties," ante, at 816-817 (emphasis added), Oklahoma law expressly provides that the damages "caused by the breach of an obligation to pay money only is deemed to be the amount due by the terms of the obligation, with interest thereon." Okla. Stat., Tit. 23, § 22 (1981) (emphasis added); see also § 6 ("Any person who is entitled to recover damages certain, or capable of being made certain by calculation, . . . is entitled also to recover interest thereon"). The Oklahoma Supreme Court has specifically held that oil field royalty owners may sue as a class to recover royalties due them and may recover interest on the amount of recovery. West Edmond Hunton Line Unit v. Young, 325 P. 2d 1047 (1958).

    143

    2. No authority in the Court's string citation regarding Oklahoma's 6% statutory interest rate supports the statement that Oklahoma would "most likely" impose that rate in a suit such as this. Ante, at 817. The constitutional and statutory provisions merely provide that "in the absence of any contract" the rate is indeed 6%. Okla. Stat. Ann., Tit. 15, § 266 (1981). The cited judicial decisions merely hold that interest is recoverable on certain obligations, including royalties due to oil field royalty owners, without discussing applicable limitations on the rate.

    144

    After examining these Oklahoma authorities, the Kansas Supreme Court found the Oklahoma statutory rate, as well as that of Texas and Kansas, inapplicable by its own terms, because here Phillips had contractually agreed to the higher federal rate. 235 Kan., at 220-221, 679 P. 2d, at 1180; 222 Kan., at 563-565, 567 P. 2d, at 1318-1319. No reported Oklahoma decision contradicts this judgment, and the express terms of the Oklahoma statute permit it. See also McAnally v. Ideal Federal Credit Union, 428 P. 2d 322, 326 (Okla. 1967) (where federal law provides for interest in excess of 12% per year, that rate "must govern" over Oklahoma statutory rate).

    145

    3. The Kansas court similarly reviewed Texas' 6% interest statute and found that Phillips' contractual agreement to the FPC rate rendered the statute inapplicable. 235 Kan., at 220, 679 P. 2d, at 1180; 222 Kan., at 563-565, 567 P. 2d, at 1318-1319. It is true that Texas has not awarded suspense royalty interest at a rate higher than 6% — it is equally plain from the cited cases that no higher rate has been sought. Texas courts have, however, specifically permitted recovery at higher rates when a contract, even an implied or oral contract, evidences agreement to such rates. Preston Farm & Ranch Supply, Inc. v. Bio-Zyme Enterprises, 625 S. W. 2d 295 (Tex. 1981); Moody v. Main Bank of Houston, 667 S. W. 2d 613 (Tex. App. 1984).

    146

    4. While noting Phillips' reliance on an Oklahoma statute stating that "accepting payment of the whole principal, as such, waives all claim to interest," Okla. Stat. Ann., Tit. 23, § 8 (1981), the Court itself demonstrates that this statute's application here is open to question, by citing as "cf." Webster Drilling Co. v. Sterling Oil of Okla., Inc., 376 P. 2d 236, 238 (Okla. 1962). In that case, the Oklahoma Supreme Court held that when a right to interest is "based upon a contract, the interest has become `a substantive part of the debt itself,' " and Title 23, § 8, "is not applicable." Id., at 238 (citation omitted). The claim to interest upheld in Webster Drilling was based on an implied contract, exactly as the Kansas Supreme Court found in Shutts I. 222 Kan., at 562, 565, 567 P. 2d, at 1317, 1319. The Kansas Supreme Court explicitly considered Title 23, § 8, and relied on Webster Drilling to find it inapplicable. 222 Kan., at 568, 567 P. 2d, at 1321. It is therefore impossible to suggest, as the Court does, that the Kansas court "ignor[ed]" the Oklahoma statute. Ante, at 817.

    147

    5. Finally, the Court plainly misconstrues Texas law by suggesting that a mere "offer" to pay suspended royalties in return for an indemnity agreement would, by itself, excuse interest. In the federal decision cited by the Court, which mentions no Texas cases at the relevant pages, Phillips Petroleum Co. v. Riverside Gas Co., 409 F. Supp., at 495-496, indemnity agreements were actually entered into. Id., at 490. The Fifth Circuit case relied on for authority, which did cite Texas cases, states that an "unconditional offer to give up possession of a disputed fund" is necessary before a bar to interest is created. Phillips Petroleum Co. v. Adams, 513 F. 2d 355, 370 (1975) (emphasis added). The Texas Supreme Court has subsequently agreed that Adams correctly stated Texas law. Phillips Petroleum Co. v. Stahl Petroleum Co., 569 S. W. 2d 480, 487 (1978). See also Fuller v. Phillips Petroleum Co., 408 F. Supp. 643, 646 (ND Tex. 1976) (entering indemnity agreement terminates interest liability because Phillips "lost the reasonably free use of the money"). No indemnity agreements were entered into by the plaintiffs here, however, and as the Kansas Supreme Court found, Phillips' indemnity offer was not "unconditional" — to the contrary, it was "far more stringent than the corporate undertaking Phillips filed with the FPC." 222 Kan., at 567, 567 P. 2d, at 1320. It is also uncontested that Phillips continued to use freely the unpaid suspense royalties long after its "burdensome" conditions were not accepted by the royalty owners. Id., at 566, 567 P. 2d, at 1320. The Court errs drastically by relying on what one Federal District Court "appears" to have held to sustain a constitutional choice-of-law claim.

    148

    [32] The fact that the Kansas court rejected its own State's statute in favor of the uniform federal interest rate, to which it found Phillips had contractually agreed, demonstrates the absence of parochialism from its decision. There is absolutely no indication that Texas or Oklahoma courts would have decided differently had the same claim been presented there.

    149

    [33] Neither Phillips nor the Court contends that Kansas cannot constitutionally apply its own laws to the claims of Kansas residents, even though the leased land may lie in other States and no other apparent connection to Kansas may exist. Phillips has done business in Kansas throughout the years relevant to this litigation and it seems unarguable that application of Kansas law, or indeed the law of any of the 50 States where royalty owners reside, to the claims of at least some of the plaintiff class members was thus "perceived as possible" by Phillips "at the time of contracting." Allstate, 449 U. S., at 331, n. 24 (STEVENS, J., concurring in judgment); see id., at 316-318, and n. 22. It was also possible, of course, that any number of royalty owners might have moved to Kansas in the years Phillips held their suspense royalties, and that Kansas has a substantial interest in seeing its residents treated fairly when they invoke the jurisdiction of its courts. See Weinberg, Conflicts Cases and the Problem of Relevant Time, 10 Hofstra L. Rev. 1023, 1040-1043 (1982). Because Phillips must have anticipated application of Kansas law to some claims, the eventual geographic distribution of royalty owners' residences goes only to "likelihood" and not to fairness of the application of Kansas law. Allstate, 449 U. S., at 331, n. 24 (STEVENS, J., concurring in judgment). Additionally, it is easy enough for national firms like Phillips to make clear their expectations by placing express choice-of-law clauses in their contracts. See Allstate, 449 U. S., at 318, n. 24; id., at 324, 328 (STEVENS, J., concurring in judgment); Clay v. Sun Ins. Office, Ltd., 377 U. S. 179, 182 (1964). No such clauses are present here, however.

    150

    [34] See Allstate, 449 U. S., at 326 (STEVENS, J., concurring in judgment) (footnote omitted): "I question whether a judge's decision to apply the law of his own State could ever be described as wholly irrational. For judges are presumably familiar with their own state law and may find it difficult and time consuming to discover and apply correctly the law of another State. The forum State's interest in fair and efficient administration of justice is therefore sufficient, in my judgment, to attach a presumption of validity to a forum State's decision to apply its own law to a dispute over which it has jurisdiction."

    151

    [35] Accord, 3 H. Newberg, Newberg on Class Actions § 13.28, p. 63 (2d ed. 1985) ("the Kansas court in Shutts II may have committed only harmless error in applying its own law because there appears to be no significant conflict of laws among the states involved").

    152

    [36] The Court's decision in Allstatehas been criticized on the ground that there may well have been no true conflict of laws present, and, therefore, no need for extended constitutional discussion. See Weintraub, Who's Afraid of Constitutional Limitations on Choice of Law?, 10 Hofstra L. Rev. 17, 18-24 (1981). As I have demonstrated, the Court is once again open to this criticism.

