Document: 383 U.S. 363 86 S.Ct. 845 15 L.Ed.2d 807 Dora SUROWITZ, etc., Petitioner,v.HILTON HOTELS CORPORATION et al. No. 161. Argued Jan. 20, 1966. Decided March 7, Rehearing Denied April 18, See 384 915, 1333. Richard F. Watt, Chicago, Ill., for petitioner. Samuel W. Block, respondents. Mr. Justice BLACK delivered the opinion of Court. 1 Petitioner, Surowitz, a stockholder in Hilton Hotels Corporation, brought this action United States District Court on behalf herself and other stockholders charging that officers directors corporation had defrauded it several million dollars by illegal devices schemes designed to cheat enrich individual defendants. The acts charged, if true, would constitute frauds grossest kind against corporation, be violation Securities Act 1933,1 Exchange 1934,2 Delaware General Corporation Law.3 Summarily stated, detailed complaint, which takes up over 60 printed pages, charges first defendants conceived carried out deceptive plan under through formal 'offer' mailed all stockholders, purchased from them some 300,000 shares its outstanding commmon stock, these manipulated stock's market price an artificially high level then at inflated sold 100,000 their own stock effect offer purchase was reduce corporation's working capital more than $8,000,000 time when financial condition weak, funds were badly needed run business. second scheme charged complaint same defendants, whom Credit caused purchase, also paying about $3,441,000 it, $2,000,000 personally received signed counsel Mrs. Surowitz compliance with Rule 11 Federal Rules Civil Procedure provides 'The signature attorney constitutes certificate him he has read pleading; best his knowledge, information, belief there is good ground support it; not interposed delay.' Also pursuant 23(b) Rules, verified petitioner, who stated allegations true she 'on information belief' thought true. 2 So far as language Surowitz's verification concerned, both strict provisions states shareholder's secondary must contain certain averments plaintiff.4 Notwithstanding sufficiency 23(b), however, court, without requiring file answer petitioner's protest, granted defendants' motion require submit oral examination counsel. In showed her answers questions did understand all, could explain statements made very small degree knowledge what lawsuit about, know any name, nature alleged misconduct, fact signing merely relied son-in-law explained facts case. On basis examination, moved dismiss alleging '1. It sham pleading, 2. Plaintiff, proper party plaintiff. * *' response, lawyer, effort cure whatever infirmity court might possibly find light deposition, filed two affidavits shed much additional extensive investigation preceded filing complaint. Despite Judge dismissed case holding affidavit 'false,' being wholly false nullity, nullity though no been 23, 'sham' required case, so, 'with prejudice.' 3 Appeals affirmed Court's dismissal, saying part: 4 'We can only conclude, below, plaintiff's because swore verity ignorant.' 342 F.2d, 606. 5 reached conclusion 41(b) despite viewed serious grave fraud 'many material are obviously cannot refuted.' 607. We agree either courts below reverse judgments. do necessary reversing, consider numerous arguments respondents based origin, history utility derivative causes class suits. No matter how weight we give function proceedings protecting corporate management so-called 'nuisance' or 'strike suits,' hold justify dismissal record shown here. 6 At approved, pending before those depositions but, noted above, affidavits, one Walter J. Rockler, son-in-law, Irving Brilliant, submitted response dismissed. These well part us here shall now state they illuminated affidavits. 7 plaintiff petitioner here, Polish immigrant limited English vocabulary practically education. For many years worked seamstress New York where reason frugality saved enough money buy thousands worth stocks. She course able select stocks assurance value. Under circumstances receive advice quite naturally went Brilliant. Brilliant graduated Harvard Law School, possessed master's economics Columbia University, professional investment advisor, addition degrees acumen, wore Phi Beta Kappa key. 1957, six litigation began, bought mother-in-law little $2,000 it. He evidently confidence 1960 wife, deceased mother's estate, trust fund created children, 2,350 common cost $45,000 $10,000 debentures. 