source: Caselaw Access Project

author: Chief Justice Burger Justice Blackmun, Justice Stevens, Justice Marshall,

license: Public Domain

text:
    PRESS-ENTERPRISE CO. v. SUPERIOR COURT OF CALIFORNIA, RIVERSIDE COUNTY
    No. 82-556.
    Argued October 12, 1983
    Decided January 18, 1984

      James D. Ward argued the cause for petitioner. With him on the briefs was John A. Boyd.

      Glenn Robert Salter argued the cause for respondent. With him on the brief were Gerald J. Geerlings and Joyce Ellen Manulis Reikes

      Briefs of amici curiae urging reversal were filed for the Society of Professional Journalists, Sigma Delta Chi, et al. by Bruce W. Sanford, W. Terry Maguire, Pamela J. Riley, Richard M. Schmidt, Jr., Donald F. Luke, Robert C. Lobdell, Robert S. Warren, Erwin G. Krasnow, Mark L. Tuft, and Boisfeuillet Jones, Jr.; and for USA Today et al. by John

        E. Came, Judith R. Epstein, Alice Neff Lucan, Edward J. McIntyre, Douglas T. Foster, and Michael B. Doráis.

      A brief of amicus curiae urging affirmance was filed by Joseph Peter Myers, pro se.

      Briefs of amici curiae were filed for the California State Public Defender by Quin Denvir, Michael G. Millman, and Joseph Levine; and for the State of California by John K. Van De Kamp, Attorney General, Harley D. Mayfield, Assistant Attorney General, and Keith I. Motley, Deputy Attorney General.

   Chief Justice Burger

delivered the opinion of the Court.

We granted certiorari to decide whether the guarantees of open public proceedings in criminal trials cover proceedings for the voir dire examination of potential jurors.

f-H

Albert Greenwood Brown, Jr., was tried and convicted of the rape and murder of a teenage girl, and sentenced to death in California Superior Court. Before the voir dire examination of prospective jurors began, petitioner, Press-Enterprise Co., moved that the voir dire be open to the public and the press. Petitioner contended that the public had an absolute right to attend the trial, and asserted that the trial commenced with the voir dire proceedings. The State opposed petitioner’s motion, arguing that if the press were present, juror responses would lack the candor necessary to assure a fair trial.

The trial judge agreed and permitted petitioner to attend only the “general voir dire.” He stated that counsel would conduct the “individual voir dire with regard to death qualifications and any other special areas that counsel may feel some problem with regard to ... in private. ...” App. 93. The voir dire consumed six weeks and all but approximately three days was closed to the public.

After the jury was empaneled, petitioner moved the trial court to release a complete transcript of the voir dire proceedings. At oral argument on the motion, the trial judge described the responses of prospective jurors at their voir dire:

“Most of them are of little moment. There are a few, however, in which some personal problems were discussed which could be somewhat sensitive as far as publication of those particular individuals’ situations are concerned.” Id., at 103.

Counsel for Brown argued that release of the transcript would violate the jurors’ right of privacy. The prosecutor agreed, adding that the prospective jurors had answered questions under an “implied promise of confidentiality.” Id., at 111. The court denied petitioner’s motion, concluding as follows:

“I agree with much of what defense counsel and People’s counsel have said and I also, regardless of the public’s right to know, I also feel that’s rather difficult that by a person performing their civic duty as a prospective juror putting their private information as open to the public which I just think there is certain areas that the right of privacy should prevail and a right to a fair trial should prevail and the right of the people to know, I think, should have some limitations and, so, at this stage, the motion to open up . . . the individual sequestered voir dire proceedings is denied without prejudice.” Id., at 121.

After Brown had been convicted and sentenced to death, petitioner again applied for release of the transcript. In denying this application, the judge stated:

“The jurors were questioned in private relating to past experiences, and while most of the information is dull and boring, some of the jurors had some special experiences in sensitive areas that do not appear to be appropriate for public discussion.” Id., at 39.

Petitioner then sought in the California Court of Appeal a writ of mandate to compel the Superior Court to release the transcript and vacate the order closing the voir dire proceedings. The petition was denied. The California Supreme Court denied petitioner’s request for a hearing. We granted certiorari. 459 U. S. 1169 (1983). We reverse.

The trial of a criminal case places the factfinding function in a jury of 12 unless by statute or consent the jury is fixed at a lesser number or a jury is waived. The process of juror selection is itself a matter of importance, not simply to the adversaries but to the criminal justice system. In Richmond Newspapers, Inc. v. Virginia, 448 U. S. 555, 569 (1980), the plurality opinion summarized the evolution of the criminal trial as we know it today and concluded that “at the time when our organic laws were adopted, criminal trials both here and in England had long been presumptively open.” A review of the historical evidence is also helpful for present purposes. It reveals that, since the development of trial by jury, the process of selection of jurors has presumptively been a public process with exceptions only for good cause shown.

A

The roots of open trials reach back to the days before the Norman Conquest when cases in England were brought before “moots,” a town meeting kind of body such as the local court of the hundred or the county court. Attendance was virtually compulsory on the part of the freemen of the community, who represented the “patria,” or the “country,” in rendering judgment. The public aspect thus was “almost a necessary incident of jury trials, since the presence of a jury . . . already insured the presence of a large part of the public.”

As the jury system evolved in the years after the Norman Conquest, and the jury came to be but a small segment representing the community, the obligation of all freemen to attend criminal trials was relaxed; however, the public character of the proceedings, including jury selection, remained unchanged. Later, during the 14th and 15th centuries, the jury became an impartial trier of facts, owing in large part to a development in that period, allowing challenges. 1 W. Holdsworth, History of English Law 332, 335 (7th ed. 1956). Since then, the accused has generally enjoyed the right to challenge jurors in open court at the outset of the trial.

Although there appear to be few contemporary accounts of the process of jury selection of that day, one early record written in 1565 places the trial “[i]n the towne house, or in some open or common place.” T. Smith, De República Anglorum 96 (Alston ed. 1906). Smith explained that “there is nothing put in writing but the enditement”:

“All the rest is doone openlie in the presence of the Judges, the Justices, the enquest, the prisoner, and so many as will or can come so neare as to heave it, and all depositions and witnesses given aloude, that all men may heave from the mouth of the depositors and witnesses what is saide.” Id., at 101 (emphasis added).

If we accept this account it appears that beginning in the 16th century, jurors were selected in public.

As the trial began, the judge and the accused were present. Before calling jurors, the judge “telleth the cause of their comming, and [thereby] giveth a good lesson to the people” Id., at 96-97 (emphasis added). The indictment was then read; if the accused pleaded not guilty, the jurors were called forward, one by one, at which time the defendant was allowed to make his challenges. Id., at 98. Smith makes clear that the entire trial proceeded “openly, that not only the xii [12 jurors], but the Judges, the parties and as many [others] as be present may heave.” Id., at 79 (emphasis added).

This open process gave assurance to those not attending trials that others were able to observe the proceedings and enhanced public confidence. The presence of bystanders served yet another purpose according to Blackstone. If challenges kept a sufficient number of qualified jurors from appearing at the trial, “either party may pray a tales.” 3 W. Blackstone Commentaries *364; see also M. Hale, The History of the Common Law of England 342 (6th ed. 1820). A “tales” was the balance necessary to supply the deficiency.

The presumptive openness of the jury selection process in England, not surprisingly, carried over into proceedings in colonial America. For example, several accounts noted the need for talesmen at the trials of Thomas Preston and William Wemms, two of the British soldiers who were charged with murder after the so-called Boston Massacre in 1770. Public jury selection thus was the common practice in America when the Constitution was adopted.

B

For present purposes, how we allocate the “right” to openness as between the accused and the public, or whether we view it as a component inherent in the system benefiting both, is not crucial. No right ranks higher than the right of the accused to a fair trial. But the primacy of the accused’s right is difficult to separate from the right of everyone in the community to attend the voir dire which promotes fairness.

The open trial thus plays as important a role in the administration of justice today as it did for centuries before our separation from England. The value of openness lies in the fact that people not actually attending trials can have confidence that standards of fairness are being observed; the sure knowledge that anyone is free to attend gives assurance that established procedures are being followed and that deviations will become known. Openness thus enhances both the basic fairness of the criminal trial and the appearance of fairness so essential to public confidence in the system. Richmond Newspapers, Inc. v. Virginia, 448 U. S., at 569-571.

This openness has what is sometimes described as a “community therapeutic value.” Id., at 570. Criminal acts, especially violent crimes, often provoke public concern, even outrage and hostility; this in turn generates a community urge to retaliate and desire to have justice done. See T. Reik, The Compulsion to Confess 288-295, 408 (1959). Whether this is viewed as retribution or otherwise is irrelevant. When the public is aware that the law is being enforced and the criminal justice system is functioning, an outlet is provided for these understandable reactions and emotions. Proceedings held in secret would deny this outlet and frustrate the broad public interest; by contrast, public proceedings vindicate the concerns of the victims and the community in knowing that offenders are being brought to account for their criminal conduct by jurors fairly and openly selected. See United States v. Hasting, 461 U. S. 499, 507 (1983); Morris v. Slappy, 461 U. S. 1, 14-15 (1983).

“People in an open society do not demand infallibility from their institutions, but it is difficult for them to accept what they are prohibited from observing.” Richmond Newspapers, supra, at 572. Closed proceedings, although not absolutely precluded, must be rare and only for cause shown that outweighs the value of openness. In Globe Newspaper Co. v. Superior Court, 457 U. S. 596 (1982), we stated:

“[T]he circumstances under which the press and public can be barred from a criminal trial are limited; the State’s justification in denying access must be a weighty one. Where . . . the State attempts to deny the right of access in order to inhibit the disclosure of sensitive information, it must be shown that the denial is necessitated by a compelling governmental interest, and is narrowly tailored to serve that interest.” Id., at 606-607.

