In Burger King Corp. v. Rudzewiez, Burger
King brought a diversity action in Florida district court against Michigan franchisees
Brian MacShara and John Rudzewicz (defendants). In seeking the franchise, the defendants met
with Burger King representatives at the company’s Michigan district office and corresponded
with Burger King’s office in Florida, where the company is incorporated and headquartered.
Following negotiations with the Burger King offices in Michigan and Florida, Rudzewiez
and MacShara entered into a franchise agreement. Rudzewicz purchased restaurant equipment from
the corporate office in Florida, and MacShara completed a Burger King management-training
course there. The franchise agreement required that MacShara
and Rudzewicz make structured payments to Burger King over the contract’s 20-year
term and contained a Florida choice-of-law provision. When the defendants failed to make
payment, Burger King brought a breach of contract action in Florida, asserting that the federal
court had diversity and trademark jurisdiction. The defendants disputed Burger King’s claim
that the Florida federal court had personal jurisdiction over them, maintaining that they
did not have enough minimum contacts with Florida to satisfy due process. The defendants
claimed that, because both men were Michigan residents and the events giving rise to the
claim occurred in Michigan, they could not have reasonably foreseen that they could be
sued in Florida. Thus, allowing Florida to assert personal jurisdiction would offend
traditional notions of fair play and substantial justice.
The trial court found that jurisdiction was proper under Florida’s long-arm statute
and entered judgment against the defendants, but the decision was overturned by the court
of appeals. Burger King appealed to the Supreme Court. Writing for the majority, Justice Brennan
held that the defendants had sufficient minimum contacts with Florida such that the exercise
of personal jurisdiction was reasonable. The Court looked to the purposeful actions toward
Florida and found “Rudzewicz established a substantial and continuing relationship
with Burger King’s Miami headquarters,” including: the defendants’ 20-year affiliation
with Burger King; the Florida choice-of-law provision in the franchise agreement; the
defendants’ negotiations with Burger King’s Florida headquarters; Rudzewicz’s purchase
of equipment from Burger King’s Florida office; and, the defendants’ remittance
of payments to Burger King’s Florida address. The Court found that, under the circumstances,
the defendants should reasonably have been on notice that they could be sued in Florida,
and that the exercise of jurisdiction would not offend notions of fair play and substantial
justice. Justice Stevens dissented, arguing that the
finding of personal jurisdiction was based essentially on the choice-of-law provision
in the parties’ contract, which was not enough to satisfy minimum contacts. He found
this to be fundamentally unfair, given the disparity in bargaining power between two
individual franchisees and such a large corporation. The Burger King case was an expansion of the
Court’s minimum contacts test from International Shoe and a continuation of the Court’s use
of the “fair play and substantial justice” metric to determine whether the exercise of
personal jurisdiction is reasonable. Burger King also laid the groundwork for Asahi Metal,
where the “purposeful act” requirement was a touchstone for evaluating whether the
reasonableness standard was satisfied. If you found this video helpful, you can explore
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