derivative action
Definitions from Case Law · United States Supreme Court
Definitions from Case Law
From 330 U.S. 518 - Koster v. Lumbermens Mut Casualty Co · 1947Most cited · 2,300 citing opinions
The stockholder's derivative action, to which this policyholder's action is analogous, is an invention of equity to supply the want of an adequate remedy at law to redress breaches of fiduciary duty by corporate managers. Usually the wrongdoing officers also possess the control which enables them to suppress any effort by the corporate entity to remedy such wrongs. Equity therefore traditionally entertains the derivative or secondary action by which a single stockholder may sue in the corporation's right when he shows that the corporation on proper demand has refused to pursue a remedy, or shows facts that demonstrate the futility of such a request.
How often courts cite the cases defining “derivative action”
Court decisions citing the 2 opinions that defined “derivative action” — 2,601 in all, by decade. Counts are citations to the defining cases as a whole, not verified uses of the term. The dip in the most recent years is a data-coverage gap, not a real trend — our corpus holds fewer opinions from the latest years.
All 2 definitions, chronological · 1945–1947
- ORIGINAL
A derivative action is a suit by a shareholder to enforce a corporate cause of action. The corporation is a necessary party to the suit. And the relief which is granted is a judgment against a third person in favor of the corporation.