- Burger King legal issues
Infobox Burger King
As with other
multi-national corporations, international fast food restaurantchain Burger King(BK) has been involved in several legal disputes and cases, as both plaintiff and defendant, in the years since its founding in 1954. Situations involving a myriad of legal topics have affected all aspects of the company's operations. Depending on the ownership and executive staff at the time of theses incidents, the company's responses to these challenges have ranged from a conciliatory dialog with its critics to a more aggressive opposition with questionable tactics and negative consequences. How the company responded to these various issues has drawn praise, scorn, and accusations of political appeasement.
Controversies and disputes with groups such as
People for the Ethical Treatment of Animals(PETA) over the welfare of animals, governmental and social agencies over health issues and compliance with nutritional labeling laws, and unions and trade groups over labor relations and laws, have touched on concepts of animal rights, corporate responsibilityand ethics, as well as social justice. While most of these disputes did not result in lawsuits, in many of the cases the situations raised legal questions, dealt with legal compliance or resulted in legal remedies such as changes in contractual procedure or binding agreements between parties, often altering the way the company interacts and negotiates with its suppliers and franchisees or how it does business with the public.
The opening of a Burger King location in the Occupied Territories lead to a
breach of contractdispute between Burger King and its Israeli franchise; the dispute eventually erupted into a geopolitical conflagration involving Muslimand Jewish groups on multiple continents over the application of and adherence to international law. The case eventually elicited reactions from members of the 22-nation Arab Leaguein which the company was threatened with legal sanctions such as the revocation of Burger King's business licenses in these Islamic countries. A second issue involving members of the Islamic faith over the interpretation of the Muslim version of canon law, Shariah, regarding the promotional artwork on a dessert package in the United Kingdom raised issues of cultural sensitivity, and, with the former example, posed a larger question about the lengths that companies must go to insure the smooth operation of their businesses in the communities they serve.
trademarkdispute involving the owners of the identically named Burger King in Mattoon, Illinoisled to a federal lawsuit whose outcome helped define the scope of the Lanham actand trademark law in the United States; while an existing trademark held by a shop of the same name in South Australiaforced the company to change its name in Australia. Legal decisions from other suits have set contractual law precedents in regards to long-arm statutes, the limitations of franchise agreements, and ethical business practices; many of these decisions have helped define general business dealings that continue to shape the entire marketplace.
In 2001 the
animal rightsgroup PETAbegan targeting the various fast food chains in the United States over issues regarding the treatment of chickens by suppliers such as Tyson Foods. Using parodies of corporate logos and slogans, the group sought to publicly embarrass the companies into changing their corporate policies in dealing with poultry suppliers. After winning concessions from McDonald's with its "McCruelty" campaign, the group targeted Burger King with a six-month campaign it called "Murder King".cite web |url=http://findarticles.com/p/articles/mi_m0EIN/is_2008_Feb_11/ai_n24256165 |title=PETA Praises Safeway for Adopting New Industry-Leading Animal Welfare Policies |author= Gale Group|publisher= Business Wire|date= 2008-02-11|accessdate=2008-03-09 |quote=June 2001: Following PETA's six-month 'Murder King' campaign, Burger King agrees to adopt standards that are in some areas better than those adopted by McDonald's.] The group and its supporters, with the backing of celebrities including Alec Baldwin, James Cromwell, and Richard Pryor, staged protests outside Burger King restaurants across the United States calling for the company to establish new compliance guidelines for its poultry suppliers.cite press release |url=http://www.goveg.com/corp_murderk.asp |title=Victory: PETA Wins 'Murder King' Campaign! |author=PETA |publisher=PETA |date= 2001-06-29|accessdate=2008-06-03 |quote=On June 28, 2001, PETA called off its 'Murder King' campaign, which involved provocative ads; celebrity support from Alec Baldwin, James Cromwell, and Richard Pryor; and—with the help of activists—more than 800 protests at Burger King restaurants worldwide. ] On June 28, 2001, Burger King agreed with the group and established a contractual framework for its suppliers defining procedures to ensure that its suppliers were conforming to agreed standards of animal welfare. These changes, along with the company's new vegetarian offering, the BK Veggiesandwich, drew praise from the group.cite press release |url=http://www.femail.com.au/murderking.htm |title=Burger King Complies With Demand for Improved Animal Welfare Standards. |author=PETA |publisher=Femail.com.au |date= 2001-06-28|accessdate=2008-03-09 |quote=The only way to avoid cruelty in meat production is to go vegetarian, but today Burger King has taken giant steps to improve the lives of millions of animals] [cite web |url=http://findarticles.com/p/articles/mi_m3190/is_12_36/ai_84237785 |title=PETA helps BK roll out vegetable-based burger |work=Nation's Restaurant News |date= 2002-03-05|accessdate=2008-03-09 |quote=Aided by former challenger PETA, the radical animal-rights group, Burger King Corp. began a national roll out of the new BK Veggie burger and new reduced-fat mayonnaise.]
In 2006, PETA went before Burger King Holding's board during its annual board meeting to request the company have its suppliers switch to a more humane method of slaughter called
controlled atmosphere killing(CAK) in the preparation of its poultry products. Using a different tack that went beyond stating that the procedure is more humane, the group claimed that the method was economically more feasible for the company as it reduces the chances of injury to workers in poultry factories and it produced better products by preventing injury to the animal. [cite web |url=http://www.bizjournals.com/southflorida/stories/2006/11/27/daily24.html?jst=b_ln_hl |title=PETA to criticize Burger King poultry choices |work=South Florida Business Journal |date= 2006-11-28|accessdate=2008-03-09 |quote=People for the Ethical Treatment of Animals said it will use its position as a Burger King Holdings stockholder at Wednesday's shareholder's meeting to show its position on the fast-food company's poultry practices.] Responding to this new protest in March 2007, Burger King announced an additional series of changes to it policies regarding animal welfare. In the policy change BK announced that it would favor suppliers of chickens that use CAK rather than electric shocks to knock birds unconscious before slaughter. The company went on to add new policies that require its pork and poultry suppliers to upgrade the living conditions of pigs and chickens; the rules require that two percent of its North American egg suppliers use cage-freeproduced eggs and 10 percent of it pork suppliers use crate free pigs for its pork products. PETA and the Humane Society of the United Stateswere quoted as saying that Burger King’s initiatives put it ahead of its competitors in terms of animal rights and welfare and that they were hopeful that the new initiative would trigger for reform throughout the fast food industry as a whole.cite web |url=http://www.nytimes.com/2007/03/28/business/28burger.html |title=Burger King Shifts Policy on Animals |author=Andrew Martin |work= The New York Times|date= 2007-03-28|accessdate=2008-03-09 |quote=In what animal welfare advocates are describing as a 'historic advance', Burger King, the world’s second-largest hamburger chain, said yesterday that it would begin buying eggs and pork from suppliers that did not confine their animals in cages and crates.] cite news |url=http://www.foxnews.com/story/0,2933,261903,00.html |title=Burger King Offers Cage-Free Food. |author=AP Wire |publisher= Fox News|date= 2007-03-28|accessdate=2007-08-21 |quote='Suppliers will hopefully respond by producing more of these types of products,' [PETA spokesman Matt] Prescott said. ]
Since the 1980s, several parties, including the
