Home/Supreme Court/Ross v. Bernhard

Ross v. Bernhard

396 U.S. 531, 90 S. Ct. 733, 24 L. Ed. 2d 729, 1970 U.S. LEXIS 3690, 13 Fed. R. Serv. 2d 1042
Supreme Court of the United States·Decided November 10, 1969·No. 42·Published·Cited by 1,032 cases

Opinions

Mr. Justice White

delivered the opinion of the Court.

The Seventh Amendment to the Constitution provides that in “[s]uits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.” Whether the Amendment guarantees the right to a jury trial in stockholders’ derivative actions is the issue now before us.

Petitioners brought this derivative suit in federal court against the directors of their closed-end investment company, the Lehman Corporation, and the corporation’s brokers, Lehman Brothers. They contended that Lehman Brothers controlled the corporation through an illegally large representation on the corporation’s board of directors, in violation of the Investment Company Act of 1940, 54 Stat. 789, 15 U. S. C. § 80a-l et seq., and used this control to extract excessive brokerage fees from the corporation. The directors of the corporation were accused of converting corporate assets and of “gross abuse [532] of trust, gross misconduct, willful misfeasance, bad faith, [and] gross negligence.” Both the individual defendants and Lehman Brothers were accused of breaches of fiduciary duty. It was alleged that the payments to Lehman Brothers constituted waste and spoliation, and that the contract between the corporation and Lehman Brothers had been violated. Petitioners requested that the defendants “account for and pay to the Corporation for their profits and gains and its losses.” Petitioners also demanded a jury trial on the corporation's claims.

On motion to strike petitioners’ jury trial demand, the District Court held that a shareholder’s right to a jury on his corporation’s cause of action was to be judged as if the corporation were itself the plaintiff. Only the shareholder’s initial claim to speak for the corporation had to be tried to the judge. 275 F. Supp. 569. Convinced that “there are substantial grounds for difference of opinion as to this question and ... an immediate appeal would materially advance the ultimate termination of this litigation,” the District Court permitted an interlocutory appeal. 28 U. S. C. § 1292 (b). The Court of Appeals reversed, holding that a derivative action was entirely equitable in nature, and no jury was available to try any part of it. 403 F. 2d 909. It specifically disagreed with DePinto v. Provident Security Life Ins. Co., 323 F. 2d 826 (C. A. 9th Cir. 1963), cert. denied, 376 U. S. 950 (1964), on which the District Court had relied. Because of this conflict, we granted certiorari. 394 U. S. 917 (1969).

We reverse the holding of the Court of Appeals that in no event does the right to a jury trial preserved by the Seventh Amendment extend to derivative actions brought by the stockholders of a corporation. We hold that the right to jury trial attaches to those issues in derivative actions as to which the corporation, if it had [533] been suing in its own right, would have been entitled to a jury.

Free access — add to your briefcase to read the full text and ask questions with AI

Ross v. Bernhard, 396 U.S. 531, 90 S. Ct. 733, 24 L. Ed. 2d 729, 1970 U.S. LEXIS 3690, 13 Fed. R. Serv. 2d 1042 (1969).

396 U.S. 531 (Ross v. Bernhard) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Loewenstein v. US Department of Education
D. Idaho, 2020
Piggly Wiggly v. Mansel
N.D. Mississippi, 2020
Orange Co. Water Dist. v. Alcoa
California Court of Appeal, 2017
In re: Mark Christian Tarczynski
Ninth Circuit, 2015
In re Saic Inc. Derivative Litigation
948 F. Supp. 2d 366 (S.D. New York, 2013)
In re Facebook, Inc.
922 F. Supp. 2d 445 (S.D. New York, 2013)
In Re Fairfield Sentry Ltd. Litigation
458 B.R. 665 (S.D. New York, 2011)
Adler v. Walker (In Re Gulf States Long Term Acute Care of Covington, L.L.C.)
455 B.R. 869 (E.D. Louisiana, 2011)
Lundberg v. United States
720 F. Supp. 2d 25 (District of Columbia, 2010)
Plant v. Merrifield Town Center Ltd. Partnership
711 F. Supp. 2d 576 (E.D. Virginia, 2010)
Urquhart v. Wertheimer
646 F. Supp. 2d 210 (D. Massachusetts, 2009)
Biltmore Associates, LLC v. Twin City Fire Insurance
572 F.3d 663 (Ninth Circuit, 2009)
Haynes Trane Service Agency, Inc. v. American Standard, Inc.
573 F.3d 947 (Tenth Circuit, 2009)
In Re Eugenia Vi Venture Holdings, Ltd. Litigation
649 F. Supp. 2d 105 (S.D. New York, 2008)
Bartfield v. Murphy
578 F. Supp. 2d 638 (S.D. New York, 2008)
MCI WorldCom Communications, Inc. v. Communications Network International, Ltd. (In Re WorldCom, Inc.)
378 B.R. 745 (S.D. New York, 2007)
Henik Ex Rel. LaBranche & Co., Inc. v. LaBranche
433 F. Supp. 2d 372 (S.D. New York, 2006)
Melvin v. UA Local 13 Pension Plan
236 F.R.D. 139 (W.D. New York, 2006)
Rickel & Associates, Inc. v. Smith (In Re Rickel & Associates, Inc.)
320 B.R. 513 (S.D. New York, 2005)
Ernst & Young & Ernst & Young, LLP v. Bankruptcy Services, Inc. (In Re CBI Holding Co.)
311 B.R. 350 (S.D. New York, 2004)