    153

    Indeed, unless our review is restricted to cases in which conflicts are unambiguous, the Court will constantly run the risk of misconstruing the common law of any number of States. For example, the Kansas Supreme Court has already decided that Oklahoma would not apply its statutory interest rates where there is evidence of a contractual agreement to a different rate, and that such an agreement is present here. 235 Kan., at 220, 679 P. 2d, at 1180; 222 Kan., at 562-565, 567 P. 2d, at 1318-1319. Yet today the Court speculates that Oklahoma "would most likely apply" its statutory rates in this lawsuit. Ante, at 817. Since this Court has no more authority to resolve such issues of Oklahoma law than does the Kansas Supreme Court, however, the latter court remains free to abide by its former judgment.

  • 3 Sun Oil Co. v. Wortman

    1
    486 U.S. 717 (1988)
    2
    SUN OIL CO.
    v.
    WORTMAN ET AL.
    3
    No. 87-352.
    4

    Supreme Court of United States.

    5
    Argued March 22, 1988
    6
    Decided June 15, 1988
    7

    CERTIORARI TO THE SUPREME COURT OF KANSAS

    8

    [718] Gerald Sawatzky argued the cause for petitioner. With him on the briefs were Jim H. Goering, Timothy B. Mustaine, and Edwyn R. Sherwood.

    9

    [719] Gordon Penny argued the cause for respondents. With him on the briefs were W. Luke Chapin and Stephen Jones.[1]

    10
    JUSTICE SCALIA delivered the opinion of the Court.
    11

    Petitioner Sun Oil Company seeks reversal of a decision of the Supreme Court of Kansas that it is liable for interest on certain previously suspended gas royalties. Wortman v. Sun Oil Co., 241 Kan. 226, 755 P. 2d 488 (1987) (Wortman III). The Kansas Supreme Court rejected petitioner's contentions that (1) the Full Faith and Credit Clause of the Constitution, Art. IV, § 1, and the Due Process Clause of the Fourteenth Amendment prohibited application of Kansas' statute of limitations so as to allow to proceed in Kansas courts a suit barred by the statute of limitations of the State whose substantive law governs the claim, and (2) those same Clauses of the Constitution mandated interpretations of other States' substantive laws concerning interest that were different from those arrived at by the Kansas courts. We granted certiorari. 484 U. S. 912 (1987).

    12
    I
    13

    In the 1960's and 1970's, petitioner, a Delaware corporation with its principal place of business in Texas, extracted gas from properties that it leased from respondents. The leases provided that respondents would receive a royalty, usually one-eighth of the proceeds, from the sale of gas. Petitioner sold the gas in interstate commerce at prices that had to be approved by the Federal Power Commission (FPC). The FPC permitted petitioner on several occasions to collect proposed increased prices from customers pending final approval, but required petitioner to refund with interest any amount so collected that was not ultimately approved. Specifically, petitioner had on file with the FPC an undertaking [720] to comply with regulations, now codified at 18 CFR § 154.102 (1987), requiring petitioner to refund any ultimately unapproved increase plus interest at certain specified rates. § 154.102(c). Petitioner made no royalty payments to respondents on the increased amounts collected until the FPC approved the increases. The respondents' royalty shares of these increases have been called "suspended royalty payments" in this litigation.

    14

    In July 1976, petitioner paid respondents $1,167,000 in suspended royalty payments after the FPC approved increases that had been collected from July 1974 through April 1976. These payments covered 670 properties, 43.7% of which were located in Texas, 24% in Oklahoma, and 22.8% in Louisiana. In April 1978, petitioner paid respondents $2,676,000 in suspended royalty payments after the FPC approved increases that had been collected from December 1976 through April 1978. These payments covered 690 properties, 40.3% located in Texas, 31.6% in Oklahoma, and 23.6% in Louisiana.

    15

    In August 1979, respondents Richard Wortman and Hazel Moore filed a class action in a Kansas trial court on behalf of all landowners to whom petitioner had made or should have made suspended royalty payments, seeking interest on those payments for the period that the payments were held and used by petitioner. The trial court ruled that Kansas law governed all claims for interest, even claims relating to leases in another State and brought by residents of that State. The court further ruled that under Kansas law petitioner was liable for prejudgment interest at the rates petitioner had agreed to pay with respect to customer refunds under the FPC regulations. These rates were 7% per annum prior to October 10, 1974; 9% from then until September 30, 1979; and thereafter the average prime rate compounded quarterly. The trial court relied on Shutts v. Phillips Petroleum Co., 222 Kan. 527, 567 P. 2d 1292 (1977) (Shutts I), cert. denied, 434 U. S. 1068 (1978). That case, which also involved suspended royalty payments, had held that Kansas law governed [721] the claims of residents of other States concerning properties in those States, and that under Kansas law (1) the royalty owners were entitled to interest on suspended royalty payments because the royalty payments became owing under the royalty contract at the moment the gas company's customers paid the increases and (2) the interest rate to be used was that set forth in the FPC regulations because the gas company's corporate undertaking with the FPC constituted an agreement to pay that rate. See 222 Kan., at 562-565, 567 P. 2d, at 1317-1319.

    16

    The principles of Shutts I were reaffirmed in Shutts v. Phillips Petroleum Co., 235 Kan. 195, 679 P. 2d 1159 (1984) (Shutts II), a factually similar case involving suspended royalty payments different from those in Shutts I. The original decision of the trial court in this case was then affirmed on the strength of Shutts II in Wortman v. Sun Oil Co., 236 Kan. 266, 690 P. 2d 385 (1984) (Wortman I). The losing gas companies in both cases petitioned this Court for certiorari.

    17

    We reversed that part of Shutts II which held that Kansas could apply its substantive law to claims by residents of other States concerning properties located in those States, and remanded that case to the Kansas Supreme Court for application of the governing law of the other States to those claims. Phillips Petroleum Co. v. Shutts, 472 U. S. 797, 816-823 (1985) (Shutts III). We also vacated the decision in Wortman I and remanded it for reconsideration in light of our decision in Shutts III. Sun Oil Co. v. Wortman, 474 U. S. 806 (1985) (Wortman II).

    18

    On the remand in this case, the trial court held that under the law of the other States that had been held by Shutts III to govern the vast majority of claims, petitioner was liable for interest at the rate specified in the FPC regulations. The trial court further held that nothing in Shutts III precluded the application of Kansas' 5-year statute of limitations to these claims, and that therefore claims for interest on the suspended royalty payments made in July 1976 were timely. [722] The Kansas Supreme Court agreed with the first of these holdings in Shutts v. Phillips Petroleum Co., 240 Kan. 764, 732 P. 2d 1286 (1987) (Shutts IV), cert. pending, No. 87-348. The decision that the other States' pertinent substantive legal rules were consistent with those of Kansas was reaffirmed in Wortman III, the decision we now review. Wortman III also held that this Court's decision in Shutts III applied only to substantive law, and not to procedural matters such as the appropriate statute of limitations.

    19
    II
    20

    This Court has long and repeatedly held that the Constitution does not bar application of the forum State's statute of limitations to claims that in their substance are and must be governed by the law of a different State. See, e. g., Wells v. Simonds Abrasive Co., 345 U. S. 514, 516-518 (1953); Townsend v. Jemison, 9 How. 407, 413-420 (1850); McElmoyle v. Cohen, 13 Pet. 312, 327-328 (1839). We granted certiorari to reexamine this issue. We conclude that our prior holdings are sound.

    21
    A
    22

    The Full Faith and Credit Clause provides:

    23
    "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof."
    24

    The Full Faith and Credit Clause does not compel "a state to substitute the statutes of other states for its own statutes dealing with a subject matter concerning which it is competent to legislate." Pacific Employers Ins. Co. v. Industrial Accident Comm'n, 306 U. S. 493, 501 (1939). Since the procedural rules of its courts are surely matters on which a State is competent to legislate, it follows that a State may apply its own procedural rules to actions litigated in its courts. The issue here, then, can be characterized as whether a statute of [723] limitations may be considered as a procedural matter for purposes of the Full Faith and Credit Clause.

    25

    Petitioner initially argues that McElmoyle v. Cohen, supra, was wrongly decided when handed down. The holding of McElmoyle, that a statute of limitations may be treated as procedural and thus may be governed by forum law even when the substance of the claim must be governed by another State's law, rested on two premises, one express and one implicit. The express premise was that this reflected the rule in international law at the time the Constitution was adopted. This is indisputably correct, see Le Roy v. Crowninshield, 15 F. Cas. 362, 365, 371 (No. 8,269) (Mass. 1820) (Story, J.) (collecting authorities), and is not challenged by petitioner. The implicit premise, which petitioner does challenge, was that this rule from international law could properly have been applied in the interstate context consistently with the Full Faith and Credit Clause.