Center for Science in the Public Interest(CSPI), the British Heart Foundation,cite news |url=http://www.dailymail.co.uk/news/article-1020999/Waddling-centre-stage-6-Pack-monster-burger--fast-foods-latest-offering.html |title=The '6 Pack' calorie-busting monster burger that promotes 'social eating' |author=Chris Brook |work= The Daily Mail|date=2008-05-21 |accessdate=2008-06-12 |quote=One of these [Angus Burger] 'six-packs' contains almost the entire daily saturated fat allowance for a woman, and almost half the calories, so it is important that it is clear to customers that this meal is not suitable for an individual. - Victoria Taylor, dietitian for the British Heart Foundation ] the City of New York,cite web |url=http://query.nytimes.com/gst/fullpage.html?res=9D0CE6DA163CF93BA3575BC0A967958260&scp=1&sq=Burger%20Center%20for%20Science%20in%20the%20Public%20Interest&st=cse |title= How Fat? Burger King to Post Answers |author=Trish Hall |work= The New York Times|date= 1991-08-08|accessdate=2008-05-30 |quote=Executives of Burger King, based in Miami and owned by Grand Metropolitan P.L.C. of London, announced the plan yesterday after five months of discussion with New York [City] 's Consumer Affairs Commissioner, Mark Green.] and the Spanish government, have argued that Burger King has contributed to issues of obesity and unhealthy eating behaviors in Western nations by producing products that contain large amounts of salt, fat, trans-fatand calories.cite web |url=http://query.nytimes.com/gst/fullpage.html?res=9A0DE6DA1630F930A3575BC0A9619C8B63&scp=2&sq=Burger%20King%20Center%20Science%20Public%20Interest&st=nyt |title= Some Restaurant Chains Still Serve Too Much Trans Fat, Group Says |author=Ethan Wilensky-Lanford |work= The New York Times|date= 2007-08-03|accessdate=2008-05-26 |quote=Burger King French fries also have a high trans fat content, according to a study the group [CSPI] released yesterday, but McDonald's fries were found to have far less.] Since its purchase in 2002, the company has introduced several large, over-sized products including its European BK XXLline, British Angus burger six pack, Enormous Omelet Sandwichline and the BK Stackerline.cite web |url=http://www.komoradio.com/news/archive/4191016.html |title=Burger King Launches Line Of Jumbo High-Rise Burgers |author=Herb Weisbaum |publisher=KOMO Radio ( Seattle, WA) |date= 2006-07-06|accessdate=2007-10-24] cite web |url=http://www.usatoday.com/money/industries/food/2005-03-27-burger-king_x.htm | title=Burger King to offer whopper of a breakfast sandwich |author=Bruce Horovitz |work= USA Today|date= 2005-05-03|accessdate=2007-10-24] These new offerings, and others like them, have brought further international scorn and negative attention due the large portion size and increased amounts of unhealthy fats and trans-fats in these items. Many of these groups have accused Burger King and other fast food restaurant chains of failing to provide healthier alternatives. [cite web |url=http://www.nytimes.com/2006/07/28/business/media/28adco.html?_r=1&scp=9&sq=Burger%20King%20Center%20Science%20Public%20Interest&st=nyt&oref=slogin |title=U.S. Restaurant Chains Find There Is No Too Much |author=Melanie Warner |work= The New York Times|date= 2006-07-28|accessdate=2008-05-27 |quote=The restaurants, hoping to appeal to consumers looking for what the industry calls 'indulgent' offerings, are promoting the consumption of copious amounts of food. And nutritionists are calling these offerings anything but healthy.]
A 1985 agreement with the New York city public health commissioner's office over publication of nutritional data in regards to the food it sells helped define guidelines used by the city for the dissemination of nutritional information. In a five-month negotiation with Burger King and its then parent Grand Metropolitan, PLC, the company agreed to post a complete set of nutritional information that complied with the Federal Government's guidelines maximum daily recommended intake of fat and sodium. Additionally the data would be presented in a format that was easier for the general public to understand and use. On the basis of this agreement, New York public health commissioner Mark Green, with support of Mayor
David Dinkins, proposed legislation that would require all fast food restaurants to display nutritional data as well.
In response to the 2006 introduction of the BK XXL product line in Spain, the Health Ministry of the country made a public claim that the company had violated a voluntary agreement between itself and the Spanish Federation of Hoteliers and Restaurateurs, a group in which Burger King is a member. The agreement called on members of the federation to refrain from advertising larger portions of food, and the Minister of Health, Elena Salgado, claimed that the new promotion and the new sandwiches, averaging over 970 calories each, violated the accord.cite web |url=http://www.cbsnews.com/stories/2006/11/16/ap/health/mainD8LE8I081.shtml |title=Spain Nixes Burger King Ad |author=AP Wire |publisher=CBS News |date=
2006-11-16|accessdate=2007-09-26 |quote=Burger King should yank an ad campaign for its monster XXL burger _ the caloric equivalent of eating 10 fried eggs - because it violates a Spanish initiative against obesity, the Health Ministry said Thursday.] cite web |url=http://www.guardian.co.uk/media/2006/dec/06/spain.advertising |title=Spain tries to remove burger ads |author=Giles Tremlett |work= The Guardian|date= 2006-12-06|accessdate=2008-05-31 |quote=Spain's government was yesterday trying to stop the global fast-food chain Burger King advertising its biggest burgers on television as the health minister, Elena Salgado, warned of a growing obesity problem.] Furthermore, head of Spain's food regulatory body, Felix Lobo, stated a legal case could be made against Burger King for "illegally failing to comply with a contract". In a response to the Governments allegations, the European offices of Burger King released this statement: "In this campaign, we are simply promoting a line of burgers that has formed part of our menu in recent years. Our philosophy can be summed up with the motto 'As you like it,' in which our customers' taste trumps all." The company also explained that it had always worked "to reduce the risk of illness provoked by an inadequate diet and to promote a balanced ... diet". A spokesperson for the company also stated that customers have the choice of salads versus a Whopper and that they have the option to modify the their sandwiches as they please, and that the company was going to continue to advertising the products.
In May 2007 the
Center for Science in the Public Interest(CSPI) sought a state-level class action lawsuitagainst Burger King in the Superior Court for the District of Columbia over its concerns of the inclusion of trans-fats in foods served by Burger King and its failure to set a definitive time line for the elimination of them from the company's menu.cite web |url=http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20070517/burgerking_transfat_070517/20070517?hub=Health |title=Burger King responds to trans-fat cooking oil suit |author=AP Wire |publisher= CTV|date= 2007-05-17|accessdate=2007-09-28 ] cite web |url=http://www.marketwatch.com/news/story/burger-king-rolls-out-oil/story.aspx?guid=%7BF164F050-15EB-4747-956E-0EA76B4D8EC3%7D&dist=hplatest |title=Burger King rolls out oil without trans fat |author=Angela Moore |publisher= MarketWatch.com|date= 2007-07-06|accessdate=2005-05-30 |quote=Burger King was hit with a lawsuit recently, filed by the nonprofit Center for Science in the Public Interest, which complained that the restaurant chain was lagging in the industry in ridding its menu of foods cooked in oil containing trans fat.] The CSPI suit sought to require the company to place large heath warnings on the Burger King's food packaging explaining the dangers presented by trans-fat and the levels contained in the products. Burger King sought to move the case to the Federal courts and have the suit dismissed. While the Federal Courts agreed to hear the case, it denied the company's motion for dismissal, allowed the case to proceed, and sent the case back to Superior Court to face trial. [cite press release |url=http://www.cspinet.org/new/200802252.html |title=Court Rebuffs Burger King in Trans Fat Case |author=CSPI press relese |publisher= Center for Science in the Public Interest|date= 2008-02-09|accessdate=2008-05-30 ] To address the CSPI's legal challenge, as well as several laws passed in New York City, Philadelphia and other cities regarding the issue of trans-fats in its food, BK announced a plan in July 2007 to phase out all trans-fats from its products by the end of 2008.cite web |url=http://cityroom.blogs.nytimes.com/2007/08/02/want-some-trans-fats-with-those-fries/?scp=3&sq=Burger%20King%20Center%20for%20Science%20in%20the%20Public%20Interest&st=cse |title=Want Some Trans Fats With Those Fries? |author=Sewell Chan |work= The New York Times|date= 2007-08-07|accessdate=2008-05-30 |quote=Burger King said in a news release this month that it had 'begun the rollout of a trans-fat-free cooking oil to its restaurants in the United States.'] [cite web |url=http://www.msnbc.msn.com/id/19629720/ |title=Burger King to shift to trans-fat-free oil |author=Adrian Sainz, the Associated Press |publisher= MSNBC|date= 2007-07-06|accessdate=2008-05-30 |quote=Burger King said Friday it will use trans-fat-free cooking oil at all its U.S. restaurants by the end of next year  ...]
