Source: http://supreme.nolo.com/us/437/340/case.html
Timestamp: 2019-04-24 06:24:57+00:00

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Respondents brought a class action under Fed.Rule Civ.Proc. 23(b)(3) on behalf of themselves and a class of purchasers against petitioners (including an open-end investment fund, its management corporation, and a brokerage firm), seeking to recover the amount by which the allegedly artificially inflated price respondents paid for fund shares exceeded their value. Respondents sought to require petitioners to help compile a list of the names and addresses of the members of the plaintiff class from records kept by the fund's transfer agent so that the individual notice required by Rule 23(c)(2) could be sent. The class proposed by respondents numbered about 121,000 persons, of whom about 103,000 still held shares, and, since 171,000 persons currently held shares, approximately 68,000 were not members of the class. To compile a list of the class members' names and addresses, the transfer agent's employees would have had to sort manually through many records, keypunch 150,000 to 300,000 computer cards, and create several new computer programs, all for an estimated cost of over $16,000. Respondents' proposed redefinition of the plaintiff class, opposed by petitioners, to include only those persons who bought fund shares during a specified period and who still held shares was rejected by the District Court as involving an arbitrary reduction in the class, but the court held that the cost of sorting out the list of class members was the petitioners' responsibility, while also rejecting respondents' proposal, opposed by petitioners, that the class notice be included in a regular fund mailing, because it would reach the 68,000 shareholders who were not class members. On petitioners' appeal, the Court of Appeals affirmed, holding that the federal discovery rules authorized the District Court to order petitioners to assist in compiling the class list and to bear the $16,000 expense incident thereto.
as is the function of the discovery rules, and thus cannot be forced into the concept of relevancy reflected in Fed.Rule Civ.Proc. 26(b)(1), which permits discovery "regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action." Pp. 437 U. S. 350-356.
2. Where a defendant in a class action can perform one of the tasks necessary to send notice, such as identification, more efficiently than the representative plaintiff, the district court has discretion to order him to perform the task under Rule 23(d), and also has some discretion in allocating the cost of complying with such an order, although, as a general rule, the representative plaintiff should bear all costs relating to the sending of notice, because it is he who seeks to maintain the suit as a class action. See Eisen. v. Carlisle & Jacquelin, 417 U. S. 156. Pp. 437 U. S. 356-359.
3. Here, however, the District Court abused its discretion in requiring petitioners to bear the expense of identifying class members and in not requiring respondents to pay the transfer agent, where respondents can obtain the information sought by paying the transfer agent the same amount that petitioners would have to pay, the information must be obtained to comply with respondents' obligation to provide notice to their class, and no special circumstances have been shown to warrant requiring petitioners to bear the expense. Pp. 437 U. S. 359-364.
(a) Petitioners' opposition to respondents' proposed redefinition of the class and to the method of sending notice is an insufficient reason for requiring petitioners to pay the transfer agent, because it is neither fair nor good policy to penalize a defendant for prevailing on an argument against a representative plaintiff's proposals. Pp. 437 U. S. 360-361.
(b) Nor is the fact that $16,000 is a "relatively modest" sum in comparison to the fund's assets a sufficient reason for requiring petitioners to bear the expenses, since the proper test is normally whether the cost is substantial, not whether it is "modest" in relation to ability to pay. Pp. 437 U. S. 361-362.
(c) The District Court's order cannot be justified on the ground that part of the records in question were kept on computer tapes, rather than in less modern forms. P. 437 U. S. 362.
(d) And petitioners should not be required to bear the identification expense simply because they are alleged to have breached a fiduciary duty to respondents and their class, since a bare allegation of wrongdoing, whether by breach of fiduciary duty or otherwise, is not a fair reason for requiring a defendant to undertake financial burdens and risks to further a plaintiff's case. P. 437 U. S. 363.