The presumption of openness may be overcome only by an overriding interest based on findings that closure is essential to preserve higher values and is narrowly tailored to serve that interest. The interest is to be articulated along with findings specific enough that a reviewing court can determine whether the closure order was properly entered. We now turn to whether the presumption of openness has been rebutted in this case.

Ill

Although three days of voir dire in this case were open to the public, six weeks of the proceedings were closed, and media requests for the transcript were denied. The Superior Court asserted two interests in support of its closure order and orders denying a transcript: the right of the defendant to a fair trial, and the right to privacy of the prospective jurors, for any whose “special experiences in sensitive areas ... do not appear to be appropriate for public discussion.” Swpra, at 504. Of course the right of an accused to fundamental fairness in the jury selection process is a compelling interest. But the California court’s conclusion that Sixth Amendment and privacy interests were sufficient to warrant prolonged closure was unsupported by findings showing that an open proceeding in fact threatened those interests; hence it is not possible to conclude that closure was warranted. Even with findings adequate to support closure, the trial court’s orders denying access to voir dire testimony failed to consider whether alternatives were available to protect the interests of the prospective jurors that the trial court’s orders sought to guard. Absent consideration of alternatives to closure, the trial court could not constitutionally close the voir dire.

The jury selection process may, in some circumstances, give rise to a compelling interest of a prospective juror when interrogation touches on deeply personal matters that person has legitimate reasons for keeping out of the public domain. The trial involved testimony concerning an alleged rape of a teenage girl. Some questions may have been appropriate to prospective jurors that would give rise to legitimate privacy interests of those persons. For example a prospective juror might privately inform the judge that she, or a member of her family, had been raped but had declined to seek prosecution because of the embarrassment and emotional trauma from the very disclosure of the episode. The privacy interests of such a prospective juror must be balanced against the historic values we have discussed and the need for openness of the process.

To preserve fairness and at the same time protect legitimate privacy, a trial judge must at all times maintain control of the process of jury selection and should inform the array of prospective jurors, once the general nature of sensitive questions is made known to them, that those individuals believing public questioning will prove damaging because of embarrassment, may properly request an opportunity to present the problem to the judge in camera but with counsel present and on the record.

By requiring the prospective juror to make an affirmative request, the trial judge can ensure that there is in fact a valid basis for a belief that disclosure infringes a significant interest in privacy. This process will minimize the risk of unnecessary closure. The exercise of sound discretion by the court may lead to excusing such a person from jury service. When limited closure is ordered, the constitutional values sought to be protected by holding open proceedings may be satisfied later by making a transcript of the closed proceedings available within a reasonable time, if the judge determines that disclosure can be accomplished while safeguarding the juror’s valid privacy interests. Even then a valid privacy right may rise to a level that part of the transcript should be sealed, or the name of a juror withheld, to protect the person from embarrassment.

The judge at this trial closed an incredible six weeks of voir dire without considering alternatives to closure. Later the court declined to release a transcript of the voir dire even while stating that “most of the information” in the transcript was “dull and boring.” Supra, at 504. Those parts of the transcript reasonably entitled to privacy could have been sealed without such a sweeping order; a trial judge should explain why the material is entitled to privacy.

Assuming that some jurors had protectible privacy interests in some of their answers, the trial judge provided no explanation as to why his broad order denying access to information at the voir dire was not limited to information that was actually sensitive and deserving of privacy protection. Nor did he consider whether he could disclose the substance of the sensitive answers while preserving the anonymity of the jurors involved.

Thus not only was there a failure to articulate findings with the requisite specificity but there was also a failure to consider alternatives to closure and to total suppression of the transcript. The trial judge should seal only such parts of the transcript as necessary to preserve the anonymity of the individuals sought to be protected.

> h-H

The judgment of the Court of Appeal is vacated, and the case is remanded for proceedings not inconsistent with this opinion.

It is so ordered.

Justice Blackmun,

concurring.

I agree that in this case the trial judge erred in closing the voir dire proceeding and in refusing to release a transcript of that proceeding without appropriate specific findings that nondisclosure was necessitated by a compelling governmental interest and was narrowly tailored to serve that interest. I write separately to emphasize my understanding that the Court does not decide, nor does this case require it to address, the asserted “right to privacy of the prospective jurors.” Ante, at 510.

Certainly, a juror has a valid interest in not being required to disclose to all the world highly personal or embarrassing information simply because he is called to do his public duty. We need not decide, however, whether a juror, called upon to answer questions posed to him in court during voir dire, has a legitimate expectation, rising to the status of a privacy right, that he will not have to answer those questions. See Nixon v. Administrator of General Services, 433 U. S. 425, 458 (1977); Whalen v. Roe, 429 U. S. 589, 599 (1977).

1 am concerned that recognition of a juror’s privacy “right” would unnecessarily complicate the lives of trial judges attempting to conduct a voir dire proceeding. Could a juror who disagreed with a trial judge’s determination that he had no legitimate expectation of privacy in certain information refuse to answer without a promise of confidentiality until some superior tribunal declared his expectation unreasonable? Could a juror ever refuse to answer a highly personal, but relevant, question, on the ground that his privacy right outweighed the defendant’s need to know? I pose these questions only to emphasize that we should not assume the existence of a juror’s privacy right without considering carefully the implications of that assumption.

Nor do we need to rely on a privacy right to decide this case. No juror is now before the Court seeking to vindicate that right. Even assuming the existence of a juror’s privacy right, the trial court erred in failing to articulate specific findings justifying the closure of the voir dire and the refusal to release the transcript. More important, as the trial court recognized, the defendant has an interest in protecting juror privacy in order to encourage honest answers to the voir dire questions. The State has a similar interest in protecting juror privacy, even after the trial — to encourage juror honesty in the future — that almost always will be coextensive with the juror’s own privacy interest. Thus, there is no need to determine whether the juror has a separate assert-able constitutional right to prevent disclosure of his answers during voir dire. His interest in this case, and in most cases, can be fully protected through the interests of the defendant and the State in encouraging his full cooperation.

With these qualifications, I join the Court’s opinion. I agree that the privacy interest of a juror is a legitimate consideration to be weighed by a trial court in determining whether the public may be denied access to portions of a voir dire proceeding or to a transcript of that proceeding. I put off to another day consideration of whether and under what conditions that interest rises to the level of a constitutional right.

Justice Stevens,

concurring.

The constitutional protection for the right of access that the Court upholds today is found in the First Amendment, rather than the public trial provision of the Sixth. If the defendant had advanced a claim that his Sixth Amendment right to a public trial was violated by the closure of the voir dire, it would be important to determine whether the selection of the jury was a part of the “trial” within the meaning of that Amendment. But the distinction between trials and other official proceedings is not necessarily dispositive, or even important, in evaluating the First Amendment issues. Nor is our holding premised simply on our view as to how a criminal trial is most efficaciously conducted. For the question the Court decides today — “whether the voir dire process must be open — focuses on First. . . Amendment values and the historical backdrop against which the First Amendment was enacted.” Ante, at 509, n. 8.

The focus commanded by the First Amendment makes it appropriate to emphasize the fact that the underpinning of our holding today is not simply the interest in effective judicial administration; the First Amendment’s concerns are much broader. The “common core purpose of assuring freedom of communication on matters relating to the functioning of government,” Richmond Newspapers, Inc. v. Virginia, 448 U. S. 555, 575 (1980) (plurality opinion), that underlies the decision of cases of this kind provides protection to all members of the public “from abridgment of their rights of access to information about the operation of their government, including the Judicial Branch.” Id., at 584 (Stevens, J., concurring). See also id., at 587-588 (Brennan, J., concurring in judgment). As Justice Powell has written:

“What is at stake here is the societal function of the First Amendment in preserving free public discussion of governmental affairs. No aspect of that constitutional guarantee is more rightly treasured than its protection of the ability of our people through free and open debate to consider and resolve their own destiny.” Saxbe v. Washington Post Co., 417 U. S. 843, 862 (1974) (dissenting opinion).

This principle was endorsed by the Court in Globe Newspaper Co. v. Superior Court, 457 U. S. 596 (1982).

“Underlying the First Amendment right of access to criminal trials is the common understanding that ‘a major purpose of that Amendment was to protect the free discussion of governmental affairs.’ Mills v. Alabama, 384 U. S. 214, 218 (1966). By offering such protection, the First Amendment serves to ensure that the individual citizen can effectively participate in and contribute to our republican system of self-government.” Id., at 604.

It follows that a claim to access cannot succeed unless access makes a positive contribution to this process of self-governance. Here, public access cannot help but improve public understanding of the voir dire process, thereby enabling critical examination of its workings to take place. It is therefore, I believe, entirely appropriate for the Court to identify the public interest in avoiding the kind of lengthy voir dire proceeding that is at issue in this case, ante, at 510, n. 9. Surely such proceedings should not be hidden from public view.

The fact that this is a First Amendment case does not, of course, mean that the public’s right of access is unlimited. Indeed, in other contexts in which the right of access has been implicitly endorsed, the Court has made this plain. As the Court recognizes, the privacy interests of jurors may in some circumstances provide a basis for some limitation on the public’s access to voir dire. Ante, at 511-513. See also ante, at 515-516 (Blackmun, J., concurring). The First Amendment source of the right of access to the voir dire examination should not preclude frank recognition of the need to examine the content of the censored communication in determining whether, and to what extent, it may remain private. When the process of drawing lines between what must be open and what may be closed begins, it will be necessary to identify at least some of the limits by reference to the subject matter of certain questions that arguably may probe into areas of privacy that are worthy of protection. Since that function can safely be performed without compromising the First Amendment’s mission of securing meaningful public control over the process of.governance, this form of regulation is not an abridgment of any First Amendment right. In this context, as in others, “a line may be drawn on the basis of content without violating the goverment’s paramount obligation of neutrality in its regulation of protected communication.” Young v. American Mini Theaters, Inc., 427 U. S. 50, 70 (1976) (plurality opinion).