    26

    The first sentence of the Full Faith and Credit Clause was not much discussed at either the Constitutional Convention or the state ratifying conventions. However, the most pertinent comment at the Constitutional Convention, made by James Wilson of Pennsylvania, displays an expectation that would be interpreted against the background of principles developed in international conflicts law. See 2 M. Farrand, The Records of the Federal Convention of 1787, p. 488 (rev. ed. 1966). Moreover, this expectation was practically inevitable, since there was no other developed body of conflicts law to which courts in our new Union could turn for guidance.[2]

    27

    [724] The reported state cases in the decades immediately following ratification of the Constitution show that courts looked without hesitation to international law for guidance in resolving the issue underlying this case: which State's law governs the statute of limitations. The state of international law on that subject being as we have described, these early decisions uniformly concluded that the forum's statute of limitations governed even when it was longer than the limitations period of the State whose substantive law governed the merits of the claim. See Nash v. Tupper, 1 Cai. 402, 412-413 (N. Y. 1803) (citing unreported 1795 New York case, [725] Page v. Cable, holding the same); Pearsall v. Dwight, 2 Mass. 84, 89-90 (1806); Ruggles v. Keeler, 3 Johns. 263, 267-268 (N. Y. 1808) (Kent, C. J.); Graves v. Graves's Executor, 5 Ky. 207, 208-209 (1810). By 1820, the use of the forum statute of limitations in the interstate context was acknowledged to be "well settled." Medbury v. Hopkins, 3 Conn. 472, 473 (1820); accord, Le Roy v. Crowninshield, supra, at 371 ("settled"); cf. McCluny v. Silliman, 3 Pet. 270, 276-277 (1830) ("well settled"); Hawkins v. Barney's Lessee, 5 Pet. 457, 466 (1831) ("not to be questioned"). Obviously, judges writing in the era when the Constitution was framed and ratified thought the use of the forum statute of limitations to be proper in the interstate context. Their implicit understanding that the Full Faith and Credit Clause did not preclude reliance on the international law rule carries great weight.

    28

    Moreover, this view of statutes of limitations as procedural for purposes of choice of law followed quite logically from the manner in which they were treated for domestic-law purposes. At the time the Constitution was adopted the rule was already well established that suit would lie upon a promise to repay a debt barred by the statute of limitations — on the theory, as expressed by many courts, that the debt constitutes consideration for the promise, since the bar of the statute does not extinguish the underlying right but merely causes the remedy to be withheld. See Little v. Blunt, 26 Mass. 488, 492 (1830) ("[T]he debt remained, the remedy was gone"); see also Wetzell v. Bussard, 11 Wheat. 309, 311 (1826). This is the same theory, of course, underlying the conflicts rule: the right subsists, and the forum may choose to allow its courts to provide a remedy, even though the jurisdiction where the right arose would not. See Graves v. Graves's Executor, supra, at 208-209 ("The statute of limitations. . . does not destroy the right but withholds the remedy. It would seem to follow, therefore, that the lex fori, [726] and not the lex loci was to prevail with respect to the time when the action should be commenced").

    29

    The historical record shows conclusively, we think, that the society which adopted the Constitution did not regard statutes of limitations as substantive provisions, akin to the rules governing the validity and effect of contracts, but rather as procedural restrictions fashioned by each jurisdiction for its own courts. As Chancellor Kent explained in his landmark work, 2 J. Kent, Commentaries on American Law 462-463 (2d ed. 1832): "The period sufficient to constitute a bar to the litigation of sta[l]e demands, is a question of municipal policy and regulation, and one which belongs to the discretion of every government, consulting its own interest and convenience."

    30

    Unable to sustain the contention that under the original understanding of the Full Faith and Credit Clause statutes of limitations would have been considered substantive, petitioner argues that we should apply the modern understanding that they are so. It is now agreed, petitioner argues, that the primary function of a statute of limitations is to balance the competing substantive values of repose and vindication of the underlying right; and we should apply that understanding here, as we have applied it in the area of choice of law for purposes of federal diversity jurisdiction, where we have held that statutes of limitations are substantive, see Guaranty Trust Co. v. York, 326 U. S. 99 (1945).

    31

    To address the last point first: Guaranty Trust itself rejects the notion that there is an equivalence between what is substantive under the Erie doctrine and what is substantive for purposes of conflict of laws. 326 U. S., at 108. Except at the extremes, the terms "substance" and "procedure" precisely describe very little except a dichotomy, and what they mean in a particular context is largely determined by the purposes for which the dichotomy is drawn. In the context of our Erie jurisprudence, see Erie R. Co. v. Tompkins, 304 U. S. 64 (1938), that purpose is to establish (within the limits [727] of applicable federal law, including the prescribed Rules of Federal Procedure) substantial uniformity of predictable outcome between cases tried in a federal court and cases tried in the courts of the State in which the federal court sits. See Guaranty Trust, supra, at 109; Hanna v. Plumer, 380 U. S. 460, 467, 471-474 (1965). The purpose of the substance-procedure dichotomy in the context of the Full Faith and Credit Clause, by contrast, is not to establish uniformity but to delimit spheres of state legislative competence. How different the two purposes (and hence the appropriate meanings) are is suggested by this: It is never the case under Erie that either federal or state law — if the two differ — can properly be applied to a particular issue, cf. Erie, supra, at 72-73; but since the legislative jurisdictions of the States overlap, it is frequently the case under the Full Faith and Credit Clause that a court can lawfully apply either the law of one State or the contrary law of another, see Shutts III, 472 U. S., at 823 ("[I]n many situations a state court may be free to apply one of several choices of law"). Today, for example, we do not hold that Kansas must apply its own statute of limitations to a claim governed in its substance by another State's law, but only that it may.

    32

    But to address petitioner's broader point of which the Erie argument is only a part — that we should update our notion of what is sufficiently "substantive" to require full faith and credit: We cannot imagine what would be the basis for such an updating. As we have just observed, the words "substantive" and "procedural" themselves (besides not appearing in the Full Faith and Credit Clause) do not have a precise content, even (indeed especially) as their usage has evolved. And if one consults the purpose of their usage in the full-faith-and-credit context, that purpose is quite simply to give both the forum State and other interested States the legislative jurisdiction to which they are entitled. If we abandon the currently applied, traditional notions of such entitlement we would embark upon the enterprise of constitutionalizing [728] choice-of-law rules, with no compass to guide us beyond our own perceptions of what seems desirable.[3] There is no more reason to consider recharacterizing statutes of limitation as substantive under the Full Faith and Credit Clause than there is to consider recharacterizing a host of other matters generally treated as procedural under conflicts law, and hence generally regarded as within the forum State's legislative jurisdiction. See, e. g., Restatement (Second) of Conflict of Laws § 131 (remedies available), § 133 (placement of burden of proof), § 134 (burden of production), § 135 (sufficiency of the evidence), § 139 (privileges) (1971).

    33

    In sum, long established and still subsisting choice-of-law practices that come to be thought, by modern scholars, unwise, [729] do not thereby become unconstitutional. If current conditions render it desirable that forum States no longer treat a particular issue as procedural for conflict of laws purposes, those States can themselves adopt a rule to that effect, e. g., Heavner v. Uniroyal, Inc., 63 N. J. 130, 135-141, 305 A. 2d 412, 415-418 (1973) (statute of limitations), or it can be proposed that Congress legislate to that effect under the second sentence of the Full Faith and Credit Clause, cf. Mills v. Duryee, 7 Cranch 481, 485 (1813); Pacific Employers Ins. Co. v. Industrial Accident Comm'n, 306 U. S., at 502. It is not the function of this Court, however, to make departures from established choice-of-law precedent and practice constitutionally mandatory. We hold, therefore, that Kansas did not violate the Full Faith and Credit Clause when it applied its own statute of limitations.

    34
    B
    35

    Petitioner also makes a due process attack upon the Kansas court's application of its own statute of limitations.[4] [730] Here again neither the tradition in place when the constitutional provision was adopted nor subsequent practice supports the contention. At the time the Fourteenth Amendment was adopted, this Court had not only explicitly approved (under the Full Faith and Credit Clause) forum-state application of its own statute of limitations, but the practice had gone essentially unchallenged. And it has gone essentially unchallenged since. "If a thing has been practised for two hundred years by common consent, it will need a strong case for the Fourteenth Amendment to affect it." Jackman v. Rosenbaum Co., 260 U. S. 22, 31 (1922).