558 F.2d 636, reversed and remanded.
Respondents are the representative plaintiffs in a class action brought under Fed.Rule Civ.Proc. 23(b)(3). They sought to require petitioners, the defendants below, to help compile a list of the names and addresses of the members of the plaintiff class from records kept by the transfer agent for one of petitioners so that the individual notice required by Rule 23(c)(2) could be sent. The Court of Appeals for the Second Circuit held that the federal discovery rules, Fed.Rules Civ.Proc. 26-37, authorize the District Court to order petitioners to assist in compiling the list, and to bear the $16,000 expense incident thereto. We hold that Rule 23(d), which concerns the conduct of class actions, not the discovery rules, empowers the District Court to direct petitioners to help compile such a list. We further hold that, although the District Court has some discretion in allocating the cost of complying with such an order, that discretion was abused in this case. We therefore reverse and remand.
agreement, the Fund pays Management Corp. a fee which is computed in part as a percentage of the Fund's net asset value. Petitioner Oppenheimer & Co. is a brokerage firm that owns 82% of the stock of Management Corp., including all of its voting stock. The individual petitioners are directors or officers of the Fund or Management Corp., or partners in Oppenheimer & Co.
121,000 persons. About 103,000 still held shares in the Fund, while some 18,000 had sold their shares after the end of the class period. Since about 171,000 persons currently held shares in the Fund, it appeared that approximately 68,000 current Fund shareholders were not members of the class.
The transfer agent's employees also testified that, in order to compile a list of the class members' names and addresses, they would have to sort manually through a considerable volume of paper records, keypunch between 150,000 and 300,000 computer cards, and create eight new computer programs for use with records kept on computer tapes that either are in existence or would have to be created from the paper records. See App. 163-212. The cost of these operations was estimated in 1973 to exceed $16,000.
"the expense is relatively modest, and it is defendants who are seeking to have the class defined in a manner which appears to require the additional expense."
"solution to this problem starts with my earlier ruling that it is the responsibility of defendants to cull out from their records a list of all class members and provide this list to plaintiffs. Plaintiffs will then have the responsibility to prepare the necessary notice and mail it at their expense."
federal discovery rules, Fed.Rules Civ.Proc. 26-37. The en bane court further held that although Rule 26(c) protects parties from "undue burden or expense" in complying with discovery requests, the District Court did not abuse its discretion under that Rule in requiring petitioners to bear this expense. 558 F.2d at 649-650.
"The time and expense of gathering [class members'] names and addresses is a necessary predicate to providing each with notice of the action's pendency without which the action may not proceed [citing Eisen IV]. Viewed in this context, it becomes strikingly clear that, rather than being controlled by the federal civil discovery rules, identification of absentee class members' names and addresses is part and parcel of rule 23(c)(2)'s mandate that the class members receive"
"the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort."
In re Nissan Motor Corp. Antitrust Litigation, 552 F.2d 1088, 1102 (1977). In the Fifth Circuit's view, Rule 23(d), which empowers district courts to enter appropriate orders in the handling of class actions, is the procedural device by which a district court may enlist the aid of a defendant in identifying class members to whom notice must be sent. The Nissan court found it unnecessary to decide whether Eisen IV requires a representative plaintiff always to bear the cost of identifying class members. Since the representative plaintiffs could perform the required search through the defendants' records as readily as the defendants themselves, and since the search had to be performed in order to advance the representative plaintiffs' case, they were required to perform it, and thus to bear its cost. See 552 F.2d at 1102-1103.
We granted certiorari in the instant case to resolve the conflict that thus has arisen and to consider the underlying cost allocation problems. 434 U.S. 919 (1977).
"In any class action maintained under subdivision(b)(3), the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort."
"In the absence of any support under Rule 23, [the representative plaintiff's] effort to impose the cost of notice on [defendants] must fail. The usual rule is that a plaintiff must initially bear the cost of notice to the class. . . . Where, as here, the relationship between the parties is truly adversary, the plaintiff must pay for the cost of notice as part of the ordinary burden of financing his own suit."
