Mr. Justice Douglas
delivered the opinion of the Court.
These cases are here on petitions for certiorari and raise one identical question.
These are suits brought in the District Court for the Southern District of New York. Lum’s, one of the respondents in the Lehman Bros. petition, is a Florida corporation with headquarters in Miami. Each W the three petitions, which we consolidated for oral argument, involves shareholders’ derivative suits naming Lum’s and others as defendants; and the basis of federal jurisdiction is diversity of citizenship, 28 "U. S. C. § 1332 (a)(1), about which there is no dispute.
The complaints allege that Chasen, president of Lum’s, called Simon, a representative of Lehman Bros., and told him about disappointing projections of Lum’s earnings, estimates that were confidential, not public. Simon is said to have told an emplayeé of IDS about them. On the next day, it is alleged that the IDS defendants sold 83,000 shares of Lum’s on the New York Stock Exchange for about $17.50 per share. Later that day the exchanges halted trading in Lum’s stock and on the next trading day it opened at $14 per share, the public being told that the. projected earnings Would be “substantially lower” than anticipated. The theory of the complaints was that Chasen was a fiduciary but used the inside information along with others for profit áhd that Chasen. and his group áre liable to Lum’s for their unlawful profits.
Lehman and Simon defended on the ground that the IDS sale was not made through them and that neither one benefited from the sales. Nonetheless plaintiffs claimed that Chasen and the other defendants were liable under Diamond v. Oreamuno, 24 N. Y. 2d 494, 248 N. E. 2d 910 (1969). Diamond proceeds on the theory that “inside” information Of an officer or director of a corporation is an asset of the corporation which had been acquired by th. insiders as fiduciaries, of the company and misappropl ted in violation of trust.
The District Court, looked to the choice-of-law rules of the State of New York, Klaxon Co. v. Stentor Electric Mfg. Co., 313 U. S. 487 (1941) , and held that the law of the State of incorporation'.governs the existence and extent of corporate fiduciary, obligations, as well, as the'liability for violation of them.- - Diamond. did, indeed, so indicate, 24 N. Y. 2d, at 503-504, 248 N. E. 2d, at 915.
-ThéFDistrict Court in examining'Florida law concluded' that, although the highest court in Florida;, has -.not considered the question, several district courts off appeal indicate that a complaint which fails to allege both wrongful gets and damage to the corporation must be dismissed. The District Court went on to consider whether If Florida followed the Diamond- rationale, defendants would be liable. It concluded that the present complaints go beyoijid Diamond, as Chasen, the only fiduciary of Lum’s involved in the suits, never sold any of his holdings on the basis of inside information. The other defendants were not fiduciaries of Lum’s. The’ District Court accordingly dismissed the complaints, 335 F. Supp. 329 (1971).
The Court of Appeals by a divided vote reversed the District Court. 478 F. 2d 817 (CA2 1973). While the Court of Appeals held that Florida law was controlling, it found none that was decisive. So it then turned to the law of other jurisdictions, particularly that of New York, to see if Florida “would probably” interpret Diamond to make it applicable here. The Court of Appeals concluded that the defendants had engaged with Chasen “to misuse corporate property,” id., at 822, and that the theory. of Diamond reaches that situation, “viewing ,the case as the Florida court would probably view it.” Ibid. There were emanations from other Florida decisions that made the majority oh the Court of Appeals feel that' Florida would follow that reading of Diamond. Such a construction of Diamond, the Court of Appeals said, would have “the prophylactic effect of providing a disincentive to insider trading.” Id., at 823. And so it would. Yet under the regime of Erie R. Co. v. Tompkins, 304 U. S. 64 (1938), a State can make just the opposite her law, providing there is no overriding federal rule which pre-empts state law by reason of federal curbs on trading in the stream of commerce.
The, dissenter on the Court of Appeals. urged that that court certify the state-law question to the Florida Supreme Court as is provided in Fla. Stat. Ann. § 25.031 and its Appellate Rule 4.61. 478 F. 2d, at 828. That path-is open to this Court and to any court of appeals of the United States. We have, indeed, used it before as have courts of appeals.
Moreover when state law does not make the certification procedure available, a federal court not infrequently will stay, its hand, remitting the parties to the state court to resolve the controlling state law on which the federal rule may turn. Kaiser Steel Corp. v. W. S. Ranch Co., 391 U. S. 593 (1968). Numerous applications of that practice are reviewed in Meredith v. Winter Haven, 320 U. S. 228 (1943), which teaches that the mere difficulty in- ascertaining local law is no excuse for remitting the parties to a state tribunal for the start of another lawsuit. We do not suggest that where there is doubt as to local law and where the certification procedure is available, resort to it is obligatory. It does, of course, in the long run save timé, energy, and resources and helps build a cooperative judicial federalism.' Its use in a given case rests in the sound discretion of the federal court.
