CivPro Class 5, pp120-150 Burger King Corp. v.

Rudzewicz Facts: suit in Florida federal court against a Michigan based franchisee for breach of his franchise agreement with Burger King, a Florida company D entered into a franchise contract with P to open a restaurant in Michigan P was incorporated in florida and a choice of law clause in the contract indicated that Florida law was controlling the contract allowed D to use P's trademark and service for 20 years in Michigan all financial obligations owed to burger king were sent to florida and D received training in florida an economic downturn led to decreased sales and D failed to meet his obligations under the contract BK terminated the franchise, but Rud refused and continued to operate as a BK franchisee BK sued for $228,875 in damages Procedural History: District Court found for BK circuit court reversed SCOTUS reversed, found for BK Issues: to what extent can a contract constitute a contract for the purposes of due process analysis (through min contacts analysis needed for personal jurisdiction)? How do you apply the min contacts test for a person who has never entered the forum state? Holding/ Rule: alone, signing a contract with a party in the forum state is not sufficient to meet the min contacts requirement for that forum state. However, if the contract in that state is an intermediate step to tie up prior negotiations and contemplated future consequences, the party may be seen as having purposefully established min contacts in that forum state especially when the consequences arise proximately from the actiivites allowed by the contract. Purposeful availment a plaintiff need not show that an out of state defendant has both min contacts with the forum state and that it is fair and equitable to required the D to defend the suit in state the factors the court must balance in addressing reasonableness in an analysis of personal jurisdiction are: the extent of a D's peurposeful interjection in the forum state the burden on the D in defending in the forum the extent of conflict with the sovereignty of D's state the forum state's interst in adjudicating the dispute the most efficient judical resolution of the controversy the importance of the forum to the P's interesnt in conveneint and effective relief and the existence of an alternative forum Rationale: the franchise grew out of a contract which had a substantial connection with FL in light of D's voluntary acceptance of the long-term and exacting regulation of his business from BK's Miami headquarters, the quality and nature of his relationship to the company in FL can in no sense be viewed as random, fortuitous, or attenuated during the disputes, D carried on a continuous course of communication with FL office, and it was the FL office that made the key negotiating decisions out of which this case came the contract documents emphasize that BK's operations are conducted and supervised from the Miami headquarters various franchise documents provided that all disputes would be governed by FL law The court held that in this case the franchise agreement with Burger King allowed Rudzewicz to benefit from an association with a Florida corporation for twenty years. Rudzewicz had continuing and direct contacts with

Burger King. The fact that Rudzewiczs contacts were purposeful allowed the state to exercise personal jurisdiction despite that those contacts were minimal. The contract indicated that Florida law would apply. It cannot be a shock that Burger King would sue Rudzewicz there for a breach of the contract in light of the clear contractual terms of the agreement. Rudzewicz had not shown that he would be unfairly prejudiced or harmed by a trial in Florida and the purposeful involvement of Rudzewicz in the contract met the minimum contact requirements. Dissent: MI had a much larger stake in this litigation D never sold anything in FL it is unfair for the franchisor to choose the venue where the franchisee will be sued Notes: various franchise documents provided that all disputes would be governed by FL law. This is called a choice of law provision the battles over which state has jurisdiction are hugely significant federal courts borrow the jurisdictional rules of the state where they are located it doesnt matter where the best place to litigate the case is at no point are the jurisdictions compared the lawsuit could have been brought by the Ds in MI if they had filed first both states are find for jurisdiction most important part of the min contacts analysis in this case is the 20 year agreement with BK Asahi Metal Industry Co. v. Superior Court

Facts: Zurcher (CA) lost control of motorcycle and collided with a tractor. He was badly hurt and his wife was killed zurcher sued ching shin rubber. Chen shin filed a cross-complaint seeking indemnification from its codefendants and from petitioner, Asahi, the manufacturer of the valve assembly Zurcher's claims against everyone was settled and dismissed except for the claim against asahi asahi is a Japanese corporation who sold valve assemblies to cheng Shin in taiwan. Cheng shin sold finished products to US, 20% to CA Procedural History: Superior Court of CA ruled against Asahi Court of Appeal of CA reversed, ruled for Asahi Supreme Court of CA reversed, ruled against Asahi SCOTUS reversed, ruled for Asahi, no jurisdiction Issue: does mere awareness on the part of a foreign defendant that the component it manufactured, sold, and delivered outside the US would reach the forum state in the stream of commerce constitutes min contacts between the D and the forum state such that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice Holding/Rule: the mere awareness on the part of a foreign D that the components it manufactured, sold, and delivered outside of the US would reach the forum state in the stream of commerce does not constitute min contacts in that state the D's awareness that the stream of commerce may or will sweep the product into the forum state does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum state Rationale: stream of commerce plus asahi never purposefully availed itself of the CA market jurisdiction is proper when the contacts result from actions of the D that create substantial connection with the forum state the substantial connection between the D and the forum state necessary for finding of the min contacts must come about by an an action of the defendant purposefully directed toward the forum state

asahi does not do business directly in CA, has no office, agents, employees, or property in CA. It did not create, control, or employ the distribution system that brought its valves to CA Dissent: Brennan... pure stream of commerce if a party is aware that the final product is being marketed in the forum state, the possibility of a lawsuit there cannot come as a surprise the D indirectly benefits from the state's laws that regulate and facilitate commercial activity Stevens... decision about stream of commerce/ min contacts isnt necessary because of other holding a regulate course of dealing that delivers over 100k units annually over a period of several years would constitute purposeful availment even though the item delivered to the forum state was a standard product marketed throughout the world Notes: two views...both of which are accurate to some extent asahi was fully aware that their products were used in CA based upon the level of activity. How much activity was this? Stevens thins a lot asahi never contemplated being subject to suit in CA there isnt a majority in the opinion, only a plurality court split 4-4-1 on whether stream of commerce was enough o'connor said that stream of commerce by itself is not sufficiently purposeful. Need stream of commerce plus advertising, designing fro market (it's not terribly hard to find these plus factors) vandelune v. 4B elevator court found that a british manufacturer designed a component part for the american grain elevator market the opposing view was that this plus will simply require more work by Ps to discover the plus points. If advertising is enough, virtually any american company will be found to have done enough.

J. McIntyre Machinery, LTD. v. Nicastro (the first time the court explored personal jurisdiction in a stream of commerce conflict since its 1987 decision in Asahi) Facts: the P's severe injuries were caused by a 3 ton metal shearing machine manufactured by McIntyre that severed four fingers on Nicastro's right hand accident occurred in saddle brook, New Jerey Nicastro filed a product liablity against McIntrye in state court McIntuyre, a british corporation, had no office in new jersey; it neither paid taxes or owned property there, and it neither advertised in nore sent any employees to the state McIntyree's only contact with New Jersey was the metal shearing machine itself an independent distributor sold the machine to Nicastro's employer McIntyre sought dismissal for want of personal jurisdiction Issue: do the New Jersey courts have jurisdiction over J. McIntryre, notwithstanding the fact that the company at no time either marketed goods in the state or shipped them there?