Surowitz v. Hilton Hotels Corp.

383 U.S. 363, 86 S. Ct. 845 (1966)

 

RULE:

The basic purpose of the Federal Rules is to administer justice through fair trials, not through summary dismissals as necessary as they may be on occasion. These rules were designed in large part to get away from some of the old procedural booby traps which common-law pleaders could set to prevent unsophisticated litigants from ever having their day in court. If rules of procedure work as they should in an honest and fair judicial system, they not only permit, but should as nearly as possible guarantee that bona fide complaints be carried to an adjudication on the merits. Fed. R. Civ. P. 23 (b), like the other civil rules, was written to further, not defeat, the ends of justice.

FACTS:

Petitioner, a stockholder in Hilton Hotels Corporation, brought an action on behalf of herself and other stockholders charging the corporation's officers and directors with fraud. The complaint was signed by petitioner's counsel in compliance with Rule 11 of the Federal Rules of Civil Procedure. Pursuant to Rule 23 (b) the complaint was verified by petitioner, who stated that some of the allegations were true and that "on information and belief" she thought the others were true. In an oral examination by respondents' counsel, petitioner, an immigrant with practically no formal education and limited knowledge of the English language, showed that she did not understand the complaint and that in signing the verification she relied on her son-in-law's explanation of the facts. Respondents then moved to dismiss the complaint on the ground that it was a sham and that petitioner was not a proper party plaintiff. Petitioner's counsel filed two affidavits, one by himself and the other by petitioner's son-in-law, an investment advisor, demonstrating that extensive investigation had preceded the filing of the complaint. Despite the affidavits the District Court dismissed the suit with prejudice on the ground that petitioner's affidavit was false and a sham. The Court of Appeals affirmed and dismissed the petitioner's derivative suit. The case was appealed.

ISSUE:

Should the suit of the plaintiff be dismissed despite the fact that the lawyers already investigated the allegations in the complaint?

ANSWER:

No

CONCLUSION:

The court held that Fed. R. Civ. P 23(b) did not justify dismissal of petitioner's case merely because petitioner was uneducated about the nature of the suit and lacked an understanding of English. The court reversed and remanded, holding that the case should not be dismissed because the charges of fraud were shown by the record to be based on reasonable belief from a careful investigation.

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