The U.S. Supreme Court case Cohen, Executrix, et al. v. Beneficial Industrial Loan Corp., et al., 1948 revolved around a conflict between state and federal laws regarding shareholder litigation in derivative suits (lawsuits brought by shareholders on behalf of the corporation). The issue arose when New Jersey enacted a law requiring plaintiffs to post security for expenses in derivative suits if they owned less than 5% of the company's stock or their shares were worth less than $50,000. When Anna Cohen filed such a suit against Beneficial Industrial Loan Corporation and others in federal court under diversity jurisdiction, she did not meet these requirements. Beneficial argued that this law should apply even though it was being sued in federal court because the lawsuit involved matters of corporate governance traditionally regulated by states. However, Cohen contended that Federal Rules of Civil Procedure should prevail over conflicting state laws. In its decision, the Supreme Court sided with Beneficial and held that Erie doctrine (which generally requires federal courts sitting in diversity to apply state substantive law) extended to procedural rules affecting substantial rights as well; thus allowing application of New Jersey’s statute requiring plaintiff shareholders to post security for costs.

In the dissenting opinion for Cohen v. Beneficial Industrial Loan Corp., Justice Hugo Black argued that federal courts should not apply state laws in diversity cases if they conflict with federal rules of procedure. He believed that the majority's decision to allow New Jersey's security-for-expenses statute to be applied in a case brought under diversity jurisdiction was inconsistent with this principle and undermined the uniformity of federal procedural law. Furthermore, he contended that Congress had intended for Federal Rules of Civil Procedure to govern all aspects of procedure in civil actions before federal courts when it enacted them, regardless of whether these actions were based on state or federal law. Therefore, according to Justice Black, allowing states' procedural statutes like New Jersey’s security-for-expenses statute to supersede Federal Rules would violate Congressional intent and create unnecessary confusion about which rules apply in different situations.