Eisenberg v. Flying Tiger Line, Inc.,

451 F.2d 267 (2nd Cir. 1971)

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Nature of the Case

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Facts

Eisenberg (P) sued to enjoin a plan of reorganization and merger. It was a derivative action. Flying Tiger Line, Inc. (D) moved to require P to post security under New York Business Law Section 627. That motion was granted, and P was given 30 days to post $35,000 in security. P did not comply, and the action was dismissed. P appealed. The suit was brought on by a series of corporate maneuvers that left the 4.5 million original shares of the company as those of a holding company rather than those of the operating company. P contends that the end result of the plan was to deprive minority stockholders of any vote or any influence over the affairs of the company. D insists that the complex reorganization was done to bring about diversification without interference from the Civil Aeronautics Board.