No. 5-99-0830 IN THE APPELLATE COURT OF ... - Appellate.net

state’s law when it is not within the “expectation of the parties” at the time they enter into
the transaction at issue. Shutts, 472 U.S. at 822.
The Supreme Court’s decision in Shutts is controlling. Shutts was a class action filed
in Kansas on behalf of residents of all 50 states against a lessee of oil and gas properties
located in 11 states. In an effort to facilitate adjudication of the case on a classwide basis,
the trial court applied Kansas law to all class members’ claims. Noting that “[t]here 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,” the Court held that the
application of Kansas law to claims that had nothing to do with Kansas was “sufficiently
arbitrary and unfair as to exceed constitutional limits.” 472 U.S. at 822. The Court
emphasized that “Kansas ‘may not abrogate the rights of parties beyond its borders having
no relation to anything done or to be done within them.’” Id. (quoting Home Ins. Co. v. Dick,
281 U.S. 397, 410 (1930)). It concluded that these “constitutional limitations . . . must be
respected even in a nationwide class action.” Id. at 823.
The circuit court’s decision to apply ICFA to the claims of millions of non-Illinois
class members directly conflicts with Shutts. Just as Kansas had no stake in the outcome of
claims centered entirely in other states, Illinois has no legitimate interest in regulating State
Farm’s specification of non-OEM parts in other states pursuant to policy language that was
reviewed and approved by insurance regulators in those states. For Illinois to apply its law
under such circumstances squarely violates the Full Faith and Credit Clause.
Furthermore, just as neither Phillips nor the non-Kansan class members could have
anticipated that Kansas law would apply to their disputes, neither State Farm nor out-of-state
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