## Facts

- Sun Oil Company produced natural gas from leased properties in Texas, Oklahoma, and Louisiana and owed royalties to the lessors.
- Federal regulators allowed Sun to collect proposed interstate gas price increases before final approval if Sun later refunded any disallowed amounts “plus interest” at specified rates.
- Sun withheld the royalty portions attributable to the unapproved price increases until final approval, effectively retaining and using the funds during the interim.
- Royalty owners filed a Kansas state-court class action seeking interest on the delayed royalty payments, asserting entitlement to interest at the regulator-specified rates under the producing states’ laws.
- Kansas courts applied Kansas’s five-year statute of limitations, which made the claims timely, and awarded interest based on their reading of Texas, Oklahoma, and Louisiana law.

## Issues

1. Whether the Full Faith and Credit Clause or the Fourteenth Amendment Due Process Clause bars a forum state from applying its own statute of limitations to claims governed by another state’s substantive law.
2. Whether Kansas violated Full Faith and Credit or Due Process by construing Texas, Oklahoma, and Louisiana law to permit recovery of interest at the federal regulator-specified rates on the suspended royalties.

## Decision

- The U.S. Supreme Court affirmed the Kansas Supreme Court.
- Kansas did not violate Full Faith and Credit or Due Process by applying its own statute of limitations rather than shorter limitation periods of Texas, Oklahoma, or Louisiana.
- Kansas did not violate Full Faith and Credit or Due Process by its construction of the producing states’ interest law on the record presented.
- Justice Scalia wrote the Court’s opinion; Justice Brennan (joined by Justices Marshall and Blackmun) concurred; Justice O’Connor (joined by Chief Justice Rehnquist) concurred in part and dissented in part; Justice Kennedy did not participate.

## Legal Principles

- A forum state may, consistent with Full Faith and Credit and Due Process, treat statutes of limitations as procedural for choice-of-law purposes and apply its own limitations period even when another state’s substantive law governs the claim.
- Erie “substance/procedure” concepts do not control constitutional limits on state choice-of-law decisions; a limitations rule may be “substantive” for Erie purposes without being constitutionally required to be treated as substantive in conflicts analysis.
- Due Process is not violated where a defendant lacks a legitimate expectation that a forum will apply another state’s limitations period, given the long-standing practice that the forum controls limitations as a matter of procedure.
- A forum state’s interpretation of another state’s substantive law does not become a Full Faith and Credit or Due Process violation merely because it is disputed; the challenger must show the forum contradicted clearly established law of the other state.
- Concurring view: even if many states historically label a matter “procedural,” constitutional analysis may still require attention to whether the rule functions substantively in the specific context.
- Partial dissenting view: a forum may be constitutionally required to respect other states’ substantive interest-rate policies rather than effectively displacing them through an implied-agreement theory.

## Conclusion

The Court held that Kansas could apply its own statute of limitations to claims arising under other states’ substantive law and that Kansas’s contested construction of the producing states’ interest law did not violate Full Faith and Credit or Due Process absent a showing that it conflicted with clearly established foreign law.


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