Document: 57 L.Ed.2d 253 98 S.Ct. 2380 437 U.S. 340 OPPENHEIMER FUND, INC., et al., Petitioners,v.Irving SANDERS al. No. 77-335. Argued Feb. 28-March 1, 1978. Decided June 19, Syllabus Respondents brought a class action under Fed.Rule Civ.Proc. 23(b)(3) on behalf of themselves and purchasers against petitioners (including an open-end investment fund, its management corporation, brokerage firm), seeking to recover the amount by which allegedly artificially inflated price respondents paid for fund shares exceeded their value. sought require help compile list names addresses members plaintiff from records kept fund's transfer agent so that individual notice required Rule 23(c)(2) could be sent. The proposed numbered about 121,000 persons, whom 103,000 still held shares, and, since 171,000 persons currently approximately 68,000 were not class. To members' addresses, agent's employees would have had sort manually through many records, keypunch 150,000 300,000 computer cards, create several new programs, all estimated cost over $16,000. Respondents' redefinition class, opposed petitioners, include only those who bought during specified period was rejected District Court as involving arbitrary reduction in but court sorting out petitioners' responsibility, while also rejecting respondents' proposal, included regular mailing, because it reach shareholders members. On appeal, Appeals affirmed, holding federal discovery rules authorized order assist compiling bear $16,000 expense incident thereto. Held: 1. Federal 23(d), empowers district courts enter appropriate orders handling actions, rules, is source authority Court's directing information such facilitate sending rather than define or clarify issues case, function thus cannot forced into concept relevancy reflected 26(b)(1), permits "regarding any matter, privileged, relevant subject matter involved pending action." Pp. 350-356. 2. Where defendant can perform one tasks necessary send notice, identification, more efficiently representative plaintiff, has discretion him task some allocating complying with order, although general rule should costs relating he seeks maintain suit action. See Eisen v. Carlisle & Jacquelin, 417 156, 94 2140, 40 732. 356-359. 3. Here, however, abuse requiring identifying pay agent, where obtain paying same pay, must obtained comply obligation provide no special circumstances been shown warrant expense. 359-364. (a) Petitioners' opposition method insufficient reason neither fair nor good policy penalize prevailing argument plaintiff's proposals. 360-361. (b) Nor fact "relatively modest" sum comparison assets sufficient expenses, proper test normally whether substantial, "modest" relation ability pay. 361-362. (c) justified ground part question tapes less modern forms. P. 362. (d) And identification simply they are alleged breached fiduciary duty bare allegation wrongdoing, breach otherwise, undertake financial burdens risks further case. 363. 558 F.2d 636, reversed remanded. Donald N. Ruby, New York City, respondents. Alfred Berman, petitioners; Norman L. Greene, Gerald Gordon, John F. Davidson, Daniel E. Kirsch, briefs. Mr. Justice POWELL delivered opinion Court. 1 plaintiffs 23(b)(3). They defendants below, Second Circuit Fed.Rules 26-37, authorize We hold concerns conduct direct list. that, abused this therefore reverse remand. 2 * Petitioner Oppenheimer Fund, Inc. (Fund), diversified registered Investment Company Act 1940, 15 U.S.C. § 80a-1 seq. (1976 ed.). Fund agents sell public at net asset value plus sales charge. Management Corp. (Management Corp.) manages Fund's portfolio. Pursuant advisory agreement, pays fee computed percentage Co. firm owns 82% stock Corp., including voting stock. directors officers partners 3 various times 1968 1969. March 26, May 12, 18, 1969, filed three separate complaints, later consolidated, other violated securities laws 1969 issuing causing issued misleading prospectuses annual reports Fund.1 In particular, failed disclose invested "restricted" securities,2 investments, used restricted books. overvalued books, value, artificially. purchasers, shares' value.3 4 April 1973, moved