Where Should a Shareholder File a Lawsuit?

Are you a shareholder who is considering taking legal action against a corporation? Whether you are considering filing a direct action or a derivative action, it is crucial that you understand the appropriate venue for your case. At Pike & Lustig, LLP, we have deep experience with shareholder law. Here, our Miami shareholder dispute attorney provides a guide that shareholders can use to help them determine where they should file a lawsuit.

 First Issue: Jurisdiction (Which State to File in) 

You need to file a shareholder claim in a state that has jurisdiction over the corporation and over your specific case. The American Bar Association (ABA) explains that “a court has no authority to decide a case unless it has jurisdiction over the person or property involved.” When determining the jurisdiction for filing a shareholder lawsuit, the primary considerations include:

• The state where the corporation is incorporated;
• The state where the corporation is headquartered; and
• The state where the underlying “cause of action” occurred.

A shareholder may be able to file their lawsuit in multiple different jurisdictions. In some cases, a shareholder may have a claim in both Florida and in another state, such as Delaware. However, as a general rule, the most straightforward procedural path is for a shareholder to file the lawsuit in the state where the company is legally incorporated. It is the state of incorporation’s laws that largely govern disputes related to corporate affairs. Still, there are exceptions.

Second Issue: State Court or Federal Court 

Choosing between state and federal court for a shareholder lawsuit depends largely on the nature of the case and the specific claims involved. If the lawsuit involves questions of federal law, or if the parties are from different states and the amount in controversy exceeds $75,000, federal courts can have jurisdiction over the matter. Though, the federal court may apply state law. Otherwise, state courts are typically suitable for shareholder litigation—especially for cases primarily concerning state laws and/or an alleged breach of fiduciary duty by the corporation.

A Shareholder Lawyer Can Help You Determine Where You Can (and Should) File 

Shareholder litigation is complicated. It is a highly technical, procedural-intensive process. A knowledgeable South Florida shareholder attorney can help you navigate difficult strategic decisions, including about where to file a lawsuit. Your lawyer can analyze the specifics of your case, consider the advantages of different jurisdictions, and advise on the optimal venue for litigation. Your attorney will also assess whether state or federal court offers a more favorable legal environment for your specific situation.

 Set Up a Confidential Consultation With Our Miami, FL Shareholder Rights Lawyer Today

At Pike & Lustig, LLP, our Miami shareholder litigation attorney has deep knowledge of the law, including all relevant legal procedures. We can help you determine where you can and should file a lawsuit. If you have any specific questions, please do not hesitate to contact our business law team today. We handle shareholder disputes throughout Southeastern Florida.

Source:

americanbar.org/groups/public_education/resources/law_related_education_network/how_courts_work/jurisdiction/