MEMORANDUM AND ORDER

CANNELLA, District Judge:

Motion by defendants, for summary judgment on Claims I and II of the complaint for failure to state a claim under the federal securities laws, is granted. Fed.R.Civ.P. 12(b)(6), 56.

Motion by defendants, to dismiss the remaining state law claims for lack of jurisdiction over the subject matter, is denied. Fed.R.Civ.P. 12(b)(1).

Motion by defendants, for summary judgment on Claim VI for failure to state a claim under state law, is denied. Fed.R.Civ.P. 12(b)(6), 56.

Motion by defendant Robert Zimring, for summary judgment, is denied. Fed.R.Civ.P. 56.

Motion by plaintiff, for an Order certifying this action as a class action, is granted. Fed.R.Civ.P. 23.

Jurisdiction is based on the federal securities laws, 15 U.S.C. § 77v, 78aa, diversity of citizenship, 28 U.S.C. § 1332(a), and the doctrine of pendent jurisdiction.

FACTS

Most of the pertinent facts have been related in an earlier opinion in this case, see 425 F. Supp. 440 (S.D.N.Y. 1976); nevertheless, a recitation will be useful here. For the purposes of these motions, the Court has treated the facts alleged in the complaint as true, and drawn all reasonable inferences from the complaint, as well as from any uncontroverted evidence, in favor of the plaintiff. See, e.g., Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

In 1953, the A. Sandler Company ["Sandler"] executed an "Agreement" which created the "Sandler of Boston Profit Sharing Retirement Plan and Trust" ["the Trust"], a non-contributory pension plan intended by Sandler to qualify for tax exemption under section 165(a) of the Internal Revenue Code of 1939. The Agreement provided for a committee of three persons ["the Committee"], at least one of whom had to be a beneficiary, to administer the retirement plan and make investment decisions for the Trust. Sandler retained the power to appoint and remove Committee members, with or without cause, and the Agreement expressly permitted the Committee to invest the assets of the Trust in Sandler stock. In addition, the Agreement required the Committee to furnish each beneficiary with an annual statement of the value of his or her interest, and it gave each beneficiary the right to inspect a copy of the Agreement and all later amendments, as well as annual reports concerning investment transactions of the Trust fund.

In the event of a merger, consolidation, or sale of the assets of Sandler, the Agreement permitted Sandler's successor either to allow the Plan to terminate, in which case the Committee would distribute the Trust assets, or, to adopt and continue the Plan, in which case it would assume all the powers and duties of Sandler under the Agreement. Sandler, or any successor that adopted the Plan, had the power to amend the Agreement, as well as the power to terminate the Plan and Trust at any time, in its sole discretion.

The plaintiff in this action, Louis Klamberg, became an employee of Sandler in 1945 and a member of the Plan at its inception in 1953. He subsequently received annual statements of his interest in the Trust assets as well as announcements of amendments to the Plan that had been adopted by Sandler. By early 1969, the total value of the Trust assets was approximately $1 million, and the total value of Klamberg's interest, approximately $100,000.

On April 1, 1969, defendant Kayser-Roth Corporation ["Kayser-Roth"] acquired all of the stock of Sandler. Shortly thereafter, although it continued to operate Sandler as a separate entity, Kayser-Roth had the Committee members removed and replaced by the individual defendants Jackson, Zimring, and Roth, who were at the time "control persons," or "insiders" of Kayser-Roth. The Committee then invested $724,000, or about 70%, of the Trust assets in Kayser-Roth stock. The complaint does not state precisely when the Committee made these purchases.

None of the defendants ever told the beneficiaries: (1) that the former Committee members had been removed, or that they had been replaced by Kayser-Roth insiders; (2) that $724,000 (or, for that matter, any amount) of the Trust's assets had been invested in Kayser-Roth stock; or (3) any other information in their possession concerning Kayser-Roth stock. Each beneficiary continued to receive from the Committee one-sentence annual statements of the value of his or her interest.

On February 13, 1970, the defendants Glasser, Jackson, Roth and Slaner met as the Sandler Board of Directors, of which they constituted a quorum. At that meeting they amended the Plan to freeze membership and discontinue company contributions as of November 1, 1968. Simultaneously, they provided for the participation of Sandler employees in the Kayser-Roth Employee Retirement Plan as of November 1, 1968. On May 29, 1970, each Sandler employee received a letter from the company stating, inter alia:

We are pleased to announce that, effective as of November 1, 1968, each of you who was a member of . . . [the Sandler Plan] on October 31, 1968, will become a member of the Kayser-Roth Corporation Employees' Retirement Plan, provided that you are still employed by the Company. . . .