In the case before us, as the Court correctly explains, there can be no doubt that the trial court applied an imper-missibly broad rule of secrecy. Accordingly, I join the opinion of the Court.

Justice Marshall,

concurring in the judgment.

I agree with the result reached by the Court but write separately to stress that the constitutional rights of the public and press to access to all aspects of criminal trials are not diminished in cases in which “deeply personal matters” are likely to be elicited in voir dire proceedings. Ante, at 511. Indeed, the policies underlying those rights, see Richmond Newspapers, Inc. v. Virginia, 448 U. S. 555, 572-573 (1980) (plurality opinion); id., at 593-597 (Brennan, J., concurring in judgment), are most severely jeopardized when courts conceal from the public sensitive information that bears upon the ability of jurors impartially to weigh the evidence presented to them. Cf. Globe Newspaper Co. v. Superior Court, 457 U. S. 596, 606 (1982) (“Public scrutiny of a criminal trial enhances the quality and safeguards the integrity of the factfinding process . . .”). Therefore, prior to issuing a closure order, a trial court should be obliged to show that the order in question constitutes the least restrictive means available for protecting compelling state interests. In those cases where a closure order is imposed, the constitutionally preferable method for reconciling the First Amendment interests of the public and the press with the legitimate privacy interests of jurors and the interests of defendants in fair trials is to redact transcripts in such a way as to preserve the anonymity of jurors while disclosing the substance of their responses. Ante, at 513. Only in the most extraordinary circumstances can the substance of a juror’s response to questioning at voir dire be permanently excluded from the salutary scrutiny of the public and the press.

Also, I feel compelled to note my strong disagreement with the Court’s gratuitous comments concerning the length of voir dire proceedings in this and other cases. The Court’s opinion states:

“We cannot fail to observe that a voir dire process of such length [six weeks], in and of itself, undermines public confidence in the courts and the legal profession. The process is to ensure a fair impartial jury, not a favorable one. Judges, not advocates, must control that process to make sure privileges are not so abused. Properly conducted it is inconceivable that the process could extend over such a period. We note, however, that in response to questions counsel stated that it is not unknown in California courts for jury selection to extend six months.” Ante, at 510, n. 9.

The question whether the voir dire proceedings in this case extended for too long a period is not before this Court. Not surprisingly, therefore, we know few of the facts that would be required to venture a confident ruling on that question. Some of the circumstances of which we are aware, however, cast considerable doubt on the majority’s judgment. Albert Greenwood Brown, Jr., was accused of an interracial sexual attack and murder. Given the history and continuing legacy of racism in our country, that fact alone should suggest that a greater than usual amount of inquiry may have been needed in order to obtain a fair and impartial jury in this case. I find it not at all “inconceivable” that the voir dire process could have legitimately extended over six weeks.

Similarly, in the absence of facts not presently available to the Court, it is wrong to assume, as does the majority opinion, that a voir dire proceeding as elaborate and time-consuming as that which occurred in this case “in and of itself undermines public confidence in the courts and the legal profession.” Ibid. After all, this was a capital case involving an interracial sexual attack that was bound to arouse a heightened emotional response from the affected community. In a situation of this sort, the public’s response to the use of unusually elaborate procedures to protect the rights of the accused might well be, not lessened confidence in the courts, but rather heightened respect for the judiciary’s unshakeable commitment to the ideal of due process even for persons accused of the most serious of crimes.

Furthermore, in the absence of a claim that the length of voir dire proceedings violates federal law, this Court strays beyond its proper role when it lectures state courts on how best to structure such proceedings. We simply lack the authority to forbid state courts to devote what we might consider an inordinate amount of time to ensuring that a jury is unbiased.

For the foregoing reasons, I agree with the judgment but cannot join the opinion of the Court.

       Pollock, English Law Before the Norman Conquest, 1 Select Essays in Anglo-American Legal History 88, 89 (1907).

       Radin, The Right to a Public Trial, 6 Temp. L. Q. 381, 388 (1932); see 3 W. Blaekstone, Commentaries *349.

       In 1352, a statute was enacted to permit challenges to petit jurors on the ground of their participation as “indicators” on the presenting jury. 25 Edw. 3, Stat. 5, ch. 3; see T. Plucknett, A Concise History of Common Law 109 (1929). Objections had always been allowed on grounds of personal hostility. 1 W. Holdsworth, History of English Law 332, 324-325 (7th ed. 1956).

         In Peter Cook’s Trial, 4 Har. St. Tr. 737, 738-740 (O. B. 1696), the accused himself attempted to pose questions directly to jurors in order to sustain challenges. “You may ask upon a Voyer Dire, whether he [the juror] have any Interest in the Cause; nor shall we deny you Liberty to ask whether he be fitly qualified, according to Law by having a Freehold of sufficient Value.” Id., at 748. And in Harrison’s Trial, 2 Har. St. Tr. 308, 313 (O. B. 1660), the reporter remarks that the defendant’s persistence in challenging jurors provoked laughter in the courtroom: “Here the People seemed to laugh,” he writes, upon the defendant’s 10th peremptory challenge.

       As noted in Richmond Newspapers, Inc. v. Virginia, 448 U. S. 555, 565, n. 5 (1980), it is not surprising that there is little in the way of contemporary record of the openness of those early trials. Historians have commented that early Anglo-Saxon laws “deal rather with the novel and uncertain, than with the normal and undoubted rules of law. . . . Why trouble to record that which every village elder knows? ” E. Jenks, A Short History of English Law 3-4 (2d ed. 1922).

       By the statute 35 Hen. 8, ch. 6 (1543), the judge was empowered to award a “tales de circumstantibus, of persons present in court, to be joined to the other jurors to try the cause.” 3 W. Blackstone, supra, at *365. If the judge issued such a writ, the sheriff brought forward “talesmen” from among the bystanders in the courtroom. These talesmen were then subject to the same challenges as the others.

       3 Legal Papers of John Adams 17, nn. 51, 52, 18 (1965) (Adams) (quoting William Palfrey to John Wilkes, Oct. 1770, in Elsey, John Wilkes and William Palfrey, 34 Col. Soc. Mass., Pubns. 411, 423-425 (1943)); 3 Adams 49, n. 9 (quoting Acting Governor Thomas Hutchinson in Additions to Hutchinson’s History 32 (C. Mayo ed.)); 3 Adams 100.

       That for certain purposes, e. g., double jeopardy, a trial begins when the first witness, Wade v. Hunter, 336 U. S. 684, 688 (1949), or the jurors, Downum v. United States, 372 U. S. 734 (1963)', are sworn does not bear on the question presented here. The rules of attachment of jeopardy represent the broad perception that the Government’s action has reached the point where its power to retrace its steps must be checked by the “countervailing interests of the individual protected by the double jeopardy clause of the fifth amendment.” United States v. Velazquez, 490 F. 2d 29, 34 (CA2 1973); accord, United States v. Jorn, 400 U. S. 470, 480 (1971). By contrast, the question we address — whether the voir dire process must be open — focuses on First, rather than Fifth, Amendment values and the historical backdrop against which the First Amendment was enacted.

       We cannot fail to observe that a voir dire process of such length, in and of itself, undermines public confidence in the courts and the legal profession. The process is to ensure a fair impartial jury, not a favorable one. Judges, not advocates, must control that process to make sure privileges are not so abused. Properly conducted it is inconceivable that the process could extend over such a period. We note, however, that in response to questions counsel stated that it is not unknown in California courts for jury selection to extend six months.

       We have previously noted that in some limited circumstances, closure may be warranted. Thus a trial judge may, “in the interest of the fair administration of justice, impose reasonable limitations on access to a trial. ‘[T]he question in a particular case is whether that control is exerted so as not to deny or unwarrantedly abridge . .. the opportunities for the communication of thought and the discussion of public questions immemorially associated with resort to public places.’” Richmond Newspapers, 448 U. S., at 581-582, n. 18 (quoting Cox v. New Hampshire, 312 U. S. 569, 574 (1941)).

       Petitioner contends that respondent’s closure order was based on the requirement in Hovey v. Superior Court, 28 Cal. 3d 1, 80, 616 P. 2d 1301 (1980), that jurors answer voir dire questions concerning juror death qualifications “outside the presence of .'. . fellow venirepersons.” Id., at 81, 616 P. 2d, at 1354. The docket sheet merely states, however, that petitioner’s motion to be admitted to jury voir dire “is denied and granted in part, as stated on the record.” The transcript of hearing on the motion is unenlightening on this score. See App. 93. Thus, it is not clear that the judge’s ruling was based on Hovey.

      Assuming that Hovey was the basis for the trial court’s order, it is unclear that the interests Hovey sought to protect could have justified respondent’s closure order. In Hovey, the California Supreme Court focused on studies that indicated that jurors were prejudiced by the answers of other jurors during voir dire. There was no indication that the presence of the public or press affected jurors. The California Supreme Court in fact stated that its decision would not “in any way affect the open nature of a trial.” 28 Cal. 3d, at 80-81, 616 P. 2d, at 1354.

