A.F.A. Tours, Inc. v. Whitchurch

937 F.2d 82, 1991 U.S. App. LEXIS 14879, 19 U.S.P.Q.2D (BNA) 1519

 

RULE:

Before making a determination that the plaintiff’s claim does not meet the jurisdictional minimum set by 28 U.S.C.S. § 1332, a federal district court must afford the plaintiff an appropriate and reasonable opportunity to show good faith in believing that a recovery in excess of the jurisdictional amount is reasonably possible.

FACTS:

The plaintiff, AFA, operated a travel and tour business, specializing in deluxe tours for U.S. residents to overseas destinations. It expended large sums of money and significant time and labor to develop its customer list, marketing information and tour information, and regarded this information as confidential trade secrets. AFA sued its former employee, Whitchurch, in a diversity suit in federal court for the misappropriation of trade secrets, and claimed it was entitled to damages exceeding the jurisdictional minimum of $50,000. The district court dismissed the complaint on the ground that it would not be possible for AFA to prove damages amounting to more than $50,000. AFA appealed.

ISSUE:

In determining whether the plaintiff meets the jurisdictional minimum to maintain a diversity action in federal court, does the sum claimed by the plaintiff, if made in good faith, control?

ANSWER:

Yes.

CONCLUSION:

The question of whether or not a customer list is a trade secret is generally a question of fact. In assessing the record to determine whether there is a genuine issue as to any material fact, the court is required to resolve all ambiguities and draw all factual inferences favor of the party against whom summary judgment is sought. Drawing all permissible fact inferences in favor of AFA, the district court could not have concluded that as a matter of law the list was not confidential or was unworthy of trade secret protection. The appeals court vacated the judgment and remanded back to the district court for further proceedings.

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