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

Class action and derivative actions are two different types of legal proceedings. A class action is a lawsuit wherein one or more individuals represent a group of people who have allegedly suffered the same harm from the same defendant. The representative or representatives are seeking relief on behalf of the entire group, which is known as a “class.” A derivative action is a lawsuit brought by a shareholder on behalf of a corporation, limited liability company or other entity against officers, directors, or other insiders of that same entity. In a class action, the goal is to obtain relief for the entire class, even if the individual members of the class may have suffered varying degrees of harm. Any monetary award is split among the class members, with the amount of compensation depending on the individual circumstances of each class member. Derivative actions, on the other hand, are brought to address wrongs committed against the corporation or entity itself. The relief obtained is for the benefit of the shareholders or members of the entity, not the individual bringing the action. In Kansas, class actions and derivative actions are both considered suitable courses of action for obtaining relief from wrongs suffered by individuals or entities. Each type of action has its own set of requirements that must be met for it to be successful. For example, class actions require representation of a valid class, while derivative actions require an individual to demonstrate that he or she is a shareholder of the entity that is the subject of the action.

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

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