. . . . .

The [Sandler Plan] is to continue in existence but membership is to be frozen as of October 31, 1968 and no further contributions are to be made to the Plan. Your interest, if any, in the Plan will be fully-vested and distribution will be made to you at the time you attain your normal retirement date. The assets of the Plan are to be invested by the Trustees appointed by the Board of Directors of the Company and your interest will increase or decrease according to investment success with no guarantee of performance.

Klamberg and the other beneficiaries took no action with respect to the Trust's investment in Kayser-Roth stock. The complaint alleges that they were "induced" not to act by the defendants' nondisclosures, but fails to specify what they would have done had they known the material facts.

Klamberg retired in early 1974, at which time the value of his interest in the Trust was approximately $55,000; the value of all the Trust assets at that time was approximately $500,000. The decrease occurred primarily because the Kayser-Roth stock had declined in value from $724,000 in 1969 to $210,000 in 1974. Klamberg has brought this action individually and on behalf of all other persons who were beneficiaries of the Trust on April 1, 1969.

Of the six claims contained in the complaint, only two raise federal questions. Specifically, Claims I and II allege violations of section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a), and of section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated by the Securities and Exchange Commission thereunder. Claims III, IV and V allege breaches of common law fiduciary duties by the individual defendants. Claim VI alleges that the defendants breached the Agreement when they retroactively amended the Plan without terminating it. Jurisdiction over the latter four claims is based on diversity of citizenship and the doctrine of pendent jurisdiction.

Klamberg has now moved, under Rule 23 of the Federal Rules of Civil Procedure, for an Order certifying this action as a class action. The individual defendants have collectively cross-moved for summary judgment on Claims I and II, for failure to state a cause of action under the federal securities laws, and on Claim VI, for failure to state a cause of action under state law. Also, the defendants contend that the Court lacks subject matter jurisdiction over the state law claims. In a separate motion, the defendant Robert Zimring moves for summary judgment, claiming that he cannot be held legally liable because his duties with respect to the Trust were purely ministerial.

SECURITIES LAW CLAIMS

The claims under section 10(b) and Rule 10b-5 must be dismissed for failure to allege conduct that was materially deceptive or manipulative. In Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 97 S.Ct. 1292, 51 L.Ed.2d 480 (1977), the Supreme Court ruled decisively that "deceptive" or "manipulative" conduct is a requisite of a Rule 10b-5 cause of action. The Court defined "manipulative" as a "term of art" that refers to various practices, none of which are involved here.

Although the Court did not elaborate on the meaning of "deceptive," it can be fairly inferred that no special term of art was intended. Webster's New International Dictionary (2d ed. 1934) defines "deceive" as, inter alia: "to cause to believe the false, or disbelieve the truth." "Deceptive" means "tending to deceive; having the power to mislead; as, a deceptive appearance." Id. "To deceive," then, refers to the effect of conduct on the observer; "deceptive," on the other hand, refers more to a quality of the conduct itself, to wit, its propensity to deceive. Of course, any estimation of that propensity requires some reference to an observer. We may label something "deceptive," meaning deceptive generally, if it would tend to deceive most any ordinary observer. Nevertheless, something that is not deceptive generally may yet be labelled "deceptive" if it would tend to deceive a particular person or class of persons. This distinction is especially significant for appraising omissions — failures to act or disclose — for whereas false statements or partial disclosures may be deceptive generally, mere silence is deceptive only to persons with particular reasons to draw specific inferences from it.

In 10b-5 cases, whether conduct may "fairly be viewed as deceptive" will generally depend upon the circumstances of the particular person or class allegedly deceived, their knowledge and perceptive faculties. In other words, before the court can ask "Was the conduct deceptive?", it must first ascertain "To whom?" Since a 10b-5 action requires a causal connection between the defendant's violation and the plaintiff's loss, the allegedly deceived observers will have to be persons who were in a position to make a decision that led to that loss. Such a decision will often be whether to purchase or sell securities, but may also include a proxy vote, a decision to seek an injunction, or even whether to retire from active employment.

