Also known as: prosecutes an action · prosecuted an action · prosecuting an action · prosecution of an action · bring an action · prosecute action
Written by attorneys — see sources below.
The commencement and pursuit of litigation to enforce a legal right.
Paula Pierce, a member of a member-managed LLC, sent a written demand to the other members asking them to cause the company to sue a third party for breach of contract. After four months passed with no lawsuit filed, Paula commenced and maintained the derivative action herself in the company's name.
Perry Pratt, a limited partner, delivered a detailed demand to the general partner requesting that the partnership sue a supplier for defective parts. Five months later the general partner had taken no action, so Perry initiated and prosecuted the derivative suit on the partnership's behalf.
Pedro Pacheco alleged predicate acts of mail fraud in a civil RICO complaint against a supplier. After the district court dismissed the initial pleading, Pedro amended and continued to prosecute the action through discovery and summary judgment.
In 1979, petitioner Sedima, a Belgian corporation, entered into a joint venture with respondent Imrex Co. to provide electronic components to a Belgian firm. The buyer was to order parts through Sedima. Imrex was to obtain the parts in this country and ship them to Europe. The agreement called for Sedima and Imrex to split the net proceeds. Imrex filled roughly $8 million in orders placed with it through Sedima. Sedima became convinced that Imrex was presenting inflated bills, cheating Sedima out of a portion of its proceeds by collecting for nonexistent expenses. In 1982, Sedima filed this action in the Federal District Court for the Eastern District of New York. The complaint set out common-law claims of unjust enrichment, conversion, and breach of contract, fiduciary duty, and a constructive trust. In addition, it asserted RICO claims under § 1964(c) against Imrex and two of its officers. Two counts alleged violations of § 1962(c), based on predicate acts of mail and wire fraud. A third count alleged a conspiracy to violate § 1962(c). Claiming injury of at least $175,000, the amount of the alleged overbilling, Sedima sought treble damages and attorney's fees. The District Court held that for an injury to be "by reason of a violation of section 1962," as required by § 1964(c), it must be somehow different in kind from the direct injury resulting from the predicate acts of racketeering activity. It found no allegation here of any injury apart from that which would result directly from the alleged predicate acts of mail fraud and wire fraud. Accordingly, it dismissed the RICO counts for failure to state a claim. A divided panel of the Court of Appeals for the Second Circuit affirmed. After a lengthy review of the legislative history, the Court of Appeals held that Sedima's complaint was defective in two ways. It failed to allege an injury "by reason of a violation of section 1962." It also failed to allege that the defendants had already been criminally convicted of the predicate acts of mail and wire fraud, or of a RICO violation. In light of the variety of approaches taken by the lower courts and the importance of the issues, the Supreme Court granted certiorari.
View casePenelope Price sued the city under section 1983 for a policy that caused her constitutional injury. She prosecuted the action by presenting evidence of the official policy at trial and obtained a judgment against the municipality.
In July 1971 petitioners, a class of female employees of the Department of Social Services and of the Board of Education of the City of New York, commenced this action under 42 U.S.C. § 1983 in the United States District Court for the Southern District of New York. They sued the Department and its Commissioner, the Board and its Chancellor, and the city of New York and its Mayor, all in their official capacities. The complaint alleged that the city and its agencies had as a matter of official policy compelled pregnant employees to take unpaid leaves of absence before such leaves were required for medical reasons. The suit sought injunctive relief and backpay for periods of unlawful forced leave. On cross-motions for summary judgment, the District Court held petitioners' claims for injunctive and declaratory relief moot because the city and the Board had changed their maternity-leave policies after the complaint was filed. The court found that the acts complained of were unconstitutional under the Fourteenth Amendment. It denied backpay on the ground that any damages would come ultimately from the city of New York and that holding otherwise would circumvent the immunity conferred on municipalities by Monroe v. Pape. On appeal, petitioners renewed their arguments that the Board of Education was not a municipality within the meaning of Monroe v. Pape and that the District Court had erred in barring a damages award against the individual defendants. The Court of Appeals for the Second Circuit held that the Board was not a “person” under § 1983 because it performed a vital governmental function and had no final say over its appropriations. It also held that a damages action against officials sued in their official capacities could not proceed because any award would have to be paid by a city held not amenable to suit in Monroe v. Pape. The Supreme Court granted certiorari to consider whether local governmental officials and local independent school boards are “persons” within the meaning of 42 U.S.C. § 1983 when equitable relief in the nature of back pay is sought against them in their official capacities. After oral argument, the Court requested the parties to address whether Monroe v. Pape should be reconsidered in light of the legislative history of the Civil Rights Act of 1871.
