Diversity Jurisdiction: Steuben Foods Inc. v. International Dispensing Corp.

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U.S. District Court, Western District of New York

Diversity Jurisdiction

Sanctions

Steuben Foods Inc. v. International Dispensing Corp.
09-CV-989
Judge Skretny

Background: On Nov. 16, 2009, plaintiff Steuben Foods, Inc. commenced the civil action by filing a complaint in the U.S. District Court for the Western District of New York. Therein, the plaintiff requests a declaratory judgment and an award of compensatory damages for anticipatory breach of contract in violation of state law. The defendant filed a motion to dismiss and has requested sanctions. The plaintiff is a New York corporation that manufactures and markets aseptically-processed foods and beverages, including certain “bag-in-box” products. Defendant IDC developed a “Fresh Flow Tap” aseptic valve that permits storage and dispensation under commercial conditions of low acid products in a non-refrigerated state when used with aseptic “bag-in-box” processing technology. The plaintiff alleges that, in June 2006, the defendants entered into an exclusivity and marketing agreement with the plaintiff. Under the terms, the plaintiff received the exclusive right to use the valve in certain product categories to market it to its customers.

Ruling: The court finds defendants Abbott and IDC both are citizens of New York since either the place of incorporation or the principal business location can be used in determining diversity jurisdiction. Because the plaintiff also is a citizen of New York, diversity is not complete and the court lacks subject-matter jurisdiction. Contrary to the defendants’ assertion, the plaintiff’s factual contentions were supported by evidentiary support, albeit insufficient to sustain its burden of proof. There is little evidence of bad faith in the accusations. The evidence arguably supported the plaintiff’s contention that Abbott was a Colorado citizen and defendant IDC’s principal place of business is in Illinois.

Frank V. Balon of Hiscock & Barclay LLP for the plaintiff; Gregory Paul Vidler of Guzov Ofsink, LLC for the defendants