Brief Fact Summary. Plaintiff, a Florida corporation, and Defendants, Michigan residents, had a franchise agreement specifying that Defendants may be subject to suit in Florida. Plaintiff sued Defendants in Florida federal court based on diversity of citizenship for non-payment under the franchise agreement. Defendants moved to dismiss on the grounds that Florida did not have personal jurisdiction over Defendants.
Synopsis of Rule of Law. When the defendant has a business relationship and agreement with a corporation located in the forum state and there is a forum-selection clause in the agreement, the forum state may exercise personal jurisdiction if the long- arm statute permits. If exercising jurisdiction would cause a grave hardship to the defendant, then exercising jurisdiction would violate due process.
Facts. Rudzewicz and MacShara (Defendants), residents of Michigan, had a contract with Burger King (Plaintiff) as franchisees for 20 years. The contract said that the franchise relationship would be established in Miami (where Plaintiff’s principal offices are) and that the relationship would be governed by Florida law. Defendants fell behind in monthly payments and Plaintiff brought a diversity action in federal court in Florida. Defendants argued that the court lacked jurisdiction because Defendants were residents of Michigan and the claim did not “arise” in Florida. The Court said the claims did arise under the Florida long-arm statute and found for Plaintiff. The Court of Appeals reversed on the grounds that exercising jurisdiction would offend the “fundamental fairness of due process.” P appealed.
Issue. : May a court may exercise personal jurisdiction on a franchisee in an action for breach of contract when the franchisee voluntarily accepts long-term and exacting regulation by the franchisor’s headquarters, the franchisee had notice that he may be subject to suit in the forum state, and the franchisee would not be gravely disadvantaged by exercising jurisdiction in the forum state?