Legal Document

471 U.S. 462 105 S.Ct. 2174 85 L.Ed.2d 528 BURGER KING CORPORATION, Appellantv.John RUDZEWICZ. No. 83-2097. Argued Jan. 8, 1985. Decided May 20, Syllabus Appellant is a Florida corporation whose principal offices are in Miami. It conducts most of its restaurant business through franchise operation, under which franchisees licensed to use appellant's trademarks and service marks leased standardized facilities for period 20 years. The governing contracts provide that the relationship established Miami governed by law, call payment all required monthly fees forwarding relevant notices headquarters. headquarters sets policy works directly with attempting resolve major problems. Day-to-day monitoring franchisees, however, conducted district turn report Appellee Michigan resident who, along another resident, entered into 20-year contract appellant operate Michigan. Subsequently, when restaurant's patronage declined, fell behind their payments. After extended negotiations among office, proved unsuccessful solving problem, terminated ordered vacate premises. They refused continued restaurant. then brought diversity action Federal District Court Florida, alleging had breached obligations requesting damages injunctive relief. claimed that, because they were residents claim did not "arise" within lacked personal jurisdiction over them. But court held subject pursuant Florida's long-arm statute, extends any person, whether or citizen State, who breaches State failing perform acts requires be performed there. Thereafter, judgment against on merits. Appeals reversed, holding "[j]urisdiction these circumstances would offend fundamental fairness touchstone due process." Held: Court's exercise statute violate Due Process Clause Fourteenth Amendment. Pp. 471-487. (a) A forum may assert specific nonresident defendant where an alleged injury arises out relates actions himself purposefully directed toward residents, otherwise "fair play substantial justice." Jurisdiction avoided merely physically enter forum. 471-478. (b) An individual's out-of-state party cannot alone automatically establish sufficient minimum contacts other party's home Instead, prior contemplated future consequences, terms parties' actual course dealing, must evaluated determine 478-479. (c) Here, appellee continuing headquarters, received fair notice from documents dealings he might suit Florida. found "experienced sophisticated" businessman act economic duress disadvantage imposed appellant, has pointed no factors unconstitutionality assertion jurisdiction. 479-487. 724 F.2d 1505 (CA11 1984), reversed remanded. Joel S. Perwin, Miami, Fla., appellant. Thomas H. Oehmke, Detroit, Mich., appellee. Justice BRENNAN delivered opinion Court. 1 "[a]ny this state," inter alia, "[b]reach[es] state so long as cause contractual breach. Fla.Stat. § 48.193(1)(g) (Supp.1984). United States Southern sitting diversity, relied provision exercising allegedly agreement make payments question presented offended "traditional conception[s] justice" embodied International Shoe Co. v. Washington, 326 310, 320, 66 154, 160, 90 L.Ed. 95 (1945). 2 * A. 3 Burger King Corporation one world's largest organizations, 3,000 outlets 50 States, Commonwealth Puerto Rico, 8 foreign nations. approximately 80% operation company styles "Burger System"—"a comprehensive format operating system sale uniform quality food products." App. 46.1 licenses years leases them same term. In addition, acquire variety proprietary information concerning "standards, specifications, procedures methods Restaurant." Id., at 52. also receive market research advertising assistance; ongoing training management;2 accounting, cost-control, inventory-control guidance. By permitting tap King's national reputation benefit proven dispensing fare, enables go significantly lowered barriers entry.3 4 exchange benefits, pay initial $40,000 fee commit themselves royalties, sales promotion fees, rent computed part gross sales. Franchisees agree submit organization's exacting regulation virtually every conceivable aspect operations.4 imposes standards undertakes rigid conviction "[u]niformity service, appearance, product essential preservation image benefits accruing therefrom both Franchisee Franchisor." 31. 5 oversees two-tiered administrative structure. headquarters.5 See nn. 7, 9, infra. network 10 6 instant litigation grows termination aptly described franchisee "a divorce proceeding commercial partners." Record 4. John Rudzewicz, senior partner Detroit accounting firm. 1978, was approached Brian MacShara, son acquaintance, suggested jointly apply area. MacShara proposed serve manager if Rudzewicz put up investment capital; exchange, two evenly share profits. Believing MacShara's idea offered attractive tax-deferral opportunities, agreed venture. id., 438-439, 444, 460. 