437 U.S. 340, 351 & n.12 (1978)
Respondents, purchasers of shares in Oppenheimer Fund, Inc. in 1968 and 1969, filed three separate complaints on March 26, May 12, and June 18, 1969, later consolidated, against the Fund, its management corporation, a brokerage firm, and individual officers and directors.1 The complaints alleged violations of federal securities laws through misleading prospectuses and reports that failed to disclose investments in restricted securities and their valuation methods.2
In April 1973, respondents moved for class certification under Rule 23(b)(3) on behalf of all purchasers of Fund shares between March 28, 1968, and April 24, 1970.3 They also sought an order requiring petitioners to pay for the required individual notice to class members.4 Following the Second Circuit's decision in Eisen III, respondents deposed employees of the Fund's transfer agent to gather information on class identification and notice methods.5
The depositions revealed that the proposed class numbered approximately 121,000 persons, with about 103,000 still holding shares.6 Compiling a list of names and addresses would require manual sorting of paper records, keypunching 150,000 to 300,000 computer cards, and creating eight new computer programs, at an estimated cost exceeding $16,000 in 1973.7 Respondents then proposed redefining the class to include only current shareholders and inserting notice in a regular Fund mailing at a cost of about $5,000.8 Petitioners opposed both the redefinition, which would exclude 18,000 former shareholders, and the mailing method due to potential impact on non-class shareholders.9
On May 15, 1975, the District Court certified the class as originally proposed, rejected the redefinition and mailing proposal, and ordered petitioners to bear the cost of compiling the class list.10 A divided panel of the Court of Appeals for the Second Circuit reversed the cost allocation, but the en banc court affirmed the District Court's order by a 7-3 vote.11 The Supreme Court granted certiorari to address the conflict with the Fifth Circuit's decision in In re Nissan Motor Corp. Antitrust Litigation.12
Whether the federal discovery rules authorize a district court to order defendants in a Rule 23(b)(3) class action to assist in compiling a list of the names and addresses of plaintiff class members so that the individual notice required by Rule 23(c)(2) can be sent?13
The scope of discovery under Rule 26(b)(1) is limited to matters relevant to the subject matter of the pending action or reasonably calculated to lead to the discovery of admissible evidence.14 Information sought solely to facilitate sending class notice does not satisfy this standard because it does not bear on any issue in the case and cannot be forced into the concept of relevancy.15
No. Respondents sought the names and addresses of class members only to enable them to send the class notice.16 This is shown by their willingness to abandon the request if the District Court accepted their proposed redefinition of the class to current shareholders. They also offered to insert notice in a regular Fund mailing at a cost of about $5,000.
The en banc Court of Appeals hypothesized a potential issue regarding whether notice had properly been sent.17 But that issue cannot arise until respondents already have obtained the information they seek.18 No other potential issues in the litigation bring respondents' request within the scope of legitimate discovery under Rule 26(b)(1) as applied to the depositions of the transfer agent's employees and the estimated $16,000 cost of compiling the list from paper records and computer tapes.19
The federal discovery rules do not authorize a district court to order defendants to assist in compiling the list of class members for notice purposes.20
Whether Rule 23(d) empowers a district court to direct defendants to perform tasks necessary to send class notice, including identification of class members?21
Rule 23(d) vests power in the district court to order one of the parties to perform the tasks necessary to send the individual notice required by Rule 23(c)(2), including identification of class members, because Rule 23 deals comprehensively with class actions and authorizes appropriate orders for the fair conduct of the action.22
Yes. Rule 23(d) authorizes district courts to enter orders requiring parties to perform tasks necessary for notice. This includes directing defendants to help identify class members when the representative plaintiffs move for certification of a class of approximately 121,000 purchasers under Rule 23(b)(3). Identification is simply another task that must be performed to send notice.23
The District Court's order directing petitioners to have the transfer agent compile the list from existing records falls within this authority.24 This holds even though the discovery rules do not apply to the request made after the Eisen III decision.
Rule 23(d) empowers a district court to direct defendants to perform tasks necessary to send class notice, including identification of class members.25
Whether a district court abuses its discretion by requiring defendants to bear the expense of compiling a list of class members' names and addresses when the representative plaintiffs could obtain the information at the same cost from the transfer agent?26
Under Rule 23(d), when a defendant can perform a task necessary to send class notice more efficiently than the representative plaintiff, the court may order the defendant to perform it.27 However, the representative plaintiff ordinarily bears the cost unless the expense is insubstantial or the task is one the defendant performs in the ordinary course of business.28 The test is whether the expense is substantial rather than whether it is modest in relation to ability to pay.29
Yes. The cost of compiling the list exceeded $16,000 in 1973 and required manual sorting of paper records, keypunching up to 300,000 computer cards, and creating eight new computer programs. This expense would be no greater for respondents than for petitioners since both would hire the transfer agent.
Petitioners' opposition to respondents' proposed redefinition of the class, which would arbitrarily exclude 18,000 former shareholders, was meritorious and should not result in a cost penalty.30 The District Court's characterization of the sum as relatively modest compared to the Fund's $500 million in assets does not justify shifting the substantial burden to petitioners when the expenditure benefits only respondents.31
The district court abused its discretion by requiring defendants to bear the expense of compiling the list of class members' names and addresses.32