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

A.F.A. Tours, Inc. v. Whitchurch
937 F.2d 82 (2d Cir. 1991).

Facts	-A.F.A. Tours, Inc. (P) sued its former employee Whitchurch (D). -Plaintiff alleged that Defendant stole confidential information such as customer lists from Plaintiff after Defendant ceased employment with Plaintiff. -Plaintiff further alleged that Defendant used or intended to use such information in order to compete with Plaintiff. -Plaintiff requested compensatory damages in excess of $50,000 and punitive damages of $250,000. -New York law allowed punitive damages if there was willful and wanton misappropriation. -Defendant argued that the plaintiff did not satisfy the jurisdictional amount because he only acquired two customers signatures on tours and that the information that he used was not confidential.
Procedural History	-Whitchurch (D) moved for summary judgment. -The district court granted the motion on the grounds that there was no possible way that any fact finder would award damages to T.F.A. Tours and no possible basis for reaching the fifty thousand dollar amount in controversy requirement for diversity jurisdiction. -A.F.A. Tours appealed to the Court of Appeals for the Second Circuit. It contended that the dismissal was improper because the trial court failed to provide an opportunity to show that it satisfied the jurisdictional amount, and failed to apply the proper standard to A.F.A. Tours’ requests for damages and injunctive relief.
Issue	What is required for dismissal for lack of subject matter jurisdiction for failure to satisfy the amount-in-controversy requirement for diversity?
Holding	The Supreme Court of the United States established this test in St. Paul Mercury Indemnity Co. v. Red Cab Co. Federal district courts have jurisdiction over diversity actions where the amount in controversy exceeds $50,000, exclusive of interest and costs. The court can impose costs on the claimant if the claim is later found to be less than $50,000. In this case A.F.A. Tours was not afforded ample opportunity to prove that its claim could have exceeded $50,000.
Rules	Unless provided otherwise by law, the sum claimed by the plaintiff controls if the claim is apparently made in good faith. In order to justify dismissal, it must appear to a legal certainty that the claim is for less than the jurisdictional amount.
Analysis	-The judgment is vacated and remanded for further proceedings. In order to justify dismissal, a district court must show to a legal certainty that a plaintiff cannot recover the jurisdictional amount. -A plaintiff must be afforded a reasonable opportunity to show that it has a good faith belief that it is reasonably possible for the plaintiff to recover in excess of the jurisdictional amount. -In this situation, Plaintiff showed that if Defendant were eventually successful in acquiring 2% of Plaintiff’s entire clientele, the Plaintiff’s damages could be $51,000. In addition, the record could support a finding of punitive damages, which would meet the jurisdictional amount as well.