Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)

Burger King Corp. v. Rudzewicz

No. 83-2097

Argued January 8, 1985
Decided May 20, 1985
471 U.S. 462

APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR THE

ELEVENTH CIRCUIT

Syllabus

Appellant is a Florida corporation whose principal offices are in Miami. It conducts most of its restaurant business through a franchise operation, under which franchisees are licensed to use appellant’s trademarks and service marks in leased standardized restaurant facilities for a period of 20 years. The governing contracts provide that the franchise relationship is established in Miami and governed by Florida law, and call for payment of all required monthly fees and forwarding of all relevant notices to the Miami headquarters. The Miami headquarters sets policy and works directly with the franchisees in attempting to resolve major problems. Day-to-day monitoring of franchisees, however, is conducted through district offices that, in turn, report to the Miami headquarters. Appellee is a Michigan resident who, along with another Michigan resident, entered into a 20-year franchise contract with appellant to operate a restaurant in Michigan. Subsequently, when the restaurant’s patronage declined, the franchisees fell behind in their monthly payments. After extended negotiations among the franchisees, the Michigan district office, and the Miami headquarters proved unsuccessful in solving the problem, headquarters terminated the franchise and ordered the franchisees to vacate the premises. They refused, and continued to operate the restaurant. Appellant then brought a diversity action in Federal District Court in Florida, alleging that the franchisees had breached their franchise obligations and requesting damages and injunctive relief. The franchisees claimed that, because they were Michigan residents and because appellant’s claim did not "arise" within Florida, the District Court lacked personal jurisdiction over them. But the court held that the franchisees were subject to personal jurisdiction pursuant to Florida’s long-arm statute, which extends jurisdiction to any person, whether or not a citizen or resident of the State, who breaches a contract in the State by failing to perform acts that the contract requires to be performed there. Thereafter, the court entered judgment against the franchisees on the merits. The Court of Appeals reversed, holding that "[j]urisdiction under these circumstances would offend the fundamental fairness which is the touchstone of due process."

Held: The District Court’s exercise of jurisdiction pursuant to Florida’s long-arm statute did not violate the Due Process Clause of the Fourteenth Amendment. Pp. 471-487.

(a) A forum may assert specific jurisdiction over a nonresident defendant where an alleged injury arises out of or relates to actions by the defendant himself that are purposeful directed toward forum residents, and where jurisdiction would not otherwise offend "fair play and substantial justice." Jurisdiction in these circumstances may not be avoided merely because the defendant did not physically enter the forum. Pp. 471-478.

(b) An individual’s contract with an out-of-state party cannot alone automatically establish sufficient minimum contacts in the other party’s home forum. Instead, the prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing, must be evaluated to determine whether a defendant purposefully established minimum contacts within the forum. Pp. 478-479.

(c) Here, appellee established a substantial and continuing relationship with appellant’s Miami headquarters, and received fair notice from the contract documents and the course of dealings that he might be subject to suit in Florida. The District Court found that appellee is an "experienced and sophisticated" businessman who did not act under economic duress or disadvantage imposed by appellant, and appellee has pointed to no other factors that would establish the unconstitutionality of Florida’s assertion of jurisdiction. Pp. 479-487.

724 F.2d 1505, reversed and remanded.

BRENNAN, J., delivered the opinion of the Court, in which BURGER, C.J., and MARSHALL, BLACKMUN, REHNQUIST, and O’CONNOR, JJ., joined. STEVENS, J., filed a dissenting opinion, in which WHITE, J., joined, post, p. 487. POWELL, J., took no part in the consideration or decision of the case.