Jeanne Koster v. Lingan A. Warren, Milton L. Selby, Chester N. Sanders, Dwight M. Cochran, and Safeway Stores, Inc.

Appellant, as stockholder in Safeway Stores, Incorporated, has brought this stockholder’s derivative action on behalf of the corporation with federal jurisdiction resting on diversity of citizenship. She has taken this appeal from a judgment of dismissal for failure to post security pursuant to the provisions of § 834 of California’s Corporations Code.

That section provides that the defendant in a stockholder’s derivative action may move the court for an order requiring the plaintiff to furnish security upon the ground: “That there is no reasonable probability that the prosecution of the cause of action alleged in the complaint against the moving party will benefit the corporation or its security holders.” That section further provides:

Following a hearing at which appellees, as moving parties, supported their motion by testimony and affidavit, the district court concluded that there was no reasonable probability that appellant would prevail in her causes of action. She was directed to post bond in the sum of |100,000. Upon her failure to do so within the time prescribed, the action was dismissed.

Upon this appeal, appellant attacks the district court’s conclusion that there…