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Ps sued under a derivative action for the failure of AT&T (D) to collect an outstanding debt of $1.5 million from the Democratic National Committee for communications services provided to them during the 1968 Democratic national convention. Ps claim that the failure to collect this debt was a failure to exercise diligence in handling the affairs of D and that this act violated the law as a contribution to the DNC. Ps sought an injunction requiring D to collect the debt and an injunction against providing further services to DNC until the debt was paid in full. The district court dismissed the complaint for failure to state a claim upon which relief could be granted. Ps appealed.

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