7 applied Birmingham, Michigan, office autumn 1978. Their application forwarded preliminary February 1979. During ensuing four months it assume existing facility Drayton Plains, attended prescribed management courses during period, see n. 2, supra, purchased $165,000 worth equipment Davmor Industries division Even before final agreements signed, parties began disagree site-development building design, computation rent, able assign liabilities formed.6 disputes negotiated Birmingham headquarters.7 With some misgivings, finally obtained limited concessions headquarters,8 signed agreements, commenced operations June signing obligated personally exceeding $1 million relationship. Plains apparently enjoyed steady summer 1979, but declined after recession later year. soon far Headquarters sent default, several officials engaged prolonged ultimately mail telephone,9 occupy B 9 1981, invoking court's 28 U.S.C. 1332(a) original federal trademark 1338(a).10 "within [the of] court" "at plaintiff's place Dade County, Florida," ¶ 6, 121, charged tortiously infringing continued, unauthorized restaurant, &Par; 35-53, 130-135. sought damages, relief, costs attorney's fees. special appearances argued, denied motions hearing, non-resident arising agreements." 138. filed answer counterclaim seeking violations Michigan's Franchise Investment Law, Mich.Comp.Laws 445.1501 et seq. (1979). 3-day bench trial, again concluded "jurisdiction matter cause." 159. Finding infringed marks, them, severally, $228,875 damages. "to immediately close Restaurant Number 775 give keys possession said Corporation," 163, failed prove elements counterclaim, awarded King. 11 appealed Eleventh Circuit.11 divided panel Circuit judgment, concluding could properly (Supp.1984) "the led left bereft reasonable financially unprepared prospect Florida." Corp. 1505, 1513 (1984). Accordingly, majority Ibid. 12 Circuit's 1254(2), we postponed probable 469 814, 77, 83 25 Because unclear actually itself unconstitutional case, conclude appeal does lie therefore dismiss appeal.12 Treating jurisdictional statement petition writ certiorari, 2103, grant now reverse. II 13 protects liberty interest being binding judgments meaningful "contacts, ties, relations." U.S., 319, S.Ct., 160.13 requiring individuals have warning particular activity [them] sovereign," Shaffer Heitner, 433 186, 218, 97 2569, 2587, 53 683 (1977) (STEVENS, J., concurring judgment), "gives degree predictability legal allows potential defendants structure primary conduct assurance will render liable suit," World-Wide Volkswagen Woodson, 444 286, 297, 100 559, 567, 62 490 (1980). 14 Where seeks consented there,14 warning" requirement satisfied "purposefully directed" his activities forum, Keeton Hustler Magazine, Inc., 465 770, 774, 104 1473, 1478, 79 790 (1984), results injuries "arise relate to" those activities, Helicopteros Nacionales de Colombia, S.A. Hall, 466 408, 414, 1868, 1872, 80 404 (1984).15 Thus "[t]he exceed powers asserts delivers products stream commerce expectation consumers State" subsequently injure consumers. 297-298, 567-568. Similarly, publisher distributes magazines distant fairly accountable resulting there defamatory story. supra; Calder Jones, 783, 1482, 804 (1984) (suit author editor). And respect interstate obligations, emphasized "reach beyond create relationships citizens state" sanctions consequences activities. Travelers Health Assn. Virginia, 339 643, 647, 70 927, 929, 94 1154 (1950). McGee Life Insurance Co., 355 220, 222-223, 78 199, 200-201, 223 (1957). 15 We noted reasons why legitimately directs" residents. generally "manifest interest" providing convenient redressing inflicted actors. 223, 201; 776, 1479. Moreover, derive benefit" Kulko California Superior Court, 436 84, 96, 98 1690, 1699, 56 132 (1978), well unfair allow escape having account arise proximately such activities; readily wielded territorial shield avoid been voluntarily assumed. "modern transportation communications made much less burdensome sued defend engages activity," usually him burdens litigating relating activity. 201. 16 Notwithstanding considerations, constitutional remains "minimum contacts" State. 316, 158. Although argued foreseeability causing should considerations require,16 consistently kind "sufficient benchmark" 295, 566. critical process analysis . defendant's connection reasonably anticipate haled there." 