Burger King v. Rudzewicz
Encyclopedia
Burger King v. Rudzewicz, 471 U.S. 462 (1985), is a notable case in United States
civil procedure
that came before the Supreme Court of the United States
addressing personal jurisdiction.
of Michigan
and was the senior partner in a Detroit accounting firm. He was approached by Brian MacShara, the son of a business
acquaintance, who suggested that they open a Burger King
franchise together. The parties eventually reached an agreement whereby Rudzewicz provided the necessary capital and MacShara assumed the responsibility of managing the restaurant
. The partners agreed to share profits
equally.
Rudzewicz and MacShara applied jointly to Burger King's district office in Birmingham, Michigan
in the fall of 1978. The application was forwarded to Burger King's office in Miami, Florida
and the parties reached a preliminary agreement in February, 1979. MacShara attended the prescribed management
courses at Burger King University in Miami in order to learn to operate a Burger King franchise. The partners purchased $165,000 in restaurant equipment from Davmor Industries, a Burger King corporate division located in Miami.
Under the franchise agreement, Rudzewicz and MacShara were to remit their franchise fees and royalties
to Burger King's Florida
headquarters. Due to an economic downturn
, the defendants were unable to make their monthly payments to Burger King, prompting the Florida-based corporation to file a lawsuit in Florida for breach of contract
and infringement of Burger King's trademarks and service marks through the defendants' unauthorized operation as a Burger King restaurant after the defendants received notice to vacate the premises.
for the Southern District of Florida in May 1981. Burger King also invoked the Court's original jurisdiction
over disputes arising under federal trademark law pursuant to 28 U.S.C. § 1338(a). The District Court held that Florida had jurisdiction because of a statute that allowed the state to extend jurisdiction to anyone breaching a contract within the state. The United States Court of Appeals for the Eleventh Circuit
reversed the lower court's decision, finding that even though the defendants had minimum contacts
with Florida, to exercise jurisdiction over the defendants would be fundamentally unfair and thus violate the due process clause of the Fourteenth Amendment
. Burger King then appealed to the Supreme Court.
argued that Rudzewicz had never been to Florida and had no business established in Florida. Rudzewicz could not have anticipated being summoned into court in Florida, and it violates the due process clause to require a small businessman in Michigan to have to make an appearance in a court in Florida to present his defense.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
civil procedure
Civil procedure
Civil procedure is the body of law that sets out the rules and standards that courts follow when adjudicating civil lawsuits...
that came before the Supreme Court of the United States
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
addressing personal jurisdiction.
Facts
John Rudzewicz was a citizen and resident of the stateU.S. state
A U.S. state is any one of the 50 federated states of the United States of America that share sovereignty with the federal government. Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. Four states use the official title of...
of Michigan
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
and was the senior partner in a Detroit accounting firm. He was approached by Brian MacShara, the son of a business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
acquaintance, who suggested that they open a Burger King
Burger King
Burger King, often abbreviated as BK, is a global chain of hamburger fast food restaurants headquartered in unincorporated Miami-Dade County, Florida, United States. The company began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain...
franchise together. The parties eventually reached an agreement whereby Rudzewicz provided the necessary capital and MacShara assumed the responsibility of managing the restaurant
Restaurant
A restaurant is an establishment which prepares and serves food and drink to customers in return for money. Meals are generally served and eaten on premises, but many restaurants also offer take-out and food delivery services...
. The partners agreed to share profits
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
equally.
Rudzewicz and MacShara applied jointly to Burger King's district office in Birmingham, Michigan
Birmingham, Michigan
Birmingham is a city in Oakland County of the U.S. state of Michigan and an affluent suburb of Detroit. As of the 2010 census, the population was 20,103...
in the fall of 1978. The application was forwarded to Burger King's office in Miami, Florida
Miami, Florida
Miami is a city located on the Atlantic coast in southeastern Florida and the county seat of Miami-Dade County, the most populous county in Florida and the eighth-most populous county in the United States with a population of 2,500,625...
and the parties reached a preliminary agreement in February, 1979. MacShara attended the prescribed management
Management
Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...
courses at Burger King University in Miami in order to learn to operate a Burger King franchise. The partners purchased $165,000 in restaurant equipment from Davmor Industries, a Burger King corporate division located in Miami.
Under the franchise agreement, Rudzewicz and MacShara were to remit their franchise fees and royalties
Royalties
Royalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...
to Burger King's Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
headquarters. Due to an economic downturn
Early 1980s recession
The early 1980s recession describes the severe global economic recession affecting much of the developed world in the late 1970s and early 1980s. The United States and Japan exited recession relatively early, but high unemployment would continue to affect other OECD nations through at least 1985...
, the defendants were unable to make their monthly payments to Burger King, prompting the Florida-based corporation to file a lawsuit in Florida for breach of contract
Breach of contract
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....
and infringement of Burger King's trademarks and service marks through the defendants' unauthorized operation as a Burger King restaurant after the defendants received notice to vacate the premises.
Procedure
Burger King brought a diversity action pursuant to 28 U.S.C. § 1332(a) against the defendants in the United States District CourtUnited States district court
The United States district courts are the general trial courts of the United States federal court system. Both civil and criminal cases are filed in the district court, which is a court of law, equity, and admiralty. There is a United States bankruptcy court associated with each United States...
for the Southern District of Florida in May 1981. Burger King also invoked the Court's original jurisdiction
Original jurisdiction
The original jurisdiction of a court is the power to hear a case for the first time, as opposed to appellate jurisdiction, when a court has the power to review a lower court's decision.-France:...
over disputes arising under federal trademark law pursuant to 28 U.S.C. § 1338(a). The District Court held that Florida had jurisdiction because of a statute that allowed the state to extend jurisdiction to anyone breaching a contract within the state. The United States Court of Appeals for the Eleventh Circuit
United States Court of Appeals for the Eleventh Circuit
The United States Court of Appeals for the Eleventh Circuit is a federal court with appellate jurisdiction over the district courts in the following districts:* Middle District of Alabama...
reversed the lower court's decision, finding that even though the defendants had minimum contacts
Minimum contacts
Minimum contacts is a term used in the United States law of civil procedure to determine when it is appropriate for a court in one state to assert personal jurisdiction over a defendant from another state...
with Florida, to exercise jurisdiction over the defendants would be fundamentally unfair and thus violate the due process clause of the Fourteenth Amendment
Fourteenth Amendment to the United States Constitution
The Fourteenth Amendment to the United States Constitution was adopted on July 9, 1868, as one of the Reconstruction Amendments.Its Citizenship Clause provides a broad definition of citizenship that overruled the Dred Scott v...
. Burger King then appealed to the Supreme Court.
Holding
The Supreme Court concluded that the defendants purposefully availed themselves of the protections of the forum state (Florida) and were, therefore, subject to jurisdiction there. The Court reasoned that the defendants had a "substantial and continuing" relationship with Burger King in Florida and that due process would not be violated because the defendants should have reasonably anticipated being summoned into court in Florida for breach of contract.Dissent
In a dissent joined by Justice Byron Raymond White, Justice John Paul StevensJohn Paul Stevens
John Paul Stevens served as an Associate Justice of the Supreme Court of the United States from December 19, 1975 until his retirement on June 29, 2010. At the time of his retirement, he was the oldest member of the Court and the third-longest serving justice in the Court's history...
argued that Rudzewicz had never been to Florida and had no business established in Florida. Rudzewicz could not have anticipated being summoned into court in Florida, and it violates the due process clause to require a small businessman in Michigan to have to make an appearance in a court in Florida to present his defense.