       As to most of the information sought during voir dire, it is difficult to believe that when a prospective juror receives notice that he is called to serve, he has an expectation, either actual or reasonable, that what he says in court will be kept private. Despite the fact that a juror does not put himself voluntarily into the public eye, a trial is a public event. See Craig v. Harney, 331 U. S. 367, 374 (1947). See also Globe Newspaper Co. v. Superior Court, 457 U. S. 596 (1982); Richmond Newspapers, Inc. v. Virginia, 448 U. S. 555 (1980); Gannett Co. v. DePasquale, 443 U. S. 368 (1979). And, as the Court makes clear today, voir dire, like the trial itself, is presumptively a public proceeding. The historical evidence indicates that voir dire has been conducted in public and most prospective jurors are aware that they will be asked questions during voir dire to determine whether they can judge impartially.
      On other hand, courts have exercised their discretion to prevent unnecessarily intrusive voir dire questions. See Sprouce v. Commonwealth, 2 Va. Cas. 375 (1823) (“[In England]. . . the juror is not obliged to answer any question tending to fix infamy, or disgrace, on him . . .”); Ryder v. State, 100 Ga. 528, 535, 28 S. E. 246, 248 (1897) (“Certainly, neither the court nor counsel should ask any question which would involve a breach of the juror’s privilege to refuse to answer on the ground that so doing would tend to incriminate, or otherwise disgrace, him”). More recent cases have relied, however, not on juror privacy, but on the trial judge’s discretion to limit voir dire to protect juror safety or to prevent irrelevant questioning. See, e. g., United States v. Barnes, 604 P. 2d 121, 140 (CA2 1979), cert. denied, 446 U. S. 907 (1980); United States v. Taylor, 562 F. 2d 1345, 1355 (CA2), cert. denied sub nom. Salley v. United States, 432 U. S. 909 (1977).

       In closing the voir dire and in refusing to release the transcript, the trial court relied on both the defendant’s right to a fair trial and a juror’s right to privacy. It did not make clear whether it interpreted the California Supreme Court’s decision in Hovey v. Superior Court, 28 Cal. 3d 1, 616 P. 2d 1301 (1980), to require closure, see ante, at 511, n. 11, or whether it concluded that the defendant had an additional interest in protecting juror privacy to encourage juror honesty. In any event, it concluded that the interests of the jurors and the defendant were consistent and that both required the protection of juror privacy.

       “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”
      It is, of course, well settled that the Fourteenth Amendment makes this provision applicable to the abridgment of speech by the States, including state judges. See, e. g., Nebraska Press Assn. v. Stuart, 427 U. S. 539 (1976).

       “In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial. . . .” It was, of course, this Amendment that was construed in Gannett Co. v. DePasquale, 443 U. S. 368 (1979), a case holding that the defendant’s right to a public trial cannot be asserted vicariously by persons who are not parties to the proceeding.

       It is worthy of note that the orderly development of First Amendment doctrine foreshadowed by Justice Powell’s opinion in Saxbe almost certainly would have been delayed if Gannett had not been decided as it was.

       See also Houchins v. KQED, Inc., 438 U. S. 1, 30-32 (1978) (Stevens, J., dissenting) (footnotes omitted):
      “The preservation of a full and free flow of information to the general public has long been recognized as a core objective of the First Amendment to the Constitution. . . .
      “In addition to safeguarding the right of one individual to receive what another elects to communicate, the First Amendment serves an essential societal function. Our system of self-government assumes the existence of an informed citizenry. As Madison wrote:
      “ ‘A popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy, or, perhaps both. Knowledge will forever govern ignorance: And a people who mean to be their own Governors, must arm themselves with the power which knowledge gives.’ 9 Writings of James Madison 103 (G. Hunt ed. 1910).
      “It is not sufficient, therefore, that the channels of communication be free of governmental restraints. Without some protection for the acquisition of information about the operation of public institutions such as prisons by the public at large, the process of self-governance contemplated by the Framers would be stripped of its substance.”

       Of course, if this were a Sixth Amendment case, rather than a First Amendment case, and if the defendant had no objection to closure, the length of the voir dire would be irrelevant. Such is not the case under the rationale for today’s decision.

       In Zemel v. Rusk, 381 U. S. 1 (1965), the Court said: “The right to speak and publish does not carry with it the unrestrained right to gather information.” Id., at 17 (emphasis supplied). In Branzburg v. Hayes, 408 U. S. 665 .(1972), after rejecting any suggestion “that news gathering does not qualify for First Amendment protection,” id., at 681, the Court held that the protection did not extend to a reporter’s refusal to testify before a grand jury, at least under the facts of that ease.

       See generally Farber, Content Regulation and the First Amendment: A Revisionist View, 68 Geo. L. J. 727 (1980); Redish, The Content Distinction in First Amendment Analysis, 34 Stan. L. Rev. 113 (1981); Schauer, Categories and the First Amendment: A Play in Three Acts, 34 Vand. L. Rev. 265, 282-296 (1981); Shiffrin, Defamatory Non-Media Speech and First Amendment Methodology, 25 UCLA L. Rev. 915, 942-963 (1978); Stephan, The First Amendment and Content Discrimination, 68 Va. L. Rev. 203 (1982); Note, Content Regulation and the Dimensions of Free Expression, 96 Harv. L. Rev. 1854 (1983).

       The criminal trial around which this suit revolves was one in which “the most serious and emotional of issues were presented — the rape and strangulation killing of a fifteen year old white schoolgirl on her way to school, by a black man twenty-six years of age, with a prior conviction of forcible rape on an adolescent Caucasian girl.” Brief for Joseph Peter Myers (trial counsel for Albert Greenwood Brown, Jr.) as Amicus Curiae 2.

       It is unlikely that there exists a public consensus regarding the proper contours of voir dire proceedings. Certainly there is a lack of consensus within the legal community. See, e. g., Ham v. South Carolina, 409 U. S. 524 (1973). See also Babcock, Voir Dire: Preserving “Its Wonderful Power,” 27 Stan. L. Rev. 545 (1975) (limiting voir dire examination undercuts the ability of litigants to utilize fully the right to a jury trial and works to the relative disadvantage of poor litigants who lack the resources to use other means to gather information about potential jurors).


author: Justice Brennan Justice Stevens,

text:
    DAILY INCOME FUND, INC., et al. v. FOX
    No. 82-1200.
    Argued November 7, 1983
    Decided January 18, 1984

      Daniel A. Pollack argued the cause for petitioners. With him on the briefs were Frederick P. Schaffer, George C. Seward, and Anthony R. Mansfield.

      Richard M. Meyer argued the cause and filed a brief for respondent.

        Harvey L. Pitt filed a brief for the Investment Company Institute as amicus curiae urging reversal.

        Solicitor General Lee, Deputy Solicitor General Claiborne, Samuel A. Alito, Jr., Daniel L. Goelzer, Paul Gonson, Jacob H. Stillman, Richard A. Kirby, and Myma Siegel filed a brief for the Securities and Exchange Commission as amicus curiae urging affirmance.

   Justice Brennan

delivered the opinion of the Court.

The question for decision is whether Rule 28.1 of the Federal Rules of Civil Procedure requires that an investment company security holder first make a demand upon the company’s board of directors before bringing an action under § 36(b) of the Investment Company Act of 1940 to recover allegedly excessive fees paid by the company to its investment adviser. The Court of Appeals for the Second Circuit held in this case that the demand requirement of Rule 23.1 does not apply to such actions. Fox v. Reich & Tang, Inc., 692 F. 2d 250 (1982). Two other Courts of Appeals have reached a contrary conclusion. We granted certiorari to resolve the conflict, 460 U. S. 1021 (1983), and now affirm.

Respondent is a shareholder of petitioner Daily Income Fund,' Inc. (Fund), an open-end diversified management investment company, or “mutual fund,” regulated by the Investment Company Act of 1940 (ICA or Act), 15 U. S. C. §80a-l et seq. (1982 ed.). The Fund invests in a portfolio of short-term money market instruments with the aim of achieving high current income while preserving capital. Under a written contract, petitioner Reich & Tang, Inc. (R&T), provides the Fund with investment advice and other management services in exchange for a fee currently set at one-half of one percent of the Fund’s net assets. From 1978 to 1981, the Fund experienced substantial growth; its net assets increased from about $75 million to $775 million. During this period, R&T’s fee of one-half of one percent of net assets remained the same. Accordingly, annual payments by the Fund to R&T rose from about $375,000 to an estimated $3,875,000 in 1981.

Alleging that these fees were unreasonable, respondent brought this action in the United States District Court for the Southern District of New York, naming both the Fund and R&T as defendants. The complaint alleged that, because the Fund’s assets had been continually reinvested in a limited number of instruments, R&T’s investment decisions had remained routine and substantially unchanged as the Fund grew. By receiving significantly higher fees for essentially the same services, R&T had, according to respondent, violated the fiduciary duty owed investment companies by their advisers under § 36(b) of the ICA. Pub. L. 91-547, §20, 84 Stat. 1428, 15 U. S. C. §80a-35(b) (1982 ed.). The complaint sought damages in favor of the Fund as well as payment of respondent’s costs, expenses, and attorney’s fees.

Petitioners moved to dismiss the suit for failure to comply with Federal Rule of Civil Procedure 23.1, which governs “a derivative action brought by one or more shareholders . . . to enforce a right of a corporation . . . , the corporation . . . having failed to enforce a right which may properly be asserted by it. . . .” The Rule requires a shareholder bringing such a suit to set forth “the efforts, if any, made by the plaintiff to obtain the action he desires from the directors . . . , and the reasons for his failure to obtain the action or for not making the effort.” Respondent contended that the Rule 23.1 “demand requirement” does not apply to actions brought under § 36(b) of the ICA and that, in any event, demand was excused because the Fund’s directors had participated in the alleged wrongdoing and would be hostile to the suit. The District Court, finding Rule 23.1 applicable to § 36(b) actions and finding no excuse based on the directors’ possible self-interest or bias, dismissed the action. Fox v. Reich & Tang, Inc., 94 F. R. D. 94 (1982).

