What is the difference between a class action and a derivative action?

A class action and a derivative action are two different types of legal actions related to business and corporations. In both cases, they involve the filing of a lawsuit against a business or corporation. In a class action, a group of people join together to file a suit against the defendant. All of the people in the group are represented by a single individual, who is usually the plaintiff. The complaint in a class action typically involves a legal claim that is common to all the individuals in the group. An example of this type of suit would be a group of people filing a class action against a company for misrepresentation. A derivative action, on the other hand, is brought by a shareholder or group of shareholders of a corporation against the board of directors or the officers of the company. This type of action is usually brought when the board or officers of the company have breached their fiduciary duty to the shareholders. For example, if the board of directors made a decision that would be detrimental to the shareholders’ investment, then the shareholders might file a derivative action against the board of directors. The main difference between these two types of action is that a class action involves a group of people filing a complaint against a defendant, whereas a derivative action is filed by shareholders of a corporation against their board of directors or officers.

Related FAQs

Can a class action be appealed?
What is the difference between class action and single plaintiffs lawsuits?
How do I file a class action lawsuit?
When is a class action lawsuit moot?
What are the requirements to file a class action lawsuit?
What are class action federal rules of procedure?
What is the difference between a class action lawsuit and a private attorney general action?
What is an aggregate settlement in a class action lawsuit?
What is a class action lawsuit?
What types of cases can be brought as class action lawsuits?

What is the difference between a class action and a derivative action?

Related FAQs

Related Blog Posts