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Herrick Co., Inc. v. SCS Communications, Inc.

The district court lacked federal subject matter jurisdiction over a lawsuit arising out of a business deal that went wrong. Observing that diversity jurisdiction is available only when all adverse parties to a litigation are completely diverse in their citizenships, the court concluded that the parties were not diverse and that remand was necessary for further consideration of the question of jurisdiction.

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Argued: Monday August 7, 2000

Appeal and cross-appeal from a grant of partial summary judgment and from a subsequent jury verdict as to those issues not decided on summary judgment. VACATED and REMANDED for further determinations concerning federal subject matter jurisdiction.

The Herrick Company, Inc. and Norton Herrick (collectively “Herrick” or “plaintiffs”) and SCS Communications, Inc. and its principal Stephen C. Swid (collectively “SCS/Swid”) appeal and cross- appeal in this diversity suit from a judgment, entered by the United States District Court for the Southern District of New York (Patterson, J.), following a jury verdict awarding Herrick compensatory damages against SCS/Swid for breach of contract and breach of fiduciary duty. On appeal, Herrick attacks a setoff the district court granted against the jury award. SCS/Swid appeals the judgment below more generally, arguing (a) that the district court erred in deciding at summary judgment that a contract existed and therefore sending only questions of breach and damages to the jury, (b) that the jury trial on breach and damages was infected with error, and (c) that there is no federal jurisdiction over the lawsuit. Because we find an absence of federal subject matter jurisdiction over the lawsuit as presently constituted and because, as an appellate court, we cannot determine whether the defect in jurisdiction may be cured, we do not reach the merits of the parties’ substantive contentions. We therefore vacate the judgment of the district court and remand the case to that court for further consideration.

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