The Court of Appeals reversed. Fox v. Reich & Tang, Inc., 692 F. 2d 250 (1982). The court concluded that Rule 23.1 by its terms applies only when the corporation could itself “‘assert,’ in a court, the same action under the same rule of law on which the shareholder plaintiff relies.” Id., at 254. Relying on both the language and the legislative history of § 36(b), the court determined that an investment company may not itself sue under that section to recover excessive adviser fees. Id., at 254-261. Accordingly, the court held that Rule 23.1 does not apply to actions by security holders brought under §36(b). Id., at 261.

I — I I — I

Although any action m which a shareholder asserts the rights of a corporation could be characterized as “derivative,” see n. 11, infra, Rule 23.1 applies in terms only to a “derivative action brought by one or more shareholders or members to enforce a right of a corporation [when] the corporation [has] failed to enforce a right which may properly be asserted by it” (emphasis added). This qualifying language suggests that the type of derivative action governed by the Rule is one in which a shareholder claims a right that could have been, but was not, “asserted” by the corporation in court. The “right” mentioned in the emphasized phrase, which cannot sensibly mean any right without limitation, is most naturally understood as referring to the same right, or at least its substantial equivalent, as the one asserted by the plaintiff shareholder. And, in the context of a rule of judicial procedure, the reference to the corporation’s “failure to enforce a right which may properly be asserted by it” obviously presupposes that the right in question could be enforced by the corporation in court.

This interpretation of the Rule is consistent with the understanding we have expressed, in a variety of contexts, of the term “derivative action.” In Hawes v. Oakland, 104 U. S. 450, 460 (1882), for instance, the Court explained that a derivative suit is one “founded on a right of action existing in the corporation itself, and in which the corporation itself is the appropriate plaintiff.” Similarly, Cohen v. Beneficial Loan Corp., 337 U. S. 541, 548 (1949), stated that a derivative action allows a stockholder “to step into the corporation’s shoes and to seek in its right the restitution he could not demand in his own”; and the Court added that such a stockholder “brings suit on a cause of action derived from the corporation.” Id., at 549. Finally, Ross v. Bernhard, 396 U. S. 531, 534 (1970), described a derivative action as “a suit to enforce a corporate cause of action against officers, directors, and third parties” (emphasis in original) and viewed the question there presented — whether the Seventh Amendment confers a right to a jury in such an action — as the same as whether the corporation, had it brought the suit itself, would be entitled to a jury. Id., at 538-539. In sum, the term “derivative action,” which defines the scope of Rule 23.1, has long been understood to apply only to those actions in which the right claimed by the shareholder is one the corporation could itself have enforced in court. See also Koster v. Lumbermens Mutual Casualty Co., 330 U. S. 518, 522 (1947); Price v. Gurney, 324 U. S. 100, 105 (1945); Delaware & Hudson Co. v. Albany & Susquehanna R. Co., 213 U. S. 435, 447 (1909).

The origin and purposes of Rule 23.1 support this understanding of its scope. The Rule’s provisions derive from this Court’s decision in Hawes v. Oakland, supra. Prior to Hawes, federal courts exercising their equity powers had commonly entertained suits by minority stockholders to enforce corporate rights in circumstances where the corporation had failed to sue on its own behalf. Id., at 452. See Dodge v. Woolsey, 18 How. 331, 339 (1856); 7A C. Wright & A. Miller, Federal Practice and Procedure § 1821, pp. 296-297 (1972). The Court in Hawes, while emphasizing the importance of such suits as a means of “protecting the stockholder against the frauds of the governing body of directors or trustees,” 104 U. S., at 453, noted that this equitable device was subject to two kinds of potential abuse. First, corporations that were engaged in disputes with citizens of their home State could collude with out-of-state stockholders to obtain diversity jurisdiction in order to litigate the dispute in the federal courts. Id., at 452-453. Second, derivative actions brought by minority stockholders could, if unconstrained, undermine the basic principle of corporate governance that the decisions of a corporation — including the decision to initiate litigation — should be made by the board of directors or the majority of shareholders. See id., at 454-457.

To address these problems, the Court in Hawes established a number of prerequisites to bringing derivative suits in the federal courts. These requirements were designed to limit the use of the device to situations in which, due to an unjustified failure of the corporation to act for itself, it was appropriate to permit a shareholder “to institute and conduct a litigation which usually belongs to the corporation.” Id., at 460. With some additions and changes in wording, the conditions set out in Hawes have been carried forward in successive revisions of the federal rules.

Some of the requirements first announced in Hawes were intended to reduce the burden on the federal courts by diverting corporate causes of action “to the State courts, which are their natural, their lawful, and their appropriate forum.” Id., at 452-453. At the same time, however, the Court sought to maintain derivative suits as a limited exception to the usual rule that the proper party to bring a claim on behalf of a corporation is the corporation itself, acting through its directors or the majority of its shareholders. Id., at 460-461. As the Court later explained, this aspect of the rules governing derivative suits reflects the basic policy that “[w]hether or not a corporation shall seek to enforce in the courts a cause of action for damages is, like other business questions, ordinarily a matter of internal management and is left to the discretion of the directors, in the absence of instruction by vote of the stockholders.” United Copper Securities Co. v. Amalgamated Copper Co., 244 U. S. 261, 263 (1917). See also Corbus v. Alaska Treadwell Gold Mining Co., 187 U. S. 455, 463 (1903).

The principal means by which the Court in Hawes sought to vindicate this policy was, of course, its requirement that a shareholder seek action by the corporation itself before bringing a derivative suit. 104 U. S., at 460-461. This “demand requirement” affords the directors an opportunity to exercise their reasonable business judgment and “waive a legal right vested in the corporation in the belief that its best interests will be promoted by not insisting on such right. They may regard the expense of enforcing the right or the furtherance of the general business of the corporation in determining whether to waive or insist upon the right.” Corbus v. Alaska Treadwell Gold Mining Co., supra, at 463. On the other hand, if, in the view of the directors, “litigation is appropriate, acceptance of the demand places the resources of the corporation, including its information, personnel, funds, and counsel, behind the suit.” Note, The Demand and Standing Requirements in Stockholder Derivative Actions, 44 U. Chi. L. Rev. 168,171-172 (1976) (footnote omitted). Like the Rule in general, therefore, the provisions regarding demand assume a lawsuit that could be controlled by the corporation’s board of directors.

In sum, the conceptual basis and purposes of Rule 23.1 confirm what its language suggests: the Rule governs only suits “to enforce a right of a corporation” when the corporation itself has “failed to enforce a right which may properly be asserted by it” in court. In this case, therefore, we must decide whether the right asserted by a shareholder suing under § 36(b) of the ICA could be judicially enforced by the investment company. We turn to consider that question.

I ► — I

In determining whether § 36(b) confers a right that could be judicially enforced by an investment company, we look first, of course, at the language of the statute. As noted in n. 2, supra, § 36(b) imposes a fiduciary duty on an investment company’s adviser “with respect to the receipt of compensation for services” paid by the company and provides that “[a]n action may be brought under this subsection by the [Securities and Exchange] Commission, or by a security holder of such registered investment company on behalf of such company” against the adviser and other affiliated parties. By its terms, then, the unusual cause of action created by § 36(b) differs significantly from those traditionally asserted in shareholder derivative suits. Instead of establishing a corporate action from which a shareholder’s right to sue derivatively may be inferred, § 36(b) expressly provides only that the new corporate right it creates may be enforced by the Securities and Exchange Commission (SEC) and security holders of the company.

Petitioners nevertheless contend that an investment company has an implied right of action under § 36(b). In evaluating such a claim, our focus must be on the intent of Congress when it enacted the statute in question. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U. S. 353, 377-378 (1982). That intent may in turn be discerned by examining a number of factors, including the legislative history and purposes of the statute, the identity of the class for whose particular benefit the statute was passed, the existence of express statutory remedies adequate to serve the legislative purpose, and the traditional role of the States in affording the relief claimed. Ibid.; Middlesex County Sewerage Authority v. National Sea Clammers Assn., 453 U. S. 1, 13-15 (1981); California v. Sierra Club, 451 U. S. 287, 292-293 (1981); Cannon v. University of Chicago, 441 U. S. 677 (1979); Cort v. Ash, 422 U. S. 66, 78 (1975). In this case, consideration of each of these factors plainly demonstrates that Congress intended the unique right created by § 36(b) to be enforced solely by the SEC and security holders of the investment company.

As we have previously noted, Congress adopted the ICA because of its concern with “the potential for abuse inherent in the structure of investment companies.” Burks v. Lasker, 441 U. S. 471, 480 (1979). Unlike most corporations, an investment company is typically created and managed by a pre-existing external organization known as an investment adviser. Id., at 481. Because the adviser generally supervises the daily operation of the fund and often selects affiliated persons to serve on the company’s board of directors, the “‘relationship between investment advisers and mutual funds is fraught with potential conflicts of interest.’” Ibid., quoting Golf and v. Chestnutt Corp., 545 F. 2d 807, 808 (CA2 1976). In order to minimize such conflicts of interest, Congress established a scheme that regulates most transactions between investment companies and their advisers, 15 U. S. C. § 80a-17 (1982 ed.); limits the number of persons affiliated with the adviser who may serve on the fund’s board of directors, § 80a-10; and requires that fees for investment advice and other services be governed by a written contract approved both by the directors and the shareholders of the fund, § 80a-15.