567. defining "reasonably anticipate" litigation, frequently drawn reasoning Hanson Denckla, 357 235, 253, 1228, 1239-1240, 1283 (1958): 17 "The unilateral satisfy contact rule vary nature activity, each case avails privilege conducting thus protections laws." 18 This "purposeful availment" ensures solely result "random," "fortuitous," "attenuated" contacts, 1478; 299, 568, "unilateral third person," 417, 1873.17 proper, "substantial connection" 94, 1698, 7.18 "deliberately" significant 781, 1481, created "continuing obligations" between 648, manifestly availed there, shielded protections" forum's laws presumptively unreasonable require well. 19 presence enhance affiliation reinforce inescapable fact modern life amount transacted wire across lines, obviating need physical conducted. So actor's efforts rejected notion absence can defeat 774-775, 778-790, 1486-1487; 200-201. Cf. Hoopeston Canning Cullen, 318 313, 317, 63 602, 605, 87 777 (1943). Once decided considered light comport 160. courts "appropriate case[s]" evaluate burden defendant," State's adjudicating dispute," obtaining effective relief," judicial system's efficient resolution controversies," "shared furthering substantive social policies." 292, 564. These sometimes reasonableness upon lesser showing than required. See, e.g., 780, 1481; 788-789, 223-224, 201-202. On hand, jurisdiction, present compelling unreasonable. Most accommodated means short finding unconstitutional. For example, clash law "fundamental policies" choice-of-law rules.19 claiming inconvenience seek change venue.20 Nevertheless, requirements inherent concept even 564; Restatement (Second) Conflict Laws §§ 36-37 (1971). As previously noted, rules employed way "so gravely difficult inconvenient" unfairly "severe disadvantage" comparison opponent. Bremen Zapata Off-Shore 407 1, 18, 92 1907, 1917, 32 513 (1972) (re forum-selection provisions); 21 (1) 22 Applying principles believe record evidence supporting conclusion breach process. At outset, note lower respecting what extent constitute "contact" purposes analysis.21 If clearly cannot. ago "mechanical" tests, 159, "conceptualistic theories contracting performance," 604. "highly realistic" approach recognizes "contract" "ordinarily intermediate step serving tie real object transaction." 316-317, 604-605. factors—prior dealing determining 23 ties attributed brief Miami.22 maintain and, appears record, never visited Yet dispute grew State." 201 (emphasis added). Eschewing option independent local enterprise, deliberately "reach[ed] beyond" purchase long-term manifold nationwide organization. 929. Upon approval, carefully structured envisioned wide-reaching Rudzewicz' voluntary acceptance "quality nature" sense viewed "attenuated." 1239; 568. refusal contractually confidential termination, caused foreseeable was, very least, called injuries. 24 concluded, supervision emanating believed intents embodiment King" "reason outside Michigan." F.2d, 1511. post, 488-489 dissenting). overlooks indicating certainly knew affiliating enterprise based primarily emphasize supervised enforced 5, supra. repeatedly confirmed decisionmaking authority vested served largely link franchisees. When problems arose computation, defaulted payments, learned powerless only channel Throughout disputes, carried continuous direct telephone, key negotiating decisions arose. gave insufficient weight provisions various law. agreement, stated: 26 "This Agreement shall become valid executed accepted BKC Florida; deemed construed accordance choice designation suits 72. 27 reasoned irrelevant relying Denckla proposition center gravity necessarily confer sovereign prerogative jurisdiction." 1511-1512, 10, citing 254, 1240. misperceives import quoted proposition. subsequent cases —which focuses transaction, simply conduct—is distinct minimum-contacts threshold purposeful forum.23 Nothing our cases, suggests ignored considering invoked laws" purposes. standing combined interdependent reinforced deliberate possible Judge Johnson dissent below, entering expressly govern disputes. 1513.24 (2) 29 Nor persuasively outweigh discussed above "legitimate [Rudzewicz] answerable related 1479; (noting redress residents").25 although length (1979), governs many aspects relationship, demonstrated how acknowledged possibly unconstitutional.26 Finally, Appeals' "severely impaired [Rudzewicz'] ability witnesses defense counterclaim," 1512-1513, wholly without support record.27 inconvenient litigate venue. point achieve magnitude, 201, case. 30 involved characteristic disparity bargaining power" "elements surprise," "lacked notice" suggesting contrary "boilerplate declarations lengthy printed contract." 10. 489-490 arguments contending guilty misrepresentation, fraud, duress; him; adhesion. 