    36

    A State's interest in regulating the workload of its courts and determining when a claim is too stale to be adjudicated certainly suffices to give it legislative jurisdiction to control the remedies available in its courts by imposing statutes of limitations. Moreover, petitioner could in no way have been unfairly surprised by the application to it of a rule that is as old as the Republic. There is, in short, nothing in Kansas' action here that is "arbitrary or unfair," Shutts III, 472 U. S., at 821-822, and the due process challenge is entirely without substance.

    37
    III
    38

    In Shutts III, we held that Kansas could not apply its own law to claims for interest by nonresidents concerning royalties from property located in other States. The Kansas Supreme Court has complied with that ruling, but petitioner claims that it has unconstitutionally distorted Texas, Oklahoma, and Louisiana law in its determination of that law made in Shutts IV and applied to this case in Wortman III.

    39

    To constitute a violation of the Full Faith and Credit Clause or the Due Process Clause, it is not enough that a [731] state court misconstrue the law of another State. Rather, our cases make plain that the misconstruction must contradict law of the other State that is clearly established and that has been brought to the court's attention. See, e. g., Pennsylvania Fire Ins. Co. v. Gold Issue Mining & Milling Co., 243 U. S. 93, 96 (1917); Western Life Indemnity Co. v. Rupp, 235 U. S. 261, 275 (1914); Louisville & Nashville R. Co. v. Melton, 218 U. S. 36, 51-52 (1910); Banholzer v. New York Life Ins. Co., 178 U. S. 402, 408 (1900); see also Shutts III, supra, at 834-842 (STEVENS, J., concurring in part and dissenting in part). We cannot conclude that any of the interpretations at issue here runs afoul of this standard.

    40

    1. Texas: Petitioner contests the Kansas Supreme Court's interpretation of Texas law on the interest rate. Texas' statutory rate of 6% does not apply when a "specified rate of interest is agreed upon by the parties." Tex. Rev. Civ. Stat. Ann., Art. 5069-1.03 (Vernon 1987). Such an agreement need not be express, but can be inferred from conduct. See Preston Farm & Ranch Supply, Inc. v. Bio-Zyme Enterprises, 625 S. W. 2d 295, 298, 300 (Tex. 1981). The Kansas court held an agreement to pay interest at a higher rate was implied by petitioner's undertaking with the FPC to comply with federal regulations setting forth the applicable rates of interest for refundable moneys held in suspense. See Shutts IV, 240 Kan., at 777, 783-784, 790-791, 732 P. 2d, at 1298, 1302, 1306; see also Shutts I, 222 Kan., at 562-565, 567 P. 2d, at 1317-1319.

    41

    Petitioner brought to the Kansas court's attention no Texas decision clearly indicating that an agreement to pay interest at a specified rate would not be implied in these circumstances.[5] Petitioner's reliance on Phillips Petroleum [732] Co. v. Stahl Petroleum Co., 569 S. W. 2d 480 (Tex. 1978), is misplaced. Although that case was similar to the present one on its facts, the point at issue here was neither raised nor decided. In Stahl, the intermediate Texas court had ordered interest paid at the statutory 6% rate. There is nothing [733] to indicate, however, that the royalty owner had requested anything else, and only the lessee and not the royalty owner appealed. Id., at 481. Thus, the Texas Supreme Court's holding that 6% interest was payable is in no way a holding that more than 6% was not. It is far from unconstitutional for the Kansas Supreme Court to anticipate that the Texas Supreme Court would distinguish the case on the eminently reasonable ground that no rate of interest based on an implied agreement was at issue.

    42

    2. Oklahoma: Petitioner contests the Kansas Supreme Court's interpretations of Oklahoma law as to both liability for interest and the rate to be paid. Concerning liability, petitioner relies on a statute providing that "[a]ccepting payment of the whole principal, as such, waives all claim to interest." Okla. Stat., Tit. 23, § 8 (1981). But the Oklahoma Supreme Court has held that this statute does not bar a claim for interest based on an implied agreement to pay interest, since in that event the interest becomes, for purposes of the statute, part of the "principal" owed. See Webster Drilling Co. v. Sterling Oil of Oklahoma, Inc., 376 P. 2d 236, 238 (1962). Regarding the rate of interest, Oklahoma law provides for 6% only "in the absence of any contract as to the rate of interest, and by contract the parties may agree to any rate as may be authorized by law." Okla. Stat., Tit. 15, § 266 (1981). Thus, for Oklahoma as for Texas, petitioner's contention founders on the fact that it pointed to no decision indicating that an agreement to pay more than 6% interest would not be implied in circumstances such as those of the present case.

    43

    3. Louisiana: Finally, petitioner contests the Kansas Supreme Court's interpretation of Louisiana law both as to liability for interest and the rate to be paid. Concerning liability, petitioner relies on Whitehall Oil Co. v. Boagni, 217 So. 2d 707 (La. App. 1968), aff'd on other issues, 255 La. 67, 229 So. 2d 702 (1969). That case involved a situation opposite from that involved here: the gas companies had paid the [734] royalties on increased prices before FPC approval, and were seeking interest on those payments when the approval did not ensue. It thus involved a claim for unjust enrichment, see 217 So. 2d, at 709, and does not stand for the proposition that no interest is recoverable on a contractual debt — which would arguably (if not inevitably) have been governed by the Louisiana statute mandating interest on "[a]ll debts . . . from the time they become due." La. Civ. Code Ann., Art. 1938 (West 1977); see also Wurzlow v. Placid Oil Co., 279 So. 2d 749, 772-774 (La. App.) (applying Art. 1938 to oil and gas royalties), cert. denied, 282 So. 2d 140 (La. 1973).

    44

    As to petitioner's claim that if interest was payable Louisiana's 7% rate clearly applied: The 7% rate specified in the above-quoted statute applied "unless otherwise stipulated." Art. 1938. Petitioner brought to the Kansas court's attention no Louisiana decision indicating that an implied agreement could not constitute such a stipulation, or that an implied agreement would not be found in the circumstances of this case. Cf. Boutte v. Chevron Oil Co., 316 F. Supp. 524, 531 (ED La. 1970) (dictum) (gas company will owe royalty owner interest at FPC rates on suspended royalty payments once FPC approves increases), aff'd, 442 F. 2d 1337 (CA5 1971).

    45
    * * *
    46

    For the reasons stated, the judgment of the Kansas Supreme Court is

    47

    Affirmed.

    48
    JUSTICE KENNEDY took no part in the consideration or decision of this case.
    49
    JUSTICE BRENNAN, with whom JUSTICE MARSHALL and JUSTICE BLACKMUN join, concurring in part and concurring in the judgment.
    50

    I join Parts I and III of the Court's opinion. Although I also agree with the result the Court reaches in Part II, I [735] reach that result through a somewhat different path of analysis.

    51

    For 150 years, this Court has consistently held that a forum State may apply its own statute of limitations period to out-of-state claims even though it is longer or shorter than the limitations period that would be applied by the State out of which the claim arose. See Wells v. Simonds Abrasive Co., 345 U. S. 514 (1953) (shorter); Townsend v. Jemison, 9 How. 407 (1850) (longer); McElmoyle v. Cohen, 13 Pet. 312 (1839) (shorter). The main question presented in this case is whether this line of authority has been undermined by more recent case law concerning the constitutionality of state choice-of-law rules.[6] See Phillips Petroleum Co. v. Shutts, 472 U. S. 797 (1985); Allstate Ins. Co. v. Hague, 449 U. S. 302 (1981). I conclude that it has not.

    52

    I start, as did the Court in Wells, by emphasizing that "[t]he Full Faith and Credit Clause does not compel a state to adopt any particular set of rules of conflict of laws; it merely sets certain minimum requirements which each state must observe when asked to apply the law of a sister state." 345 U. S., at 516. The minimum requirements imposed by the Full Faith and Credit Clause[7] are that a forum State should not apply its law unless it has " `a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.' " Phillips Petroleum, supra, at 818, quoting [736] Allstate, supra, at 312-313 (plurality opinion of BRENNAN, J., joined by WHITE, MARSHALL, and BLACKMUN, JJ.). The constitutional issue in this case is somewhat more complicated than usual because the question is not the typical one of whether a State can constitutionally apply its substantive law where both it and another State have certain contacts with the litigants and the facts underlying the dispute. Rather the question here is whether a forum State can constitutionally apply its limitations period, which has mixed substantive and procedural aspects, where its contacts with the dispute stem only from its status as the forum.