In the years following passage of the Act, investment companies enjoyed enormous growth, prompting a number of studies of the effectiveness of the Act in protecting investors. One such report, commissioned by the SEC, found that investment advisers often charged mutual funds higher fees than those charged the advisers’ other clients and further determined that the structure of the industry, even as regulated by the Act, had proved resistant to efforts to moderate adviser compensation. Wharton School Study of Mutual Funds, H. R. Rep. No. 2274, 87th Cong., 2d Sess., 28-30, 34, 66-67 (1962). Specifically, the study concluded that the unaffiliated directors mandated by the Act were “of restricted value as an instrument for providing effective representation of mutual fund shareholders in dealings between the fund and its investment adviser.” Id., at 34. A subsequent report, authored by the SEC itself, noted that investment advisers were generally compensated on the basis of a fixed percentage of the fund’s assets, rather than on services rendered or actual expenses. Securities and Exchange Commission, Public Policy Implications of Investment Company Growth, H. R. Rep. No. 2337, 89th Cong., 2d Sess., 89 (1966) (hereinafter SEC Report). The Commission determined that, as a fund’s assets grew, this form of payment could produce unreasonable fees in light of the economies of scale realized in managing a larger portfolio. Id., at 94, 102. Furthermore, the Commission concluded that lawsuits by security holders challenging the reasonableness of adviser fees had been largely ineffective due to the standards employed by courts to judge the fees. Id., at 132-143. See infra, at 540, and n. 12.

In order to remedy this and other perceived inadequacies in the Act, the SEC submitted a series of legislative proposals to Congress that led to the 1970 Amendments to the Act. Some of the proposals Congress ultimately adopted were intended to make the fund’s board of directors more independent of the adviser and to encourage greater scrutiny of adviser contracts. See, e. g., 15 U. S. C. §80a-10(a) (1982 ed.) (requiring that at least 40% of the directors not be “interested persons,” a broader category than the previously identified group of persons “affiliated” with the adviser, see §80a-2(a)(19)); §80a-15(c) (requiring independent directors as well as shareholders to approve adviser contracts); Burks v. Lasker, supra, at 482-483. The SEC had, however, determined that approval of adviser contracts by shareholders and independent directors could not alone provide complete protection of the interests of security holders with respect to adviser compensation. See SEC Report, at 128-131, 144, 146-147. Accordingly, the Commission also proposed amending the Act to require “reasonable” fees. Id., at 143-147. As initially considered by Congress, the bill containing this proposal would have empowered the SEC to bring actions to enforce the reasonableness standard and to intervene in any similar action brought by or on behalf of the company. H. R. 9510, 90th Cong., 1st Sess., §8(d) (1967); S. 1659, 90th Cong., 1st Sess., §8(d) (1967).

Representatives of the investment company industry, led by amicus Investment Company Institute (ICI), expressed concern that enabling the SEC to enforce the fairness of adviser fees might in essence provide the Commission with ratemaking authority. Accordingly, ICI proposed an alternative to the SEC bill which would have provided that actions to enforce the reasonableness standard “be brought only by the company or a security holder thereof on its behalf.” Mutual Fund Legislation of 1967: Hearings on S. 1659 before the Senate Committee on Banking and Currency, 90th Cong., 1st Sess., pt. 1, pp. 100-101 (1967) (hereinafter 1967 Hearings). The version that the Senate finally passed, however, rejected the industry’s suggestion that the investment company itself be expressly authorized to bring suit. S. 3724, 90th Cong., 2d Sess., §8(d)(6) (1968). Instead, the Senate bill required a security holder to make demand on the SEC before bringing suit and provided that, if the Commission refused or failed to bring an action within six months, the security holder could maintain a suit against the adviser in a “derivative” or representative capacity. Ibid. Like the original SEC proposal, however, the Senate bill provided that the SEC could intervene in any action brought by the company or by a security holder on its behalf. Id., §22.

After the bill was reintroduced in the 91st Congress, further hearings and consultations with the industry led to the present version of §86(b). See S. 2224, 91st Cong., 1st Sess., §20(b) (1969); 115 Cong. Rec. 13648 (1969) (statement of Sen. McIntyre). The new version adopted “a different method of testing management compensation.” S. Rep. No. 91-184, p. 5 (1969). Instead of containing a statutory standard of “reasonableness,” the new version imposed a “fiduciary duty” on investment advisers. Id., at 5-6. The new bill further provided that “either the SEC or a shareholder may sue in court on a complaint that a mutual fund’s management fees involve a breach of fiduciary duty.” Id., at 7. The reference in the previous bill to the derivative or representative nature of the security holder action was eliminated, as was the earlier provision for intervention by the SEC in actions brought by the investment company itself. See S. 2224, supra, §22.

In short, Congress rejected a proposal that would have expressly made the statutory standard governing adviser fees enforceable by the investment company itself and adopted in its place a provision containing none of the indications in earlier drafts that the company could bring such a suit. This legislative history strongly suggests that, in adopting § 36(b), Congress did not intend to create an implied right of action in favor of the investment company.

That conclusion is further supported by the purposes of the statute. As noted above, the SEC proposed the predecessor to § 86(b) because of its concern that the structural requirements for investment companies imposed by the Act would not alone ensure reasonable adviser fees. See supra, at 538. Indeed, the Commission concluded that the Act’s provisions for independent directors and approval of adviser contracts had actually frustrated effective challenges to adviser fees. In particular, the Commission noted that in the three fully litigated cases in which security holders had attacked such fees under state law, the courts had relied on the approval of adviser contracts by security holders or unaffiliated directors to uphold the fees. SEC Report, at 132-148. For this reason, the Senate Report proposing the final version of the statute noted that, while shareholder and directorial approval of the adviser’s contract is entitled to serious consideration by the court in a § 36(b) action, “such consideration would not be controlling in determining whether or not the fee encompassed a breach of fiduciary duty.” S. Rep. No. 91-184, at 15; see id., at 5. In contrast to its approach in other aspects of the 1970 Amendments, then, Congress decided not to rely solely on the fund’s directors to assure reasonable adviser fees, notwithstanding the increased disinterestedness of the board. See Burks v. Lasker, 441 U. S., at 481-482, n. 10, and 484. See also SEC Report, at 146-148 (right of SEC and security holders to bring actions essential; although role of disinterested directors should be enhanced, “even a requirement that all of the directors of an externally managed investment company be persons unaffiliated with the company’s adviser-underwriter would not be an effective check on advisory fees and other forms of management compensation”). This policy choice strongly indicates that Congress intended security holder and SEC actions under § 36(b), on the one hand, and directorial approval of adviser contracts, on the other, to act as independent checks on excessive fees.

Nor do other factors on which we have relied to identify an implied cause of action support petitioners’ claim that the right asserted by a shareholder in a § 36(b) action could be enforced by the investment company. First, investment companies, as well as the investing public, are undoubtedly within “the class for whose especial benefit” § 36(b) was enacted, Cort v. Ash, 422 U. S., at 78 (emphasis in original); see n. 11, supra. Section §36(b)’s express provision for actions by security holders, however, ensures that, even if the company’s directors cannot bring an action in the fund’s name, the company’s rights under the statute can be fully vindicatéd by plaintiffs authorized to act on its behalf. For this reason, it is unnecessary to infer a right of action in favor of the corporation in order to serve the statute’s “broad remedial purposes.” Cf. Herman & MacLean v. Huddleston, 459 U. S. 375, 386-387 (1983). See also Middlesex County Sewerage Authority v. National Sea Clammers Assn., 453 U. S., at 13-15. Second, because § 36(b) creates an entirely new right, it was obviously not enacted “in a statutory context in which an implied private remedy [had] already been recognized by the courts.” Cf. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U. S., at 378; Herman & MacLean v. Huddleston, supra, at 384-386. Third, a corporation’s rights against its directors or third parties with whom it has contracted are generally governed by state, not federal, law. Burks v. Lasker, supra, at 478. See Cort v. Ash, supra, at 78.

> f — (

A shareholder derivative action is an exception to the normal rule that the proper party to bring a suit on behalf of a corporation is the corporation itself, acting through its directors or a majority of its shareholders. Accordingly, Rule 23.1, which establishes procedures designed to prevent minority shareholders from abusing this equitable device, is addressed only to situations in which shareholders seek to enforce a right that “may properly be asserted” by the corporation itself. In contrast, as the language of § 36(b) indicates, Congress intended the fiduciary duty imposed on investment advisers by that statute to be enforced solely by security holders of the investment company and the SEC. It would be anomalous, therefore, to apply a Rule intended to prevent a shareholder from improperly suing in place of the corporation to a statute, like § 36(b), conferring a right which the corporation itself cannot enforce. It follows that Rule 23.1 does not apply to an action brought by a shareholder under § 36(b) of the Investment Company Act and that the plaintiff in such a case need not first make a demand upon the fund’s directors before bringing suit.

The judgment of the Court of Appeals is therefore

Affirmed.

Justice Stevens,

concurring in the judgment.

There are two petitioners in this case, the Mutual Fund and its investment adviser. Even if the former could properly assert an action against the latter under § 36(b) of the Investment Company Act of 1940, 84 Stat. 1428, 15 U. S. C. §80a-35(b) (1982 ed.) — an action which in turn could be “derivatively” brought by a security holder — in my opinion it would nevertheless remain clear that respondent, as a shareholder of the Fund, could maintain this action without first making a demand on the directors of the Fund to do so.

