Still Standing

6 Pages Posted: 29 Mar 2015 Last revised: 16 Oct 2015

See all articles by Peter A. Zablotsky

Peter A. Zablotsky

Touro University - Jacob D. Fuchsberg Law Center

Sa'id Vakili

Vakili & Leus, LLP

Date Written: 2014


Under California Law, to qualify as a derivative plaintiff and institute an action on behalf of a corporation, the plaintiff must show: 1) status as a shareholder of record, holder of a beneficial interest, or holder or a voting trust certificate, 2) shareholder status at the time of the wrong to the corporation giving rise to the action (the contemporaneous ownership rule), and 3) that reasonable effort was made to inform the corporate directors about the action and induce them to commence suit (a prelitigation demand), unless those efforts would have been “useless” or “futile” (demand futility). Various challenges have been advanced to disqualify plaintiff shareholders in derivative actions in state court. Whether based on the existence of a simultaneous direct claim or action, the lack of contemporaneous ownership, the principles of guardian ad litem, or even Rule 23.1 of the Federal Rules of Civil Procedure, these challenges have met with little success.

Note: © Los Angeles Lawyer, Los Angeles County Bar Association. Reprinted with permission.

Keywords: shareholder derivative actions, California Law, contemporaneous ownership, guardian ad litem, Rule 23.1

Suggested Citation

Zablotsky, Peter A. and Vakili, Sa'id, Still Standing (2014). 37 L.A. Law. 27 (Oct. 2014), Touro Law Center Legal Studies Research Paper Series No. 15-34, Available at SSRN:

Peter A. Zablotsky (Contact Author)

Touro University - Jacob D. Fuchsberg Law Center ( email )

225 Eastview Drive
Central Islip, NY 11722
United States

Sa'id Vakili

Vakili & Leus, LLP ( email )

3701 Wilshire Boulevard, Suite 1135
Los Angeles, CA 90010
United States

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