Getting Beyond Kansas

Abstract

This essay, written for a symposium on the 25th anniversary of Philips Petroleum v. Shutts, critically examines the legacy of Shutts. The first part argues that Shutts solved the immediate problem of allowing a centralized forum to adjudicate common claims of market-based harms, despite the multistate citizenship of the affected individuals. Shutts handled this by applying a due process balancing approach to the question of personal jurisdiction and, in turn, allowing notice and the ability to opt out to suffice to establish binding personal jurisdiction over class actions. Shutts could not, however, provide a mechanism to ensure that the forum in which the case was consolidated was the most appropriate place to litigate the matter, as opposed to simply being an appropriate forum. The result was widespread forum-shopping in class actions. That problem has been addressed, to some extent, by the newly enacted Class Action Fairness Act.

The second part of this essay addresses the problem of choice of law once a case is consolidated in a single proceeding. Shutts struck down the application of forum law to transactions that were unrelated to the Kansas site of the litigation. But Shutts left open the question of what the permissible parameters of choice of law should be. This essay concludes with an argument for why the use of a standardized body of law, such as that from the home state of the defendant, is the necessary next step for the efficient adjudication of common market-based claims.

Keywords: class actions, Shutts, choice of law

JEL Classification: K10, K40, K41