Id. at 417 U. S. 178-179.
either the procedure by which a representative plaintiff might require a defendant to help identify class members or whether costs may be allocated to the defendant in such a case. The specific holding of Eisen IV is that, where a representative plaintiff prepares and mails the class notice himself, he must bear the cost of doing so.
The parties in the instant case center much of their argument on the questions whether the discovery rules authorize a district court to order a defendant to help identify the members of a plaintiff class so that individual notice can be sent, and, if so, which rule applies in this case. For the reasons stated in Part A below, we hold that Rule 23(d), not the discovery rules, is the appropriate source of authority for such an order. This conclusion, however, is not dispositive of the cost allocation question. As we explain in 437 U. S. we think that where a defendant can perform one of the tasks necessary to send notice, such as identification, more efficiently than the representative plaintiff, the district court has discretion to order him to perform the task under Rule 23(d). In such cases, the district court also has some discretion in allocating the cost of complying with its order. In 437 U. S. however, we conclude that the District Court abused its discretion in this case.
Although respondents' request resembles discovery in that it seeks to obtain information, we are convinced that it more properly is handled under Rule 23(d). The critical point is that the information is sought to facilitate the sending of notice, rather than to define or clarify issues in the case.
claim or defense of any other party, including the existence, description, nature, custody, condition and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence."
"a potential issue in all [Rule 23(b)(3) class action] litigation whether the required notice has properly been sent. A list of the names and addresses of the class members would, of course, be essential to the resolution of that issue."
such an order is appropriate and of how the cost of the defendant's complying with such an order should be allocated.
Although the Fifth Circuit held that Rule 23(d), not the discovery rules, authorizes a district court to order a defendant to provide information needed to identify class members to whom notice must be sent, it also suggested that principles embodied in the discovery rules for allocating the performance of tasks and payment of costs might be relevant to a district court's exercise of discretion under Rule 23(d). See Nissan, 552 F.2d at 1102. Petitioners and the en banc dissent, on the other hand, argue that Eisen IV always requires a representative plaintiff to pay all costs incident to sending notice, whether he or the defendant performs the required tasks. Eisen IV does not compel this latter conclusion, for it did not involve a situation where a defendant properly was ordered under Rule 23(d) to perform any of the tasks necessary to sending the notice.
The first question that a district court must consider under Rule 23(d) is which party should perform particular tasks necessary to send the class notice. The general rule must be that the representative plaintiff should perform the tasks, for it is he who seeks to maintain the suit as a class action and to represent other members of his class. In Eisen IV, we noted the general principle that a party must bear the "burden of financing his own suit," 417 U.S. at 479 U. S. 179. Thus, ordinarily there is no warrant for shifting the cost of the representative plaintiff's performance of these tasks to the defendant.
"it is a sufficient answer to such interrogatory to specify the records from which the answer may be derived or ascertained and to afford to the party serving the interrogatory reasonable opportunity to"
the usual case, the test should be whether the expense is substantial, rather than, as under Rule 26(c), whether it is "undue."
Nevertheless, in some instances, the expense involved may be so insubstantial as not to warrant the effort required to calculate it and shift it to the representative plaintiff. In Nissan, for example, the court did not find it necessary to direct the representative plaintiffs to reimburse the defendants for the expense of producing their files for inspection. In other cases, it may be appropriate to leave the cost where it falls because the task ordered is one that the defendant must perform in any event in the ordinary course of its business. [Footnote 28] Although we do not attempt to catalogue the instances in which a district court might be justified in placing the expense on the defendant, we caution that courts must not stray too far from the principle underlying Eisen IV that the representative plaintiff should bear all costs relating to the sending of notice because it is he who seeks to maintain the suit as a class action.
