Re: Derivative v. Individual

"E Summerson" <[EMAIL PROTECTED]> wrote:

> California Civil Case involving corporate affairs:
> 
> Why do lawyers argue whether a cause of action
> brought is a derivative action or an individual action?
> 
> If an individual has some gripe about the way things
> worked out at their coproration, and they are going
> after the directors pockets, does it really matter if
> their cause of action is individual or derivative?

Yes.  If it's individual you generally can't hold directors or 
employees personally responsible except for their personal torts.  
However if a director performed an act that essentially cheated the 
corporation, and that in turn had negative effects to outsiders, the 
director can only be held [civilly] liable in a derivative action.

> Is a derivative action somehow less?  It would seem
> that in most opinions, the defendants argue that the
> causes are derivative and wrongly stated as individual.

Right.  Because if it's the corporation that was wronged, even if 
other were affected, only the corporation can sue the director for 
those things.

There are other way of suing someone personally, including piercing 
the corporate veil.  But that's difficult to do and a derivative 
action is probably going to be easier.

Stu