Burger King Corp. v. Rudzewicz

471 U.S. 462 (1985)

Yeazell, pp. 137-144


Facts: The defendant started a Burger King franchise.  Things went sour and Burger King sued in federal court in Florida to terminate the franchise.  Rudzewicz challenged the court’s personal jurisdiction.


Procedural Posture: The district court rejected the defendant’s jurisdiction challenge, and at trial Burger King won.  The Eleventh Circuit overturned the verdict, accepting the jurisdictional argument.  Burger King appealed to the United States Supreme Court.


Issue: Does Rudzewicz’s contract with Burger King evince substantial ties to the state of Florida?


Rule: In considering whether a contract creates a contact, there are four factors to be considered:


1.     The nature of prior negotiations between the parties

2.     The “contemplated future consequences” of entering into the contract

3.     The terms of the contract

4.     The course of dealing between the parties


Analysis: The Court argues that the four criteria it establishes to measure the connectedness of a contract with a state are met in this case:


1.     Rudzewicz chose to negotiate for a franchise with a Florida company when he could have chosen to establish a franchise of a company based in Michigan or many other states.

2.     Rudzewicz knew that he would derive many benefits by being affiliated with Burger King because of its national reach.

3.     The terms of the contract clearly indicate that Burger King conducts its operations out of Miami.

4.     Rudzewicz clearly learned from his dealings with Burger King that the decision making power lay in the Florida headquarters and not the Michigan district office.


The Court also says that the Court of Appeals erred in finding factually that Rudzewicz lacked fair notice because the District Court found that the business was basically done cleanly, and the FRCP says that you can’t set aside the findings of fact of a lower court under they’re clearly wrong.


The Court says in its dicta that its decision doesn’t mean that all defendants who are parties to contracts with big corporations can be haled to remote forums.  The Court basically says that each case must be weighed individually.  In particular, the Court says that jurisdiction can’t be based on a contract obtained through fraud or other wrongdoing.


Justices Stevens and Powell dissent, saying that the result is unfair because Rudzewicz lacked notice that he could be haled into Florida court.  They especially note the power differential between the parties and claim that Rudzewicz was “financially unprepared” to defend a suit in Florida.


I note that Asahi had not been decided at this point, so the five factors were not yet law.


Conclusion: The Court reversed the ruling of the Eleventh Circuit, and thus upheld the ruling of the trial court.


Notes and Problems



a.      Perhaps Rudzewicz could have persuaded Burger King to include language in its contract saying all disputes are to be settled in Michigan court.  This seems most unlikely due to the unequal bargaining power between the parties.

b.     I can’t see what qualifications this ruling places upon Burger King’s right to sue any franchisee in Florida.  One possible limitation would be that Burger King couldn’t sue a franchisee whose contract was fraudulent.

c.     Perhaps the best strategy would be to preemptively sue Burger King, because nearly any forum in the country would be found to have jurisdiction over the company since it does business everywhere.  If Burger King tried to move the venue, I don’t think it would succeed.  Furthermore, if Burger King counter-claimed, I think the rules would dictate that the case would stay in the court where the action started.

2.     The franchisee established minimum contacts with Florida by entering into a legitimate contract with a company there and gaining foreseeable benefits and protections under Florida law.  The car dealer did not establish minimum contacts with Oklahoma and never did any business there.

1.     Burger King comes before Asahi, and doesn’t use the World-Wide five factor test.  The Court talks about “fair play” in the more general and practical sense of “fairness”.  The majority in Asahi systematically goes through the five factors and finds that they weigh against California having jurisdiction.

2.     The Court says such questions must be decided on a case-by-case basis.  For example, if the Colorado homeowner financed a $30,000 condo, it may be less likely that New Jersey has jurisdiction than if the homeowner financed a $3,000,000 mansion.  Presumably, in the latter case the defendant’s burden would be lower in coming to New Jersey and the forum state’s interest would be greater.

[Supplement: Yeazell, FEDERAL RULES OF CIVIL PROCEDURE at 381 (2003).]  Unlike in Burger King, HMH did not purposely avail itself of the protections of
Virginia laws by choosing to have its contract governed by Ohio law.  Also, Diamond clearly would not be burdened by going to Ohio, because they have done so before.  I think the majority is right because this case is distinguishable from Burger King.

3.     Here the issue of state versus federal court is addressed.  The FRCP generally gives federal courts the same jurisdictional reach as the state where it sits.

a.      Federal courts have been given the power by Congress to serve process anywhere in the country.  Under Pennoyer, this makes sense, because the federal government exercises power within its own borders, that is, all over the country.

b.     Shoe introduced the idea of the convenience of a forum to a defendant.  If it’s inconvenient to hale an Alaskan defendant into Hawaii state court, wouldn’t it also be inconvenient to hale an Alaskan defendant into a U.S. District Court in Hawaii?  If the defendant has sufficient Shoe contacts with the given forum, then we say there’s no problem.  But what if the state court in Hawaii wouldn’t have jurisdiction over the Alaskan defendant?  Would a federal court in Hawaii have jurisdiction?  The book asks us to note the dual due process clauses in the Fifth (federal) and Fourteenth (state) Amendments.


a.      It would be very difficult to maintain that Duke has established any contacts whatsoever with the state of New York, unless it is argued that by placing something on the Internet you have established minimum contacts with New York.  If you argued that point successfully, you would also have to concede that you had established minimum contacts with every jurisdiction in the world.  I suppose the New York nightclub could argue that the website operator could have taken measures to limit access to the site to Missouri by checking IP addresses or asking viewers to enter their state of residence before seeing the infringed trademark.

b.     In this case, I think there is a good case for personal jurisdiction because Zippo.com has solicited business in Pennsylvania.

c.     I think there is a distinguishing factor between the cases, in that Zippo.com sought business worldwide, while TheGreenNote.com only sought business within the state of Missouri.

d.     The case for jurisdiction is clearly stronger with Zippo.

5.     Okay!  Pavlovich v. Superior Court


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