    53

    Were statutes of limitations purely substantive, the issue would be an easy one, for where, as here, a forum State has no contacts with the underlying dispute, it has no substantive interests and cannot apply its own law on a purely substantive matter. Nor would the issue be difficult if statutes of limitations were purely procedural, for the contacts a State has with a dispute by virtue of being the forum always create state procedural interests that make application of the forum's law on purely procedural questions "neither arbitrary nor fundamentally unfair." Phillips Petroleum, supra, at 818. Statutes of limitations, however, defy characterization as either purely procedural or purely substantive. The statute of limitations a State enacts represents a balance between, on the one hand, its substantive interest in vindicating substantive claims and, on the other hand, a combination of its procedural interest in freeing its courts from adjudicating stale claims and its substantive interest in giving individuals repose from ancient breaches of law. A State that has enacted a particular limitations period has simply determined that after that period the interest in vindicating claims becomes outweighed by the combination of the interests in repose and avoiding stale claims. One cannot neatly categorize this complicated temporal balance as either procedural or substantive.

    54

    [737] Given the complex of interests underlying statutes of limitations, I conclude that the contact a State has with a claim simply by virtue of being the forum creates a sufficient procedural interest to make the application of its limitations period to wholly out-of-state claims consistent with the Full Faith and Credit Clause. This is clearest when the forum State's limitations period is shorter than that of the claim State. A forum State's procedural interest in avoiding the adjudication of stale claims is equally applicable to in-state and out-of-state claims. That the State out of which the claim arose may have concluded that at that shorter period its substantive interests outweigh its procedural interest in avoiding stale claims would not make any difference; it would be " `neither arbitrary nor fundamentally unfair,' " Phillips Petroleum, supra, at 818, for the forum State to conclude that its procedural interest is more weighty than that of the claim State and requires an earlier time bar, as long as the time bar applied in a nondiscriminatory manner to in-state and out-of-state claims alike.

    55

    The constitutional question is somewhat less clear where, as here, the forum State's limitations period is longer than that of the claim State. In this situation, the claim State's statute of limitations reflects its policy judgment that at the time the suit was filed the combination of the claim State's procedural interest in avoiding stale claims and its substantive interest in repose outweighs its substantive interest in vindicating the plaintiff's substantive rights. Assuming, for the moment, that each State has an equal substantive interest in the repose of defendants, then a forum State that has concluded that its procedural interest is less weighty than that of the claim State does not act unfairly or arbitrarily in applying its longer limitations period. The claim State does not, after all, have any substantive interest in not vindicating rights it has created. Nor will it do to argue that the forum State has no interest in vindicating the substantive rights of nonresidents: the forum State cannot discriminate against [738] nonresidents, and if it has concluded that the substantive rights of its citizens outweigh its procedural interests at that period then it cannot be faulted for applying that determination evenhandedly.

    56

    If the different limitations periods also reflect differing assessments of the substantive interests in the repose of defendants, however, the issue is more complicated. It is, to begin with, not entirely clear whether the interest in the repose of defendants is an interest the State has as a forum or wholly as the creator of the claim at issue. Even if one assumes the latter, determining whether application of the forum State's longer limitations period would thwart the claim State's substantive interest in repose requires a complex assessment of the relative weights of both States' procedural and substantive interests. For example, a claim State may have a substantive interest in vindicating claims that, at a particular period, outweighs its substantive interest in repose standing alone but not the combination of its interests in repose and avoiding the adjudication of stale claims. Such a State would not have its substantive interest in repose thwarted by the claim's adjudication in a State that professed no procedural interest in avoiding stale claims, even if the forum State had less substantive interest in repose than the claim State, because the forum State would be according the claim State's substantive interests all the weight the claim State gives them. Such efforts to break down and weigh the procedural and substantive components and interests served by the various States' limitations periods would, however, involve a difficult, unwieldy and somewhat artificial inquiry that itself implicates the strong procedural interest any forum State has in having administrable choice-of-law rules.

    57

    In light of the forum State's procedural interests and the inherent ambiguity of any more refined inquiry in this context, there is some force to the conclusion that the forum State's contacts give it sufficient procedural interests to make it " `neither arbitrary nor fundamentally unfair,' " Phillips Petroleum, [739] 472 U. S., at 818, for the State to have a per se rule of applying its own limitations period to out-of-state claims — particularly where, as here, the States out of which the claims arise view their statutes of limitations as procedural. See ante, at 729-730, n. 3. The issue, after all, is not whether the decision to apply forum limitations law is wise as a matter of choice-of-law doctrine but whether the decision is within the range of constitutionally permissible choices, Wells, 345 U. S., at 516, and we have already held that distinctions similar to those offered above "are too unsubstantial to form the basis for constitutional distinctions," id., at 517-518 (holding that it is constitutionally irrelevant whether the foreign limitations period is built into the statutory provision creating the out-of-state cause of action at issue). This conclusion may not be compelled, but the arguments to the contrary are at best arguable, and any merely arguable inconsistency with our current full-faith-and-credit jurisprudence surely does not merit deviating from 150 years of precedent holding that choosing the forum State's limitations period over that of the claim State is constitutionally permissible.

    58

    The Court's technique of avoiding close examination of the relevant interests by wrapping itself in the mantle of tradition is as troublesome as it is conclusory. It leads the Court to assert broadly (albeit in dicta) that States do not violate the Full Faith and Credit Clause by adjudicating out-of-state claims under the forum's own law on, inter alia, remedies, burdens of proof, and burdens of production. Ante, at 728. The constitutionality of refusing to apply the law of the claim State on such issues was not briefed or argued before this Court, and whether, as the Court asserts without support, there are insufficient reasons for "recharacterizing" these issues (at least in part) as substantive is a question that itself presents multiple issues of enormous difficulty and importance which deserve more than the offhand treatment the Court gives them.

    59

    [740] Even more troublesome is the Court's sweeping dictum that any choice-of-law practice that is "long established and still subsisting" is constitutional. Ibid. This statement on its face seems to encompass choice-of-law doctrines on purely substantive issues, and the blind reliance on tradition confuses and conflicts with the full-faith-and-credit test we articulated just three years ago in Phillips Petroleum, supra, at 818. See also Allstate, 449 U. S., at 308-309, n. 11 (plurality opinion of BRENNAN, J., joined by WHITE, MARSHALL, and BLACKMUN, JJ.) (stating that a 1934 case giving "controlling constitutional significance" to a traditional choice-of-law test "has scant relevance for today"). That certain choice-of-law practices have so far avoided constitutional scrutiny by this Court is in any event a poor reason for concluding their constitutional validity. Nor is it persuasive that the practice reflected the rule applied by States or in international law around the time of the adoption of the Constitution, see ante, at 723-726, since "[t]he very purpose of the full faith and credit clause was to alter the status of the several states as independent foreign sovereignties," Milwaukee County v. M. E. White Co., 296 U. S. 268, 276-277 (1935), not to leave matters unchanged.[8] The Court never offers a satisfactory [741] explanation as to why tradition should enable States to engage in practices that, under our current test, are "arbitrary" or "fundamentally unfair." The broad range of choice-of-law practices that may, in one jurisdiction or another, be traditional are not before this Court and have not been surveyed by it, and we can only guess what practices today's opinion [742] approves sight unseen. Nor am I much comforted by the fact that the Court opines on the constitutionality of traditional choice-of-law practices only to the extent they are "still subsisting," for few cases involve challenges to practices that no longer subsist. One wonders as well how future courts will determine which practices are traditional enough (or subsist strongly enough) to be constitutional, and about the utility of requiring courts to focus on such an uncertain and formalistic inquiry rather than on the fairness and arbitrariness of the choice-of-law rule at issue. Indeed, the disarray of the Court's test is amply demonstrated by the fact that two of the Justices necessary to form the Court leave open the issue of whether a forum State could constitutionally refuse to apply a shorter limitations period regarded as substantive by the foreign State, see post, at 743 (O'CONNOR, J., joined by REHNQUIST, C. J., concurring in part and dissenting in part), even though in many States the subsisting tradition of applying the forum's limitations period recognizes no exception for limitations periods considered substantive by the foreign State. See generally Restatement (Second) of Conflict of Laws § 143 and Reporter's Note (1971) (collecting cases).[9]

    60

    [743] In short, I fear the Court's rationale will cause considerable mischief with no corresponding benefit. This mischief is all the more unfortunate because it appears to stem from the misperception that this case cannot be resolved without conclusively labeling statutes of limitations as either "procedural" or "substantive." Having asked the wrong question (and an unanswerable one), it is no wonder the Court resorts to tradition rather than analysis to answer it. Because I believe a careful examination of the Phillips Petroleum test and the governmental interests created by the relevant contacts provides narrower and sounder grounds for affirming, I concur in the judgment.

