Frank Nelson v. Joseph A. Gammon

This is a shareholders’ derivative action filed by two stockholders. Jurisdiction is based upon diversity of citizenship. Kentucky law controls. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

The action arose out of the merger of National Industries, Inc. (National) and Fu-qua Industries, Inc. (Fuqua). Appellant Nelson owned 100 shares of National common stock and appellant Swolsky was owner of 4,592 National shares. The suit was filed against the two corporations and six former directore of National, seeking money damages of $3,596,921.25 and the unwinding of…