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Model Bus. Corp. Act § 7.41 (2016).
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1What is a derivative suit?
What is a derivative suit?2What is the difference between a direct action and a derivative action?
What is the difference between a direct action and a derivative action?3In general, may a member in an unincorporated association bring a derivative suit?
In general, may a member in an unincorporated association bring a derivative suit?4What two elements must be present for a shareholder to having standing to bring a derivative suit on behalf of a corporation in many state courts?
What two elements must be present for a shareholder to having standing to bring a derivative suit on behalf of a corporation in many state courts?5What does it mean to say that the plaintiff in a derivative suit fairly and adequately represents the corporation’s interests in bringing the deriv...
What does it mean to say that the plaintiff in a derivative suit fairly and adequately represents the corporation’s interests in bringing the derivative action?6Must a shareholder always make a written demand on a corporation to take suitable action before seeking judicial authorization to pursue a derivati...
Must a shareholder always make a written demand on a corporation to take suitable action before seeking judicial authorization to pursue a derivative suit on the corporation’s behalf?7In the context of derivative litigation, what does it mean to say that the board of directors cannot independently assess a demand to bring suit?
In the context of derivative litigation, what does it mean to say that the board of directors cannot independently assess a demand to bring suit?8After making a written demand on a corporation to take suitable action, must a shareholder always wait 90 days before seeking judicial authorizatio...
After making a written demand on a corporation to take suitable action, must a shareholder always wait 90 days before seeking judicial authorization to pursue a derivative suit on the corporation’s behalf?9If a corporation makes a good-faith determination that a derivative suit is not in the corporation’s best interests and moves to dismiss the deriva...
If a corporation makes a good-faith determination that a derivative suit is not in the corporation’s best interests and moves to dismiss the derivative suit, must a court grant the corporation’s motion to dismiss the derivative suit?10For purposes of derivative litigation, who is an independent director?
For purposes of derivative litigation, who is an independent director?11If a derivative suit is successful, does the shareholder who brought the action usually receive the damage award?
If a derivative suit is successful, does the shareholder who brought the action usually receive the damage award?12A corporation agreed to rent space in a building owned by the corporation’s former chief executive officer (CEO). After several months, some shareh...
A corporation agreed to rent space in a building owned by the corporation’s former chief executive officer (CEO). After several months, some shareholders discovered that the former CEO had failed to comply with some provisions in the lease agreement. The shareholders wanted the corporation to sue the former CEO for breach of the lease, but the board of directors was reluctant to sue a former corporate officer. Further, the damage was already done and not ongoing. The shareholders sent a written demand to the board requesting that the board sue the former CEO for breach of the lease. After a week, the board had not yet responded to the demand. Frustrated, the shareholders filed a derivative lawsuit against the CEO on behalf of the corporation. Did the shareholders follow all the required pre-suit procedures for filing a derivative suit?13A corporation entered into a contract to sells its scrap metal to a scrap-metal processor. The contract contained a repurchase provision. This prov...
A corporation entered into a contract to sells its scrap metal to a scrap-metal processor. The contract contained a repurchase provision. This provision provided that the corporation would refund the processor if the processor bought any structurally deficient metal from the corporation. There was some ambiguity in the repurchase provision, and the corporation considered suing the processor for a potentially fraudulent repurchase demand. One of the corporation’s current shareholders had owned shares of the corporation for many years. This shareholder owned a company that competed directly with the scrap-metal processor. To try to hurt her competitor, the shareholder demanded that the corporation sue the scrap-metal processor. The board rejected the demand.Does the shareholder have standing to bring a derivative suit against the scrap-metal processor on behalf of the corporation?14A group of shareholders was pursuing a derivative lawsuit against a corporation’s board of directors for failing to bring a claim against a former ...
A group of shareholders was pursuing a derivative lawsuit against a corporation’s board of directors for failing to bring a claim against a former director. The corporation moved to dismiss the derivative lawsuit. As part of its motion, the corporation presented evidence that three of the corporation’s four officers had conducted a reasonable inquiry and made a good-faith determination that the derivative proceeding was not in the corporation’s best interests.Must the court now grant the corporation’s motion to dismiss the derivative suit?15Shareholders brought a derivative lawsuit alleging that two of the corporation’s directors had improperly embezzled money from the corporation. Dur...
Shareholders brought a derivative lawsuit alleging that two of the corporation’s directors had improperly embezzled money from the corporation. During the discovery phase of the litigation, various emails detailing the embezzlement were discovered. Over $1,000,000 was eventually recovered. May the shareholders who initiated the derivative lawsuit receive any portion of the recovered funds?16What requirement must a plaintiff satisfy to have standing to bring a derivative action in federal court on behalf of a corporation or unincorporat...
What requirement must a plaintiff satisfy to have standing to bring a derivative action in federal court on behalf of a corporation or unincorporated association?17In a federal derivative suit, what pleading requirements must the complaint satisfy?
In a federal derivative suit, what pleading requirements must the complaint satisfy?18Do state-law demand requirements typically apply in federal derivative litigation?
Do state-law demand requirements typically apply in federal derivative litigation?19In federal court, does any settlement, voluntary dismissal, or compromise of a derivative suit require court approval?
In federal court, does any settlement, voluntary dismissal, or compromise of a derivative suit require court approval?20What is a class action?
What is a class action?21In general, may corporate shareholders or members in an unincorporated association sue the entity or its officers in a class action?
In general, may corporate shareholders or members in an unincorporated association sue the entity or its officers in a class action?22In general, does a derivative suit require the plaintiff to obtain class certification and comply with all the other requirements of class actions?
In general, does a derivative suit require the plaintiff to obtain class certification and comply with all the other requirements of class actions?23In federal court, what are the basic prerequisites for a class action?
In federal court, what are the basic prerequisites for a class action?24In federal court, if the basic prerequisites for a class action are met, is that alone enough for the court to permit the class action?
In federal court, if the basic prerequisites for a class action are met, is that alone enough for the court to permit the class action?25In federal court, does any compromise, settlement, or voluntary dismissal of a class action require court approval?
In federal court, does any compromise, settlement, or voluntary dismissal of a class action require court approval?