    61
    JUSTICE O'CONNOR, with whom THE CHIEF JUSTICE joins, concurring in part and dissenting in part.
    62

    The Court properly concludes that Kansas did not violate the Full Faith and Credit Clause or the Due Process Clause when it chose to apply its own statute of limitations in this case. Different issues might have arisen if Texas, Oklahoma, or Louisiana regarded its own shorter statute of limitations as substantive. Such issues, however, are not presented in this case, and they are appropriately left unresolved. Accordingly, I join Parts I and II of the Court's opinion.

    63

    In my view, however, the Supreme Court of Kansas violated the Full Faith and Credit Clause when it concluded that the three States in question would apply the interest rates [744] set forth in the regulations of the Federal Power Commission (FPC). The Court correctly states that misconstruing those States' laws would not by itself have violated the Constitution, for the Full Faith and Credit Clause only required the Kansas court to adhere to law that was clearly established in those States and that had been brought to the Kansas court's attention. See ante, at 730-731. Under the standard the Court articulates, however, the Clause was violated. Each of the three States has a statute setting an interest rate that is different from the FPC rate, and the Supreme Court of Kansas offered no valid reason whatsoever for ignoring those statutory rates. Neither has this Court suggested a colorable argument that could support the Kansas court's decision, and its affirmance of that decision effectively converts an important constitutional guarantee into a precatory admonition.

    64

    The Kansas courts have applied equitable principles to justify their choice of the FPC interest rate in this and analogous cases. See ante, at 720-722; Phillips Petroleum Co. v. Shutts, 472 U. S. 797, 816 (1985) (Shutts III). In Shutts III, we noted that "Oklahoma would most likely apply its constitutional and statutory 6% interest rate rather than the much higher Kansas rates applied in this litigation"; that "Texas has never awarded any such interest at a rate greater than 6%, which corresponds with the Texas constitutional and statutory rate"; and that "[t]he Kansas interest rate also conflicts with the rate which is applicable in Louisiana." Id., at 817, and n. 7. We supported each of these propositions with appropriate citations to state law, but remanded the case so that the Supreme Court of Kansas could provide "a more thoroughgoing treatment" of the apparent conflicts between its law and the law of the other three States. Id., at 818. We then vacated the judgment in the present case and remanded for reconsideration in light of Shutts III. See Sun Oil Co. v. Wortman, 474 U. S. 806 (1985) (Wortman II).

    65

    On remand, the Supreme Court of Kansas considered the Shutts case first, and then applied the conclusions reached [745] there in the case before us today. See Shutts v. Phillips Petroleum Co., 240 Kan. 764, 732 P. 2d 1286 (1987) (Shutts IV); 241 Kan. 226, 229, 755 P. 2d 488, 490-491 (1987) (opinion below). When one reviews the reasoning of the Kansas court, an undertaking that the majority omits without explanation, that court's failure to give full effect — or any effect — to the laws of its sister States becomes unmistakable.

    66

    Adhering to its equitable theory of unjust enrichment, which it now claimed would be adopted by each of the States whose laws it purported to apply, the Kansas court concluded:

    67
    "Under equitable principles, the states would imply an agreement binding [the oil and gas company] to pay the funds held in suspense to the royalty owners when the FPC approved the respective rate increases sought by [the company], together with interest at the rates and in accordance with the FPC regulations found in 18 CFR § 154.102 (1986) to the time of judgment herein. These funds held by [the company] as stakeholder originated in federal law and are thoroughly permeated with interest fixed by federal law in the FPC regulations . . . ." Shutts IV, supra, at 800, 732 P. 2d, at 1313.
    68

    This conclusion was not supported with so much as a single colorable argument. The Kansas court, for example, took note of the following Texas statute:

    69
    " `When no specified rate of interest is agreed upon by the parties, interest at the rate of six percent per annum shall be allowed on all accounts and contracts ascertaining the sum payable, commencing on the thirtieth (30th) day from and after the time when the sum is due and payable.' " 240 Kan., at 777, 732 P. 2d, at 1298 (quoting Tex. Rev. Civ. Stat. Ann., Art. 5069-1.03 (Vernon 1987)) (emphasis added).
    70

    This statute was held inapplicable for the following reason. "No Texas court ever mentioned the higher rates set by federal regulations to which [the oil and gas company] had [746] agreed to comply in its corporate undertaking. This issue has not been determined by the Texas Supreme Court." 240 Kan., at 777, 732 P. 2d, at 1298 (emphasis in original; citations omitted). Thus, the only reason suggested for ignoring the contrary language of the Texas statute was that the Texas Supreme Court had not specifically rejected the Kansas equitable theory. The court cited no case in which the Kansas theory had ever been proposed to the Texas courts; no case suggesting that the Texas courts would "imply an agreement" by the parties to adopt the FPC rates in these circumstances; and no case from any jurisdiction adopting the Kansas theory under which the funds in question were "thoroughly permeated with interest fixed by federal law." In sum, the Kansas court offered not a single affirmative reason for supposing that the Texas courts would adopt the Kansas theory in the face of the contrary language of the Texas statute.

    71

    The Supreme Court of Kansas dealt with the following Oklahoma statute in an equally unsatisfactory manner.

    72
    " `The legal rate of interest shall be six percent (6%) in the absence of any contract as to the rate of interest, and by contract the parties may agree to any rate as may be authorized by law, now in effect or hereinafter enacted.' " Id., at 784, 732 P. 2d, at 1302 (quoting Okla. Stat., Tit. 15, § 266 (1981)) (emphasis added).
    73

    The Kansas court's entire discussion of this statute was as follows:

    74
    "In the above cases where interest was awarded, the applicable rate was six percent. However, in First Nat. Bank v. Cit. & So. Bank, 651 F. 2d 696 (10th Cir. 1981), applying Oklahoma law, a federal circuit court awarded interest at the rate of ten percent as provided in the promissory note and rejected the argument that interest must be limited to Oklahoma's legal rate of six percent. Therefore, in equity, the corporate undertaking entered [747] into by [the oil and gas company] and the FPC would probably be viewed by implication as contractual by the Oklahoma courts and the rates required in 18 CFR § 154.102 (1986) would be imposed, rather than the statutory six percent." 240 Kan., at 784, 732 P. 2d, at 1302.
    75

    The court did not explain why it thought that Oklahoma law could properly be inferred from a decision by a federal court. Nor did the court explain why an express agreement in a promissory note should be considered equivalent to the fictional or "implied" agreement that the court chose to find in the case before it. (In First Nat. Bank of Hominy, Okla. v. Citizens and Southern Bank of Cobb Cty., Marietta, Ga., 651 F. 2d 696 (CA10 1981), the defendant was the guarantor of the obligation evidenced by the promissory note.) Once again, the Kansas court read its theory of unjust enrichment into another State's law without a shred of affirmative support for doing so.

    76

    The applicable Louisiana statute provided that " `[a]ll debts shall bear interest at the rate of seven percent per annum from the time they become due, unless otherwise stipulated.' " 240 Kan., at 791, 732 P. 2d, at 1307 (quoting La. Civ. Code Ann., Art. 1938 (West 1977)) (emphasis added). After discussing three irrelevant federal decisions, the Kansas court concluded: "We find Louisiana would apply the FPC rates of interest under equitable principles. Whitehall Oil Co. v. Boagni, [255] La. 67." 240 Kan., at 793, 732 P. 2d, at 1308. Boagni, a 1969 decision of the Supreme Court of Louisiana, does not support the proposition for which it was cited. In that case, an oil and gas company was permitted to recover royalties from its lessors after the FPC revised downwards the gas prices to which the royalties were tied. The Louisiana court reached this conclusion by applying equitable principles "to determine conflicting claims under a contract where there is neither express law nor contractual provisions governing a determination of them." 255 La. 67, 74, 229 So. 2d 702, 704 (1969) (emphasis added). This holding does not [748] in any way support the proposition that the Louisiana courts would apply equitable principles to reach a result contrary to that dictated by the language of a Louisiana statute. Thus, the Supreme Court of Kansas again concluded that one of its sister States would decline to apply its own statute, and the Kansas court again failed to offer any colorable support for its conclusion.

