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Transcript:
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This is Tony Doo, the founder of Focus Law. We help business owners break free from dishonest partners and bad deals. If you are a shareholder, member of an LLC, or part of a board, you think someone inside a company has done something wrong, you might want to sue. But here’s what most people get tripped up. Not every business lawsuit is yours to file. If the harm is to the company and not to you personally, the law says you had to file a derivative action and that comes with special rule. Derivative
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action are lawsuits brought on behalf of the company itself usually against the insider such as executives, directors or managing partners. The idea is you’re not suing for yourself. you are stepping into the company’s shoes to fix something the company want or hasn’t. In a Tuty case, the plaintiffs tried to bring a personal claim for something that clearly belongs to the LLC. A business opportunity, he said, was taken. The court threw it out. Why? Because he did not follow the rules
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for derivative action. In California, those rules are strict. You have one to own your interest at a time of the wrongdoing. Two, you had to maintain ownership throughout the case and three you had to make a formal demand to the board to take action first. If you skip those steps, the court may never even consider your case. So, here’s the bottom line. If you are thinking about suing over something that harm the company and not you personally, you may need to file a derivative action and if
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you get the process wrong, your case could be dismissed even before it ever starts. A focus law we help client to navigate those complex business dispute the right way with strategy, precision and experience. So before you make the demand to the board or even thin the lawsuit, let’s talk. Call me at 714-415207. We’ll help you figure out the right way to file lawsuit with the right claim, the right process, and the right path moving forward.
This transcript was AI-generated.