In response to the issue of childhood obesity, Burger King announced in October 2007 that it was joining The Council of Better Business Bureaus Children's Food and Beverage Advertising Initiative. The program is a voluntary self-regulation program designed to shift advertising messages aimed at children so that they encourage healthier eating habits and lifestyles. [cite press release |url=http://us.bbb.org/WWWRoot/SitePage.aspx?site=113&id=dba51fbb-9317-4f88-9bcb-3942d7336e87 |title=Children's Food and Beverage Advertising Initiative |publisher=The Council of Better Business Bureaus |accessdate=2007-10-04 ] As part of its participation in the program, Burger King announced a series of steps relating to its advertising and children's product lines it was committing itself to:
... In addition, Burger King Corp. will:
* Restrict advertising to children under 12 that uses third-party licensed characters to Kids Meals that meet its Nutrition Guidelines
* Refrain from advertising in elementary schools and from product placement in media primarily aimed at children under 12
* Promote Kids Meals that meet its Nutrition Guidelines on its Web site
* Promote healthy lifestyles and healthy dietary choices in advertisingcite web |url=http://www.reuters.com/article/domesticNews/idUSN1142981420070912?feedType=RSS&feedName=domesticNews |title=Burger King to limit ads aimed at children under 12 |author=Reuters |publisher=Reuters |date=
2007-09-12|accessdate=2007-10-04 ] cite press release |url=http://www.bk.com/companyinfo/content/news/detail.aspx?id=910 |title=Burger King Corporation joins the Council of Better Business Bureaus' Children's Food and Beverage Advertising Initiative |author=Burger King |publisher=Burger King Holdings |date= 2007-09-12|accessdate=2007-10-04 ]
The modified Kid's Meal line will include new products, such as broiled Chicken Tenders; apple "fries", French cut, raw apples served in a fry box; and Kraft macaroni and cheese. [cite web |url=http://www.usatoday.com/money/industries/food/2007-09-11-healthy-meals_N.htm |title=Burger King has a new twist on fries: Fresh Apples. |author=Bruce Horovitz |work=
USA Today|date= 2007-09-21|accessdate=2007-09-21 ] cite web |url=http://www.usatoday.com/money/industries/food/2007-09-12-burger-king-health_N.htm |title=Burger King to sell broiled chicken in healthier kid menu |author=Adrian Sainz |work= USA Today|date= 2007-09-12|accessdate=2007-09-12] According to the statement by the company's corporate parent Burger King Brands, the meals will contain no more than 560 calories per meal, less than 30 percent of calories derived from fat, less than 10 percent of calories from saturated fat, no added trans fats and no more than 10 percent of calories from added sugars. As of August 1, 2008, Burger King has introduced the product line in the United States, but not the broiled Chicken Tenders product that is available in the United Kingdom and Ireland.cite web |url=http://www.bk.com/Nutrition/PDFs/brochure.pdf |title=Burger King US Nutritional Brochure |author=BK publication |publisher=Burger King Holdings |date=January 2008 |accessdate=2004-10-27 |format=PDF] cite web |url=http://www.bk.com/#menu=2,-1,-1 |title=Burger King US Menu |author=BK publication |publisher=Burger King Holdings |accessdate=2008-06-01] cite web |url=http://www.burgerking.co.uk/pdfs/nutrition_allergen.pdf |title=Burger King UK Nutritional Brochure |author=BK publication |publisher=Burger King Holdings |accessdate=2004-10-27 |format=PDF] cite web |url=http://www.burgerking.co.uk/food/index.aspx |title=Burger King UK/Ireland Menu |author=BK publication |publisher=Burger King Holdings |accessdate=2008-06-01]
A protracted South Florida labor dispute between the
Coalition of Immokalee Workers(CIW) and growers of tomatoes in the region expanded to include Burger King and other major fast food companies, including McDonald'sand Yum! Brands. In 2001, the CIW sought a pay raise for tomato pickers in the region and, starting with its "Boot the Bell" campaign aimed at Yum! subsidiary Taco Bell, began to target the chains with protests, letter writing campaigns, and petitions demanding that the companies purchase tomatoes only from suppliers who agree to the pay increase.cite press release |url=http://www.ciw-online.org/about.html |title=About CIW |author=CIW publication |publisher= Coalition of Immokalee Workers|accessdate=2008-06-04 |quote=In 2001, we turned a new page in our organizing, launching the first-ever farmworker boycott of a major fast-food company -- the national boycott of Taco Bell ...] cite press release |url=http://www.pcusa.org/fairfood/pdf/summary.pdf |title=Coalition of Immokalee Workers and Yum Brands Reach Historic Agreement for Human Rights |author=Presbyterian Church (U.S.A.) |publisher=Presbyterian Church (U.S.A.) |date= 2005-03-12|accessdate=2008-06-08 |type=PDF |quote=In the ensuing years thousands of Presbyterians across the country upheld the boycott and wrote letters, prayed, protested and supported the CIW and its work.] cite web |url=http://www.8thdaycenter.org/resources/bulletins/06_0331%20Immokalee%20&%20McDonald's.html |title=Farmworkers Focus on McDonald's (letter writing campaign, 2005)|author=Eighth Day Center for Justice |publisher=Eighth Day Center for Justice |accessdate=2008-06-07 |quote=Contact McDonald's now, or at your earliest convenience and demand that they, too, pay a fair price for their tomatoes and that they work withthe CIW to end human rights violations in the fields.... Print out the sample letter below, or write your own, and mail or fax it to McDonald's Corporation ...] The campaign, which eventually attracted the support of religious groups, labor organizations, student groups and anti-slavery activists, became known as the Campaign for Fair Food with a stated goal to increase the wages of the pickers by 1¢ per pound picked above the 45¢ paid per bucket at the time, or about 77¢ for each 32-pound (14.5 kg) bucket in 2005 US dollars.cite web |url=http://www.thenation.com/doc/20071231/gould-wartofsky |title=Farmworkers and Students Take On Burger King |author=Michael Gould-Wartofsky |work= The Nation|date= 2007-12-14|accessdate=2008-06-04 |quote=Hundreds of students, workers, clergy and allied activists marched with them, as they have since the birth of the Campaign for Fair Food in 2001 ...] cite web |url=http://www.sanders.senate.gov/news/record.cfm?id=296872 |title=It's just a penny a pound, people |author=Robyn E. Blumner |work= The St. Petersburg Times, Reprinted by Sen. Bernie Sanders|date= 2008-04-24|accessdate=2008-06-04 |quote=Burger King Corp. has refused to join with other fast food giants to pay workers an additional penny per pound of tomatoes.] cite web |url=http://www.flex-news-food.com/pages/12757/Burger-King/Tomato/USA/tomato-pickers-protest-burger-king-miami-hq.html |title=Tomato Pickers Protest at Burger King Miami HQ |author=Reuters |publisher= Reuters|date= 2007-03-12|accessdate=2008-06-04 |quote=At the time of the McDonald's deal, the CIW said the extra penny would raise pickers' wages to 77 cents for each 32-pound (14.5 kg) bucket of tomatoes they picked, effectively a 71 percent wage hike.] In 2005, McDonald's Corporation and Yum! signed agreements acquiescing to the group's purchasing demands, although implementation was put on hold due to threats by the Florida Tomato Growers Exchange to fine its members $100,000 if they complied; however, Burger King corporate parent Burger King Brands declined to enter into a similar agreement with the group.cite web |url=http://www.qsrmagazine.com/articles/exclusives/0208/immokalee-1.phtml |title=Tomato Troubles |author=Jamie Hartford |work=QSR Magazine |date=February 2008 |accessdate=2008-03-28 |quote=We are working diligently to find a legal way to comply with this scheme.]
