Civil Procedure Class Notes 9/15/03


We were in Burger King, the last of the specific jurisdiction cases.


Why does Yeazell save this case for last?  The case sort of “blends” minimum contacts with fair play analysis, even though the court itself says that these are two separate tests.


The question: should Florida have personal jurisdiction over the non-resident defendants?


Minimum contacts as a threshold


We’re two years before Asahi, which reasserts this threshold test.  However, the Court also says if there’s lots of fair play, the minimum contacts required might be less.


How could we argue that there are no contacts in this case?  What do we know about Rudzewicz?  He never went to Florida at all.  His Burger King franchise is in Michigan.  His fries aren’t making it to Florida.  He isn’t putting products into the stream of commerce in Florida.  He’s not licensed to do business in Florida.  He doesn’t pay any taxes in Florida.  His principle contacts were in Michigan.


So you can make a good argument for no contacts.


Why would there be contacts?  Rudzewicz and his partner signed a 20-year franchise agreement with Burger King.  Does the time period of the contract matter?  Yes.  It’s not an isolated, one-time transaction.  There shall be repeated contacts over a 20-year period.  It’s foreseeable that conflicts may arise between the parties and that a lawsuit may be brought in Florida.  What else creates contacts between the franchisees and Burger King?  Rudzewicz’s partner actually did go down to Burger King U. in Florida.  He didn’t do that as an individual, but in his capacity as a partner in the franchise.  The partners also bought equipment from Burger King in Florida.


What else?  World-Wide talked about “networks” of businesses where there is a free flow of information, products, and services.  Does this franchise model work the same way?  A franchise works more independently from its franchisor than a Volkswagen dealer with respect to the manufacturer and distributor.


The contract itself says that it will be construed in accordance with the laws of the state of Florida.  What about purposeful availment?


There are other things besides personal jurisdiction that courts decide before a trial, or in other words, before judging the case on its merits.  The court looks at choice of law and venue in addition to jurisdiction.  Usually, none of these is much of a challenge, but there will, of course, be some hard cases.


In a dispute, you can mutually choose what laws will govern the dispute, as long as there is some connection between the laws chosen and the parties.


There may also be a forum selection clause in a contract, where the parties agree ahead of time where suit will be brought in case there are any disputes.


It turns out in Michigan forum selection clauses are illegal.


So, were there minimum contacts?  They had a long contract with Burger King.  They negotiated with Burger King in Florida.  They knew decision making power was vested in the headquarters in Florida.  There are many facts that can support each side, so how do we decide such a case?  Stream of commerce is not going to help in this type of case.


How do we distinguish Burger King from the other cases we’ve looked at lately?  It is the fact that getting sued in Florida was, arguably, quite foreseeable.


There’s one thing we know for sure from this case:


Simply making a contract with an out-of-state defendant is not enough to create sufficient contacts.


Why does the Supreme Court find that there is no jurisdiction over Seaway in World-Wide, and yet there is jurisdiction over Rudzewicz in Burger King?  How do we distinguish?  Unlike Seaway, which has absolutely no contact with Oklahoma, Rudzewicz does some stuff in Florida: the negotiations, the contract, buying the equipment and having his partner travel there.  Is there a difference between the two defendants?  In general, courts are more willing to hale corporations into foreign courts, and less willing to hale individuals.


The Court describes Rudzewicz as a sophisticated businessman, though this level of sophistication is unimportant.  The important thing is that he didn’t negotiate the contract with Burger King himself, but rather he had legal counsel who negotiated his contract for him.


Stevens says that Burger King could be settled merely on fairness grounds (he says it’s unfair) and that it’s unnecessary to do the minimum contacts test.


What should Mr. Rudzewicz have done?  He should have sued Burger King in Michigan.  How come?  Well, there would have been no problem getting personal jurisdiction over Burger King in Michigan.  This is part of your job as an attorney.  You have to try to win the “race to the courthouse”.  If you sue Burger King in Michigan, you’re making a strategic tradeoff because you’re reducing the possibility of settling the case out of court.


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