Burger King v. Rudzewicz
471 U.S. 462, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985)

  • Florida has a long-arm statute that extends jurisdiction to any person, regardless of location or citizenship, who breaches a contract that involves acts to be performed in Florida.
  • Rudzewicz, a Michigan resident, breached a franchise agreement with Burger King (a Florida corporation), by failing to make payments in Florida.
    • Rudzewicz and a partner (MacShara) bought a Burger King franchise in Detroit.  Business declined and the partners were unable to pay their royalty fees to Burger King.  Burger King terminated the franchise and ordered the partners to vacate the restaurant.  They refused, and continued to operate under the Burger King name.
    • Burger King sued for breach of contract (under 28 USC § 1332(a) for diversity jurisdiction) as well for trademark infringement (under § 1338(a), which gives Federal jurisdiction to trademark disputes).
      • The contract had a clause stating that all disputes would be governed by Florida law.
        • This is called a choice-of-law provision.
    • Rudzewicz argued that since he was a Michigan resident, and because the claims did not arise within the Southern District of Florida, the District Court lacked personal jurisdiction over them.
  • The Trial Court found that Florida had personal (in personam) jurisdiction under Florida’s long-arm statute.  They also found for Burger King and ordered Rudzewicz to close the restaurant.  Rudzewicz appealed.
  • The Federal Appellate Court reversed the judgment.  Buger King appealed.
    • Rudzewicz claimed that he was not financially prepared for the prospect of franchise litigation in Florida, and could not get a fair trial there.
    • Rudzewicz also claimed that since he did business mostly with the regional office, he had no reason to anticipate a suit outside of Michigan.
    • The Appellate Court found that choice-of-law provisions do not automatically give Florida the right to extend jurisdiction outside their legal limits.
  • The US Supreme Court overturned the Appellate Court and found that Florida does have jurisdiction.
    • The US Supreme Court found that Florida’s long-arm statute violated the 14th Amendment.
    • In Shafer v. Heitner (433 U.S. 18 (1977)) the Court required that individuals have “fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign.”  This requirement can be satisfied if the individual has purposefully directed his activities at residents of the forum.
    • States have a manifest interest in providing its residents a convenient forum for redressing injuries inflicted by out-of-state actors.
    • The Court found that Rudzewicz chose not to open a local independent restaurant and instead deliberately reached out beyond Michigan and negotiated with a Florida corporation and formed a 20-year relationship.  Based on these facts, it appears that Rudzewicz purposefully directed his activities to Florida.
    • Just because Michigan has an interest in this contract, that in no way makes it unconstitutional for Florida to render jurisdiction.
  • Notice that this case is a reversal of World-Wide Volkswagen v. Woodson (444 U.S. 286 (1980)).  The justice that gave the majority opinion here (Brennan) is the one that gave the dissent in World-Wide.  And White, who gave the dissent here is the one that gave the majority opinion in World-Wide.