A December 2007 "QSR Magazine" article about the conflict claimed that Burger King Brands had devised a contingency plan to remove itself from the dispute. Citing internal company documents, the Associated Press stated BK had concerns that such agreements might prove to be a possible violation of anti-trust laws, had possible tax implications, and that there were issues with third-party oversight for the agreements. As part of the company's plan, "QSR Magazine" claimed that the company was going to cease purchasing product from suppliers with whom the CIW was in disagreement. In response, the company issued a press release in February 2007 claiming that while it is a large purchaser, it is not responsible for the pay rates of it suppliers' workers as wage disputes are the province of the producer. BK also pointed out that it has an open offer of employment for any dissatisfied CIW members and scholarships (through its Have it Your Way Foundation) for family members of CIW workers. [cite press release |url=http://www.bk.com/companyinfo/content/news/detail.aspx?id=899 |title=Burger King Corporation Issues "Penny per Pound" Statement |author=Burger King |publisher=Burger King Holdings |date=
In the release, Steven Grover, BK Vice President of Global Food Safety, Quality Assurance, and Regulatory Compliance, confirmed the factuality of the QSR report and that if the dispute between the growers and the CIW continues, the company would go forward with its plans to stop purchasing tomatoes from farms in the Immokalee region. The company stated it would purchase only one percent of its tomatoes from that area and other suppliers could easily make up the difference. Speaking on the dispute, Grover stated, "We’re being asked to do something that we have legal questions about. We want to find a way to make sure that workers are protected and receive a decent wage."cite web |url=http://www.nytimes.com/2007/12/24/us/24tomato.html?_r=1&adxnnl=1&oref=slogin&ref=us&adxnnlx=1198516223-xZ6CSo6cYFX5T2J1DjmZ3A&pagewanted=all |title=Tomato Pickers’ Wages Fight Faces Obstacles |author=Steven Greenhouse |work=
The New York Times|date= 2007-12-24|accessdate=2008-03-28 |quote=Steve Grover, vice president for food safety and regulatory compliance at Burger King, said his company rejected the coalition’s demands because it did not employ the pickers directly and did not know how it would pay them, withhold their taxes or determine their immigration status.] CIW spokesperson Julia Perkins faulted this move, stating, "... farm workers across the country and world face the same problems as those in the Immokalee region, but many do not have a human rights organization, such as the CIW, to stand up for their interests. Running away from the scene of the crime, does that make you any more innocent? Are they really willing to pay an exorbitantly higher transportation cost [s] to bring in tomatoes from overseas or Mexico and pass that on to their customers rather than pay a penny more per pound?"
In an April 2008 Senate hearing chaired by U.S. Sen.
Bernie Sanders(I-VT) regarding farm conditions, Eric Schlosser, author of the best-selling " Fast Food Nation", commented on Burger King's recalcitrance to sign an agreement with the CIW while Yum! and McDonald's had. Schlosser stated, "The admirable behavior of these two industry giants makes the behavior or Burger King ... seem completely unjustifiable."cite web |url=http://www.news-press.com/apps/pbcs.dll/article?AID=/20080704/NEWS01/107040011/1014/business |title=Burger King gets farm workers petition; Daughter of Burger King VP says dad wrote anti-coalition postings |author=Amy Bennett Williams |work= The Fort Meyers News-Press|date= 2008-04-28|accessdate=2008-04-28 |quote=At Senate hearings on farm conditions held by U.S. Sen. Bernie Sanders, I-Vt., earlier this month, Eric Schlosser, author of the best-selling 'Fast Food Nation,' praised Yum! and McDonald's for working with the coalition and urged Burger King to do the same. 'The admirable behavior of these two industry giants makes the behavior of Burger King ... seem completely unjustifiable.'] In May 2008 several issues came to the fore that damaged the credibility of Burger King and its position on the topic. Steven Grover was found to be trolling websites that have posted pro-CIW positions and opinions. Under an assumed screen name, Grover posted several comments disparaging the ethics and honesty of the leadership of the group.cite web |url=http://www.burson-marsteller.com/Newsroom/Lists/BMNews/DispForm.aspx?ID=3713&nodename=B-M in the News&subTitle=Burger King's Virtual Missteps 'a Cautionary Tale' |title=Burger King's virtual missteps `a cautionary tale' |author=Elaine Walker |work= The Miami Herald|date= 2008-05-18|accessdate=2008-05-24 |quote= The fast-food chain fired Grover and company spokesman Keva Silversmith last week for violating the company's Code of Business Ethics and Conduct.] Besides the trolling incident, several terse, stridently worded e-mails were sent from a possibly fictitious employee at the BK global headquarters in Miami to supporters and media groups;cite web |url=http://www.npr.org/templates/story/story.php?storyId=90268069 |title=Burger King Locked in Dispute with Farm Workers |publisher= NPR|date= 2008-05-08|accessdate=2008-07-31 |quote=Williams says a Burger King executive, Stephen Grover, has been tied to blog posts and e-mails spreading misinformation about the effort to secure a pay increase for the farm workers.] the company labeled these communications as unsanctioned and not reflecting official corporate positions. Additionally, Burger King was found to have hired an outside security company, Pembroke Pines, Floridabased Diplomatic Tactical Services, to infiltrate the CIW and its supporting groups and spy on their members.cite web |url=http://www.nytimes.com/2008/05/07/opinion/07schlosser.html?_r=1&oref=slogin |title=Burger With a Side of Spies |author=Eric Schlosser |work= The New York Times|date= 2008-05-07|accessdate=2008-06-09 |quote=And now it turns out that the Burger King Corporation, home of the Whopper, hired a private security firm to spy on the Student/Farmworker Alliance ...] After an investigation into the allegations, BK terminated Grover and company spokesman Keva Silversmith for their actions. Burger King also terminated its relationship with Diplomatic Tactical Services at approximately the same time as the employee terminations. Critics of the action, such as PR Watcheditor Sheldon Rampton, noted that it appeared that the two terminated employees were being made scapegoats by the company. Rampton went on to note that Silversmith had been, up to a few weeks before the story came to light, employed by the PR firm Edelman, which had been contracted by company parent Burger King Brands to provide PR services; Edelman has employed tactics on the behalf of its other clients, Wal-Martand Microsoft, which Rampton and his organization termed "sleazy". Sen. Sanders agreed with Rampton's claim of scapegoating, and called for hearings into the incidents to investigate the company's behaviors to see if other Burger King officers had instigated the attacks on the labor group as company policy. Sanders stated that he wished to "make sure that we find out how high up the corporate ladder this scheme went".
The issue was resolved on May 23, 2008 when BK CEO John Chidsey announced an agreement with the CIW granting the requested 1¢ pay increase to the workers. Chidsey also apologized on behalf of the company for the comments made about the pickers and the behavior of Grover and Silversmith. Additionally, the company agreed to provide a ½¢ per pound payment to the CIW to cover payroll taxes and administrative costs for the tomato growers.cite web |url=http://www.nytimes.com/2008/05/24/business/24farm.html?_r=1&sq=Burger%20King%20Tomatoes&st=nyt&oref=slogin&scp=1&pagewanted=print |title=Burger King Grants Raise to Pickers |author=Andrew Martin |work=
The New York Times|date= 2008-05-24|accessdate=2008-05-24 |quote=At a news conference on Capitol Hill, the hamburger chain, based in Miami, said it would pay tomato prices adequate to give workers a wage increase of 1.5 cents a pound.]