pursuant allowing them represent consisting between 28, 1968, 24, 1970.4 Relying 54 F.R.D. 565 (S.D.N.Y.1972), absent 23(c)(2). erre ordering 90% notifying Jacquelin (Eisen III), 479 1005. thereupon deposed derived, develop manageability, methods upon pass. These employees' statements, together supplied established persons. About 18,000 sold after end period. Since appeared current 5 testified considerable volume paper eight programs use either existence created records. App. 163-212. these operations 1973 exceed 6 Having learned this, face III, redefine 1970, Fund. inserted periodic mailings shareholders, offered printing inserting notices, $5,000. 146. proposals made unnecessary redefined notify them. Petitioners arbitrarily exclude former period, possibly prejudice. mailing This, feared, set off wave selling detriment Fund.5 7 15, 1975, six years litigation began, ruled motions then pending. Sanders Levy, 20 Serv.2d 1218 (SDNY 1975). first met requirements class-action treatment Id., 1220-1221. It "would involve class." 1221.6 At time, "the culling . responsibility defendants." Ibid. explanation given relatively m dest defined manner appears additional expense." Finally, proposal mailing. Noting Judge said his "solution problem starts my earlier ruling cull plaintiffs. Plaintiffs will prepare mail 1222.7 8 divided panel insofar addresses. 636 (C.A.2 1976).8 majority thought IV, 732 (1974), affirmed III pertinent part, integral step process F.2d, 642.9 rehearing en banc, panel's decision vote seven three. 646.10 IV did control case might 26-37. banc 26(c) protects parties "undue burden expense" requests, 649-650. 9 By apply itself conflict Fifth Circuit, recently held: 10 "The time gathering [class members'] predicate providing each action's pendency without may proceed [citing ]. Viewed context, becomes strikingly clear being controlled civil absentee parcel 23(c)(2)'s mandate receive 'the best practicable circumstances, identified reasonable effort.' " re Nissan Motor Antitrust Litigation, 552 1088, 1102 (1977). 11 Circuit's view, procedural device enlist aid found decide requires always search defendants' readily themselves, performed advance plaintiffs' cost. 1102-1103. 12 granted certiorari instant resolve arisen consider underlying cost-allocation problems. 434 919, 391, 275 II 13 arise requirement 23(c)(2), provides part: 14 "In maintained subdivision (b)(3), shall effort." plain language "requires sent U.S., 177, S.Ct., 2152. preliminary hearing merits party notice. 177-178, Instead, 16 absence support 23, [the plaintiff's] effort impose [defendants] fail. usual initially Where, here, relationship truly adversary, ordinary financing own suit." 178-179, 2153. 17 instance, if members.11 present concerning procedure w ich identify members, allocated specific prepares mails himself, doing so. 18 center much questions so, applies For reasons stated Part A we order. This conclusion, dispositive question. As explain B, think 23(d). cases, C, conclude A. 19 Although request resembles information, convinced properly handled critical point scope 26(b)(1) follows: 21 "Parties regarding action, relates claim defense party, existence, description, nature, custody, condition location documents, tangible things identity having knowledge discoverable matter. objection inadmissible trial reasonably calculated lead admissible evidence." 22 key phrase definition—"relevant action"—has construed broadly encompass bears on, issue Hickman Taylor, 329 495, 501, 67 385, 388, 91 L.Ed. 451 (1947).12 Consistently notice-pleading system Rules, limited raised pleadings, designed issues. 500-501, 388. variety fact-oriented related merits.13 23 "discovery, like matters procedure, ultimate boundaries." 507, 392. Discovery "reasonably evidence" within 26(b)(1). Thus, deny claims defenses stricken,14 events occurred before applicable limitations unless otherwise case.15 reason, amendment 26(b) bring contents insurance agreements insurer liable satisfy judgment defendant, ordinarily considered, jury deciding issues.16 24 attempt "relevancy" described above. difficulty do seek bearing 653 (en dissent).17 If relevance issues, willing, were, abandon accept argued desired enable purpose. Taking word, appear 26(b)(1).18 25 avoided "relevant action" meaning need Tacitly acknowledging aimed illuminating instead hypothesized there "a potential [Rule class-action] course essential resolution issue." 