Facts
Rudzewicz, a Michigan resident and citizen, was approached by MacShara about starting a Burger King in the Detroit area. Rudzewicz would front the capital and MacShara would manage the franchise and they would split the profits. They jointly applied through the Michigan district office which was forwarded to the Miami headquarters. The final agreements were signed, obligating Rudzewicz to payments exceeding $1 million over the 20-year franchise. Shortly after, business began to deteriorate, the rent payments fell behind then Burger King sued in federal district court in Florida.
Procedural History
Rudzewicz and MacShara challenged personal jurisdiction and the district court rejected the challenge. The judge awarded Burger King both damages and injunctive relief. The Appeals Court reversed the judgment concluding Florida could not exercise personal jurisdiction.
Issue(s)
Did the Appeals Court err in finding there was no personal jurisdiction?
Holding(s)
Yes.
Reasoning/Analysis
The court found that the franchise grew out of a contract which had a substantial connection with Florida. Rudzewicz deliberately reached out beyond Michigan and negotiated with a Florida corporation for the purchase of a long-term franchise and the benefits that would derive from this affiliation. Rudzewicz knew he was affiliating himself with an enterprise based in Florida and when problems arose and they contacted the Michigan office, they were told the communications would be channeled to the Miami headquarters.
Judgment/Outcome
The court reversed the judgment of the Court of Appeals and remanded for further proceedings.
Concurring Opinions/Dissenting Opinions/Comments
Stevens and White dissented stating that Rudzewicz did business only in Michigan, his business, property and payroll taxes were payable there, and he sold all of his products there. There is a significant element of unfairness by requiring a franchisee to defend in the forum chosen by the franchsior.
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