Burger King Corp. v. Rudzewicz

471 U.S. 462 (1985)

Facts:

  • Defendant, a Michigan resident, and his partner entered into a franchise contract with plaintiff, a Florida corp.
  • Burger King has 10 district offices that report to its headquarters in Miami. The governing contracts provide that the franchise relationship is established in Miami and governed by FL law.
  • From the beginning of their business relationship in 1979, after realizing the district offices had little power, defendants dealt directly with the Miami headquarters to negotiate and gain concessions.
  • In late 1979 patronage at defendant’s restaurant began to decline and defendant fell behind on payments, and defendant dealt with both the district and Miami offices.
  • BK ultimately decided to terminate the franchise and ordered defendant to vacate premises.
  • Defendant refused and continued to operate the restaurant as a BK. 

Procedural History:

  • Plaintiff commences litigation in FL district court (federal) alleging breach of contract and copyright infringement in 1981, seeking damages, injunctive relief, and costs. Plaintiff is seeking to force defendant to close the restaurant.
  • District court ruled that they did have jurisdiction
  • After a 3-day bench trial, the court ruled in favor of plaintiffs and awarded damages.
  • Defendant appeals to the 11th Circuit, which holds that the FL district court did not have jurisdiction

Reversed and remanded

Contentions of parties:

Defendants: FL cannot exercise personal jurisdiction because defendant is a Michigan resident and the claim did not arise within FL.

Issue:

Whether the exercise of the Florida long arm statute went against the principles of minimum contacts and fair play embodied in the Due Process Clause.

Whether a FL court can exercise personal jurisdiction over a foreign defendant.

Holding:

The exercise of the Florida long arm statute did not go against the principles of minimum contacts and fair play embodied in the Due Process Clause because plaintiff directed his actions toward FL and jurisdiction over him would not be unfair.

Rule:

A court can exercise personal jurisdiction over a foreign defendant if:

  1. The defendant established minimum contacts with the state of FL and purposefully availed him/herself of the rights and protections of FL law, therefore reasonably foreseeing being hailed into court in FL.
  2. Jurisdiction over the defendant is fair and reasonable. Factors:
    1. Defendant’s burden
    2. State interest
    3. Plaintiff’s interest
    4. Interstate judicial interests.
    5. Shared state interest.

Reasoning:

*Besides the RULE above, other factors came into play:

  1. Foreseeability: Even though not a factor on its own, it should not be seen as the foreseeability of injury occurring in another state, but reasonably anticipating being hailed into court.
  2. Physically entering the state: In modern business, mainly conducted at long distances, physical presence is irrelevant if the actor’s efforts are “purposefully directed” toward the State.

* A court can exercise personal jurisdiction over a foreign defendant if:

  1. The defendant established minimum contacts with the state of FL and purposefully availed him/herself of the rights and protections of FL law.

Even though the 11th Circuit Court concluded that the Michigan office was believed by the defendant to be the embodiment of BK and he had no reason to anticipate a suit in FL, the SC disagrees.

  1. The dispute grew out of a contract with substantial connections to FL
  2. Defendant deliberately negotiated with a FL corporation and knew they were primarily based there
  3. Defendant, by dealing directly with them in rent negotiations, knew that authority was in Miami
  4. Franchise contract provided that it was governed by FL law, and by signing it, he “purposefully availed” himself of the benefits and rules of FL law.
  5. Defendant agreed to binding arbitration in FL
  1. Jurisdiction over the defendant is fair and reasonable. Factors:
    1. Defendant’s burden

Even though it can be burdensome, this is not the case because he can get a change of venue

    1. State interest
      Defendant has not proved that FL has no interest and that Michigan does
    2. Plaintiff’s interest

The district court ruled that there was copyright infringement and the ruling was uncontested by defendant

    1. Interstate judicial interests.

Even though Michigan has interests, it does not make FL’s interests unconstitutional

Court’s Order:

Reversed and remanded

Dissent:

STEVENS and WHITE:

* The judgment is unfair and superficial because defendant did no business (as a restaurant) in FL.

New Information, questions, etc:

New test:

  1. Minimum Contacts: Purposeful availment that allows foreseeability
  2. Reasonableness test