§ 3.01 Overview of Derivative Actions

• Jurisdiction: Washington

§ 3.01 OVERVIEW OF DERIVATIVE ACTIONS

A shareholder derivative action allows a corporation's shareholder "to enforce a corporate right which the corporation fails, is unable, or refuses to assert by court action." Haberman v. Wash. Pub. Power Supply Sys., 109 Wn.2d 107, 147, 744 P.2d 1032 (1987), amended, 109 Wn.2d 107, 750 P.2d 254, appeal dismissed, 488 U.S. 805 (1988). Both the cause of action in a derivative lawsuit and any resulting judgment belong to the corporation. LaHue v. Keystone Inv. Co., 6 Wn. App. 765, 780-81, 496 P.2d 343, review denied, 81 Wn.2d 1003 (1972).

The power to bring derivative actions derives from equity and is intended to protect the corporation from harm when directors or officers are engaged in fraud or collusion or where the corporation is otherwise unable to bring an action:

[W]here it is shown that the stockholder has exhausted all his available means to obtain within the corporation itself redress of his grievances or the institution of an action in conformity to his wishes, and it appears that the corporation is incapable of enforcing a right of action accruing to it or that its

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