Re: Derivative v. Individual

On Mon, 01 Dec 2003 17:31:40 -0500, "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?

>. . . .

Derivative actions have special rules.  The idea is that a shareholder
is trying to force the corporation to take action against a
codefendant (usually a director or officer) for some reason.  The
rules in most states (probably including California, but I don't
practice there and haven't read the statutes) require special notices
and allow the corporation to take over the suit.  If the corporation
takes over, it can decide that the suit is not in the best interest of
the corporation and drop it.  (Of course, a disinterested committee
will need to make that decision, so there is a rare chance such a
decision can be challenged.)

                                Daniel Reitman