Phillips Petroleum Co. v. Shutts , 105 S. Ct. 2965 ( 1985 )

Justice Rehnquist

delivered the opinion of the Court.

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.

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 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).

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.

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.

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 Ander-sons 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.

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 Ander-sons, 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.

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 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.

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 CPR §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.

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 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.

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.

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.

H-I

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 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.

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).

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).

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 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.

Respondents may be correct that petitioner does not possess standing's 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.

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.

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 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).

II

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.

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, 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.

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.)

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. 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.

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.

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.¹ 311 U. S., at 41.

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.

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).

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 example, the defendant sought to avoid class certification by alleging that the absent plaintiffs would not be adequately represented and were not amenable to jurisdiction. See Phillips Petroleum v. Duckworth, No. 82-54608 (Kan., June 28, 1982).

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).

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 counterclaims or cross-claims, or liability for fees or costs.² 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.

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 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.

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.

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,³ it must provide minimal 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.

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.

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 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.⁴ 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.”

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 score's of state statutes and of the class-action provision of the Federal Rules of Civil Procedure,⁵ and for the reasons stated we do not think that the Constitution requires the State to sacrifice the obvious advantages in judicial efficiency resulting from the “opt out” approach for the protection of the rara avis portrayed by petitioner.

We therefore hold that the protection afforded the plaintiff class members by the Kansas statute satisfies the Due Process Clause. The interests 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.

HH HH 1 — 1

The Kansas courts applied Kansas contract and Kansas equity law to every claim in this case, notwithstanding that 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.⁶ Petitioner protested that the Kansas 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 Kansás law, and set the interest rates under Kansas equity principles.

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.

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 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).

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.

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.⁷ 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 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.

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.

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.

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 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.

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.

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.

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 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.

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.

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:

“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.

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.

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 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.⁸

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.

Here the Supreme Court of Kansas took the view that in a nationwide class action where procedural due process guarantees 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.

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.

It is so ordered.

Justice Powell took no part in the decision of this case.

1 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.

2 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.

3 Our holding today is limited to those class actions which seek to bind known plaintiffs concerning claims wholly or predominately 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.

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

“[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).

5 The following statutes or procedural rules permit “opt out” notice in some types of class actions:

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(e)(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(l)(b)(ii); Pa. Rule Civ. Proc. 1711(a); Tenn. Rule Civ. Proc. 23.03(2)(a); Vt. Rule Civ. Proc. 23(e)(2)(A); Wash. Ct. Rule 23(C)(2)(f); Wyo. Rule Civ. Proc. 23(c)(2)(A).

6 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.

7 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).

8 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.