CORT V. ASH 422 U.S. 66 (1975) CASE BRIEF

CORT V. ASH

422 U.S. 66 (1975)

NATURE OF THE CASE: This was a dispute over an implied private shareholder action. Ash (P) brought this action seeking damages in favor of Bethlehem Steel Corp., in connection with the 1972 Presidential election that Cort (D) corporate directors had authorized from general corporate funds in alleged violation of 18 U.S.C. 610, which prohibits corporations from making contributions or expenditures in connection with specified federal election. The District Court then granted Ds' motion for summary judgment. The Court of Appeals reversed.

FACTS: Section 610 was a criminal statute that prohibited corporations from making a contribution or expenditure in connection with any election at which Presidential or Vice Presidential electors are to be voted for. P owns 50 shares of Bethlehem stock and was qualified to vote in the 1972 Presidential election. He filed this suit on behalf of himself and, derivatively, on behalf D. The complaint specified two separate and distinct bases for jurisdiction and relief. Count I alleged jurisdiction under 28 U.S.C. 1331 and sought to state a private claim for relief under 18 U.S.C. 610, which, as mentioned, in terms provides only for a criminal penalty. Count II invoked pendent jurisdiction for a claim under Delaware law, alleging that the corporate campaign expenditures were 'ultra vires, unlawful and [a] willful, wanton and gross breach of duty owed to.' The District Court denied a preliminary injunction. Eventually, the District Court then granted Ds' motion for summary judgment without opinion. The Court of Appeals reversed. It held that, since the complaint sought damages for the corporation for violation of 610, the controversy was not moot, although the election which occasioned it was past. The Court of Appeals held further that 'a private cause of action, whether brought by a citizen to secure injunctive relief or by a stockholder to secure injunctive or derivative damage relief, [is] proper to remedy violation of 610.'

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LEGAL ANALYSIS:

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