The District Court offered two reasons why petitioners should pay the transfer agent, but neither is persuasive. First, the court thought that petitioners should bear this cost because it was their opposition to respondents' proposed redefinition of the class and method of sending notice that made it necessary to incur the cost. A district court necessarily has some discretion in deciding the composition of a proper class and how notice should be sent. Nor is it improper for the court to consider the potential impact that rulings on these issues may have on the expense that the representative plaintiff must bear in order to send the notice. See Eisen IV, 417 U.S. at 417 U. S. 179 n. 1; id. at 417 U. S. 179-181 (Douglas, J., dissenting in part). But it is neither fair nor good policy to penalize a defendant for prevailing on an argument against a representative plaintiff's proposals. If a defendant's argument has merit, it should be accepted regardless of his willingness to bear the extra expense that its acceptance would require. Otherwise, a defendant may be discouraged from advancing arguments entirely appropriate to the protection of his rights or the rights of absent class members.
in this case. The District Court seems to have agreed with petitioners that respondents' proposed redefinition of the class was improper. [Footnote 30] Otherwise, its actions would be difficult to fathom, for its rejection of the proposed redefinition increased the cost to respondents as well as petitioners. [Footnote 31] By the same token, if the District Court believed that sending the notice to current Fund shareholders who were not class members might harm the Fund, it should not have required the Fund to buy protection from this threat. Yet it must have believed that the Fund would be harmed, for otherwise there was no reason to reject respondents' proposal, and thus increase the cost that respondents themselves would have to bear. For these reasons, we hold that the District Court erred in linking the questions of class definition and method of notice to the cost allocation question.
it is "modest" in relation to ability to pay. In the context of a lawsuit in which the defendants deny all liability, the imposition on them of a threshold expense of $16,000 to enable the plaintiffs to identify their own class hardly can be viewed as an insubstantial burden. Cf. Eisen IV, supra at 417 U. S. 176. As the expenditure would benefit only respondents, we think that the amount of money involved here would cut strongly against the District Court's holding, even if the principle of Nissan did not control.
The panel dissent and the en banc majority suggested several additional reasons to justify the District Court's order, none of which we find persuasive. Both opinions suggest that the fact that part of these records are kept on computer tapes justifies imposing a greater burden on petitioners than might be imposed on a party whose records are kept in another form. Thus, the panel dissent warned that potential defendants may be tempted to use computers "irretrievably [to bury] information to immunize business activity from later scrutiny," 558 F.2d at 645 n. 1, and the en banc majority argued that, even where no bad motive is present, "complex electronic processes may be required to extract information which might have been obtainable through a minimum of effort had different systems been used." Id. at 64.
borders on the frivolous. Apart from the fact that no one has suggested what "different systems" petitioners should have used, we do not think a defendant should be penalized for not maintaining his records in the form most convenient to some potential future litigants whose identity and perceived needs could not have been anticipated. See id. at 54 (en banc dissent).
Respondents also contend that petitioners should be required to bear the identification expense because they are alleged to have breached a fiduciary duty to respondents and their class. See also id. at 645-646 (panel dissent). Although we had no occasion in Eisen IV to consider this argument, see 417 U.S. at 417 U. S. 178, and n. 15, suggestions to this effect have met with trenchant criticism elsewhere. [Footnote 32] A bare allegation of wrongdoing, whether by breach of fiduciary duty or otherwise, is not a fair reason for requiring a defendant to undertake financial burdens and risks to further a plaintiff's case. Nor would it be in the interests of the class of persons to whom a fiduciary duty is owed to require them, through the fiduciary, to help finance every suit by one of their number that alleges a breach of fiduciary duty, without regard to whether the suit has any merit.
we hold that the District Court abused its discretion in not requiring respondents to pay the transfer agent to identify the members of their own class. The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.
The complaints alleged violations of the Securities Act of 1933, 15 U.S.C. § 77a et seq. (1976 ed.), the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq. (1976 ed.), the Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq. (1976 ed.), and rules promulgated under these Acts. They also alleged pendent state law claims of fraud and breach of fiduciary duty.
