Court Opinion

ID: 9420350
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:54:05.069044+00
Date Added: 2024-06-11T17:22:24.289908
License: Public Domain

Mr. Justice Douglas,
with whom
Mr. Justice Frankfurter concurs, dissenting in part.
The cause of action on which this suit is brought is a derivative one. Though it belongs to the corporation, the stockholders are entitled under state law to enforce it. The measure of the cause of action is the claim which the corporation has against the alleged wrongdoers. This New Jersey statute does hot add one iota to nor subtract one iota from that cause of action. It merely prescribes the method by which stockholders may enforce it. Each state has numerous regulations governing the institution of shits in its courts.- They may favor the litigation or they may affect it adversely. But they do not fall under the principle of Erie R. Co. v. Tompkins, 304 U. S. 64, unless they define, qualify or delimit the cause of action or otherwise relate to it.
This-New Jersey statute, like statutes governing security for costs, regulates only the procedure for instituting a particular cause of action and hence need not be applied in- this diversity suit in the federal court. Rule 23 of the Federal Rules of Civil Procedure defines that procedure for the federal courts.