Does the application of Minnesota law to determine the effect of an insurance policy provision violate constitutional protections under the Due Process Clause or Full Faith and Credit Clause?

Ralph Hague, a Wisconsin resident, died in a motorcycle accident in Wisconsin. He held an insurance policy with Allstate Insurance Co. covering three automobiles, each with $15,000 in uninsured motorist coverage. The motorcycle operator and automobile driver involved in the accident lacked valid insurance. Hague had been employed in Minnesota for 15 years, commuting daily from Wisconsin.

Following the accident, Hague's widow relocated to Minnesota, remarried a Minnesota resident, and was appointed personal representative of Hague's estate. She initiated legal action in Minnesota, seeking to 'stack' the uninsured motorist coverages to obtain total coverage of $45,000. Allstate contended that Wisconsin law, which prohibited stacking, should apply to the case.

Allstate Insurance Company (defendant) challenged the application of Minnesota's insurance stacking law in a case initially heard in Minnesota District Court. The district court applied Minnesota law allowing stacking. Allstate appealed this decision to the Minnesota Supreme Court, which affirmed the lower court's ruling. Dissatisfied with the outcome, Allstate then appealed to the U.S. Supreme Court. The Supreme Court granted certiorari to review the constitutionality of Minnesota's choice of law in this matter.

(Brennan, J.)

No. The application of Minnesota law to determine the effect of an insurance policy provision does not violate constitutional protections under the Due Process Clause or Full Faith and Credit Clause. Sufficient contacts existed between Minnesota and the parties and occurrence to create state interests that justified the application of its law. These contacts included the decedent's employment in Minnesota, Allstate's presence and conduct of business in the state, and the widow's post-accident relocation to Minnesota. For a state's substantive law to be constitutionally applied, the state must have significant contacts creating state interests, such that the choice of law is neither arbitrary nor fundamentally unfair. This principle ensures that the application of a state's law is consistent with the basic requirements of due process and does not infringe upon the sovereignty of other states. The aggregation of contacts in this case, while individually perhaps insufficient, collectively established a significant connection between the forum state and the dispute. This connection was substantial enough to make the application of Minnesota law foreseeable and not unfair to the defendant. The fact that Allstate was doing business in Minnesota meant it could reasonably anticipate being subject to Minnesota law in certain circumstances. Furthermore, Minnesota had a legitimate interest in regulating insurance relationships that affected its residents and in providing full compensation to accident victims. The post-occurrence change of residence, while not dispositive on its own, added to the web of contacts justifying the application of Minnesota law. This decision reaffirms the flexibility of choice-of-law analysis in the modern era, recognizing that in an interconnected society, rigid territorial rules may not always serve the interests of justice or reflect the realities of interstate activity.

Concurrence (Stevens, J.) The Full Faith and Credit Clause should only invalidate a state's choice of law if it unjustifiably infringes on another state's sovereignty, which is not the case here. There is no due process violation as the application of Minnesota law is not fundamentally unfair to the litigants. This approach provides a more nuanced framework for evaluating choice of law issues in future cases, balancing state sovereignty concerns with fairness to parties involved.

Dissent (Powell, J.) The contacts between Minnesota and the litigation are insufficient to justify the application of Minnesota law. The post-accident change of residence is constitutionally irrelevant. The majority's interpretation of other contacts as justifying Minnesota's jurisdiction is flawed, as these contacts are trivial or irrelevant to furthering Minnesota's legitimate interests. This overly broad interpretation of state jurisdiction could lead to forum shopping and unpredictable application of state laws in future cases.