The same set of ugly facts can give rise to a welter of claims. And not just a welter — also a variety.
Take a securities fraud case. It alleges that somebody misled investors, who as a result overpaid for a stock, bond, or other security. But the bad facts that motivated the lying often also suggest that the officers and directors didn't do their jobs — as fiduciaries to the company itself. Those claims fall under the "derivative" rubric.
An Eighth Circuit decision today drew the distinction. It thumped a district court for letting a single lead plaintiff, Horizon Asset Management, dump derivative claims in favor of bringing securities fraud claims only. The panel said (having affirmed dismissal of the securities claims):
It may be debatable whether a conflict of interest necessarily prevents a single plaintiff, such as Horizon, from bringing both direct claims against a corporation and derivative claims on the corporation's behalf. . . . Once it was clear that Horizon would not pursue the derivative claims, it was error for the district court to abide by its decision to appoint Horizon as the sole lead plaintif to prosecute a single consolidated complaint.
Horizon Asset Mgmt. Inc. v. H & R Block, Inc., No. 08-1593, slip op. at 19-20 (8th Cir. Sept. 9, 2009).