View casePablo Perez filed a section 1983 complaint alleging that police officers violated his rights during an arrest. He prosecuted the action through motions practice and obtained a favorable ruling on qualified immunity.
On October 29, 1958, at approximately 5:45 a.m., thirteen Chicago police officers entered the apartment of James Monroe and his family without a search warrant or arrest warrant. The officers roused the Monroes from bed using flashlights and forced them at gunpoint to stand naked in the living room while ransacking every room, emptying drawers, and ripping mattress covers. Detective Pape struck Mr. Monroe several times with his flashlight and called him "nigger" and "black boy." Other officers hit and kicked several of the children and pushed them to the floor. Mr. Monroe was then taken to the police station and detained on open charges for ten hours. During this period he was interrogated about a murder, exhibited in lineups, and not permitted to call his family or attorney, although he was not brought before a magistrate despite their availability. He was released without any criminal charges being filed against him. The complaint alleged that these actions occurred under color of the statutes, ordinances, regulations, customs, and usages of Illinois and Chicago, and that the City had no rules or controls over its police officers, permitting them to act without restraint. The Monroes claimed deprivations of rights under the Fourth and Fourteenth Amendments and sought compensatory and punitive damages from the officers and the City. The district court dismissed the complaint for failure to state a claim upon which relief could be granted. The Court of Appeals for the Seventh Circuit affirmed the dismissal, and the Supreme Court granted certiorari to review the judgment.
View casePrism Analytics, a disappointed purchaser, brought a Rule 10b-5 claim against a company for misleading statements. After the district court dismissed the complaint, Prism appealed and continued to prosecute the action in the court of appeals.
In 1963 the United States filed a civil antitrust action against Old Blue Chip Stamp Co., a company providing trading stamps to retailers, and nine retailers who owned 90 percent of its shares. In 1967 the action was terminated by entry of a consent decree. The decree contemplated a plan of reorganization whereby Old Blue Chip would merge into a newly formed corporation, Blue Chip Stamps. The holdings of the majority shareholders would be reduced. The new company would offer a substantial number of its shares of common stock to retailers who had used the stamp service in the past but were not shareholders. The offering was to be proportional to past stamp usage and packaged in units consisting of common stock and debentures. The reorganization plan was carried out. The offering was registered with the Securities and Exchange Commission under the Securities Act of 1933. A prospectus was distributed to all offerees as required by section 5 of that Act. Somewhat more than 50 percent of the offered units were actually purchased. In 1970, two years after the offering, Manor Drug Stores, a former user of the stamp service and therefore an offeree of the 1968 offering, filed suit in the United States District Court for the Central District of California against Old and New Blue Chip, eight of the nine majority shareholders of Old Blue Chip, and the directors of New Blue Chip. The complaint alleged that the prospectus prepared and distributed in connection with the offering was materially misleading in its overly pessimistic appraisal of Blue Chip's status and future prospects. It further alleged that Blue Chip intentionally made the prospectus overly pessimistic. This was done to discourage the offerees from accepting the offer. The goal was so that the rejected shares might later be offered to the public at a higher price. Class members because of and in reliance on the false and misleading prospectus failed to purchase the offered units. The complaint sought on behalf of the alleged class some $21,400,000 in damages representing the lost opportunity to purchase the units, the right to purchase the previously rejected units at the 1968 price, and some $25,000,000 in exemplary damages. The district court dismissed the complaint for failure to state a claim upon which relief might be granted. On appeal to the United States Court of Appeals for the Ninth Circuit, a divided panel reversed the district court. After the Ninth Circuit denied rehearing en banc, the Supreme Court granted certiorari.
View caseThe member must first make a demand on the managers or other members requesting that they cause the company to bring the action. If the managers or members do not bring the action within a reasonable time, the member may then prosecute the derivative action.
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The general partner must be given a reasonable time to bring the action after receiving the demand. Courts assess reasonableness based on the complexity of the claim and any steps taken toward litigation or settlement.
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Yes. When the persons who would receive the demand have a disabling conflict, such as personally benefiting from the alleged wrong, demand is futile and the member may prosecute the derivative action without first making demand.
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Vague assurances or internal review without concrete action such as filing suit or preserving the claim do not satisfy the reasonable-time requirement. The limited partner may then prosecute the derivative action.
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