Burger
King Corp. v. Rudzewicz
471
Yeazell,
pp. 137-144
Facts: The defendant started a
Burger King franchise. Things went sour
and Burger King sued in federal court in
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
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
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
4. Rudzewicz
clearly learned from his dealings with Burger King that the decision making
power lay in the
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
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
1.
a. Perhaps
Rudzewicz could have persuaded Burger King to include language in its contract
saying all disputes are to be settled in
b. I can’t see
what qualifications this ruling places upon Burger King’s right to sue any
franchisee in
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
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
2. The Court says
such questions must be decided on a case-by-case basis. For example, if the
[Supplement: Yeazell, FEDERAL RULES OF CIVIL PROCEDURE at 381 (2003).] Unlike in Burger King, HMH did not
purposely avail itself of the protections of
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.
4.
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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