ON TRANSINDIVIDUAL SUITS: FROM DERIVATIVE, THROUGH AGGREGATIVE, TO COLLECTIVE LITIGATION

Abstract

Transindividual litigation has revolutionized modern law. It has altered the ad-judication of legal claims to the bone. Beyond their impact on a large number of people, the underlying actions operate in a unique fashion. In particular, they call for the constant protection of the interests of the parties under the plaintiffs’ deputization. Not surprisingly, corporate law has partaken in this phenomenon. For instance, derivative suits allow individuals to sue for a larger collectivity, somewhat along the lines of citizen suits from over a century later. Of course, they turn on the assertions of the corporation, rather than those of society as a whole. Likewise, stockholders have deployed class actions on a regular basis. Thereby, they have for the most part aggregated their claims against the corporative entity besides the board of directors. This Article will concentrate on (1) derivation suits alongside (2) shareholder class actions. It will surface a deep divergence underneath a surface resemblance between them. Most significantly, complainants aim at the vindication of a genuinely collective, indivisible right in the former. They exert themselves for the enforcement of an aggregation of individual entitlements upon the latter. Consequently, these mechanisms contradistinguish themselves at the core. They differ in several cardinal respects: from their representative mode, onto their objective, through their internal construction of fairness, to their perspective on adequate representation. An appreciation of their dichotomous opposition can contribute to an understanding of the inner workings of each of them. It additionally irradiates the relationship among the internal players: from the corporation itself, onto the directorate, through the investors, to the stakeholders. Upon a grasp of the dichotomy, one gains invaluable insights into group entitlements generally. Moreover, a new interpretation of the key contradistinction, omnipresent in the caselaw, of (1) derivative from (2) direct corporate assertions will become necessary. Specifically, it will require a focus on the nature of the right at stake.