Sun Oil Co. v. Wortman, 486 U.S. 717 (1988)

Sun Oil Co. v. Wortman

No. 87-352

Argued March 22, 1988
Decided June 15, 1988
486 U.S. 717

CERTIORARI TO THE SUPREME COURT OF KANSAS

Syllabus

In the 1960’s and 1970’s, petitioner extracted gas from properties leased from respondents in Texas, Oklahoma, and Louisiana, in exchange for agreements to pay royalties. Petitioner’s prices for interstate gas sales had to be approved by the Federal Power Commission (FPC), which permitted petitioner to collect proposed increased prices from customers prior to FPC approval on the condition that petitioner comply with regulations requiring it to refund to customers any ultimately unapproved increase plus interest at specified rates. Petitioner withheld royalties on the unapproved increases until it obtained FPC approval. Two of the respondents filed a class action in a Kansas court, seeking interest on the suspended payments for the period they were held and used by petitioner. The trial court held that petitioner was liable for interest at the FPC-set rates under Texas, Oklahoma, and Louisiana law, and that the application of Kansas’ 5-year statute of limitations rendered respondents’ claims for interest on the July, 1976, payments timely. The Kansas Supreme Court affirmed, rejecting petitioner’s contentions that (1) the Full Faith and Credit Clause of the Constitution and the Due Process Clause of the Fourteenth Amendment required the application of the statutes of limitations of the other States, under which the suit would be barred, and (2) those same constitutional provisions mandated interpretations of the other States’ substantive laws concerning interest that were different from the interpretations arrived at in this case.

Held:

1. The Constitution does not bar application of the forum State’s statute of limitations to claims governed by the substantive law of a different State. Pp. 722-730.

(a) Kansas did not violate the Full Faith and Credit Clause by applying its own statute of limitations. The holding of M’Elmoyle v. Cohen, 13 Pet. 312, that statutes of limitation may be treated as procedural, and therefore governed by the forum State’s law for choice-of-law purposes, was correct when handed down. Petitioner’s argument that this traditional view should be abandoned in favor of the modern understanding that statutes of limitations are substantive -- as exemplified by Guaranty Trust Co. v. York, 326 U.S. 99, which so held for Erie doctrine purposes -- is without merit. Guaranty Trust itself rejected the notion that there is an equivalence between what is substantive under the Erie doctrine and what is substantive for choice-of-law purposes. The adoption of petitioner’s argument under the Full Faith and Credit Clause, in the face of the traditional and still subsisting general practice to the contrary, would amount to the improper constitutionalizing of choice-of-law rules, without sufficient guiding standards. Pp. 722-729.

(b) Petitioner’s due process attack upon Kansas’ adoption of its own statute of limitations is without merit. Both the tradition in place when the constitutional provision was adopted and subsequent and subsisting general practice establish that a State has legislative jurisdiction to control the remedies available in its courts by imposing statutes of limitations in the interest of regulating the courts’ workload and determining when a claim is stale. Petitioner could not have been unfairly surprised by the application of this established rule. Pp. 729-730.

2. The Kansas Supreme Court did not violate the Full Faith and Credit Clause or the Due Process Clause in its constructions of the laws of Texas, Oklahoma, and Louisiana regarding interest, since it contradicted no law of those States that was clearly established and that had been brought to the court’s attention. The court pointed to laws of those States authorizing agreements to pay interest at higher than the specified rates, and petitioner did not point to decisions clearly contradicting the court’s conclusion that such an agreement was implied by petitioner’s undertaking with the FPC. Phillips Petroleum Co. v. Stahl Petroleum Co., 569 S.W.2d 480 (Tex.), Okla.Stat., Tit. 23, § 8 (1981), and Whitehall Gil Co. v. Boagni, 217 So.2d 707 (La.App.), distinguished. Pp. 730-734.

241 Kan. 226, 734 P.2d 1190, affirmed.

SCALIA, J., delivered the opinion of the Court, in Part I of which all participating Members joined, in Part II of which REHNQUIST, C.J., and WHITE, STEVENS, and O’CONNOR, JJ., joined, and in Part III of which BRENNAN, WHITE, MARSHALL, BLACKMUN, and STEVENS, JJ., joined. BRENNAN, J., filed an opinion concurring in part and concurring in the judgment, in which MARSHALL and BLACKMUN, JJ., joined, post, p. 734. O’CONNOR, J., filed an opinion concurring in part and dissenting in part, in which REHNQUIST, C.J., joined, post, p. 743. KENNEDY, J., took no part in the consideration or decision of the case.