The rule that sometimes requires a shareholder to make an appropriate demand before commencing a derivative action has its source in the law that gives rise to the derivative action itself. Rule 23.1 of the Federal Rules of Civil Procedure merely requires that the complaint in such a case allege the facts that will enable a federal court to decide whether such a demand requirement has been satisfied; Rule 23.1 is not the source of any such requirement. The plain language of the Rule makes that perfectly clear; the Rule does not require a demand, it only requires that the complaint allege with particularity what demand if any has been made on the corporation. Moreover, the history of Rule 23.1 and its predecessors, which the Court recites ante, at 529-533, demonstrates that the demand requirement was not created by the Rule, but rather by a decision of this Court, Hawes v. Oakland, 104 U. S. 450 (1882). When the current Rule’s predecessor was promulgated shortly after Hawes, it did not create a demand requirement — that had already been done by Hawes. Rather it operated to ensure that the pleadings would be adequate to enable courts to decide whether the applicable demand requirement had been satisfied. Thus the Rule concerns itself solely with the adequacy of the pleadings; it creates no substantive rights.

In this case the respondent fully complied with Rule 23.1. Having made no effort to obtain action from the directors, he simply pleaded that no demand had been made. The question in this case is not whether the complaint complies with the pleading requirements in Rule 23.1. Rather, the question is whether the federal statute that expressly creates a cause of action that the shareholder may maintain on behalf of the mutual fund implicitly conditions that express right on an unmentioned intracorporate procedural requirement. For two reasons it is clear to me that it does not.

First, the text and legislative history of the statute are inconsistent with a demand requirement. No such condition is mentioned in the statute, and it is a matter of sufficient importance to warrant express mention if Congress had intended it. Instead, the express terms of the statute are inconsistent with such a requirement. A demand requirement is premised upon the usual respect courts accord the managerial prerogatives of directors, see n. 2, supra; however, in § 36(b) Congress explicitly rejected the usual rule. As the Court has previously recognized, and acknowledges again today, § 36(b) stands in contrast to the rest of the Act in that unlike its other provisions, § 36(b) limits the usual discretion accorded directors by providing that the directors’ position shall be given only “such consideration by the court as is deemed appropriate under all the circumstances.” See ante, at 539-541; Burks v. Lasker, 441 U. S. 471, 484 (1979). Congress laid out its own test for consideration of the directors’ position in § 36(b), rather than relying on a demand requirement and the usual respect for managerial decision-making which it embodies.

The reason for congressional rejection of the usual deference paid directorial expertise and prerogatives is clear enough. The history of the statute is replete with findings that directors could not be relied upon to control excessive advisory fees. See ante, at 537-541; Wharton School Study of Mutual Funds, H. R. Rep. No. 2274, 87th Cong., 2d Sess., 30, 34, 66-67 (1962); Securities and Exchange Commission, Public Policy Implications of Investment Company Growth, H. R. Rep. No. 2337, 89th Cong., 2d Sess., 128-148 (1966); Hearings on S. 1659 before the Senate Committee on Banking and Currency, 90th Cong., 1st Sess., 1193-1200 (1967); S. Rep. No. 91-184, pp. 2, 5-6 (1969). In light of these findings, it cannot be maintained that Congress intended that the very directors who had failed to control excessive fees be involved in the decision whether to challenge those fees.

Moreover, Congress specifically considered the demand issue, in a predecessor version of § 36(b), passed by the Senate in 1968, which required that a security holder make a demand on the Securities and Exchange Commission prior to filing suit. S. 3724, 90th Cong., 2d Sess., §8(d)(6) (1968). After further consideration this requirement was deleted. Thus, it cannot be said that Congress was unaware of the demand concept, yet it decided not to impose it even with respect to the SEC.

Second, a demand requirement would serve no meaningful purpose and would undermine the efficacy of the statute. As noted above, Congress intended to authorize this type of shareholder action even though the contract between the fund and its investment adviser had been expressly approved by the independent directors of the fund. Since the disinterested directors are required to review and approve all advisory fee contracts under §15 of the Act, 15 U. S. C. § 80a-15 (1982 ed.), a demand would be a futile gesture after the directors have already passed on the contract. Because the directors may not terminate a suit, see Burks, supra, at 484, the only effect of a demand requirement would be to delay the commencement of the suit. That in turn would reduce the effectiveness of the Act as a vehicle for protecting investors, since § 36(b)(3) limits recovery to actual damages incurred beginning one year prior to commencement of suit. Thus the demand process would permit investment advisers to keep several months of excessive fees — a consequence squarely at odds with the purposes of the Act and hence congressional intent.

I find nothing in the statute or its history supporting the notion that Congress intended to condition the maintenance of a § 36(b) action on any antecedent intracorporate demand procedure. I would therefore affirm the judgment of the Court of Appeals without reaching the question whether the Fund itself could maintain an action under § 36(b).

        Weiss v. Temporary Investment Fund, Inc., 692 F. 2d 928 (CA3 1982), cert. pending, No. 82-1592; Grossman v. Johnson, 674 F. 2d 115 (CA1), cert. denied, 459 U. S. 838 (1982).

       Section 36(b) of the ICA provides, in relevant part:
      “For the purposes of this subsection, the investment adviser of a registered investment company shall be deemed to have a fiduciary duty with respect to the receipt of compensation for services, or of payments of a material nature, paid by such registered investment company or by the security holders thereof, to such investment adviser or any affiliated person of such investment adviser. An action may be brought under this subsection by the Commission, or by a security holder of such registered investment company on behalf of such company, against such investment adviser, or any affiliated person of such investment adviser, or any other person enumerated in subsection (a) of this section who has a fiduciary duty concerning such compensation or payments, for breach of fiduciary duty in respect of such compensation or payments paid by such registered investment company or by the security holders thereof to such investment adviser or person.” 15 U. S. C. §80a-35(b) (1982 ed.).
      Section 36(b) goes on to provide, inter alia, that proof of a defendant’s misconduct is unnecessary, § 80a-35(b)(l), that approval by the board of directors or shareholders of the adviser’s compensation “shall be given such consideration by the court as is deemed appropriate under all the circumstances,” § 80a-35(b)(2), and that recovery is limited to actual damages for a period of one year prior to suit, § 80a-35(b)(3).

       Rule 23.1 provides in full:
      “In a derivative action brought by one or more shareholders or members to enforce a right of a corporation or of an unincorporated association, the corporation or association having failed to enforce a right which may properly be asserted by it, the complaint shall be verified and shall allege (1) that the plaintiff was a shareholder or member at the time of the transaction of which he complains or that his share or membership thereafter devolved on him by operation of law, and (2) that the action is not a collusive one to confer jurisdiction on a court of the United States which it would otherwise not have. The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action he desires from the directors or comparable authority and, if necessary, from the shareholders or members, and the reasons for his failure to obtain the action or for not making the effort. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of the shareholders or members similarly situated in enforcing the right of the corporation or association. The action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to shareholders or members in such manner as the court directs.”

       One commentator has explained that “the derivative suit may be viewed as the consolidation in equity of, on the one hand, a suit by the shareholder against the directors in their official capacity, seeking an affirmative order that they sue the alleged wrongdoers, and, on the other, a suit by the corporation against these wrongdoers.” Note, Demand on Directors and Shareholders as a Prerequisite to a Derivative Suit, 73 Harv. L. Rev. 746, 748 (1960). The Court in Hawes embraced this conception of the suit as consolidating “two causes of action,” 104 U. S., at 452, and referred throughout its opinion to a derivative action as “one in which the right of action [is] in the company,” id., at 455; see id., at 457 (cases impose limits on “the right of a stockholder to sue in cases where the corporation is the proper party to bring the suit”). See also Gorbus v. Alaska Treadwell Gold Mining Co., 187 U. S. 455, 463 (1903) (describing rules governing derivative suits as limiting situations in which “a court of equity may ... be called upon at the appeal of any single stockholder to compel the directors of the corporation to enforce every right which it may possess, irrespective of other considerations”); Black’s Law Dictionary 1272 (5th ed., 1979).

       Shortly after Hawes was decided, the Court codified its requirements in Equity Rule 94, which provided:
      “Every bill brought by one or more stockholders in a corporation, against the corporation and other parties, founded on rights which may properly be asserted by the corporation, must be verified by oath, and must contain an allegation that the plaintiff was a shareholder at the time of the transaction of which he complains, or that his share had devolved on him since by operation of law; and that the suit is not a collusive one to confer on a court of the United States jurisdiction of a case of which it would not otherwise have cognizance. It must also set forth with particularity the efforts of the plaintiff to secure such action as he desires on the part of the managing directors or trustees, and, if necessary, of the shareholders, and the causes of his failure to obtain such action.” 104 U. S. ix-x (1882).
      In 1912, the Court replaced the original Rule with Equity Rule 27, identical to its predecessor except that it added at the very end the phrase “or the reasons for not making such effort.” 226 U. S., Appendix, p. 8. This language was apparently intended to codify a judicially recognized exception to the old Rule in certain circumstances where, in the discretion of the court, a demand may be excused. See Delaware & Hudson Co. v. Albany & Susquehanna R. Co., 213 U. S. 435 (1909).
      When the Federal Rules were promulgated in 1937, the provisions of Equity Rule 27 were substantially restated in Rule 23(b). See 3B J. Moore & J. Kennedy, Moore’s Federal Practice ¶23.1.15[1], p. 23.1-10 (2d ed. 1982). Finally, in 1966, the present version of new Rule 23.1 was adopted as part of a comprehensive revision of the Rules governing class actions. See id., ¶23.1.01, p. 23.1-3.