    77

    At bottom, the Kansas court's insistence on its equitable theory seems based on nothing more than its conviction that it would have been "fair" for the parties to agree that the oil and gas company should pay the same interest rates for suspended royalty payments arising from approved price increases that the company would have had to pay its customers for refunds arising from disapproved price increases. That is a wholly inadequate basis for concluding that three other States would conclude that the parties did make such an agreement. Even assuming that the result imposed on the parties by the Kansas court was "fair," which is not at all obvious, neither that court nor this Court has given any reason for concluding that the parties to the case before us agreed either to adopt the FPC interest rates or to be bound by the Kansas judiciary's notions of equity.

    78

    The majority does not discuss the Kansas court's analysis of its sister States' statutes, which clearly indicate that rates of 6% or 7% were applicable. Indeed, the Court appears to think that no analysis was necessary because the Kansas court was not bound by the language of the statutes with which it was confronted. See ante, at 732, n. 4 ("Relief cannot be granted in this Court unless decisions plainly contradicting the Kansas court's interpretations were brought to the Kansas court's attention" (emphasis added; citations omitted)). This suggestion is inconsistent with the language of the Full Faith and Credit Clause and is not dictated by the holding in any of our previous cases. Nor is the Court on firmer ground when it imagines that the Kansas court merely read "standard contract law" into the statutes of its sister [749] States. Ibid. The "industry practice" of complying with FPC regulations where they are applicable hardly implies an "industry usage" or "common understanding" under which the terms of those regulations are to be applied in other situations where they are not applicable. Neither the Kansas court nor this Court has pointed to a single instance — let alone an "industry practice" — in which an oil company and its lessor agreed that the FPC interest rates would apply in circumstances like those presented here. Unless "industry usage" means "practices that the Supreme Court of Kansas thinks are fair," neither standard contract law nor standard logic will support the majority's attempted defense of the Kansas court's result.

    79

    Today's decision discards important parts of our decision in Shutts III, 472 U. S. 797 (1985), and of the Full Faith and Credit Clause. Faced with the constitutional obligation to apply the substantive law of another State, a court that does not like that law apparently need take only two steps in order to avoid applying it. First, invent a legal theory so novel or strange that the other State has never had an opportunity to reject it; then, on the basis of nothing but unsupported speculation, "predict" that the other State would adopt that theory if it had the chance. To call this giving full faith and credit to the law of another State ignores the language of the Constitution and leaves it without the capacity to fulfill its purpose. Rather than take such a step, I would remand this case to the Supreme Court of Kansas with instructions to give effect to the interest rates established by law in Texas, Oklahoma, and Louisiana. I therefore respectfully dissent.

    80

    ----------

    81

    [1] Charles Alan Wright and Brent M. Rosenthal filed a brief for Wiley Goad as amicus curiae urging affirmance.

    82

    [2] JUSTICE BRENNAN's concurrence, post, at 740, misunderstands the famous statement from Milwaukee County v. M. E. White Co., 296 U. S. 268, 276-277 (1935), that "[t]he very purpose of the full faith and credit clause was to alter the status of the several states as independent foreign sovereignties." This statement is true, as the context of the statement in Milwaukee County makes clear, not because the Clause itself radically changed the principles of conflicts law but because it made conflicts principles enforceable as a matter of constitutional command rather than leaving enforcement to the vagaries of the forum's view of comity. See Estin v. Estin, 334 U. S. 541, 546 (1948) (the Full Faith and Credit Clause "substituted a command for the earlier principles of comity and thusbasically altered the status of the States as independent sovereigns") (emphasis added).

    83

    The concurrence's assertion, post, at 740-741, n. 3, that Milwaukee County did not rely upon international conflicts law is entirely beside the point. It is not our point that the content of the Full Faith and Credit Clause is governed by international conflicts law, but only (in order to meet petitioner's contention that McElmoyle was wrong when decided) that its original content was properly derived from that source. The conflicts law embodied in the Full Faith and Credit Clause allows room for common-law development, just as did the international conflicts law that it originally embodied. But the concurrence points to no such common-law development. The rule applied in McElmoyle continues to be the rule applied by most of the States. Nor, contrary to what the concurrence says, post, at 740-741, n. 3, did Milwaukee County strike down a practice that was in accord with then-accepted conflicts principles. Although the Restatement of Conflicts of Laws § 443 (1934) had taken the position that a judgment for taxes was not enforceable in another State, our opinion noted that "[t]he precise question now presented appears to have been decided in only a single case, New York v. Coe Manufacturing Co., 112 N. J. L. 536, 172 Atl. 198 [(1934)]," which held, as did this Court, that such a judgment was enforceable. 296 U. S., at 278-279. The opinion took some pains, moreover, to distinguish the traditional conflicts rules that one State need not entertain an action for taxes based on another State's statute, id., at 274-277; see also id., at 279, and that generally one State need not enforce a judgment from another State for a penalty, see id., at 279-280. Cf. Restatement of Conflicts of Laws § 443, Comment d (1948 Supp.) (money judgments based on tax claims are enforceable "since such claims are not deemed penalties").

    84

    [3] Contrary to JUSTICE BRENNAN's concurrence, post, at 739-742, there is nothing unusual about our approach. This Court has regularly relied on traditional and subsisting practice in determining the constitutionally permissible authority of courts. See, e. g., Young v. United States ex rel. Vuitton et Fils, S. A., 481 U. S. 787, 795, and n. 7 (1987) (Article III); Tuil v. United States, 481 U. S. 412, 417-421 (1987) (Seventh Amendment); Aetna Life Ins. Co. v. Lavoie, 475 U. S. 813, 820-821 (1986) (disqualification of judges); Press-Enterprise Co. v. Superior Court of California, Riverside County, 464 U. S. 501, 505-508 (1984) (openness of jury selection process); Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U. S. 50, 57-60, and nn. 10-11, 64-76, and nn. 15, 25, 86-87, n. 39 (1982) (plurality opinion of BRENNAN, J., joined by MARSHALL, BLACKMUN, and STEVENS, JJ.) (Article III); id., at 90-91 (REHNQUIST, J., joined by O'CONNOR, J., concurring in judgment); United States v. Nixon, 418 U. S. 683, 696 (1974) ("In the constitutional sense, controversy . . . means the kind of controversy courts traditionally resolve"). The concurrence's citation, post, at 740, of the criticism by the plurality opinion in Allstate Ins. Co. v. Hague, 449 U. S. 302 (1981), of Hartford Accident & Indemnity Co. v. Delta & Pipe Land Co., 292 U. S. 143 (1934), is not to the contrary. That criticism merely rejected the view that the Constitution enshrines the rule that the law of the place of contracting governs validity of all provisions of the contract. By the time of Allstate, of course, such a rule could not have been characterized as a subsisting tradition, if it ever could have been, in light of escape devices such as the doctrine of public policy, characterization of an issue as procedural, and the rule that the law of the place of performance governs matters of performance.

    85

    [4] Although petitioner takes up this issue after discussion of the full-faith-and-credit claim, and devotes much less argument to it, we may note that, logically, the full-faith-and-credit claim is entirely dependent upon it. It cannot possibly be a violation of the Full Faith and Credit Clause for a State to decline to apply another State's law in a case where that other State itself does not consider it applicable. Although in certain circumstances standard conflicts law considers a statute of limitations to bar the right and not just the remedy, see Restatement (Second) of Conflict of Laws § 143 (1971), petitioner concedes, see Tr. of Oral Arg. 4-5, that (apart from the fact that Kansas does not so regard the out-of-state statutes of limitations at issue here) Texas, Oklahoma, and Louisiana view their own statutes as procedural for choice-of-law purposes, see, e. g., Los Angeles Airways, Inc. v. Lummis, 603 S. W. 2d 246, 248 (Tex. Civ. App. 1980), cert. denied, 455 U. S. 988 (1982); Western Natural Gas Co. v. Cities Service Gas Co., 507 P. 2d 1236, 1242 (Okla.), cert. denied, 409 U. S. 1052 (1972); Kirby Lumber Co. v. Hicks Co., 144 La. 473, 475, 80 So. 663 (1919). A full-faith-and-credit problem can therefore arise only if that disposition by those other States is invalid — that is, if they, as well as Kansas, are compelled to consider their statutes of limitations substantive. The nub of the present controversy, in other words, is the scope of constitutionally permissible legislative jurisdiction, and it matters little whether that is discussed in the context of the Full Faith and Credit Clause, as the litigants have principally done, or in the context of the Due Process Clause. Since we are largely traversing ground already covered, our discussion of the due process claim can be brief.

