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Burger King Corp. v. Rudzewicz

Supreme Court of the United States

January 8, 1985, Argued ; May 20, 1985, Decided

No. 83-2097

Opinion

 [*463]   [***535]   [**2177]  JUSTICE BRENNAN delivered the opinion of the Court.

 The State of Florida's long-arm statute extends jurisdiction to "[any] person, whether or not a citizen or resident of this state," who, inter alia, "[breaches] a contract in this state by failing to perform acts required by the contract to [****5]  be performed in this state," so long as the cause of action  [*464]  arises from the alleged contractual breach. Fla. Stat. § 48.193 (1)(g) (Supp. 1984). The United States District Court for the Southern District of Florida, sitting in diversity, relied on this provision in exercising personal jurisdiction over a Michigan resident who allegedly had breached a franchise agreement with a Florida corporation by failing to make required payments in Florida. The question presented is whether this exercise of long-arm jurisdiction offended "traditional [conceptions] of fair play and substantial justice" embodied in the Due Process Clause of the Fourteenth Amendment. International Shoe Co. v.  [**2178]  Washington, 326 U.S. 310, 320 (1945).

Burger King Corporation is a Florida corporation whose principal offices are in Miami. It is one of the world's largest restaurant organizations, with over 3,000 outlets in the 50 States, the Commonwealth of Puerto Rico, and 8 foreign nations. Burger King conducts approximately 80% of its business through a franchise operation that the company styles the "Burger King System" -- "a comprehensive restaurant format and operating  [****6]  system for the sale of uniform and quality food products." App. 46. 1 [****7]  Burger King licenses its  [***536]  franchisees to use its trademarks and service marks for a period of 20 years and leases standardized restaurant facilities to them for the same term. In addition, franchisees acquire a variety of proprietary information concerning the "standards, specifications, procedures and methods for operating  [*465]  a Burger King Restaurant." Id., at 52. They also receive market research and advertising assistance; ongoing training in restaurant management; 2 and accounting, cost-control, and inventory-control guidance. By permitting franchisees to tap into Burger King's established national reputation and to benefit from proven procedures for dispensing standardized fare, this system enables them to go into the restaurant business with significantly lowered barriers to entry. 3

In exchange for these benefits, franchisees pay Burger King an initial $ 40,000 franchise fee and commit themselves to payment of monthly royalties, advertising and sales promotion fees, and rent computed in part from monthly gross sales. Franchisees also agree to submit to the national organization's exacting regulation of virtually every conceivable aspect of their operations. 4 Burger King imposes these standards and undertakes its rigid regulation out of conviction that "[uniformity] of service, appearance, and quality of product is essential to the preservation of the Burger King image and the benefits accruing therefrom to both Franchisee and Franchisor." Id., at 31.

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471 U.S. 462 *; 105 S. Ct. 2174 **; 85 L. Ed. 2d 528 ***; 1985 U.S. LEXIS 14 ****; 53 U.S.L.W. 4541

BURGER KING CORP. v. RUDZEWICZ

Prior History:  [****1]  APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT.

Disposition:  724 F.2d 1505, reversed and remanded.

CORE TERMS

franchise, franchisees, headquarters, negotiations, personal jurisdiction, purposefully, restaurant, Magazine, district office, district court, residents, court of appeals, disputes, notice, forum state, out-of-state, contacts, rent, circumstances, affiliation, obligations, trademark, benefits, franchise relationship, minimum contact, due process, foreseeability, purposes, offend, terms

Civil Procedure, In Rem & Personal Jurisdiction, In Personam Actions, General Overview, Constitutional Law, Substantive Due Process, Scope, Minimum Contacts, Placement of Product in Commerce, Foreseeability, International Trade Law, Dispute Resolution, International Commercial Arbitration, Arbitration, Venue, Motions to Transfer, Preliminary Considerations, Contracts Law, Affirmative Defenses, Coercion & Duress, Fraud & Misrepresentation