Burger King Corp. v. Rudzewicz

Brief Fact Summary.

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Burger King (a Florida corporation) sued Rudzewicz, a Michigan franchisee, for breach of the franchise agreement. The lawsuit was brought in federal district court in Florida (based on diversity of citizenship), with jurisdiction based on Florida’s long arm statute. The federal district upheld its jurisdiction over Rudzewicz; the Court of Appeals found that personal jurisdiction was lacking.

Synopsis of Rule of Law.

Where a defendant has established minimum contacts with a state, additional considerations (such as the burden on the defendant, for example) may serve to establish the reasonableness of jurisdiction with a lesser showing of minimum contacts than would otherwise be required; a defendant seeking to defeat jurisdiction must present a compelling case that consideration of such factors makes the exercise of a court’s jurisdiction over him unreasonable.

Facts.

Burger King (a Florida corporation) sued Rudzewicz, a Michigan franchisee, for breach of the franchise agreement. The lawsuit was brought in federal district court in Florida (based on diversity of citizenship), with jurisdiction based on Florida’s long arm statute. (For causes of action arising from a breach of contract, Florida’s long arm statute extended jurisdiction over any person who breached a contract in the state by failing to perform acts required by the contract to be performed in the state).  The federal district upheld its jurisdiction over Rudzewicz; the Court of Appeals found that personal jurisdiction was lacking.

Issue.

Did the Florida federal district court’s exercise of jurisdiction over Rudzewicz offend the traditional notions of fair play and justice embodied in the due process clause of the Fourteenth Amendment?

Held.

No. Rudzewicz established a substantial and continuing relationship with Burger King’s headquarters in Florida, received fair notice from the contract and the parties’ course of dealing that he might be subject to a lawsuit in Florida, and failed to demonstrate how defending a lawsuit brought against him in Florida was fundamentally unfair.

Dissent.

Justice Stevens

Justice Stevens’ dissent argued that there was significant unfairness in requiring the franchisee to defend the case in a forum chosen by the franchisor.

Discussion.

An individual’s contract with an out of state party does not, by itself, automatically establish minimum contacts sufficient for a jurisdictional basis; prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ course of dealing must be evaluated to determine whether sufficient contacts exist.