Abstract
When a corporation suffers a harm caused by its own directors or officers, most often resulting from a breach of fiduciary duty, and the board does not initiate litigation to remedy the alleged wrong, shareholders may file suit on behalf of the corporation to redress the harm. Courts recognize this cause of action—a single derivative suit—in the name of equity, meaning equitable principles drive a court’s recognition of the action. Consulting the same equitable principles, courts have extended the single derivative suit to shareholders owning shares in a corporation that owns a subsidiary, allowing these shareholders to bring “double derivative” suits on behalf of the corporation’s subsidiary when the subsidiary suffers a similar harm. North Carolina’s courts have not explicitly addressed whether a plaintiff may bring a double derivative claim under North Carolina law. This Comment argues that North Carolina, if given the opportunity, should recognize the double derivative suit because of the suit’s equitable nature, North Carolina’s receptiveness to justifying other business-related causes of action in the name of equity, and the ease at which North Carolina could statutorily recognize the cause of action.
Recommended Citation
Lauryl E. M. Fright, On the Double (Derivative): North Carolina Could Single-Handedly Recognize Double Derivative Suits, 46 Campbell L. Rev. 203 (2024).