In the summer of 1999, a geopolitical dispute with the global Islamic community and Jewish groups in the United States and Israel arose over an
Israeli franchisee opening stores in the Israeli-occupied territories. When Burger King franchisee in Israel, Rikamor, Ltd., opened a store in the West Banksettlement of Ma'aleh Adumimin August of that year, Islamic groups, including the Arab Leagueand American Muslims for Jerusalem, argued that international Burger King parent Burger King Corporation's licensing of the store helped legitimize the disputed settlement.cite web |url=http://news.bbc.co.uk/1/hi/world/middle_east/415827.stm |title=Middle East protest grows against burger giant |author=BBC News |publisher= BBC|date= 1999-08-10|accessdate=2008-06-04 |quote=The Arab League is to consider backing a campaign to force the closure of a fast-food outlet in a West Bank Jewish settlement built on land seized during the 1967 war.] cite web |url=http://www.allbusiness.com/middle-east/israel/711850-1.html |title=U.S. Muslims Call For Burger King Boycott. |author=Candice Williams |work= Israel Faxx |date= 2007-07-07|accessdate=2008-06-27 |quote=A Washington-based Muslim group, American Muslims for Jerusalem, says it is calling on Muslims and Arabs to immediately boycott the fast food restaurant chain, Burger King, for a second time. In a news conference, the group says the Miami-based fast food] Beyond the called-for Islamic boycott of the company, the Arab League also threatened the revocation of the business licenses of Burger King's primary Middle Eastern franchise in the 22 countries that are part of the League's membership.cite web |url=http://www.allbusiness.com/retail-trade/eating-drinking-places/4284932-1.html |title=Middle East Muddle |author=Megan Steintrager |work=Nations Restaurant News |date= 2000-11-05|accessdate=2008-06-24 |quote=... and the Arab League has threatened to revoke contracts for 84 Burger Kings throughout the Middle East.]
Burger King Corporation quickly pulled the franchise license for that location and had the store shuttered explaining that Rikamor, Ltd. had violated its contract by opening the location in the West Bank.cite web |url=http://query.nytimes.com/gst/fullpage.html?res=9502E5D8103BF933A0575BC0A96F958260&sec=&spon=&pagewanted=all |title= Burger King Outlet in West Bank Becomes a Political Dispute |author=Deborah Sontag |work=
The New York Times|date= 1999-08-30|accessdate=2008-06-04 |quote=Now, after Burger King's decision on Thursday to cancel its franchise contract for the shop in Maale Adumim, Jewish groups are accusing the company of capitulating to Arab pressure.] Several American-based Jewish groups issued statements that denounced the decision as acceding to threats of boycotts by Islamic groups. Burger King Corporation issued a statement that it "made this decision purely on a commercial basis and in the best interests of thousands of people who depend on the Burger King reputation for their livelihood".cite web |url=http://www.jewishsf.com/content/2-0-/module/displaystory/story_id/11939/edition_id/230/format/html/displaystory.html |title=Dumping West Bank store puts Burger King in a pickle |author=Julia Goldman |work=The Jewish News Weekly |date= 1999-09-01|accessdate=2007-10-01 |quote=When the Burger King Corp. pulled its name from a franchise in the West Bank settlement of Ma'aleh Adumim on Thursday of last week, it claimed the reason was breach of contract. ] cite web |url=http://www.allbusiness.com/middle-east/israel/394208-1.html |title=Jews Plan to Boycott Burger King. |author=Israel Faxx news report |work= Israel Faxx |date= 1999-08-30|accessdate=2008-06-04 |quote=The Zionist Organization of America is considering calling for a worldwide Jewish boycott against Burger King, to protest its surrender to Arab threats and the closure of its branch in Ma'aleh Adumim.] An issue of a religious nature arose in 2005 in the United Kingdom when Burger King introduced a new prepackaged ice cream product; the label of the product included a silhouette of the ice cream that when rotated on its side bore a resemblance to the Islamic inscription for God, Allah(الله). When a British Muslim named Rashad Akhtar, a resident of the community of High Wycombe, was presented with the ice cream cone in a Park RoyalBurger King restaurant, he noticed the resemblance and became angered at what he felt was an offense to the Islamic faith.cite web |url=http://harpers.org/archive/2006/03/0080952 |title=I'm hatin' it |author=Davina Patel |publisher=" Harper's Magazine", excerpted from "Eastern Eye" |accessdate=2008-06-04 |quote=From a September interview with Rashad Akhtar, a twenty-seven-year-old British Muslim, who alleges that the graphic used on the lid of Burger King ice-cream cones resembles the Arabic spelling of 'Allah.'] After being informed of the likeness, the local Islamic group Muslim Council of Britainpointed out the issue of the possible interpretation to Burger King and its relevance to Shariah, the Muslim version of canon lawwhich governs the lives of members of the Islamic faith and carries the same weight as civil law in their belief structure. The company responded by voluntarily recalling the product and reissuing it with a new label.cite web |url=http://news.scotsman.com/latestnews/Burger-King-recalls-sacrilegious-desserts.2662082.jp |title=Burger King recalls 'sacrilegious' desserts |author=John Innes |publisher=Scotsman.com |date= 2005-09-07|accessdate=2008-05-10 |quote=The offending lid was spotted in a branch in Park Royal last week by business development manager Rashad Akhtar, 27, of High Wycombe.] The Muslim Council praised the company for its "sensitive and prompt action" in resolving the matter,cite web |url=http://archive.newsmax.com/archives/ic/2005/9/19/123348.shtml |title='Jihad' Threat Forces Burger King to Change Ice Cream Logo |author=NewsMax staff |publisher= NewsMax|date= 2005-09-15|accessdate=2008-06-04 |quote=It ["The Scotsman"] quoted a Muslim Council of Britain spokesman as commending the company for 'sensitive and prompt action.'] however Akhtar was not satisfied with the company's withdrawal of the product.
In response to the perceived
blasphemy, Akhtar declared it was his personal jihadto find those responsible for the packaging and destroy their professional status, personal life and the UK as a whole for having a culture allowing the insult to occur. This event, Akhtar's reaction and other similar issues with companies such as Nike and Unileverhave been used by conservative political critics, such as James Joyner, claiming that western nations and organizations are kowtowing too easily to Muslims' claims or threats and by commentators, including author Daniel C. Dennett, highlighting how factions of the Islamic faith gravitate towards iconoclasm.cite web |url=http://www.outsidethebeltway.com/archives/2005/09/_burger_king_recalls_sacrilegious_desserts/ |title=Burger King Stops Selling Anti-Muslim Ice Cream |author= James Joyner|publisher= Outside the Beltway |date= 2005-09-18|accessdate=2008-06-04 |quote=Burger King has stopped selling ice cream cones after a single idiot Muslim was offended by the shape of the swirl on the lid.] cite web |url=http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2005/10/04/do0402.xml |title= Making a pig's ear of defending democracy |author=Mark Steyn |work=The Telegraph |date= 2005-04-10|accessdate=2006-06-04 |quote=After all, how daffy does a Muslim's willingness to take offence have to be to get rejected out of court? Only the other day, Burger King withdrew its ice-cream cones from its British restaurants because Mr Rashad Akhtar of High Wycombe, after a trip to the Park Royal branch, complained that the creamy swirl on the lid resembled the word 'Allah' in Arabic script.] cite web |url=http://www.nytimes.com/2006/02/20/arts/20conn.html?scp=1&sq=Burger+King+Islam+Ice+Cream&st=nyt |title=History Illuminates the Rage of Muslims |author=Edward Rothestien |work= The New York Times|date= 2006-02-20|accessdate=2008-06-04 |quote=Today's Iconoclasts want to oppose all attempts to display forbidden images, whatever their provenance. And for a variety of reasons, many in the West readily defer. Last fall, for example, Burger King withdrew its ice cream from restaurants in Britain after receiving complaints from Muslims that the swirling illustration on the package resembled the name of Allah.]
