In the case of Smith v. Sperling (1956), the US Supreme Court was tasked with determining whether a stockholder's derivative suit could be maintained in federal court when there were insufficient grounds for diversity jurisdiction, but where both parties had agreed to waive their right to a jury trial. The plaintiff, Smith, filed a derivative suit on behalf of United Dye & Chemical Corporation against its directors and officers alleging mismanagement and waste of corporate assets. However, as all parties involved were from New Jersey, there was no basis for diversity jurisdiction under federal law which requires that litigants be citizens of different states. The defendants argued that since they had waived their right to a jury trial - an essential element in establishing federal jurisdiction - the case should proceed in state court instead. The District Court dismissed the complaint due to lack of subject matter jurisdiction while the Court of Appeals affirmed this decision. However, upon reaching the Supreme Court it held by 5-4 majority that even though complete diversity did not exist between all plaintiffs and defendants as required by statute for original Federal-court jurisdiction over suits at common law or equity; if all real parties in interest aligned themselves on same side as either plaintiffs or defendants then such alignment satisfied statutory requirement.

In the dissenting opinion for Smith v. Sperling, Justice Frankfurter argued that the majority's decision to allow a shareholder derivative suit in federal court despite an ongoing state court proceeding was inconsistent with established principles of comity and federalism. He contended that allowing such parallel proceedings could lead to conflicting judgments and undermine judicial efficiency. Moreover, he believed it would encourage forum shopping by plaintiffs seeking more favorable venues for their claims. The justice also expressed concern about potential harm to corporations from multiple lawsuits over the same issue in different courts. In his view, these risks outweighed any potential benefits from permitting concurrent jurisdiction in this context.