The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
1. breach of his fiduciary duties; and
2. misappropriation of Duff & Phelps' facilities
for use in Guy's own business.
On July 12, 1985 this Court granted Duff & Phelps' motion for
summary judgment on each of Guy's claims. Guy has now moved under
Fed.R.Civ.P. ("Rule") 56 for summary judgment on Duff & Phelps'
counterclaim. For the reasons stated in this memorandum opinion
and order, Guy's motion is denied.
Duff & Phelps is an Illinois corporation in the service
business: providing investment research, credit ratings,
financial consulting and investment management. In 1978 Guy
joined Duff & Phelps as a vice president responsible for
developing Duff & Phelps' computer capability and for studying,
teaching and implementing new methods of quantitative analysis in
investment research and management.
In 1981 (while still employed by Duff & Phelps) Guy applied to
the Commodities Futures Trading Commission ("CFTC") to become a
registered commodities trading advisor. He then began a small
commodity trading business without informing anyone at Duff &
Phelps. He operated the business from his home and then from an
office in the basement of a friend's home (Guy Dep. 6-7, 292-94).
He did some of the work at Duff & Phelps' offices between 7:00
and 7:30 a.m., before Duff & Phelps' regular business hours (id.
at 154). During that time he did however use Duff & Phelps'
telephones and occasionally its computer (id. at 131, 154,
171-72), and he frequently used Duff & Phelps' telephones during
its regular business hours (Hansen Aff. ¶ 3; Guy Dep. 171).
By July 1983 Guy had 50 to 60 customers and managed portfolios
with total assets of about $4 million (Guy Dep. 105-06, 108,
124). Earnings from his business exceeded $95,000 in 1982 and
$43,000 during the first 8 1/2 months of 1983 (D. Ex. A).
Duff & Phelps did not learn of Guy's business until late May or
early June 1983, when Hansen questioned Guy about the early
morning phone calls he often received at work (Guy Dep. 148-51;
Hansen Dep. 33-34). Guy told Hansen about the business and
provided him with documents at his request (Guy Dep. 150-51;
Hansen Dep. 35-44). About a month later Hansen told Guy he would
have to abandon his own business if he wanted to stay with Duff
& Phelps (Guy Dep. 163-64), giving Guy another month to think
over his choice (id. at 164). On July 29 Guy met with Hansen
again and said he would not give up his own business (Hansen Dep.
61). Hansen then fired him effective December 31, 1983. That date
was later advanced to September 15, 1983 by agreement (at least
in the sense Guy was given a choice between a September 1 and 15
departure) (Guy Dep. 188-89, 245).
Subject Matter Jurisdiction
Guy maintains Duff & Phelps' counterclaim is permissive in Rule
13(b) terms, thus requiring an independent federal jurisdictional
basis. Guy then says the counterclaim falls outside this Court's
diversity jurisdiction because Duff & Phelps has not alleged in
good faith an amount in controversy exceeding $10,000. That
notion is wholly without merit.
Guy's argument totally misperceives the thrust of the
jurisdictional amount requirement. St. Paul Mercury Indemnity Co.
v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 590, 82 L.Ed.
845 (1938) (footnotes omitted) remains the leading authority on
The rule governing dismissal for want of jurisdiction
in cases brought in the federal court is that, unless
the law gives a different rule, the sum claimed by
the plaintiff controls if the claim is apparently
made in good faith. It must appear to a legal
certainty that the claim is really for less than the
jurisdictional amount to justify dismissal. The
inability of plaintiff to recover an amount adequate
to give the court jurisdiction does not show his bad
faith or oust the jurisdiction. Nor does the fact
that the complaint discloses the existence of a valid
defense to the claim. But if, from the face of the
pleadings, it is apparent, to a legal certainty, that
the plaintiff cannot recover the amount claimed, or
if, from the proofs, the court is satisfied to a like
certainty that the plaintiff never was entitled to
recover that amount, and that his claim was therefore
colorable for the purpose of conferring jurisdiction,
the suit will be dismissed.
Here Duff & Phelps' breach-of-fiduciary-duty claim seeks to
recover: (1) all Guy's profits (over $100,000) plus (2) damages
for the unauthorized use of Duff & Phelps' equipment.
Unquestionably that puts more than the jurisdictional amount into
Guy claims his proffered evidence establishes Duff & Phelps
must lose on the merits. But even if he were right (and the later
discussion shows he is not), his bizarre view of subject matter
jurisdiction would convert every successful summary judgment
motion by a diversity-jurisdiction defendant (and even many a
final judgment for such a defendant after trial) into a
jurisdictional dismissal. Pursued to its logical end, Guy's
position would foreclose federal courts from ever ruling for
defendants on the merits in diversity cases, for the very
decision that a plaintiff could ...