Oppenheimer Fund v. Sanders

Oppenheimer Fund v. Sanders

Opinion

 [*342]  [***259]  [**2385]    MR. JUSTICE POWELL delivered the opinion of the Court.

 Respondents are the representative plaintiffs in a class action brought under Fed. Rule Civ. Proc. 23 (b)(3). They sought [****6]  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.

Petitioner Oppenheimer Fund, Inc. (Fund), is an open-end diversified investment fund registered under the Investment Company Act of 1940, 15 U. S. C. § 80a-1 et seq. (1976 ed.). The Fund and its agents sell shares to the public at their net asset value plus a sales charge.  [****7]  Petitioner Oppenheimer Management Corp. (Management  [***260]  Corp.) manages the Fund's investment portfolio. Pursuant to an investment advisory  [*343]  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.

Respondents bought shares in the Fund at various times in 1968 and 1969. On March 26, May 12, and June 18, 1969, they filed three separate complaints, later consolidated, which alleged that the petitioners, other than the Fund, had violated federal securities laws in 1968 and 1969 by issuing or causing to be issued misleading prospectuses and annual reports about the Fund. ¹ In particular, respondents alleged that the prospectuses and reports failed to disclose the fact that the Fund invested in "restricted" securities, ² [****9]  the risks involved in such investments, and the method used to value the restricted securities on the Fund's books. They also alleged [****8]  that the restricted securities had been overvalued on the Fund's books, causing the Fund's net asset  [**2386]  value, and thus the price of shares in the Fund, to be inflated artificially. On behalf of themselves and a class of purchasers, respondents sought to recover from petitioners, other than the Fund, the amount by  [*344]  which the price they paid for Fund shares exceeded the shares' value. ³

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