"securities acquired directly or indirectly from the issuer thereof, or from an affiliate of such issuer, in a transaction or chain of transactions not involving any public offering. . . ."
17 CFR § 230.144(a)(3) (1977). The public sale or distribution of such securities is restricted under the Securities Act of 1933 until the securities are registered or an exemption from registration becomes available. See 15 U.S.C. §§ 77d, 77e (1976 ed.).
Later in the proceedings, respondents' counsel estimated that the average recovery per class member would be about $15, and that the aggregate recovery might be $1 1/2 million.
In a separate count of their complaints, respondents also sought derivative relief on behalf of the Fund to recover excessive management fees paid by the Fund to Management Corp. as a result of the Fund's allegedly inflated net asset value.
Petitioners denied the material allegations of the complaints. In addition, they alleged a setoff against respondents and their class to the extent that the price paid by the Fund to redeem shares had exceeded their value. The non-Fund petitioners also alleged that, if they were liable to respondents and their class for overvaluation of Fund shares, then the Fund would be liable to them for excess amounts received by the Fund as a result of the overvaluation.
Petitioners submitted the sworn affidavit of Robert Galli, Secretary of the Fund and Administrative Vice President and Secretary of Management Corp., which stated that this was a real possibility in light of "the current loss of investor confidence in the stock market and the uncertain conditions under which that market exists at this time." App. 130-131.
The District Court also rejected a proposal by petitioners to set April 25, 1969, as the closing date of the class period, holding that respondents had raised triable claims of misrepresentations after that date. 20 Fed.Rules Serv.2d at 1221-1222.
"provided that the notices are sent only to class members and that plaintiffs pay in full the Fund's extra costs of mailing, including the costs of segregating the envelopes going to the class members from the envelopes going to other Fund shareholders."
"without prejudice to the right of this defendant, at the conclusion of the action, to make whatever claim it would be legally entitled to make regarding reimbursement by another party."
The court denied the Fund's request that respondents be required to post bond for the identification costs.
All three members of the panel agreed that the order allocating the expense of identification was appealable under the collateral order doctrine of Cohen v. Beneficial Loan Corp., 337 U. S. 541 (1949). 558 F.2d at 638-639; id. at 643 (Hays, J., dissenting in part). We agree. See Eisen v. Carlisle & Jacquelin (Eisen IV), 417 U. S. 156, 417 U. S. 171-172 (1974). The panel also unanimously affirmed the District Court's ruling that the suit could proceed as a class action. 558 F.2d at 642-643; id. at 643 (Hays, J., dissenting in part). This issue is not before us.
The panel majority also suggested that the Fund should not be required to bear this expense because it, unlike the other petitioners, was not named as a defendant in the class action portion of this suit. See id. at 64. The Fund itself, which is in the position of a defendant because it ultimately may be liable for any damages that respondents and their class recover, see n 4, supra, does not argue in this Court that it should not bear the expense because it is not a formal defendant. We therefore do not rely on any distinction that might be drawn between the Fund and the other petitioners in this respect.
District Judge Palmieri, the author of the panel majority opinion, did not participate in the rehearing en banc.
See App. in Eisen v. Carlisle & Jacquelin, O.T. 1973, No. 73-203, pp. 184-185.
"[T]he court should and ordinarily does interpret 'relevant' very broadly to mean matter that is relevant to anything that is or may become an issue in the litigation."
4 J. Moore, Federal Practice � 26.56 , p. 26-131 n. 34 (2d ed.1976).
For example, where issues arise as to jurisdiction or venue, discovery is available to ascertain the facts bearing on such issues. See id., � 26.56; Note, The Use of Discovery to Obtain Jurisdictional Facts, 59 Va.L.Rev. 533 (1973). Similarly, discovery often has been used to illuminate issues upon which a district court must pass in deciding whether a suit should proceed as a class action under Rule 23, such as numerosity, common questions, and adequacy of representation. See Annot., Discovery for Purposes of Determining Whether Class Action Requirements Under Rule 23(a) and (b) of Federal Rules of Civil Procedure Are Satisfied, 24 A.L.R. Fed. 872 (1975).
