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

United States Court of Appeals for the Second Circuit
937 F.2d 82 (2d Cir. 1991)


Facts

A.F.A. Tours, Inc. (AFA) (plaintiff) brought a diversity suit in federal court against Desmond Whitchurch (defendant), a former AFA employee, for misappropriation of trade secrets. AFA sought an injunction and damages “in an amount which [wa]s not . . . ascertainable, but which [wa]s believed to exceed the sum of $50,000.00.” AFA also sought punitive damages for at least $250,000. Whitchurch filed a motion to dismiss and at the oral argument of that motion, the United States District Court for the Southern District of New York raised sua sponte the issue of amount in controversy. AFA claimed that a single tour could “easily generate more than $50,000.” However, at the close of those oral arguments, the court dismissed the suit for lack of subject matter jurisdiction, holding that AFA would not be able to prove damages equaling more than $50,000. At the time, the amount in controversy needed to exceed $50,000 to maintain federal diversity jurisdiction. AFA appealed.

Rule of Law

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Issue

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Holding and Reasoning (Kearse, J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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