648. But aside never pretended anticipating "potential issue," apparent issue" until already very seek.19 perceive issues" legitimate discovery. short, right tool job.20 26 hand, deals comprehensively natural place look regulating 23(d) vests power notice.21 Moreover, sometimes notice.22 another agree authorizes defendant's cooperation sent.23 turn consideration propriate how allocated. B 27 needed sent, suggested principles embodied performance payment court's exercise Nissan, 1102. dissent, argue performs tasks. does compel latter situation ordered 28 particular tasks, noted principle "burden suit," 179, Thus shifting defendant. 29 instances, able plaintiff. disc etion recognized, instances appropriate, rough analogy usefully drawn practice 33(c) rules.24 Under Rule, when directs interrogatory answered examination responding party's business "it answer specify derived ascertained afford serving opportunity to" examine copy deriving "substantially same" party. Not unlike provision intended benefitee."25 represents application similar principle, concluded derive substantially defendants, hence supra, 348. same," itself.26 30 cases decides borne court; strongly suggests situation, leave falls, benefits, Once again, rules. presumption invoke grant protecting conditioning requesting necessarily imperfect, rarely advanced Cf. n. 30, infra. declining shift usually context.27 istrict exercising considerably ready performing derives benefit, 26(c). than, 26(c), "undue." 31 Nevertheless, insubstantial calculate example, find reimburse producing files inspection. falls event business.28 catalogue placing caution stray too far C 32 containing petitioners. apparently reference them, acted make available preparation requires, indicated above, manual old paper, keypunching up creation extant both sides assume generated hiring services third exceeding greater respondents, 1102-1103.29 33 two why persuasive. First, incur composition improper impact rulings 179 16, 2153 16; id., 179-181, 2153-2154 (Douglas, J., dissenting part). merit, accepted regardless willingness extra acceptance require. Otherwise, discouraged advancing arguments entirely protection rights 34 inequity realized seems agreed improper.30 Otherwise actions difficult fathom, rejection increased well petitioners.31 token, believed harm buy threat. Yet harmed, reject increase bear. reasons, erred linking definition 35 second sum, presumably total assets, $500 million. consideration, respect substantial; context lawsuit liability, imposition threshold hardly viewed burden. 176, 2151. expenditure benefit money here cut holding, even control. 36 dissent justify none Both opinions suggest justifies imposing imposed whose form. warned tempted computers "irretrievably [to bury] immunize activity scrutiny," 645 bad motive present, "complex electronic processes extract obtainable minimum different systems used." 649. 37 There indication contention faith conceal addition, expensive retrieve stored program yet exists job, extracted expensively Indeed, expect true, gained widespread storing information. suggestion "different systems" keep borders frivolous. Apart what used, penalized maintaining form most convenient future litigants perceived needs anticipated. 654 dissent). 38 contend 645-646 (panel occasion argument, see 178, 2152, suggestions effect trenchant criticism elsewhere.32 interests owed fiduciary, finance every number alleges duty, regard merit. 