See, e.g., United States v. 416.81 Acres of Land, 514 F.2d 627, 632 (CA7 1975); Bourget v. Government Employees Ins. Co., 313 F.Supp. 367, 372-373 (Conn.1970), reversed on other grounds, 456 F.2d 282 (CA2 1972).
See 4 J. Moore, Federal Practice � 26-56, pp. 26-126 to 26-128 (2d ed.1976), and cases there cited.
"[T]he provision makes no change in existing law on discovery of indemnity agreements other than insurance agreements by persons carrying on an insurance business."
28 U.S.C.App. p. 7778 (emphasis supplied).
This difficulty may explain why the District Court, after calling for briefs on the question whether the discovery rules applied, see Brief for Respondents 10 n. 4, did not expressly rely on those rules. See also Note, Allocation of Identification Costs in Class Actions: Sanders v. Levy, 91 Harv.L.Rev. 703, 708-709 (1978) (distinguishing between "information . . . sought solely to provide adequate notice" and "valid discovery").
In deciding whether a request comes within the discovery rules, a court is not required to blind itself to the purpose for which a party seeks information. Thus, when the purpose of a discovery request is to gather information for use in proceedings other than the pending suit, discovery properly is denied. See Mississippi Power Co. v. Peabody Coal Co., 69 F.R.D. 558, 565-568 (SD Miss.1976); Econo-Car International, Inc. v. Antilles Car Rentals, Inc., 61 F.R.D. 8, 10 (V.I.1973), rev'd on other grounds, 499 F.2d 1391 (CA3 1974). Likewise, discovery should be denied when a party's aim is to delay bringing a case to trial, or embarrass or harass the person from whom he seeks discovery. See United States v. Howard, 360 F.2d 373, 381 (CA3 1966); Balistrieri v. Holtzman, 52 F.R.D. 23, 24-25 (ED Wis.1971). See also n 20, infra.
"well settled that [a] plaintiff is entitled to conduct discovery with respect to a broad range of matters which pertain to the maintenance of a class action under Rule 23."
Brief for Respondents 25 n. 17; see n 13, supra. The difference between the cases relied on by respondents and this case is that respondents do not seek information because it may bear on some issue which the District Court must decide, but only for the purpose of sending notice.
Until respondents obtain the information and send the class notice, no issue can arise as to whether it was sent "properly."
We do not hold that class members' names and addresses never can be obtained under the discovery rules. There may be instances where this information could be relevant to issues that arise under Rule 23, see n 13, supra, or where a party has reason to believe that communication with some members of the class could yield information bearing on these or other issues. Respondents make no such claims of relevance, however, and none is apparent here. Moreover, it may be doubted whether any of these purposes would require compilation of the names and addresses of all members of a large class. See Berland v. Mack, 48 F.R.D. 121, 126 (SDNY 1969). There is a distinction in principle between requests for identification of class members that are made to enable a party to send notice and requests that are made for true discovery purposes. See n 17, supra.
"the court may make appropriate orders: . . . (2) requiring, for the protection of the members of the class or otherwise for the fair conduct of the action, that notice be given in such manner as the court may direct . . . ; [and] (5) dealing with similar procedural matters."
The Advisory Committee apparently contemplated that the court would make orders drawing on the authority of either Rule 23(d)(2) or 23(d)(5) in order to provide the notice required by Rule 23(c)(2), for its note to Rule 23(d)(2) states that. "under subdivision(c)(2), notice must be ordered. . . ." Advisory Committee's Notes to Fed.Rule Civ.Proc. 23, 28 U.S.C.App. p 7768 (emphasis supplied).
