Strike suit
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A strike suit is a lawsuit brought by a single person or group of people with the purpose of gaining a private settlement before going to court that would be less than the cost of the defendant's legal costs. Such suits frequently appear where the defendant is a considerably larger entity than the plaintiff, such as a corporation or an estate. Due to the financial incentive to settle rather than let the case be determined on its merits, strike suits are sometimes perceived as being a form of legal blackmail and referred to as holdup suits. Some states in the United States have laws to restrict or ban such lawsuits by reducing the financial gain of the plaintiff.
[edit] Strike suits in Securities Law
Company shareholders sometimes use strike suits as a means of addressing perceived failures by or discontentment with the company while avoiding becoming embroiled in litigation themselves.
- A minor shareholder sues a company for falling short on projected earnings. The lawsuit makes multiple technical claims of incompetence by the company.
- A minor shareholder sues a company for failure to follow bylaws set by the company. The lawsuit makes multiple technical claims of bylaw infractions by the company.