Cases of note
Burger King Corporation v. Hungry Jack's Pty Limited
When Burger King moved to expand its operations into Australia in the early 1970s, it found that its business name was already trademarked by a takeaway food shop in
Adelaide.cite journal |title=Where's the Beef? Why Burger King Is Hungry Jack's in Australia and Other Complications in Building a Global Franchise Brand |author=Andrew Terry |coauthors=Heatrher Forrest |journal=Northwestern Journal of International Law and Business, 2008 |volume=28 |issue=2 |pages=pp. 171–214 |issn=01963228 |date=2008 |accessdate=2008-07-27 ] As a result, Burger King provided the Australian franchisee, Jack Cowin, with a list of possible alternative names derived from pre-existing trademarks already registered by Burger King and its then corporate parent Pillsbury that could be used to name the Australian restaurants. Cowin selected the "Hungry Jack" brand name, one of Pillsbury's US pancake mixture products, and slightly changed the name to the possessive form, "Hungry Jack's".cite web |url=http://www.smh.com.au/articles/2003/06/01/1054406074309.html |title=Burger King slips into Hungry Jacks uniform |author=AP Wire |work= The Sydney Morning Herald|date= 2003-06-02|accessdate=2008-03-08 |quote=Burger King Corp's new management said on Friday it was ceding the Australian market to the Hungry Jack's brand, dissolving a convoluted relationship that at one time went to court in a franchising dispute.] The first Australian franchise of Burger King Corporation was established in Perth in 1971, under the auspices of Cowin's new company Hungry Jack's Pty, Limited.cite web |url=http://www.allbusiness.com/retail-trade/eating-drinking-places/4275422-1.html |title=Burger King Re-flags Australian Stores |author=Restaurant Business News |publisher=AllBusiness.com |date=2003-05-30 |accessdate=2007-09-29 |quote=Mr Cowin bought the Australian franchise for Burger King from the chain's then-owner, Pillsbury Co. But because the Burger King name was already registered in the country, Cowin used a Pillsbury pancake-mix brand, Hungry Jack, for his stores.... Hungry Jack's was BK's original franchisee in Australia, but the company could not use the Burger King name at the time because it was already trademarked.]
In 1990, Hungry Jack's renewed its
franchise agreementwith then BK parent Burger King Corporation, which allowed Hungry Jack's to license third party franchisee. One of the terms and conditions of the renewed agreement required Hungry Jack's to open a minimum number of new locations each year for the duration of the contract. Shortly after the Australian trademark on the Burger King name lapsed in 1996, Burger King requested that Cowin rebrand the Hungry Jack's locations to Burger King, which Cowin declined.cite web |url=http://www.smh.com.au/articles/2002/04/24/1019441267050.html |title=Jack not so hungry for Burger King |author=Allison Jackson |work= The Sydney Morning Herald|date= 2002-04-25|accessdate=2008-07-27 |quote=Burger King wanted Cowin to change the Hungry Jack's outlets to the Burger King brand when the copyright ended, though Cowin resisted.] A short time later, Burger King Corporation leveled an accusation that Hungry Jack's had violated the conditions of the renewed franchise agreement by failing to expand the chain at the rate defined and sought to terminate the agreement. Under the aegis of this claim, Burger King Corporation, in partnership with Royal Dutch Shell's Australian division Shell Company of Australia Ltd., began to open its own stores in 1997 beginning in Sydneyand throughout the Australian regions of New South Wales, Australian Capital Territoryand Victoria.cite web |url=http://www.zarcolawfirm.com/CM/News/news26.asp |title=Burger King Hit With Whopper ($44.6 Million) Of A Judgment |author=Alina Matas |publisher=Zargo Einhorn Salkowski & Brito. P.A. |date= 1999-11-11|accessdate=2007-09-29 ] cite web |url=http://southflorida.bizjournals.com/southflorida/stories/2003/05/26/daily36.html |title=In Australia, Burger King to become 'Hungry Jack's' |work=South Florida Business Journal, |date= 2003-05-30|accessdate=2007-09-29] cite press release |url=http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/11-06-1998/0000795657&EDATE= |title=Burger King Corporation Announces The Opening Of The Company's 10,000th Restaurant |author=Burger King |publisher= PR Newswire|date= 1998-11-06|accessdate=2008-03-08 |quote=Burger King Corporation announced today that it is opening its 10,000th restaurant in Australia on Saturday, November 7, a major milestone in the fast-food giant's development plans.] In addition, BK sought to limit HJ's ability to open new locations in the country, whether they were corporate locations or third-party licensees.cite web |url=http://www.findlaw.com.au/articles/default.asp?task=read&id=4242&site=LE |title=A Franchiser’s Duty of Good Faith and Fair Dealing |author=Rani Mina ( Corrs Chambers Westgarth) |publisher= Findlaw(Australia) |accessdate=2008-06-01 |quote=In contrast, it was necessary to imply this duty good faith in the Burger King case to give business efficacy to the agreement because the agreement gave Burger King a discretionary power to terminate the agreement on the basis of operational and financial grounds that involved subjective considerations. Burger King could terminate the agreement for the slightest breach based on a subjective evaluation of the circumstances if it were not obliged to act in good faith.]