8 About December 1962, mails notice announcing large amount stock. Because wanted her, took Apparently disturbed straightway set make investigation. Shortly thereafter Illinois, home office talked Rockler. Rockler friends years, apparently ever since served legal staff representing Nuremberg trials. decided investigate further, number months pursued avenues open them. By August 1963 investigation, come something matter. meantime value declined steadily, failed pay usual dividend. October, while prepared multiple violations federal securities law, met lawyers. This conference, instead producing understanding provided previously available them, increased suspicions management. instance learned meeting president chairman board unusually trusts established vice director corporation. Finally, December, almost exactly year after questionable shareholders, creating participating fraudulent taken millions treasury transferred pockets. 9 Soon investigations began letter send protesting scheme. communication Later, 1963, dividend, specific purpose gaining source income, sufficiently seek Brilliant's wrongfully damaged together discussed bringing suit. When, conversation, agreed suit then, according testimony, Her education language, except most ordinarily used words, probably sufficient guarantee right finding relationships comprehend business transactions described know, put hard-earned into getting dividends, looked wrong. knew qualified help trusted him. difficult believe anyone shocked harmed way when, circumstances, understanding, but faith correctly advised believed 10 assume may possible district stop cause action, relieve fraud, conduct pre-trial determine whether falsely sworn led And conceivably such reveal surrounding prejudice. However, need question whether, ever, call summary action. Certainly court's written order bar Unquestionably originally adopted means discourage suits' people interested quick making regard truth so coerce managers settle worthless claims get rid hand, suits have played rather important role shareholders corporations designing wiles insiders willing betray company's interests themselves. easy conceive protection investors like Surowitz. When reviewed 23(b)'s requirement, emerges plain, inescapable strike anything akin money. Moreover, iota evidence counselor, sought injury litigation. purchases benefit family $50,000 including debenture, brought, manifest desire harm way. affirming indicated counselors acted truthful irrelevant once demonstrated testimony nothing content That said: 12 'Those substantial diligent others Neither affidavit, does anything, done, offset positive disavowal relevant ownership.' 13 indicates places woman uneducated generally illiterate economic matters, never protect interests.5 14 construe 23 compelling summarily dismiss, argument cases reasonable beliefs growing careful basic administer justice fair trials, dismissals occasion. rules away old procedural booby traps common-law pleaders prevent unsophisticated litigants having day court. If procedure work should honest judicial system, permit, nearly bona fide complaints adjudication merits. civil rules, defeat ends justice. proven, clearly deceitful laws largely passed prohibit against. There is, moreover, word line actual indicating collusive trickery intimations insinuations witness said. error. three yet none even compelled admit deny wrongdoings charged. They be. reversed remanded trial Reversed remanded. 16 FORTAS decision 17 THE CHIEF JUSTICE consideration 18 HARLAN, concurring. 19 directs 'the oath' dictates shareholder. Bosc v. 39 Broadway, Inc., D.C., 80 F.Supp. 825. present seems me amounts adequate counsel, I think permitted interpretation least this. rpemise, 48 Stat. 74, amended, U.S.C. § 77a seq. (1964 ed.). 881, 78a Del.Code Ann. Tit. 8, 101 (1953 '(b) Secondary Action Shareholders. enforce association, incorporated unincorporated, association refuses rights properly asserted oath aver (1) shareholder transaction complains share devolved operation law (2) confer jurisdiction otherwise jurisdiction. forth particularity efforts secure managing trustees and, necessary, desires, reasons failure obtain effort.' Consider, example, excerpts separate paragraphs Appeals' opinion: considered advanced grasp intricacies finance. peculiar position as, principally, instrument machinery motion. unreasonable minimum requirement general connection alleges. conclude lesser provision farcical. 'But real meaning, requires relationship suit, official identity parties wrongful alleges foundation held pleading governed appears ostensible mere formality knowledgeable informative comprehension whose gives breath life. instilled reading words understand.' 608, 606, 607—608.

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