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Sun Oil Co. v. Wortman - 486 U.S. 717, 108 S. Ct. 2117 (1988)

Rule:

To constitute a violation of the full faith and credit clause, U.S. Const. art. IV, or the due process clause, U.S. Const. amend. XIV, it is not enough that a state court misconstrue the law of another state. Rather, the misconstruction must contradict law of the other state that is clearly established and that has been brought to the court's attention.

Facts:

Petitioner Sun Oil Company ("Sun"), a Delaware Corporation, extracted gas from properties leased from respondents Wortman and others (collectively, "Wortman") in Texas, Oklahoma, and Louisiana, in exchange for agreements to pay royalties. Sun's prices for interstate gas sales had to be approved by the Federal Power Commission ("FPC"), which permitted Sun to collect proposed increased prices from customers prior to FPC approval on the condition that Sun comply with regulations requiring it to refund to customers any ultimately unapproved increase plus interest at specified rates. Sun withheld royalties on the unapproved increases until it obtained FPC approval. Wortman filed a class action in a Kansas state court, seeking interest on the suspended payments for the period they were held and used by Sun. The trial court held that Sun was liable for interest at the FPC-set rates under Texas, Oklahoma, and Louisiana law, and that the application of Kansas' five-year statute of limitations rendered Wortman's claims for interest on the July 1976 payments timely. That judgment was affirmed by the state supreme court. Sun was granted a writ of certiorari. Sun contended 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 the instant case.

Issue:

(1) Was the application of the forum state's statute of limitations barred by the Constitution? (2) Did the Supreme Court of Kansas misinterpret the law of Texas, Oklahoma, and Louisiana, thereby violating the Full Faith and Credit Clause and the Due Process Clause?

Answer:

(1) No; (2) No.

Conclusion:

The Supreme Court of the United States affirmed the state supreme court's judgment. The Court held, inter alia, that: (1) the Constitution did not bar application of the forum state's statute of limitations to claims governed by the substantive law of a different state. Kansas did not violate the Full Faith and Credit Clause by applying its own statute of limitations. Statutes of limitation may be treated as procedural and therefore governed by the forum State's law for choice-of-law purposes; (2) the Supreme Court of Kansas 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 Sun did not point to decisions clearly contradicting the Court's conclusion that such an agreement was implied by Sun's undertaking with the FPC.

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