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Federal Court Cannot Reduce Good-Faith Claim to Destroy Federal Diversity
Description Appeals court reversed decision of trial court to grant summary judgement to defendant on several counts, thereby reducing the amount in controversy to less than the minimum specified in the diversity statute, and, therefore dismissed the entire action. Good-faith claim must be heard.
Topic Court Procedure
Key Words Federal Jurisdiction, Amount in Controversy
C A S E   S U M M A R Y
Facts Herremans sued his former employer for violation of Indiana's wage statute and for breach of contract. Under the statute, Herremans' damages would be doubled, bringing the amount in controversy to over the minimum amount that must be in controversy under the diversity statute. The district judge granted employer summary judgment on several counts, which reduced the amount in controversy to less than the minimum amount, then dismissed the suit for failure to state the minimum amount needed to be in controversy to be in federal court. Herremans appealed.
Decision Reversed. "The test for whether a case satisfied the amount in controversy requirement is whether the complaint makes a good-faith claim for the amount, not whether the plaintiff is actually entitled to such an amount, Otherwise every diversity case that a plaintiff lost on the merits would be dismissed for lack of federal jurisdiction, allowing the plaintiff to start over in state court. There would be no merits decisions for defendants in diversity cases and no finality when defendants won." The federal judge should have heard the case on its merits.
Citation Herremans v. Carrera Designs, Inc., 157 F.3d 1118 (7th Cir., 1998)

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