(a) Prerequisites. This rule applies when one or more shareholders or members of a corporation or an unincorporated association bring a derivative action to enforce a right that the corporation or association may properly assert but has failed to enforce. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association.
Rule 78.Derivative actions
Title X: Special Proceedings · Last amended July 1, 2016 · Last verified July 14, 2026
In one sentenceRule 78 lets a shareholder or member sue on behalf of a corporation or unincorporated association to enforce a right the entity itself has failed to pursue, and requires court approval before any such derivative suit is settled, dismissed, or compromised.
Full Text of Rule 78
(b) Pleading requirements. The complaint must be verified and must:
(1) allege that the plaintiff was a shareholder or member at the time of the transaction complained of, or that the plaintiff's share or membership later devolved on it by operation of law;
(2) allege that the action is not a collusive one to confer jurisdiction that the court would otherwise lack; and
(3) state with particularity:
(A) any effort by the plaintiff to obtain the desired action from the directors or comparable authority and, if necessary, from the shareholders or members; and
(B) the reasons for not obtaining the action or not making the effort.
(c) Settlement, dismissal, and compromise. A derivative action may be settled, voluntarily dismissed, or compromised only with the court's approval. Notice of a proposed settlement, voluntary dismissal, or compromise must be given to shareholders or members in the manner that the court orders.
Amendment History
(Adopted March 1, 2016, effective July 1, 2016.)
Plain-English Summary
A corporation or association normally decides for itself whether to sue over a wrong done to it. Rule 78 covers the exception: when the people who run the entity refuse to act, an owner can step in and bring the claim in the entity's name instead of their own. Because one shareholder is standing in for everyone else who owns a stake, the rule builds in safeguards. The suit can go forward only if the person bringing it will adequately represent the interests of other shareholders or members in the same position — a court will not let someone with a conflicting agenda hijack the entity's claim.
The complaint has to be verified, and it must lay out specific facts rather than bare assertions. The plaintiff must show they owned their share or membership when the events happened, or that it passed to them afterward by operation of law, and must confirm the suit isn't a collusive maneuver to create jurisdiction the court would otherwise lack. Most importantly, the plaintiff must describe with particularity what efforts were made to get the directors or comparable authority — and the other shareholders or members, if that step is necessary — to bring the claim themselves, and explain why those efforts failed or were not made. Once the case is filed, it cannot quietly disappear: any settlement, voluntary dismissal, or compromise needs the court's approval, and notice has to go out to the other shareholders or members in whatever form the court directs.
Frequently Asked Questions
What is a derivative action?
It is a lawsuit brought by a shareholder or member to enforce a claim that legally belongs to the corporation or association, not to the individual bringing suit. Any recovery generally benefits the entity, since the underlying right was always the entity's to assert.
Who is allowed to bring a derivative action under Rule 78?
A shareholder or member of the corporation or association, but only if that person owned the share or membership at the time of the events being complained of, or received it afterward by operation of law, and only if they will adequately represent others in the same position.
Why does the complaint have to be verified?
Verification means the plaintiff swears to the truth of the facts alleged. Because a derivative action lets one owner assert rights on behalf of everyone else, the rule requires that extra layer of accountability before the case can proceed.
What does the complaint have to say about efforts to get the corporation to act on its own?
It must describe with particularity what the plaintiff did to ask the directors or comparable authority — and the shareholders or members, if needed — to bring the claim, and explain why that effort failed or why making it would have been pointless.
Can a derivative action be settled without telling the other shareholders or members?
No. Any settlement, voluntary dismissal, or compromise requires the court's approval, and notice of the proposed resolution must be given to shareholders or members in whatever manner the court orders.
Source & verification. Rule text
are reproduced verbatim from the Idaho Rules of Civil Procedure, adopted by the
Supreme Court of Idaho. Last verified July 14, 2026. ·
Official source
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