Burger King Corp. v. Rudzewicz

Facts

Burger King Corporation, a Florida corporation with its principal offices in Miami, ran most of its business through franchises. Its contracts said the franchise relationship was established in Miami and governed by Florida law, and they required franchisees to send all fees and notices to the Miami headquarters. Ten district offices handled day-to-day monitoring. In 1978 Brian MacShara suggested to John Rudzewicz, a Michigan resident and senior partner in a Detroit accounting firm, that they jointly apply for a Burger King franchise. MacShara would manage the restaurant, and Rudzewicz would put up the money. They applied through the district office in Birmingham, Michigan, and the Miami headquarters entered into a preliminary agreement with them in February 1979. MacShara took management courses in Miami, and the pair bought $165,000 worth of restaurant equipment from a Burger King division in Miami. They disputed several terms with both the Michigan office and Miami, won limited concessions from Miami, signed the final agreements, and in June 1979 began operating an existing restaurant in Drayton Plains, Michigan. Rudzewicz personally took on payments exceeding $1 million over the 20-year franchise. After a recession, business fell and the franchisees fell far behind on their monthly payments to Miami. Negotiations by mail and telephone failed, and the Miami headquarters terminated the franchise. Rudzewicz and MacShara refused to leave and kept operating the restaurant as a Burger King.

Issues

1. Did the Due Process Clause of the Fourteenth Amendment allow the Florida federal court to exercise personal jurisdiction over Rudzewicz, a Michigan franchisee, in Burger King's suit claiming he failed to make required franchise payments in Florida?
2. Can an individual's contract with an out-of-state party, standing alone, automatically establish minimum contacts in that party's home State?
3. Once minimum contacts are shown, did other fairness considerations make jurisdiction over Rudzewicz in Florida unreasonable?

Holding

The District Court's exercise of personal jurisdiction over Rudzewicz did not offend due process. He established a substantial and continuing relationship with Burger King's Miami headquarters, received fair notice from the contract documents and the course of dealing that he might be sued in Florida, and failed to show that jurisdiction there would be fundamentally unfair.