Here resort to it would seem particularly appropriate in view of the novelty of the question and the great unsettlement, of Florida law, Florida being a distant State. When federal judges in New York attempt to predict uncertain Florida law, they act, 3s we have referred to ourselves on this Court in matters of state law, as “oufc siders” lacking the common exposure to local law .which comes from sitting in the jurisdiction.
“Reading the Texas statutes and the Texas decisions as outsiders without special competence in Téxas law, wé would have little confidence in our independent judgment regarding the application of that law to the present situation. The lower court did deny, that the Texas statutes sustained the Commission’s assertion of power. And this represents the view of an able and experienced circuit judge of the circuit which includes Texas and of two capable district judges trained in Texas law.” Railroad Comm’n v. Pullman Co., 312 U. S. 496, 499 (1941).
See also MacGregor v. State Mutual Life Assur. Co.; 315 U. S. 280, 281 (1942); Reitz v. Mealey, 314 U. S..33, 39 (1941).
The judgment of the Court of Appeals is vacated arid the cases are remanded so that that court may reconsider whether the controlling issue of Florida law should be certified to the Florida Supreme Court pursuant to Rule 4.61 of the Florida Appellate Rules.
So ordered.
Investors Diversified Services, Inc., Investor^ Variable Payment Fund, Inc., and IDS New Dimensions Fund, Inc., were defendants in the Schein case. Of those, only. Investors Diversified Services, Inc., is a defendant in the other derivative action brought by Gregorio. The dismissal of the third derivative action (GiLdenhorn) was not pursued on appeal.
One Sit and one Jundt, defendants alleged to be employees of IDS, Inc., were dismissed from the case by the District Court for lack of personal jurisdiction. There was no appeal from that' dismissal.
E. g., Palma v. Zerbey, 189 So. 2d 510, 511 (Fla. App. 1966).
The District Court also held that whether Chasen would be liable not for profiting himself from the inside information but for revealing it to' others could not be reached as Chasen, a nonresident of New York, had not been properly served.
See, e. g., Quinn v. Phipps, 93 Fla. 805, 113 So. 419 (1927).
Aldrich v. Aldrich, 375 U. S. 249 (1963); Dresner v. City of Tallahassee, 375 U. S. 136 (1963).
Trail Builders Supply Co. v. Reagan, 430 F. 2d 828 (CA5 1970); Gaston v. Pittman, 413 F. 2d 1031 (CA5 1969); Martinez v. Rodriquez, 410 F. 2d 729 (CA5 1969); Moragne v. States Marine Lines, Inc., 409 F. 2d 32 (CA5 1969), rev’d on other grounds, 398 U. S. 375 (1970); Hopkins v. Lockheed Aircraft Corp., 394 F. 2d 656 (CA5 1968); Life Ins. Co. of Virginia v. Shifflet, 380 F. 2d, 375 (CA5 1967); Green v. American Tobacco Co., 325 F. 2d 673 (CA5 1963); Sun Insurance Office v. Clay, 319 F. 2d 505 (CA5 1963) The Fifth Circúit’s willingness to certify is in part a product of frequent state court repudiation of its interpretations of state law. See the cases summarized in United Services Life Ins. Co. v. Delaney, 328 F. 2d 483, 486-487 (CA5 1964) (Brown, C. J., concurring).
Certification procedures are available in several States, including Colorado, Colo. Appellate Rule 21.1 (1970); Hawaii, Haw. Rev. Stat. §602-06 (1969); Louisiana, La. Rev. Stat. Ann. §13:72.1 (Supp. 1973); Maine, Me. Rev. Stat. Ann., Tit. 4, §57 (1964); Maryland, Md. Ann. Code, Art. 26, § 161 (Supp. 1973); Massachusetts, Mass. Sup. Jud. Ct. Rule 3:21 (1973); Montana, Mont. Sup. Ct. Rule 1 (1973); New Hampshire, N. H. Rev. Stat. Ann. §490 App. R. 20 (Supp. 1973); and Washington, Wash. Rev. Code Ann. §§ 2.60.010-2.60.030 (Supp. 1972).
See Wright, The Federal Courts and the Natiire and Quality of State Law, 13 Wayne L. Rev. 317 (1967); Kurland, Toward a Co-Operative Judicial Federalism: The Federal Court Abstention Doctrine, 24 F. R. D. 481 (1960); Note, Inter-Jurisdictional Certification: Beyond Abstention Toward Cooperative Judicial Federalism, 111 U. Pa. L. Rev. 344 (1963); Note, Florida’s Interjurisdietional Certification:- A Reexamination To Promote Expanded National Use, 22 U. Fla. L. Rev. 21 (1969).