687-691. misrepresentations, "were experienced sophisticated businessmen," time" "ac[t] by" 157-158. 648-649. Rule Civil Procedure 52(a) "[f]indings set aside unless erroneous," neither nor "definite firm conviction" findings mistaken. Gypsum 333 364, 395, 68 525, 542, 746 (1948). Anderson Bessemer City, 470 564, 573-576, 1504, ---- - ----, 84 518 (1985). To contrary, represented counsel throughout complex transactions observed accountant "who five lease time exceeded million." 1514. secure modest reduction moreover, inflexible, presumably advantages organization provided offset detriments.28 III 31 necessary reject prophylactic measure, affirmance "out-of-state collect purchases" "sow seeds default owing smaller debts." broader concerns talismanic formulas; facts [always] weighed" 92, 1696-1697.29 transaction "attenuated"30 "should 567; grounded "fraud, undue influence, overweening [a party] practical deprived day court." 12, 1914, 1917. Fuentes Shevin, 67, 94-96, 1983, 2001-2002, 556 (1972); National Equipment Rental, Ltd. Szukhent, 375 311, 329, 411, 421, 354 (1964) (BLACK, dissenting) (jurisdictional small "crippl[e] defense"). Just flexibility ensuring actors effectively "judgment proof" too prevent enable obtain unwitting customers. Rumely, 345 41, 44, 73 543, 545, 770 (1953) (courts " 'blind' '[a]ll others understand' "). forth above, dangers demonstrate fundamentally unfair, accordingly remanded further proceedings consistent opinion. 33 ordered. 34 POWELL took consideration decision 35 STEVENS, whom WHITE joins, dissenting. 36 my element unfairness chosen franchisor. undisputed maintained employees do prepare French fries, shakes, hamburgers deliver "with [would] in" Ante, 473. business, property, payroll taxes payable sold 37 appellee's office. disclaimer, ante, 478, seems rely nothing more standard boilerplate language contained documents, 481, 'purposefully laws.' 482. Such superficial creates franchisors but, significantly, inevitably relationships. 38 Vance's adequately explains I affirm court. particularly find following persuasive written today: 39 "Nothing reason face-to-face oral protracted representatives interview appraise application, discuss price terms, recommend site to, attend closing ceremony. There ever anyone negotiations. He staff reveals, state. 40 startup profits customers Plains. sale, intangible occupancy performance Under contract, responsible services including consultation. Supervision, emanated alone. working ended anonymous 41 "Given supervisory file suit. corporate insulated own 42 "Just possibility meet added costs. fraught financial surprise. device gives retailers access recognition compete better-financed, chain stores. affiliation, alter typical store concern best neighborhood community. Neither revenues geographical range prepares average owner cost litigation. 43 distribution power impairs franchisee's preparedness. 'the franchisor normally occupies [the] dominant role'. 44 "We discern indication latitude negotiate reduced risk form non-negotiable appeared respects favorable earlier discussions. fact, base excess resisted concessions, sue home. doing so, severely counterclaim. 45 "In sum, hold 1511-1513 (footnotes omitted). 46 respectfully dissent. defines system, recognized decor, color scheme style building, standards, specifications uniformity offered, inventory control. ." 43. Mandatory seminars University Whopper College Regional Training Centers around country. 39; 540-541. 43-44. Brown, Franchising Realities Remedies 6-7, 16-17 (2d ed. 1978). 24-25, (range, "quality, size, taste, processing" menu items), ("standards cleanliness"), (hours operation), 47 ("official mandatory procedures"), 48-50 (building layout, displays, equipment, vending machines, hours uniforms, advertising, promotion), (employee training), 55-56 (accounting auditing requirements), 59 (insurance requirements). extensive liability, assignments, defaults, termination. 61-74. 10-11, 37, 43, 72-73, 113. infra, 481. latter matters areas disagreement. offering advised percentage "approximated capitalized acquisition construction costs," 23, assumed function renovation costs, thereby underestimated $2,000. interpretation "incredible." 649. assignment, formed RMBK intent assigning franchise. Consistent insisted remain obligations. 62, 109. contended given assurances parol "even misleading joined merged" agreement. 648. dealt regular basis, communicated forming contracts; "very little" turned 292. 5-6; 167-168, 174-179, 182-184, 198-199, 217-218, 264-265, 292-294; 314-316, 363, 373, 416, 463, 496. $10,439 82; 222-223; 500. Miami's "deal directly" encounter difficulties, involve personnel necessary. 