This section contains the nature of the case and procedural background.

A.F.A. Tours, Inc. (P) was in the tour business. They specialized in tours of the South Pacific and Australia. A former employee of P, Whitchurch (D), formed a competing company. D had been employed by P for 17 years prior to the formation of his new company. While working for P, D had access to customer lists, marketing and tour information. P filed an action against D in federal court in diversity jurisdiction for misappropriation of trade secrets in the form of customer lists. P sought an injunction against D’s use of that information. P wanted $50,000 in damages and punitives of $250,000. D moved for summary judgment on the merits and the court raised the issue of damages sua sponte. The evidence showed that D had in fact secured reservations for two of P’s customers and that the damages could not possibly exceed $50,000, the then minimum diversity jurisdiction amount. The court determined that P could not be awarded more than $50,000 and dismissed the action for lack of diversity jurisdiction for the failure to meet the amount in controversy requirement. P appealed.

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