Shareholder Derivative Litigation


This practice note discusses shareholder derivative suits. Shareholder derivative suits are claims brought by a shareholder on behalf of the corporation itself. Given the national prominence of Delaware corporate law, this note focuses on relevant federal and Delaware statutes and jurisprudence applicable to derivative lawsuits brought by shareholders of Delaware corporations (with contrasting analyses with respect to direct shareholder class action lawsuits). Specifically, this practice note discusses direct class action lawsuits versus derivative lawsuits, the plaintiff in shareholder direct class actions and derivative suits, derivative suit procedural issues under federal and state rules, pre-litigation demand requirements, demand futility, settling a derivative lawsuit, and bearing the costs of a derivative lawsuit.