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

A class action and a derivative action are both forms of legal action, but they differ in their purpose and who is involved in the case. A class action is a legal proceeding in which a large group of people with a common interest join together to bring a lawsuit against one or more defendants. These claims are typically brought when a large number of people have been wronged by the same entity or defendant, and they are seeking compensation for their losses. In contrast, a derivative action is filed by an individual shareholder, or a group of shareholders, on behalf of a company. This type of action is often brought when a company has been wronged by an outside entity, such as a supplier or public organization, but the company itself has failed to take legal action. In this situation, the shareholders are allowed to bring a lawsuit on behalf of the company in order to seek compensation. The main difference between a class action and a derivative action is who is bringing the case. In a class action, a large group of people join together to file a lawsuit against one or more defendants. In a derivative action, a single shareholder or a group of shareholders files a lawsuit on behalf of a company. Both forms of legal action are designed to seek compensation for wrongs done by outside entities.

Related FAQs

What is the difference between a plaintiff class and a defendant class?
What is the difference between a class action arbitration and a class action lawsuit?
How much notice do class members receive before a class action settlement?
What is the role of the court in a class action lawsuit?
What is the process for distributing class action settlement funds?
What is the difference between a class action and a mass tort?
What is the statute of limitations for a class action lawsuit?
How does a class action lawsuit work?
What rights do class members have in a class action lawsuit?
What is a class action waiver?

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

Related FAQs

Related Blog Posts