95. handled credit problems, cost-cutting measures, partial refinancing franchisees' debts, dispute, matters. 59-69; 84-89, 94-95, 97-98, 100-103, 116-128, 151-152, 158, 163; 395-397, 436-438, 510-511, 524-525. summonses copies complaint 102-103. judgment. 1506, 1984). compromise waived right infringement entry 804-816. address tortious 48.193(1)(b) (Supp.1984), constitutionally extend infringement. 1486-1487, (tortious conduct); 1479, (same). reach constitutional. consider statutory question, because, argument, "accepted stipulation" 48.193 reached "in lieu [making] determination provides." Tr. Oral Arg. 12. contends proper "on basis stipulation applied." disagree. Our "overriding policy, historically encouraged Congress, minimizing docket interests sound administration," Gonzalez Automatic Employees Credit Union, 419 90, 98, 289, 294, 249 (1974) (construing 1253), threatened litigants expedient stipulating harmony Constitution. 1254(2) appeals squarely "held" face applied; rest grounds. Public Service Comm'n Batesville Telephone 284 52 76 135 (1931) (per curiam ). "our practice strict construction" Fornaris Ridge Tool 400 42, 91 156, 157, 174 (1970) ), appeals' rests stipulated applicability Rather, clear independently challenged applied. 1513. Of course, falling literal objection construction. Supreme ruled breadth 48.193(1)(g), appellate limits Clause. Scordilis Drobnicki, 443 So.2d 412-414 (Fla.App.1984); Lakewood Pipe Texas, Inc. Rubaii, 379 475, 477 (Fla.App.1979), dism'd, 383 1201 (Fla.1980); Osborn Society, 378 873, 874 (Fla.App.1979). limitations improper "invalid repugnant Constitution States," since boundaries defined by, rather of, 787-788, 1486, 7; 4, 1695-1696, (1978). protection operates restrict power, "must seen individual preserved Clause" "of federalism concerns." Ireland Compagnie des Bauxites Guinee, 456 694, 702-703, 102 2099, 2104-2105, 72 492 (1982). waivable right, "variety arrangements" litigant "express implied consent 703, 2105. context, stipulate advance controversies (1964). "freely negotiated" "unreasonable unjust," 15, 1916, (1972), enforcement "Specific" contrasts "general" exercises forum." 9; Perkins Benguet Consolidated Mining 342 437, 413, 96 485 (1952). (1980) (BRENNAN, dissenting); 219, 2588, dissenting part). principle, forbids automobile distributor resulted customer's drive divorced husband child-support former spouse's settle (1978); trustee settlor's her appointment (1958). instances, "clear suit" opportunity "alleviate litigation" single "some occasional acts" "their commission" 318, (1945); distinction derives belief category "isolated" acts, substantially diminished. Allstate Hague, 449 302, 307-313, 101 633, 637-640, 521 (1981) (opinion BRENNAN, J.). 1404(a) ("For convenience witnesses, justice, transfer civil brought"). embodies expanded version common-law doctrine non conveniens, appropriate decline "easy, expeditious inexpensive" controversy Gulf Oil Gilbert, 330 501, 508-509, 67 839, 843, 1055 (1947). Lakeside Bridge & Steel Mountain Construction 445 907, 909-910, 1087, 1088-1089, 325 (WHITE, denial certiorari) (collecting cases); Brewer, Single Contract Cases, U.Ark. Little Rock L.J. 7-11, (1983); Note, Long-Arm Commercial Litigation: Contact?, 61 B.U.L.Rev. 375, 384-388 (1981). Rudzewicz's "Rudzewicz partnership" "signed capacities." 1513, 14. franchise, however. decide travel commence participated "carried behalf of" ascribed party, (1945), least "primary participan[t]" acted directing 790, 1487. matriculation pivotal disposition permissible bounds attribution. 253-254, 1239-1240. 778, 1480; 1700; 215, 2585. agreement's disclaimer "choice added), negative implication arbitration certain condemnation 113, conceded validity 37. apparent "for King." Complaining "when plaintiff, you won't 'have your way' sues Miami," Brief 19, negligible company's size anywhere Absent cf. derived affiliations adversary's greater net wealth. show inconsistent interests. fully complied Act attempt exclusive affecting event, presupposes interested outcome resolving potentially conflicting policies," outright preclusion arguable instance trial occurred difficulty authenticating records; requisite authentication authenticity delay trial. 574-575, 578-579, 582, 598-599. mean suggest always cases. Some franchises intrastate character different structures, commentators practices inception operation. 4-5 reasons, suggestion general rule, presumption, participation relationship" represents franchisor's business. 46. does, preclude clear-cut rules. inquiry determinations few answers 'in black white. greys shades innumerable.' 1697.

Classification Label: 3