    86

    [5] The partial dissent's dissatisfaction with our decision to let stand Kansas' interpretation of Texas law, as well as Oklahoma and Louisiana law, see infra, at 733-734, appears to rest on two premises: (1) That respondents have some threshold burden of supporting Kansas' interpretation of what the other States' laws would likely be, post, at 743-744, 745-746, 746-747, 748, and (2) that respondents have not met that burden because Kansas' view of contract law is a manifest departure from normal and proper principles of contract law. Post,at 746, 748-749. We think neither premise is correct.

    87

    First, placing the initial burden on respondents to support the Kansas court's interpretations is flatly inconsistent with the precedent of this Court. Relief cannot be granted in this Court unless decisions plainly contradicting the Kansas court's interpretations were brought to the Kansas court's attention. See, e. g., Western Life Indemnity Co. v. Rupp, 235 U. S. 261, 275 (1914) ("If such decision existed, it was incumbent upon defendant to prove it as matter of fact"); Texas & N. O. R. Co. v. Miller, 221 U. S. 408, 416 (1911) ("There was neither allegation nor proof that the court of last resort in Louisiana had considered the question or made any ruling upon it, and so it became the duty of the Texas courts . . . to decide the question according to their independent judgment"); Louisville & Nashville R. Co. v. Melton, 218 U. S. 36, 52 (1910) ("[S]uch settled construction must be pleaded and proved").

    88

    Second, the partial dissent appears to assume that contract law requires a promisor to make a conscious assumption of an obligation in order to be bound. It is standard contract law, however, that a party may be bound by a custom or usage even though he is unaware of it, and indeed even if he positively intended the contrary. See U. C. C. §§ 1-201(3), 1-205(3), and Comment 4, 1 U. L. A. 44, 84, 85 (1976); Restatement (Second) of Contracts § 221, and Comment a (1981). The Kansas Supreme Court considered petitioner's undertaking with the FPC (as well as the reference to a similar undertaking in an indemnity agreement proposed by another oil company to its lessors) to be evidence of an industry usage (or "common understanding," U. C. C. § 1-205, Comment 4, 1 U. L. A. 86) that in a case such as the present one interest would be paid at the FPC-prescribed rates. See Shutts IV, 240 Kan., at 784, 732 P. 2d, at 1302 (describing undertaking with FPC as showing "industry practice"). Especially since the existence and scope of a particular usage is usually a question of fact, see U. C. C. § 1-205(2), 1 U. L. A. 84; Restatement (Second) of Contracts § 219, Comment a; § 222(2), it seems particularly inappropriate to suggest that the Kansas court, without having been referred to any decisions on the subject from the other States, should have known that its decision was contrary to the law of those other States.

    89

    [6] I agree with the Court's rejection of petitioner's additional argument that the constitutionality of applying the forum State's limitations period should be judged under the "outcome-determinative" test of Guaranty Trust Co. v. York, 326 U. S. 99 (1945). See ante, at 726-727.

    90

    [7] The minimum requirements imposed by the Due Process Clause are, in this context, the same as those imposed by the Full Faith and Credit Clause. See Phillips Petroleum Co. v. Shutts, 472 U. S. 797, 818-819 (1985); Allstate Ins. Co. v. Hague, 449 U. S. 302, 308, and n. 10 (1981) (plurality opinion of BRENNAN, J., joined by WHITE, MARSHALL, and BLACKMUN, JJ.); id., at 332 (Powell, J., joined by Burger, C. J., and REHNQUIST, J., dissenting).

    91

    [8] The Court miscites Milwaukee County and Estin v. Estin, 334 U. S. 541 (1948), for the proposition that the Full Faith and Credit Clause merely made traditional principles of conflicts law enforceable as a matter of constitutional command. See ante, at 723-724, n. 1. Although the Court correctly notes that Estin states that the Full Faith and Credit Clause "substituted a command for the earlier principles of comity," Estin, supra, at 546, nowhere does Estin state that the content of that substituted command is determined by reference to principles of traditional conflicts law. To the contrary, Estin never refers to traditional conflicts law but rather decides the full-faith-and-credit issue by carefully examining the interests of the various States in having their law applied. 334 U. S., at 546-549. Similarly, Milwaukee County does not rely on traditional conflicts law but on the conclusion that the interests behind the local policy were "too trivial to merit serious consideration when weighed against the policy of the constitutional provision and the interest of the [foreign] state whose judgment is challenged." Milwaukee County v. M. E. White Co., 296 U. S., at 277. Indeed, Milwaukee County expressly noted that its holding that a forum State was constitutionally obligated to enforce a foreign judgment for taxes conflicted with the traditional (and then-subsisting) conflicts of law rule that such foreign judgments were unenforceable. Id., at 279, n. 4 (citing and declining to follow § 443 of the 1934 Restatement of Conflict of Laws). See also Restatement of Conflict of Laws § 443, p. 159 (Supp. 1948) (explaining that this traditional conflicts rule had to be modified because it had been invalidated in Milwaukee County). Although Milwaukee County also stated that only a single case had decided the question whether a State's tax judgment was entitled to full faith and credit in another State, Milwaukee County, supra, at 278, the Court did not question the fact that the rule against enforcing foreign tax judgments accorded with then-accepted common-law conflicts doctrine. See also E. Scoles & P. Hay, Conflict of Laws §§ 24.19, 24.23 (1982). In fact, this traditional conflicts rule continues to subsist in the international context where the Full Faith and Credit Clause does not apply. See, e. g., Her Majesty, Queen in Right of Province of British Columbia v. Gilbertson, 597 F. 2d 1161, 1163-1166, and n. 8 (CA9 1979); Commissioner of Taxes, Federation of Rhodesia v. McFarland, [1965(1)] S. A. 470, 472 (South Africa Sup. Ct. 1964); United States v. Harden, [1963] S. C. R. 366 (Canada Sup. Ct.); Uniform Foreign Money-Judgments Recognition Act § 1(2), 13 U. L. A. 263 (1986) (excluding foreign tax judgments from the judgments enforceable under the Act) (adopted in 16 States); Foreign Judgments (Reciprocal Enforcement) Act, 1933, 23 & 24 Geo. 5, ch. 13, pt. I, § 1(2)(b) (same). That Milwaukee County did not also invalidate the traditional rules barring adjudication of a foreign tax suit or enforcement of a foreign penalty judgment, see ante, at 723-724, n. 1, is irrelevant — Milwaukee County reasoned that the constitutional validity of those conflicts rules was not presented, not that their traditional status rendered them sacrosanct. The simple fact remains that the question the Court addressed in Milwaukee County, like the question we should address in this case, was not one of conflicts law but of whether as a constitutional matter the forum State had interests justifying application of its own law. "Of that question this Court is the final arbiter," Milwaukee County, supra, at 274, not tradition or existing practice.

    92

    [9] The Court misses the point by stating that relying on tradition is not "unusual." Ante, at 728, n. 2. That we have in other contexts examined tradition to determine the constitutionally permissible authority of courts is no explanation for abandoning the "interest-contacts" test we have long applied to determine the constitutionally permissible authority of States under the Full Faith and Credit Clause. Nor does it explain why we should adopt a constitutional test that, in the context of conflicts of laws, is confused and purposeless. The Court only heaps more confusion on its "traditional and subsisting practice" test by asserting that by the time of Allstate Ins. Co. v. Hague, 449 U. S. 302 (1981), the rule that the law of the place of contracting applies "could not have been characterized as a subsisting tradition, if it ever could have been." Ante, at 728, n. 2. The doubt expressed about whether this rule was ever a subsisting tradition is remarkable given that it was once the dominant rule for determining what law applied in contract cases. See, e. g., Restatement of Conflict of Laws § 332 (1934). True, by the time of Allstate the rule no longer commanded a consensus, but the rule still "subsisted" in a majority of States. Scoles & Hay, Conflict of Laws § 18.21, at 666-667. It is difficult to see why this lack of uniformity or the existence of "escape devices" should render this traditional rule any less of a "subsisting tradition" than the rule that the limitations period of the forum governs, which does not apply in many States and which is subject to "escape devices" allowing application of the foreign limitations period when it is "built into" the statute creating the right, when it has attributes the forum State would regard as substantive, when it is considered substantive by the foreign State, and when the forum State has a borrowing statute. See generally Restatement (Second) of Conflict of Laws § 143 and Reporter's Note (1971) (collecting cases).

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