As a result of Burger King's actions, Hungry Jack's owner Jack Cowin and his private
holding company Competitive Foods Australiabegan legal proceedings in 2001 against Burger King's parent Burger King Corporation with a counter-claim that the company had violated the conditions of the master franchising agreement and was in breech of the contract. In a decision handed down by the Supreme Court of New South Walesthat affirmed Cowin's claims, Burger King was determined to have violated the terms of the contract and as a result was required to pay Cowin and Hungry Jack's a AU$46.9 million (US$41.6 million 2001) award.Burger King Corporation v Hungry Jack's Pty Ltd Cite Case AU|NSWCA|187|2001] The court's decision was one of the first major cases in Australia that implied that the American legal concept of good faithnegotiations does exist with the framework of the Australian legal system, which until the time of the verdict had been rarely seen in the country's courts.cite web |url=http://www.aar.com.au/pubs/comp/trpjun0100.htm |title=Importing into Australian law the US notion of good faith in contract-related dealings |publisher= Allens Arthur Robinson|accessdate=2008-05-24 |quote=Now, it seems that the Courts are using these concepts in commercial disputes in New South Wales. An unreported judgment late last year in Hungry Jack's v Burger King indicates that the notion of good faith may well be implied between the parties in some contractual disputes.] In its decision, the Court stated that Burger King had failed to act in good faith during contract negotiations by seeking to include standards and clauses that would engineer a default of the franchise agreement, allowing the company to limit the number of new Hungry Jack’s branded restaurants and ultimately claim the Australian market as its own, a purpose that was extraneous to the agreement.cite web |url=http://www.findlaw.com.au/articles/default.asp?task=read&id=3130&site=LE |title=Franchisors and good faith |author=Leiann Comben |publisher= Findlaw.com(Australia) |accessdate=2008-06-02 |quote=The Court found that Burger King's conduct, including its conduct in purporting to terminate the agreement, breached its obligation of good faith and reasonableness because its actions were neither reasonable nor for a legitimate purpose. Instead, the actions were taken: ] Burger King Corporation v Hungry Jack's Pty Ltd Cite Case AU|hcatranscripts|S157|1|2001]
After Burger King Corporation lost the case, it decided to terminate its operations in the country and in July 2002 the company transferred its assets to its New Zealand franchise group, Trans-Pacific Foods (TPF).cite press release |url=http://www.istart.co.nz/index/HM20/PC0/PVC197/EX28864/CS27744 |title=Burger King all fired up about Microsoft Great Plains Professional |author=Olympic Software |publisher=iStart |accessdate=2008-07-27 |quote=TPF Restaurants manages the New Zealand Burger King franchise. Established in New Zealand in 1994, the company now has 65 restaurants in New Zealand and a growing operation in Australia.] The terms of the sale had TPF assume oversight of the Burger King franchises in the region as the Burger King brand's master franchisee.cite press release |url=http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/04-24-2002/0001713374&EDATE= |title=Burger King Corporation Announces New Agreement Creating A Growth Platform For The Burger King(R) Brand In Australia |author=Burger King |publisher=
PR Newswire|date= 2002-04-24|accessdate=2008-07-27 |quote=The agreement also includes servicing the 21 existing BURGER KING franchisees, all new franchisees operating under the BURGER KING brand and the responsibility for growth and development of the brand in Australia] Trans-Pacific Foods administered the chain's 81 locations until September 2003 when the new management team of Burger King Corporation reached an agreement with Hungry Jack's Pty Ltd to re-brand the existing Burger King locations to Hungry Jack's and make HJP the sole master franchisee of both brands. An additional part of the agreement required Burger King Corporation to provide administrative and advertising support as to insure a common marketing scheme for the company and its products. [cite web |url=http://findarticles.com/p/articles/mi_m3190/is_23_37/ai_103382728 |title=Hungry Jack's to replace BK brand in Australia |author=The Gale Group |work=Nations Restaurant News |date= 2003-06-09|accessdate=2008-03-08 |quote='Consolidation means more money for marketing and will create a powerful, single brand with an increased focus on operations excellence that should add to growth in profitability', Brad Blum, chief executive of Miami-based Burger King, said.] Trans-Pacific Foods transferred its control of the Burger King franchises to Hungry Jack's Pty Ltd, which subsequently renamed the remaining Burger King locations as "Hungry Jack's".
Burger King v. Rudzewicz
In 1979, two Michigan businessmen, John Rudzewicz and Brian MacShara, entered into a franchise agreement with Burger King to run a restaurant in Detroit. After attending four months of training courses at the regional Burger King training facilities in Michigan and in the Florida headquarters on how to operate and administer a Burger King franchise, it was agreed that the partners would take over operation of an existing Burger King location in
Drayton Plains, Michigan. However, during this time disagreements arose between the partners and BK over issues of rent, construction fees, building designs and the assignment of legal liabilities. MacShara and Ruzewicz finally signed their franchise agreement after gaining limited concessions over the issues, with Rudzewicz assuming a 20-year, $1,000,000 financial obligation over the life of the contract.cite book |url=http://books.google.com/books?id=r7Psaabe_U8C&pg=PA244&lpg=PA244&dq=Burger+King+v.+Rudzewicz&source=web&ots=gZD77z7Rok&sig=RMA00heD0UxxajBgfKF8dzhh_zo&hl=en&sa=X&oi=book_result&resnum=6&ct=result#PPA245,M1 |title=Cases, Text, and Problems on Civil Procedure |author=Larry L. Teply |coauthors=Ralph U. Whitten |others=Denis F. McLaughlin |publisher=Wm. S. Hein Publishing |date=2002 |isbn=0837737257 |page=pp. 244–258 |quote=]
Due to a
recessionary period in the United States beginning with the energy crisis in late 1979, sales began to decline at the location and the partnership failed to pay their required franchise fees and rent service to Burger King Corporation. After attempts over the intervening months to negotiate a compromise with MacShara and Ruzewicz failed,Teply, p. 246 – Burger King's policy was to have the corporate home office negotiate directly with franchises that were in financial distress in order to come to a solution mutually resolving the issue.] Burger King terminated the franchise agreement and ordered the pair to vacate the property. Rudzewicz and MacShara refused to comply and continued operation of their restaurant even after after they were served the notice. Burger King response was to file a lawsuit in May 1981 in the United States District Court for the Southern District of Floridaclaiming breach of contractand trademark infringement. Burger King sought an injunction against the pair preventing them from operating the restaurant and seeking damages because MacShara and Ruzewicz were "... tortiously infringing its [Burger King] trademarks and service marks through their continued, unauthorized operation as a Burger King restaurant". The company also sought reimbursement of all legal fees and costs associated with the filing.
The defendants, MacShara and Rudzewicz, filed a motion to dismiss the case on the argument as Michigan residents, the District Court of Southern Florida did not have jurisdiction. After a hearing, the Court ruled that Florida has personal jurisdiction under State of Florida's
long-arm statute,§ 48.193(1)(g) (Supp. 1984) of the Florida Statutes] stating that "... a non-resident Burger King franchise is subject to the personal jurisdiction of this Court in actions arising out of its franchise agreements". The partners filed a counter claim and alleged Burger King had violated Michigan's Franchise Investment Law and sought damages and fees.§ 445.1501 "et se." (1979) of the Michigan Statutes] After a short trial, the Court found for Burger King and ordered Rudzewicz and MacShara to close the restaurant and awarded BK damages fees and costs.
After the loss, MacShara withdrew from the case but Rudzewicz appealed the decision to the
United States Court of Appeals for the Eleventh Circuit.Teply, p. 247 – MacShara did not appeal his judgement ...] In the filing, Rudzewicz claimed that since they were residents of Michigan, and because the claims did not arise within the Southern District of Florida, that District Court lacked personal jurisdiction over them.cite court |litigants=Burger King Corp. v. MacShara |vol=724 |reporter=F.2d |opinion=1505 |court=11th Cir.(Fla.) |date=1984-02-13 |url=http://bulk.resource.org/courts.gov/c/F2/724/724.F2d.1505.82-5424.html] Additionally it was claimed that the long-arm statute violated the 14th Amendment and was unconstitutional. Citing a similar case, World-Wide Volkswagen Corp. v. Woodson, the Appeals court agreed with the defendants and overturned the lower court's decision.cite court |litigants=Burger King Corp. v. Rudzewicz |vol=471 |reporter=U.S. |opinion=462 |court=SCOTUS |date=1985-05-20 |url=http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=CASE&court=US&vol=471& |quote=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.] The court also agreed with Rudzewicz's assertion of the constitutionality of Florida's long arm statute in its application to the case.
