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Simple English definitions for legal terms
adverse-domination doctrine
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A quick definition of adverse-domination doctrine:
The adverse-domination doctrine is a rule that says if a company's officers or directors do something wrong, the company can still sue them even if the time limit for suing has passed. This is because the time limit is paused until the company has enough people in charge who are not involved in the wrongdoing to notice and take action. The purpose of this rule is to make sure that bad behavior by company leaders doesn't go unnoticed or unpunished just because they control the company. This rule only helps the company, not the bad actors.
A more thorough explanation:
The adverse-domination doctrine is an equitable principle that tolls the statute of limitations on a breach-of-fiduciary-duty claim against officers and directors, especially when a corporation sues its own officers and directors. This doctrine prevents a director or officer from successfully hiding wrongful or fraudulent conduct during the limitations period.
The statute of limitations is tolled until a majority of the disinterested directors discover or are put on notice of the claim against the wrongdoers. This doctrine is available only to benefit the corporation.
Suppose a corporation's officers and directors engage in fraudulent conduct that harms the corporation. The corporation may not immediately discover the fraud, and the statute of limitations may expire before the corporation can bring a claim against the wrongdoers.
However, if the corporation is still controlled by the alleged wrongdoers, the adverse-domination doctrine may apply. The statute of limitations would be tolled until a majority of the disinterested directors discover or are put on notice of the claim against the wrongdoers. This gives the corporation more time to bring a claim against the wrongdoers and seek justice.