Abstract
This Article is premised on the belief that the derivative action is uniquely susceptible to strike suit litigation-that is, actions with little or no substantive merit but pursued to exploit the nuisance value inherent in litigation. Although there is historic support for the notion of "pernicious and vexing" derivative litigation, some modern evidence suggests that the vast majority of publicly held companies experience no derivative litigation. Commentators, however, have questioned both the validity of the modern evidence and the conclusions derived from it. Despite these criticisms, observers of the present vitality of the derivative action, far from characterizing it as an effective litigation technique, opine that the action may face "extinction." Because recent decisions such as Burks v. Lasker, Zapata Corp. v. Maldonado, and Auerbach v. Bennett have witnessed courts deferring to board decisions to terminate ongoing derivative actions on the grounds that the actions were not in the corporation's best interest, commentators suggest that directors may now possess a veto power over derivative claims. In such a climate, "[t]he strike suit . . . may very well be no more than an over-the-hill dragon, puffed into life to frighten the courts away from deciding substantive issues."
Recommended Citation
Lawrence A. Larose,
Suing in the Right of the Corporation: A Commentary and Proposal for Legislative Reform,
19
U. Mich. J. L. Reform
499
(1986).
Available at:
https://repository.law.umich.edu/mjlr/vol19/iss3/2