       In particular, the Court required the complaint in a derivative suit to allege that the plaintiff “was a shareholder at the time of the transactions of which he complains, or that his shares have devolved on him since by operation of law, and that the suit is not a collusive one to confer on a court of the United States jurisdiction in a case of which it could otherwise have no cognizance....” 104 U. S., at 461. The second of these requirements was clearly meant to discourage efforts to bring disputes between a company and citizens of the State of incorporation within the diversity jurisdiction of the federal courts. See supra, at 530; 3B J. Moore & J. Kennedy, supra, ¶ 23.1.15[1], p. 23.1-14. Although the first requirement may also have been intended to discourage contrived diversity suits, see id., ¶23.1.15[1], p. 23.1-15, it is now understood as generally “aimed at preventing the federal courts from being used to litigate purchased grievances.” 7A C. Wright & A. Miller, Federal Practice and Procedure § 1828, pp. 341-342 (1972).

       Like the requirements adopted in Hawes, the two major features of Rule 23.1 added since that decision — the requirement that the plaintiff “fairly and adequately represent the interests of the shareholders or members similarly situated in enforcing the right of the corporation or association” and the provision requiring notice and court approval of settlements — are also intended to prevent shareholders from suing in place of the corporation in circumstances where the action would disserve the legitimate interests of the company or its shareholders. See generally 7A C. Wright & A. Miller, supra, §§ 1833 and 1839; 3B J. Moore & J. Kennedy, supra, ¶¶23.1.16[3] and 23.1.24.

       Although the Court in Hawes imposed a direct requirement that shareholders make demand on directors before bringing suit, 104 U. S., at 460-461, Rule 23.1 as presently written requires only that a shareholder’s “complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action he desires from the directors or comparable authority...” (emphasis added). Relying on the emphasized qualification, added to the Rule without comment by the drafters in 1966, see n. 5, supra, the Securities and Exchange Commission (SEC), appearing as ami-cus curiae, contends that the Rule does not itself oblige the shareholder to make a demand; instead, it simply requires the plaintiff to plead compliance with applicable obligations of substantive law, ordinarily that of the State of incorporation. See Burks v. Lasker, 441 U. S. 471, 478 (1979). Because we conclude that a suit brought under § 36(b) of the ICA is not a “derivative action” for purposes of Rule 23.1, see infra, at 542, we need not decide whether the Rule itself, as a matter of federal procedure, makes demand on directors the predicate to a proper derivative suit in federal courts or whether any such obligation must instead be found in applicable substantive law.

       Petitioners point out that, even in cases where the corporation could not control the shareholder’s lawsuit, a demand on directors affords management an opportunity to pursue nonjudicial remedies for the shareholder’s grievance. But however desirable the encouragement of intra-corporate remedies may be as a matter of policy, it is not, standing alone, enough to make a suit that the corporation can neither initiate nor terminate a “derivative action” within the meaning of Rule 23.1. Such a suit does not come within the Rule’s language as it is most naturally interpreted and as we have consistently understood it. See supra, at 527-529. Moreover, the Rule and its predecessors were directed at ensuring that the proper party was before the court in a certain class of cases, see supra, at 529-533, and a shareholder action that the corporation cannot control raises no proper party concerns.

       Petitioners contend that, even if an investment company could not bring a suit under § 36(b), a shareholder’s action under that section is nevertheless derivative for purposes of Rule 23.1 because the investment company has a similar right to recover excessive fees from its investment adviser under a state-law cause of action for corporate waste. See, e. g., Llewellyn v. Queen City Dairy, Inc., 187 Md. 49, 57-58, 48 A. 2d 322, 326 (1946). The fact that the corporation may be able to achieve some of the results contemplated by § 36(b) under state law does not, however, demonstrate that a shareholder’s action brought under an independent federal statute claims “a right which may properly be asserted” by the corporation. See supra, at 527-529. The new right created by § 36(b) is not only formally distinct from that asserted in a state claim of corporate waste; it is substantively different as well. Indeed, an important reason for the enactment of § 36(b) was Congress’ belief that the standards applied in corporate waste actions were inadequate to ensure reasonable adviser fees. As the Senate Committee that reported the bill that became § 36(b) explained: “Under general rules of law, advisory contracts which are ratified by the shareholders, or in some States approved by a vote of the disinterested directors, may not be upset in the courts except upon a showing of ‘corporate waste.’ As one court put it, the fee must ‘Shock the conscience of the court.’ Such a rule may not be an improper one when the protections of arm’s-length bargaining are present. But in the mutual fund industry where .. . these marketplace forces are not likely to operate as effectively, your committee has decided that the standard of ‘corporate waste’ is unduly restrictive and recommends that it be changed.” S. Rep. No. 91-184, p. 5 (1969).
      See infra, at 540, and n. 12.

       Petitioners argue that, because § 36(b) provides for an action “by a security holder of such registered investment company on behalf of such company” (emphasis added), such an action is necessarily derivative. In this regard, petitioners rely on this Court’s statement in Burks v. Lasker, 441 U. S., at 477, that a “derivative suit is brought by shareholders to enforce a claim on behalf of the corporation” (emphasis added). See also id., at 484 (referring to actions brought under § 36(b) as “derivative”). The fact that derivative suits are brought on behalf of a corporation does not mean, however, that all suits brought on behalf of a corporation are derivative. The “on behalf” language in § 36(b) indicates only that the right asserted by a shareholder suing under the statute is a “right of the corporation” — a proposition confirmed by other aspects of the action: The fiduciary duty imposed on advisers by § 36(b) is owed to the company itself as well as its shareholders and any recovery obtained in a § 36(b) action will go to the company rather than the plaintiff. See S. Rep. No. 91-184, supra, at 6; § 36(b)(3). In this respect, a § 36(b) action is undeniably “derivative” in the broad sense of that word. See supra, at 527-528. As we have noted, however, Rule 23.1 applies by its terms only to “a derivative action brought by one or more shareholders ... to enforce a right of a corporation [when] the corporation [has] failed to enforce a right which may properly be asserted by it” (emphasis added). The legislative history of § 36(b) makes clear that Congress intended the perhaps unique “right of a corporation” established by § 36(b) to be asserted by the company’s security holders and not by the company itself. Infra, at 536-541.

       In the three cases cited by the SEC, the courts had evaluated the adviser contracts according to common-law standards of corporate waste, under which an unreasonable or unfair fee might be approved unless the court deemed it “unconscionable” or “shocking.” SEC Report, at 142. See Acampara v. Birkland, 220 F. Supp. 527, 548-549 (Colo. 1963); Saxe v. Brady, 40 Del. Ch. 474, 486, 184 A. 2d 602, 610 (1962); Meiselman v. Eberstadt, 39 Del. Ch. 563, 567-568, 170 A. 2d 720, 723 (1961). Similarly, security holders challenging adviser fees under the ICA itself had been required to prove gross abuse of trust. See Brown v. Bullock, 194 F. Supp. 207 (SDNY), aff’d, 294 F. 2d 415 (CA2 1961). See 1967 Hearings, at 117-118.

       “In a derivative action brought by one or more shareholders or members to enforce a right of a corporation or of an unincorporated association, the corporation or association having failed to enforce a right which may properly be asserted by it, the complaint shall be verified and shall allege (1) that the plaintiff was a shareholder or member at the time of the transaction of which he complains or that his share or membership thereafter devolved on him by operation of law, and (2) that the action is not a collusive one to confer jurisdiction on a court of the United States which it would otherwise not have. The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action he desires from the directors or comparable authority and, if necessary, from the shareholders or members, and the reasons for his failure to obtain the action or for not making the effort. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interest of the shareholders or members similarly situated in enforcing the right of the corporation or association. The action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to shareholders or members in such manner as the court directs.” Fed. Rule Civ. Proc. 23.1.

       This construction of the Rule is consistent with the Rules Enabling Act, which states that the federal “rules shall not abridge, enlarge or modify any substantive right,” 28 U. S. C. §2072. The thrust of petitioners’ position, and our prior eases, is that demand requirements enhance the role of managerial prerogatives and expertise by requiring the submission of disputes to management. See United Copper Securities Co. v. Amalgamated Copper Co., 244 U. S. 261, 263-264 (1917); Delaware & Hudson Co. v. Albany & Susquehanna R. Co., 213 U. S. 435, 446 (1909); Hawes v. Oakland, 104 U. S. 450, 457 (1882). It cannot be doubted that this type of requirement, designed to improve corporate governance, is one of substantive law. See Walker v. Armco Steel Corp., 446 U. S. 740 (1980); Ely, The Irrepressible Myth of Erie, 87 Harv. L. Rev. 693 (1974). Therefore, there is substantial doubt whether the Rule could create such a requirement consistently with the Rules Enabling Act. See Mississippi Publishing Corp. v. Murphree, 326 U. S. 438, 445-446 (1946); Sibbach v. Wilson & Co., 312 U. S. 1, 14 (1941). Since the Rule does not clearly create such a substantive requirement by its express terms, it should not be lightly construed to do so and thereby alter substantive rights. See Hanna v. Plumer, 380 U. S. 460, 470-471 (1965).

       Paragraph 14 of respondent’s complaint states: “No demand has been made by the plaintiff upon the Fund or its directors to institute or prosecute this action for the reason that no such demand is required under § 36(b) of the Act. Moreover, all of the directors are beholden to R&T for their positions and have participated in the wrongs complained of in this action. Their initiation of an action like the instant one would place the prosecution of this action in the hands of persons hostile to its success.” App. 7ar-8a.

       The Court does not reject this reading of the Rule, but rather leaves the question open. See ante, at 532-533, n. 8. In my judgment the Rule and its history are sufficiently clear that the question left open by the Court should be decided, rather than embarking on the more difficult private right of action analysis in which the Court engages. This is all the more justified since, in my view, there could be no demand requirement irrespective of the correct answer to the private right of action question.

       See also S. Rep. No. 91-184, p. 15 (1969).