This section continues to focus on our discussion about finding specific personal jurisdiction. As you might recall, personal jurisdiction is necessary to hear a case and specific personal jurisdiction is one of the ways to meet that standard. We have discussed at length the necessity for contacts to be formed. However, there are still questions about what can constitute a contact. The case here discusses contracts as contacts in finding specific personal jurisdiction.
Burger King v. Rudzewicz
471 U.S. 462 (1985)
Burger King is the plaintiff. Rudzewicz is the defendant. Here, the courts here are trying to determine if there is personal jurisdiction. The district court found that there was, the circuit court found that there wasn’t, and so Burger King appealed to the Supreme Court.
Question
Can a contract constitute a sufficient minimum contact in accordance with the due process clause?
Rule
A contract alone is not sufficient to be a contact. However, there are factors the court can consider to determine if it is sufficient.
- The manner of negotiations
- The terms of the contract
Holding
This contract is sufficient for the courts to find specific personal jurisdiction. Judgement of the circuit court is reversed.
Facts
Rudzewicz was based in Michigan, hoping to open a Burger King franchise in the Detroit area. They reached out to the Burger King district office in Detroit who sent their application to Burger King headquarters in Florida. From there (Florida), Rudzewics and Burger King began negotiations about opening a franchise in the Detroit area. A contract was formed saying that the choice of law would be Florida and Rudzewicz began operation. However, business was poor and he soon defaulted on several payments to Florida. Notices were sent from Florida, attempts to resolve were unsuccessful, and Burger King terminated the franchise and told Rudzewicz to vacate the premises. He refused so Burger King sued in the federal southern Florida district court. Below are the necessary facts simplified.
- Forum state is in Florida. Long-arm statute is not an issue
- Burger King is based in Florida
- Rudzewicz is based in Michigan
- Contract about the franchise gives Florida “choice of law”
Analysis
The courts begin by reviewing all the laws related to specific personal jurisdiction. After doing so, they apply it to the case at hand. They say that a contract alone is not enough to establish a sufficient minimum contact (although it can certainly help the case). To establish sufficient contacts through the contract, the court needs to examine the nature of negotiations and relevant terms. Here, the negotiations were done with the Florida office and money was sent to the Florida office. Additionally, the terms of the agreement said that Florida was the “choice of law”. From all these factors, Rudzewicz would have reasonably realized that he could be pulled into a Florida court. The court sums up it’s argument thus:
“Because Rudzewicz 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 subject to suit in Florida, and has failed to demonstrate how jurisdiction in that forum would otherwise be fundamentally unfair, we conclude that the District Court’s exercise of jurisdiction did not offend due process.”
Takeaway
A contract can be a contact but alone it is not sufficient. The court must look at the actions of the defendant to determine whether they could reasonably assume they could be pulled into court in the forum state.
Additional Notes
Specific personal jurisdiction is covered so extensively because it is litigated the most.
Foreign in our cases mean “out of state”. For example, Michigan is foreign to Utah. So, they are saying, a foreign court is a state other than the defendant’s domicile.
In this case, Rudzewics did not go to Florida, and his partner only went to Florida for training reasons. So, there was minimal physical contact with Florida. Therefore, the court needed to see if the breach of contract was enough to establish a contact with the forum state in Florida.
Once again, we need to see “does the plaintiff’s claim arise from the defendant’s conduct with the contact in the forum state?”
Here’s the difference between “Choice of Law clause” and the “Forum selection”.
- Choice of law is the substantive law that will apply in the case.
- Forum selection is the venue where any claims would need to be heard.
From this case, we learn that physical presence of the defendant in the forum state is not required under the due process clause. Therefore, a contract alone can serve as a sufficient contact as long as the defendant purposefully avails themselves to the state.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.