Thus, a number of courts have required defendants in Rule 23(b)(3) class actions to enclose class notices in their own periodic mailings to class members in order to reduce the expense of sending the notice, as respondents asked the District Court in this case to do. See, e.g., Ste. Marie v. Eastern R. Assn., 72 F.R.D. 443, 450 n. 2 (SDNY 1976); Gates v. Dalton, 67 F.R.D. 621, 633 (EDNY 1975); Popkin v. Wheelabrator-Frye, Inc., 20 Fed.Rules Serv.2d 125, 130 (SDNY 1975). See also Eisen IV, 417 U.S. at 180 n. 1 (Douglas, J., dissenting in part).
Our conclusion that Rule 23(d), not the discovery rules, is the appropriate source of authority is supported by the fact that, although a number of courts have ordered defendants to help identify class members in the course of ordering notice, few have relied on the discovery rules. See In re Nissan Motor Corp. Antitrust Litigation, 552 F.2d 1088, 1101-1102 (CA5 1977) (collecting cases).
The analogy to the discovery rules is not perfect, for those rules contemplate that discovery will proceed without judicial intervention unless a party moves for a protective order under Rule 26(c) or an order compelling discovery under Rule 37(a). Rule 23, on the other hand, contemplates that the district court routinely must approve the form of the class notice and order how it should be sent and who should perform the necessary tasks.
Advisory Committee's Notes on 1970 Amendment to Fed.Rule Civ.Proc. 33(c), 28 U.S.C.App. p. 7793, quoting D. Louisell, Modern California Discovery 125 (1963).
See Foster v. Boise-Cascade, Inc., 20 Fed.Rules Serv.2d 466, 470 (SD Tex.1975); Chrapliwy v. Uniroyal, Inc., 17 Fed.Rules Serv.2d 719, 722 (ND Ind.1973); Advisory Committee's Notes, supra at 7793.
Cf., e.g., Hodgson v. Adams Drug Co., 15 Fed.Rules Serv.2d 828, 830 (RI 1971); Adelman v. Nordberg Mfg. Co., 6 F.R.D. 383, 384 (ED Wis.1947); 4A J. Moore, Federal Practice � 33.20, pp. 33-113 to 33-114 (2d ed.1975).
Thus, where defendants have been directed to enclose class notices in their own periodic mailings and the additional expense has not been substantial, representative plaintiffs have not been required to reimburse the defendants for envelopes or postage. See cases cited in n 22, supra.
See also Note, Allocation of Identification Costs in Class Actions, 66 Calif.L.Rev. 105, 115 (1978).
The District Court characterized the proposal as "arbitrary," Sanders v. Levy, 20 Fed.Rules Serv.2d 1218, 1221 (SDNY 1975), and stated that it ruled "in favor of" petitioners on this issue, id. at 1222. Although the court also suggested that petitioners opposed the redefinition because it would reduce the res judicata effect of the judgment, id. at 1221, petitioners themselves never made this argument. We also note that the representative plaintiff in Eisen IV argued, without success, that the defendants should pay part of the cost of notice because of the supposed res judicata benefits to them from class action treatment. Reply Brief for Petitioner in Eisen v. Carlisle & Jacquelin, O.T. 1973, No. 73-203, pp. 25-26. We did not think then, nor do we now, that an unwilling defendant should be forced to purchase these "benefits."
Respondents were required to bear the additional expense at least of envelopes and postage for notice to class members who no longer held shares in the Fund. See n 7, supra.
See, e.g., 558 F.2d at 640-641 (panel majority); Popkin v. Wheelabrator-Frye, Inc., 20 Fed.Rules Serv.2d at 129-130; Berland v. Mack, 48 F.R.D. 121, 131-132 (SDNY 1969); Note, 23 Kan.L.Rev. 309, 318-319 (1975).

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