In turn, Burger King Corporation asked for a rehearing, which was denied.cite court |litigants=Burger King Corp. v. MacShara |vol=729 |reporter=F.2d |opinion=1468 |court=11th Cir.(Fla.) |date=
1984-03-22] Burger King then filed an appeal to the US Supreme Court, which agreed to hear the case on its merits, after which it would decide if it had jurisdiction to grant a writ of certiorari.105 S.Ct. 77, (US FL OCT 1, 1984) (Mem)] In its decision, the Supreme Court overturned the Appellate Court and found that Florida does have jurisdiction in the case. The Court concluded that the defendants, Rudzewicz and MacShara, sought out their franchise in the state of Florida and were availed of the protections of that state and were, therefore, subject to jurisdiction there. Additionally, the Court reasoned that the defendants had a "substantial and continuing" relationship with Burger King in Florida and that due process would not be violated because the defendants should have reasonably anticipated being summoned into court in Florida for breach of contract.cite book |url=http://www.aspenpublishers.com/Product.asp?catalog_name=Aspen&product_id=0735564000 |title=Federal Rules of Civil Procedure: With Selected Statutes |author=Steven G. Yeazell |publisher=Aspen Publishers |date= 2005-05-21|isbn=0735551529 |pages=pp. 137–144]
The decision in Burger King Corp. v. Rudzewicz, has been criticized as complicating "personal jurisdiction jurisprudence by creating, in dicta, a new bifurcated test" that duplicates a venue analysis, adds little to the minimum contacts inquiry, hinders predictability, is a burdensome process, and potentially allows a plaintiff to manipulate a defendant's constitutional rights.cite journal |author=Mona A. Lee |title=Burger King's Bifurcated Test For Personal Jurisdiction: The Reasonableness Inquiry Impedes Judicial Economy And Threatens A Defendant's Due Process Rights |journal=Temple Law Review |volume=66 |pages=p. 945 |publisher=
Temple Universityof the Commonwealth System of Higher Education |date=Fall 1993] cite journal |author=David S. Welkowitz |title=Beyond Burger King: The Federal Interest In Personal Jurisdiction |journal=Fordham Law Review |volume=56 |issue=1 |publisher= Fordham Law School|date=October 1987]
Burger King of Florida, Inc. v. Hoots
As the company expanded, it was subject to several legal issues regarding trademarks. Because of its use as a case study in American law schools, one of the most prominent incidents of infringement in the United States occurred with the similarly named Burger King located in
Mattoon, Illinois. Eugene and Elizabeth Hoots owned an ice cream shop in the city of Mattoon; due to the success of the store, in 1957 they expanded it with an additional shop in a former garage next to the original operation. Keeping with theme related to the name of the ice cream shop, "Frigid Queen", they named their burger stand "Burger King" and registered their trademark with the state of Illinoisin 1959. In 1962 The Hootses, with knowledge of the Federal trademark held by Burger King Corporation, added a second location in Charleston, Illinois.cite web |url=http://www.illinoistimes.com/gyrobase/Content?oid=oid%3A2686 |title=The Burger King and Queen of Mattoon |author=John Jermaine |work= Illinois Times|date= 2003-11-20|accessdate=2007-09-26 ]
In 1961, with its first location in
Skokie, Illinois, Burger King Corporation and its franchises began opening stores and by 1967 had over 20 locations spread throughout the state. The Hootses, claiming that their trademark gave them exclusive rights to the name in Illinois sued BK in the state, and later federal, courts under the case "Burger King of Florida, Inc. v. Hoots 403 F.2d 904 (7th Cir. 1968)". The decision issued by United States District Court for the Central District of Illinois, and upheld by the United States Court of Appeals for the Seventh Circuit, stated that the BK federal trademark, applied for in 1961 and granted in 1963, took precedence over the Hootses' older, state trademark; The Court granted the Hootses exclusive rights to the Burger King trademark within a circular area defined with a 20-mile (32 km) radius centered on their original location.403 F.2d 904 – The district court defined the Mattoon market area as a circle having a radius of twenty miles and a center located at the defendants' place of business in Mattoon, Illinois] 403 F.2d 904 – The court cited numerous examples where the federal law explicitly gave federal trademarks stronger weight than other kinds. See, for example, USC|15|1127: "The intent of this chapter is ... to protect registered marks used in such commerce from interference by State, or territorial legislation."]
The Burger King v. Hoots trademark dispute and its resulting decision went beyond the original case, it established a major
legal precedentin the United States in regards to the Lanham Act.cite court |litigants=Burger King of Florida, Inc. v. Hoots |vol=403 |reporter=F.2d |opinion=904 |court=U.S. App. 7th Cir. |date= 1968-11-15|url=http://bulk.resource.org/courts.gov/c/F2/403/403.F2d.904.16706_1.html |quote=We affirm the judgment restraining the defendants from using the name 'Burger King' in any part of Illinois except in their Mattoon, Illinois, market, and restraining plaintiffs from using their trade mark in the market area of Mattoon, Illinois ] The ruling states that while the senior user of the state service markor trademark has prior usage of the common law marks, federal statute overrides the earlier, state service mark and prohibits the senior user from preventing the junior user from exercising the use of the federally registered mark outside a defined geographic reach of the senior user. [cite book |title=Fundamentals of United States Intellectual Property Law: Copyright, Patent and Trademark |author=Sheldon W. Halpern |coauthors=Craig Allen Nard |others=Kenneth L. Port |work=Kluwer Law International |date=2006 |isbn=904112599X |url=http://books.google.com/books?id=ZATG6vcJxQ0C&pg=PA354&lpg=PA354&dq=burger+king+of+florida+inc+v+hoots&source=web&ots=fJBF-gymTP&sig=JhzvDkU98F0Y5-xQP1lZzxv6T-0&hl=en |page=p. 354, text and footnote 326 |quote=Because of the nature of Commerce in the United States has changed so dramatically in the last 50 years with changes in transportation, communication and marketing, state boundaries are becoming less and less relevant in determining the geographical scope of unregistered trademarks] [cite book |url=http://www.cap-press.com/books/1345 |title=Trademark Law and Policy |author=Kenneth L. Port |publisher=Carolina Academic Press |date=2004 |isbn=1594600198 |pages=pp. 184–187]
The Hoots decision would again affect Burger King as it moved in to the state of
Texas.Barkoff – p. 23, footnote 85] When Burger King expanded into the San Antonio area, it was prevented from utilizing the name of its signature product, the Whopper, in its local advertising and stores due to a prior state registered service mark owned by a local chain known as Whopper Burger.cite book |url=http://books.google.com/books?id=eVmD3FAG3zgC&printsec=frontcover&dq=Fundamentals+of+Franchising&rview=1&sig=ACfU3U2UKUN5gnUt4-cPAoDFwTLrGxClSA#PPR3,M1 |title=Fundamentals of Franchising |author=Rupert M. Barkoff |publisher= American Bar Association|date=2005-01-25 |isbn=1590314093 |page=p. 23 ] The chain, owned by Frank and Barbara Bates, prevented the company from using the name in Bexar Countyfor several years until Mrs. Bates, the CEO of Whopper Burger after the death of her husband in 1983, retired and sold the chain with its related trademarks to then-corporate parent Pillsbury in the mid-1980s.cite press release |url=http://www.acu.edu/acutoday/documents/2008winter/2008_Alumni_Awards.pdf |title=2008 Abilene Christan University Alumni awards |author=Sarah Carlson |publisher=Abilene Christan University |date=January 2008 |quote=Johnston and her husband, Frank M. Bates, owned and operated a fast food business in San Antonio called Whopper Burger – a restaurant chain that kept Burger King and its own star sandwich out of San Antonio for years because of trademarks on 'whopper.' Bates died in 1983 from cancer and Johnston served as president of Whopper Burger for several years until selling to the Pillsbury Company ... |type=pdf]
Burger King franchises
McDonald's legal cases
;Cases citing Rudzewicz:
* [http://caselaw.lp.findlaw.com/scripts/casesearch.pl?court=circs&CiRestriction=%22471+U.S.+462%22& Cases cited at the Circuit Court level] Findlaw
* [http://caselaw.lp.findlaw.com/scripts/casesearch.pl?court=us&CiRestriction=471+u.s.+462& Cases cited by the United States Supreme Court] Findlaw
;Cases citing Hoots:
* [http://caselaw.lp.findlaw.com/scripts/casesearch.pl?court=circs&CiRestriction=403+F.2d+904 Cases cited at the Circuit Court level] Findlaw
* [http://caselaw.lp.findlaw.com/scripts/casesearch.pl?court=US&CiRestriction=403+F.2d+904 Cases cited by the United States Supreme Court] Findlaw
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