Also known as: representative actions · representative suit · representative suits · derivative action
Written by attorneys — see sources below.
A lawsuit brought by one or more persons to enforce a right belonging to an entity or group of similarly situated persons.
Robert Rivera joined Riverstone Manufacturing as a member before the managers entered a contract that diverted company assets. After the managers refused to act, Robert remained a member and filed suit to recover the diverted funds for the LLC. The court allowed the action to proceed because Robert satisfied the membership requirements at both the time of the conduct and the commencement of suit.
Ruby Rivera became a limited partner in Raven Logistics after the general partners approved an unfavorable affiliate contract. Ruby made a demand that the general partners bring suit, which they ignored. She then commenced an action to enforce the partnership's rights under the contract.
Renata Russo prevailed in a derivative suit on behalf of Reliance Insurance, obtaining a monetary judgment against a former manager. The court directed that the entire recovery be paid to the LLC rather than to Renata personally.
Rowan Russell settled a derivative action brought for Riverside Healthcare. The court ordered the settlement funds paid directly to the limited partnership, not to Rowan.
Renee Rogers succeeded in a derivative suit that produced a substantial recovery for Riverstone Manufacturing. The court granted her request for reasonable attorneys' fees and costs to be paid from the LLC's recovery.
Roland Rhodes, as class representative, reached a proposed settlement in a suit alleging widespread harm to a large group of similarly situated persons. The court reviewed the fairness of the settlement to absent class members before granting approval.
In the early 1990s, the Judicial Panel on Multidistrict Litigation transferred all pending federal asbestos cases to the Eastern District of Pennsylvania for pretrial proceedings before Judge Weiner. Attorneys from the Plaintiffs' Steering Committee and the Center for Claims Resolution, a consortium of twenty former asbestos manufacturers, began settlement negotiations that initially addressed pending inventory claims but soon expanded to cover future claims. After CCR settled thousands of inventory plaintiffs' claims for more than $200 million through separate agreements, the parties on January 15, 1993, filed a single-day package. This package consisted of a complaint, answer, proposed settlement stipulation exceeding one hundred pages, and joint motion for conditional class certification in a new action not part of the MDL transfer. The complaint defined the class as all persons in the United States or its territories who had been exposed occupationally or through a spouse or household member to asbestos products attributable to CCR defendants and who had not filed suit as of January 15, 1993. This class encompassed both individuals with manifest diseases such as mesothelioma, lung cancer, and asbestosis and exposure-only individuals with no current symptoms. The group potentially numbered in the hundreds of thousands or millions. The accompanying stipulation created a no-fault administrative compensation matrix with fixed, non-inflation-adjusted award ranges for four disease categories. It imposed numerical caps on extraordinary claims and excluded compensation for medical monitoring, fear of future injury, and loss-of-consortium claims. A three-month opt-out period applied. The District Court conditionally certified the class under Rule 23(b)(3) for settlement purposes only, appointed class counsel, approved an extensive notice plan that reached millions of individuals, conducted fairness hearings, and entered orders finding the settlement fair while enjoining class members from pursuing separate asbestos suits. Objectors appealed, the Third Circuit vacated the certification, and the Supreme Court granted certiorari.
View caseOnly a person who is a member both at the time the conduct occurred and at the time the action is commenced may maintain the action.
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Any proceeds or benefits belong to the LLC or limited partnership, not to the individual plaintiff.
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Yes. When the action succeeds in whole or in part, the court may award the plaintiff reasonable expenses, including attorneys' fees, from the entity's recovery.
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Yes. The member or partner ordinarily must first make a demand on the managers or general partners unless demand would be futile.
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Footnotes : Chancery Rule 23.1, similar to Fed.R.Civ.P. 23.1, provides in pertinent part: In a derivative action brought by 1 or more shareholders or members to enforce a right of a corporation or of an unincorporated association, the corporation or association having failed to enforce a right which…