39 Given expense, reversed, remanded proceedings consistent opinion. ordered. complaints violations Securities 1933, 77a ed.), Exchange 1934, 78a promulgated Acts. pendent state-law fraud duty. "Restricted" "securities acquired directly indirectly issuer thereof, affiliate issuer, transaction chain transactions offering .." CFR 230.144(a)(3) sale distribution 1933 exemption registration available. §§ 77d, 77e Later counsel average recovery per member $15, aggregate $11/2 count derivative relief excessive fees result denied material allegations complaints. setoff extent redeem non-Fund overvaluation excess amounts received overvaluation. submitted sworn affidavit Robert Galli, Secretary Administrative Vice President real possibility light loss investor confidence market uncertain conditions time." 130-131. 25, closing date triable misrepresentations date. Serv.2d, 1221-1222. subsequently modified allow envelopes "provided notices full segregating going shareholders." "without prejudice conclusion whatever legally entitled reimbursement party." post bond costs. All appealable collateral-order doctrine Cohen Beneficial Loan 337 541, 69 1221, 93 1528 (1949). 638-639; 643 (Hays, agree. IV), 171-172, 2149-2150, (1974). unanimously 642-643; us. it, named portion suit. 640. itself, position ultimately damages recover, 4, formal rely distinction respect. Palmieri, author opinion, participate banc. O.T.1973, 73-203, pp. 184-185. "[T]he interpret 'relevant' mean anything become litigation." J. Moore, Practice ¶ 26.56[1], p. 26-131 (2d ed. 1976). jurisdiction venue, ascertain facts 26.56[6]; Note, Use Obtain Jurisdictional Facts, 59 Va.L.Rev. 533 (1973). Similarly, often illuminate pass numerosity, common questions, adequacy representation. Annot., Purposes Determining Whether Class Acti n Requirements 23(a) Rules Civil Procedure Are Satisfied, A.L.R.Fed. 872 (1975). See, e. g., United States 416.81 Acres Land, 514 627, 632 (C.A.7 1975); Bourget Government Employees Ins. Co., 313 F.Supp. 367, 372-373 (Conn.1970), grounds, 456 282 1972). 26-126 26-128 1976), cited. Before 26(b)(2) added discovery, courts, swayed revelation agreement tends encourage settlements, otherwise. Advisory Committee's Notes 1970 Amendment App., 7777; 26.62[1] Committee changing clarifying stated: makes change existing law indemnity carrying business." 7778 (emphasis supplied). Court, calling briefs applied, Brief expressly Allocation Identification Costs Actions: Harv.L.Rev. 703, 708-709 (1978) (distinguishing "information solely adequate notice" "valid discovery"). comes blind purpose gather suit, denied. Mississippi Power Peabody Coal 558, 565-568 (S.D.Miss.1976); Econo-Car International, Antilles Car Rentals, Inc., 61 8, (V.I. 1973), 499 1391 (C.A.3 1974). Likewise, e aim delay bringing trial, embarrass harass person Howard, 360 373, 381 1966); Balistrieri Holtzman, 52 24-25 (E.D.Wis.1971). 20, "well settled [a] broad range pertain maintenance 23." 17; 13, supra. difference relied decide, Until "properly." believe communication yield relevance, here. doubted purposes compilation large Berland Mack, 48 121, 126 (S.D.N.Y.1969). requests true purposes. 17, states direct" commonly Frankel, Some Preliminary Observations Concerning 43 39, 44 (1968); Kaplan, Continuing Work Committee: 1966 Amendments (I), 81 356, 398 157 (1967). orders: (2) requiring, .; [and] (5) dealing matters." contemplated drawing 23(d)(2) 23(d)(5) note THAT "UNDER SUBDIVISION (C)(2), NOTICE MUST BE ORDERED ." adviSory 7768 enclose reduce asked do. Ste. Marie Eastern R. Assn., 72 443, 450 (S.D.N.Y.1976); Gates Dalton, 621, 633 (E.D.N.Y.1975); Popkin Wheelabrator-Frye, 125, 130 (E.D.N.Y.1975). 180 2154 Our supported few 1101-1102 (CA5 1977) (collecting cases). perfect, contemplate judicial intervention moves protective compelling 37(a). contemplates routinely approve 33(c), 7793, quoting D. Louisell, Modern California 125 (1963). Foster Boise-Cascade, 466, 470 (S.D.Tex.1975); Chrapliwy Uniroyal, 719, 722 (N.D.Ind.1973); Notes, 7793. Cf., Hodgson Adams Drug 828, 830 (R.I.1971); Adelman Nordberg Mfg. 383, 384 (E.D.Wis.1947); 4A 33.20, 33-113 33-114 directed postage. cited 22, Actions, 66 Calif.L.Rev. 105, 115 (1978). characterized "arbitrary," 1218, 1221 (S.D.N.Y.1975), "in favor of" issue, 1222. res judicata judgment, argument. argued, success, supposed benefits treatment. Reply 25-26. then, now, unwilling force purchase "benefits." least postage longer 7, 640-641 majority); 129-130; 131-132 (S.D.N.Y.1969); Kan.L.Rev. 309, 318-319

Category: 8