California Corporate & Securities Law

A shareholder bringing a derivative claim, faces a choice. The shareholder can either make a demand on the board of directors and then challenge the board's decision not to proceed or file a complaint alleging that the demand would be futile. NRCP...

What, if any, is the standing of a corporation in a derivative action?  Until this month, that question was yet to be addressed by the Nevada Supreme Court.  We now have an answer.

Although the members of a limited liability may file a derivative action, the right of action belongs to the LLC and not to the members themselves.  This fundamental principle had real consequences for the plaintiffs in Heshejin v. Rostami, 2020 Cal....

Rule 23.1 of the Nevada Rules of Civil Procedure specifies the pleading and standing requirements for shareholder derivative actions.  Among other things, Rule 23.1 requires that a complaint "allege with particularity the efforts, if any, made by the...

In a recent posting, Professor Stephen Bainbridge breaks down the question of whether breach of fiduciary duty claims by a shareholder may be brought as direct, rather than, derivative claims. The focus of his discussion is on breach of fiduciary...

In a ruling handed down this week, U.S. District Judge Lawrence J. O'Neill addressed whether California law applied to derivative claims apparently brought on behalf of an Oregon entity. I found Judge O'Neill's ruling confusing at best. First, he...

Earlier this week, Kevin M. LaCroix wrote about a lawsuit filed recently against The We Companies, commonly referred to as WeWork.  The company attracted a lot of press attention when in September it withdrew the registration statement for its...

Section 800(b)(1) of the California Corporations Code imposes the following standing requirement for derivative lawsuits:

A derivative claim is one brought by a shareholder on behalf of the corporation to recover for harm done to the corporation.  Cohen v. Mirage Resorts, Inc., 62 P.3d 720, 732 (Nev. 2003).  However, when a derivative action is initiated, the corporation...