Eisenberg v. Flying Tiger Line, Inc.
United States Court of Appeals for the Second Circuit
451 F.2d 267 (1971)
New York law required that a plaintiff in a shareholder suit seeking a judgment in the corporation’s favor must post a security for the defendant’s litigation costs. Flying Tiger Line, Inc. (Flying Tiger) (defendant) had been reorganized so that it was a wholly owned subsidiary of another company, Flying Tiger Corporation (FTC). Flying Tiger shares were rescinded and replaced with an equivalent number of FTC shares. Flying Tiger continued to carry on its old business, now as a subsidiary. Max Eisenberg (plaintiff) contended that this corporate restructuring diluted his ability to vote his shares to influence Flying Tiger’s business, and brought suit in federal court to reverse the new structure. Flying Tiger replied that Eisenberg must post a bond in order to institute the suit. Eisenberg replied that he was not bringing a derivative suit, but was instead bringing a representative suit on his own behalf as a shareholder. The district court agreed with Flying Tiger, and dismissed Eisenberg’s suit. Eisenberg appealed.
Rule of Law
Holding and Reasoning (Kaufman, J.)