Does the Due Process Clause of the Fourteenth Amendment or the Full Faith and Credit Clause of Article IV bar a state court from applying its own substantive law to determine whether uninsured motorist coverages may be stacked, where the forum state has contacts with the parties and the occurrence consisting of the decedent's employment there, the insurer's business presence there, and the plaintiff's post-accident residence there?

Ralph Hague, a Wisconsin resident, died of injuries suffered when a motorcycle on which he was a passenger was struck from behind by an automobile in Pierce County, Wisconsin, just across the border from Red Wing, Minnesota. Both vehicle operators were Wisconsin residents and neither carried valid insurance. Hague had been employed in Red Wing for 15 years and commuted daily from his home in Hager City, Wisconsin. He held an Allstate Insurance Co. policy covering three automobiles, with uninsured motorist coverage of $15,000 per automobile, for which he paid a separate premium on each. After the accident but before this suit, his widow moved to Red Wing, then married a Minnesota resident and settled in Savage, Minnesota, at about the time suit began. A Minnesota probate registrar appointed her personal representative of her husband's estate. She sued in Minnesota for a declaration that the three coverages could be stacked for $45,000 in total coverage. Allstate argued that Wisconsin law, which disallowed stacking, governed because the policy was delivered in Wisconsin, the accident occurred there, and all those involved were Wisconsin residents at the time. Allstate was authorized to do business in Minnesota.

Respondent filed suit in Minnesota District Court seeking a declaration under Minnesota law that the uninsured motorist coverages could be stacked. The District Court interpreted Wisconsin law to disallow stacking, concluded that Minnesota's choice-of-law rules required application of Minnesota law, refused to apply Wisconsin law as inimical to Minnesota public policy, and granted summary judgment for respondent. The Minnesota Supreme Court, sitting en banc, affirmed, applying Minnesota law after analyzing the contacts and interests under Professor Leflar's choice-influencing considerations. After rehearing en banc, that court buttressed its opinion and held that applying Minnesota law was not so arbitrary and unreasonable as to violate due process. The United States Supreme Court granted certiorari to decide whether the Due Process or Full Faith and Credit Clause barred the choice of Minnesota law.

(Brennan, J., plurality opinion)

No. Four Justices (Brennan, White, Marshall, and Blackmun) announced the judgment in a plurality opinion; Justice Stevens concurred only in the judgment on separate grounds, and Justice Stewart took no part. The judgment affirming the Minnesota Supreme Court was announced by the plurality, and Justice Stevens reached the same result on separate reasoning.

The plurality framed the Court's role narrowly: the Court does not decide whether the Minnesota court's choice-of-law methodology is preferable, but only whether its choice of its own substantive law exceeded federal constitutional limits. A given set of facts may justify applying the law of more than one jurisdiction. Under both the Due Process Clause and the Full Faith and Credit Clause, the question is whether the state whose law was applied has a significant contact or significant aggregation of contacts, creating state interests, with the parties and the occurrence or transaction, so that the choice is neither arbitrary nor fundamentally unfair. Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U.S. 532 (1935).

Home Ins. Co. v. Dick, 281 U.S. 397 (1930), and John Hancock Mutual Life Ins. Co. v. Yates, 299 U.S. 178 (1936), invalidated forum law resting on a single insignificant contact (nominal residence in Dick, a post-occurrence move in Yates). Alaska Packers, Cardillo v. Liberty Mutual Ins. Co., 330 U.S. 469 (1947), and Clay v. Sun Insurance Office, Ltd., 377 U.S. 179 (1964), sustained forum law based on adequate contacts.

The plurality found three Minnesota contacts that, in the aggregate, sufficed. First, Hague had worked in Red Wing for 15 years and commuted daily across the state line, giving Minnesota an interest in the safety and well-being of its work force and in compensation for the death of a Minnesota employee, even though the accident occurred in Wisconsin. Second, Allstate did business in Minnesota, so it could not claim unfair surprise that Minnesota courts would apply Minnesota law. Third, respondent became a bona fide Minnesota resident before suit, with no suggestion of forum shopping, and was appointed personal representative there, giving Minnesota an interest in her full recovery. The plurality expressed no view on whether the first two contacts alone would suffice.

Justice Stevens concurred in the judgment on a different view: the Full Faith and Credit Clause is not violated unless forum law unjustifiably infringes another state's sovereignty, and due process is not violated unless forum law is arbitrary or fundamentally unfair, in particular by frustrating the parties' reasonable expectations. Wisconsin's sovereignty was not threatened, and stacking was the majority rule and consistent with the separate premiums paid.

Affirmed.

Concurring in the judgment (Stevens, J.) The Full Faith and Credit Clause and the Due Process Clause protect different interests and must be analyzed separately. The Full Faith and Credit Clause protects the sovereignty of other states and bars forum law only where its application threatens national unity by unjustifiably infringing another state's legitimate interests; Wisconsin's sovereignty is not threatened by applying Minnesota law to a question of contract interpretation. Due process forbids forum law that is arbitrary or fundamentally unfair, chiefly where it frustrates the litigants' reasonable expectations. A forum's application of its own law is presumptively valid given its interest in efficient judicial administration. Stacking was the majority rule, and the policy provided nationwide coverage, so Allstate could have anticipated the law of other states, and no unfair surprise resulted. The plurality's reliance on the post-accident move and Hague's Minnesota employment is misplaced, because those facts do not bear on the parties' expectations at contracting. The Minnesota decision was unsound as a matter of conflicts law, but it violates no constitutional provision, and the Court does not impose a federal choice-of-law rule.

Dissent (Powell, J., joined by Burger, C.J., and Rehnquist, J.) A forum's choice of its own law is valid only if the contacts protect the litigants from unfair surprise and reasonably further a legitimate forum policy. No expectations were frustrated, but Minnesota had no legitimate policy interest served by applying its stacking rule. Post-accident residence is constitutionally irrelevant under Yates and Dick and would invite forum shopping. The plurality answers that her move was bona fide and not motivated by litigation. Allstate does business in all 50 states, and a state has no interest in regulating conduct unrelated to persons, property, or contracts within it. Hague's employment and commute do not relate to the question of stacking coverage, and trebling benefits for a nonresident employee's estate furthers no employment or police-power policy of Minnesota. The plurality counts physical contacts without asking whether they link the litigation to a state policy.