AFA Tours v. Whitchurch

937 F.2d 82 (2d Cir. 1991)

 

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:

Plaintiff corporation sued defendant, a former employee, for misappropriate of trade secrets. Plaintiff claimed defendant, after his resignation, made use for profit of client, marketing, and tour information developed by the corporation. The federal district court granted summary judgment to defendant, finding that irrespective of the factual issues as to whether the information in question was confidential and known by defendant to be confidential, plaintiff had failed to establish amount in controversy sufficient to invoke federal diversity jurisdiction. On appeal, the federal appellate court reversed and remanded.

ISSUE:

Whether the trial court applied the correct standard in dismissing plaintiff’s case for failure to establish that plaintiff could recover the jurisdictional amount.

ANSWER:

No.

CONCLUSION:

Pursuant to 28 U.S.C.S. § 1332, federal district courts have jurisdiction over civil diversity suits where the matter in controversy exceeds the sum or value of $50,000, exclusive of interest and costs. The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that the sum claimed by the plaintiff controls if the claim is made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify a dismissal, and a federal district court must afford the plaintiff an appropriate and reasonable opportunity to show good faith. The court held that plaintiff was not afforded a fair opportunity to support its claim that a sufficient amount in controversy existed, and that, assuming the amount in controversy was sufficient, factual disputes remained as to whether the information in question was confidential and whether defendant knew that. The case was remanded for further fact-finding as to the amount in controversy.

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