Coventry Sewage Associates and Woodland Manor Improvement Association (Coventry) (plaintiffs) entered an agreement to provide private sewer services to The Stop & Shop Supermarket Company and its wholly owned subsidiary Dworkin Realty Co. (Stop & Shop) (defendants). Fees under the agreement were determined, in part, by the amount of water used by Stop & Shop. In order to track that amount, Stop & Shop forwarded to Coventry its invoices from the Kent County Water Authority (KCWA). After Coventry increased the service fee—contending that such increase was authorized by the parties’ contract—Stop & Shop stopped paying Coventry. In October 1994, Coventry sued Stop & Shop in a federal district court, under its diversity jurisdiction, seeking $74,953 for Stop & Shop’s nonpayment. In November, Stop & Shop asked KCWA about its invoices. KCWA determined that it had been incorrectly reading Stop & Shop’s water meters. KCWA submitted corrected invoices, which resulted in Coventry’s claim against Stop & Shop dropping to $18,667.18. The claim was reduced even further, to $8,485.40, when Stop & Shop paid the undisputed portion of the balance. Stop & Shop moved to dismiss Coventry’s suit on the ground that the reduced amount in controversy deprived the court of subject matter jurisdiction. The district court granted the motion to dismiss. Coventry appealed.