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Cohen v. Beneficial Industrial Loan Corporation

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Brief Fact Summary.

Petitioner filed a shareholder derivative action against Respondent in federal district court. A state law required that in certain shareholder derivative actions, a bond had to be posted by the plaintiff in order to proceed with the action. The district court held that the state law did not apply to lawsuits in federal court.

Synopsis of Rule of Law.

In this case, the court had appellate jurisdiction over the order refusing the bond-posting requirement. Such jurisdiction exists in a small class of decisions where the claims at issue are separable from and collateral to the rights asserted in the action, and where the claims are too important to be denied review and too independent from the main cause of action to require waiting until the whole case concludes to consider the appeal.

Points of Law - Legal Principles in this Case for Law Students.

The effect of the statute is to disallow appeal from any decision which is tentative, informal or incomplete.

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Facts.

Petitioner filed a shareholder derivative action against Respondent in federal district court in New Jersey. Two years after the action was filed, New Jersey enacted a law, applied retroactively, that required that in certain shareholder derivative actions, where the shareholder owned less than a certain percentage of stock, a bond to cover the defendant’s costs had to be posted by the plaintiff in order to proceed with the action. The district court held that the state law did not apply to lawsuits in federal court.

Issue.

Was the district court order, holding that the New Jersey state law that required petitioner to post bond to proceed with the class action lawsuit did not apply to suits in federal court, a final appealable order?

Held.

Yes. The district court’s order, holding that the New Jersey state law that required petitioner to post bond to proceed with the lawsuit did not apply to suits in federal court, was a final disposition.

Discussion.

The district court’s order, holding that the New Jersey state law that required petitioner to post bond to proceed with the lawsuit did not apply to suits in federal court, was a final disposition of a claimed right. The order was not an ingredient of Petitioner’s cause of action and it did not require consideration with that cause of action.


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