In the instant case, the persons in positions to decide to purchase and sell securities on behalf of the Trust were the Committee members. But these are the very persons charged with perpetrating the fraud, and certainly, it makes no sense to require the plaintiff to show that they were deceptive to themselves. By way of analogy, in a stockholders derivative action for a securities fraud perpetrated upon the corporation by outsiders, the plaintiff must ordinarily show conduct deceptive to the agents authorized to purchase or sell securities for the corporation, usually the officers or directors. But where the plaintiff alleges fraud perpetrated by the directors themselves, "it is surely not necessary to show that the directors deceived themselves. It must be enough to show that they deceived the shareholders, the real owners of the property with which the directors were dealing." Alternatively, it may be possible to show conduct that was deceptive to the corporation itself, albeit to none of the directors. Of course, what is involved here is not a corporation, but a trust of sorts, and an uncritical grafting of concepts developed to apply to the relationship among a corporation, its directors and officers, and its shareholders, to a case involving the relationship among a trustee, the trust property, and the beneficiaries, is not likely to bear lasting fruit.

Deception of Beneficiaries

Although trust beneficiaries will rarely have to vote on anything, they can often have their trustees enjoined from engaging in disputed securities transactions. Since courts view trusts as "creatures of equity," they are less hesitant to enjoin trustees than they are to enjoin corporate directors. Consequently, where a beneficiary is in a position to decide whether to seek to enjoin his trustee's impending purchase or sale of securities, it would be anomalous to say that conduct by the trustee which is deceptive to the beneficiary does not give rise to a 10b-5 cause of action.

The instant complaint, however, cannot survive on this basis, because it alleges no conduct that may fairly be viewed as materially deceptive to the Sandler Trust beneficiaries. The plaintiff's claims do not involve misrepresentation, and the nondisclosure he alleges was of (1) facts concerning the value of Kayser-Roth stock, and (2) facts concerning Kayser-Roth's control over the Trust investments, as well as (3) numerous adverse inferences from, and pejorative characterizations about, those facts.

As a general rule, so long as material facts are disclosed or already known, it is not deceptive to fail to "characterize" those facts with "pejorative nouns and adjectives," or to fail to verbalize all adverse inferences expressly. Goldberg v. Meridor, 567 F.2d 209, 218 n. 8 (2d Cir. 1977), cert. denied, 434 U.S. 1069, 98 S.Ct. 1249, 55 L.Ed.2d 771 (1978), on remand, 81 F.R.D. 105 (S.D.N.Y. 1979); accord, Golub v. PPD Corp., 576 F.2d 759, 765 (8th Cir. 1978); Hundahl v. United Benefit Life Insurance Co., 465 F. Supp. 1349, 1364-66 (N.D.Tex. 1979); Rodman v. Grant Foundation, 460 F. Supp. 1028, 1037-41 (S.D.N.Y. 1978), appeal argued, No. 744 (2d Cir. May 9, 1979); Valente v. Pepsico, Inc., 454 F. Supp. 1228, 1253-54 (D.Del. 1978); Goldberger v. Baker, 442 F. Supp. 659, 664-65 (S.D.N.Y. 1977); see Browning Debenture Holders' Committee v. DASA Corp., 560 F.2d 1078, 1084 (2d Cir. 1977). The principle underlying these cases appears to be that, once the facts are disclosed, a failure to articulate adverse inferences from or pejorative descriptions of those facts is not materially deceptive: a reasonable person would not be deceived by their nondisclosure, since he would be able to draw whatever inferences and append whatever characterizations he believed appropriate. Of course, the distinction between facts and characterizations may not be a nice one. See, e.g., Hundahl v. United Benefit Life Insurance Co., supra.

Furthermore, "there is no duty to disclose information to one who reasonably should already be aware of it." Seibert v. Sperry Rand Corp., 586 F.2d 949, 952 (2d Cir. 1978) (quoting Myzel v. Fields, 386 F.2d 718, 736 (8th Cir. 1967), cert. denied, 390 U.S. 951, 88 S.Ct. 1043, 19 L.Ed.2d 1143 (1968)); accord, Rodman v. Grant Foundation, supra, 460 F. Supp. at 1035-36 (citing several cases). It is therefore not deceptive to fail to disclose information that was "easily enough available by duly diligent inquiry." Rodman v. Grant Foundation, supra. Value of Kayser-Roth stock. Paragraph 27 of the complaint alleges that the defendants failed to disclose:

that the common stock of Kayser-Roth was not of investment quality suitable for Trust funds; that the financial condition of Kayser-Roth was in large measure dependent upon the developments of the clothing industry in general, which was traditionally subject to radical fluctuations as a result of fickle changes of public taste in the field of fashion; that the financial growth of Kayser-Roth was in large part contingent upon a continual program of acquisitions to generate earnings and that there could be no certainty that such acquisition program could be maintained or maintained successfully; that many of the acquisitions by Kayser-Roth were in fields in which Kayser-Roth had never before participated and had no experience; that many of Kayser-Roth's acquisitions were consummated in the fever of the conglomerate fad of the late 1960's at prices which were unrealistic based upon sound valuations; that shortly after their acquisition, Kayser-Roth management was considering divesting itself of the ownership of certain of these problem acquisitions; that the profits from the hosiery division, which was traditionally the largest contributor to the profits of Kayser-Roth, were under heavy pressure as a result of longer skirt lengths and the trend toward pant suits and slacks; that many of the Kayser-Roth divisions were under heavy pressure from increasing foreign competition; that Kayser-Roth was involved in foreign currency exchange and subject to radical fluctuations in that market; that Kayser-Roth was experiencing disproportionate higher costs of its raw material and labor; that there had been a sharp decline in earnings from Kayser-Roth's specialty textile division; that at the time of the purchase of its stock by the Trust, the price/earnings ratio of Kayser-Roth's stock was at an all time high, which could not be justified on the basis of comparable price earnings ratios. . . .

Complaint ¶ 27, at 9-11.

With the possible exception of Kayser-Roth's intentions concerning its so-called "problem" acquisitions, all of the factual information contained in this paragraph was readily available to plaintiff, especially since, as the complaint itself concedes, Kayser-Roth stock was at all material times traded on the New York Stock Exchange, and therefore subject to SEC and the Exchange's reporting requirements. And failure to disclose that Kayser-Roth was "considering" divesting certain of its holdings, could not, by itself, have been materially deceptive to the beneficiaries. The remainder of the paragraph comprises pejorative characterizations and adverse inferences, which, it appears, the plaintiff has drawn without the defendants' help.

Kayser-Roth's control. Paragraph 28 of the complaint alleges that the defendants failed to disclose:

a. That they had purchased Kayser-Roth stock with Trust assets;

b. That the Trust's investment in Kayser-Roth stock constituted more than 70% of Trust assets;

c. That the trustees of the Trust had been replaced shortly after the acquisition of A. Sandler Co. by Kayser-Roth;

d. That the new trustees could not have undivided loyalty to the Beneficiaries of the Trust by reason of the loyalty owed by them to Kayser-Roth and its shareholders and their own conflicting self-interests;

e. That the Trust had been improperly, retroactively amended by Kayser-Roth in 1971 so as to justify its discontinuance of contributions as of October of 1968;

f. That such purported amendment should have, by the terms of the Trust, effected an automatic termination of the Trust;

g. That the individual defendants as controlling shareholders and/or directors and/or officers of Kayser-Roth had and would continue to acquire detailed information concerning Kayser-Roth's affairs, much of which was in the nature of "inside" information not generally available to the investing public; that possessed of such information they were or might be inhibited from selling the Kayser-Roth stock on behalf of the Trust because of possible violations of the Securities Acts; and that this inhibition was or might be in conflict with the individual defendants' fiduciary obligations to plaintiff and other Beneficiaries of the Trust with respect to the Trust's investment in Kayser-Roth stock.

Complaint ¶ 28, at 12.

The only facts contained in this paragraph that might arguably have been materially deceptive are that Kayser-Roth replaced the Committee members with its own insiders, and that these persons invested more than 70% of the Trust assets in Kayser-Roth stock. The attendant conflicts of interest are readily inferable. As to subparagraphs "e" and "f," they are merely inferences about the legal effects of the 1971 amendment, about which the beneficiaries knew or could readily have learned.

Failure to disclose the replacement of Committee members and the investment in Kayser-Roth stock, however, could not have been materially deceptive to the beneficiaries. The beneficiaries knew, or could readily have learned by reading the Agreement, that upon acquiring Sandler, Kayser-Roth gained the virtually unrestricted power to appoint and remove Committee members, and that investment in Kayser-Roth stock was expressly permitted, and implicitly anticipated, by the terms of the Agreement. Moreover, nothing in the Agreement required the announcement of Trust investments or changes in the Committee's membership; nor does the complaint even allude to any other reasons — for example, previous practice — for the beneficiaries to have expected such announcements. Finally, neither the one-sentence annual statements nor the May 29, 1970 letter contain any misleading partial disclosures with respect to investment of trust assets or the composition of the Committee, especially in light of what the beneficiaries knew or should have known about the pertinent provisions of the Agreement. Therefore, in the absence of some particular reason for the beneficiaries to draw a specific inference from the defendants' silence on these matters, such silence cannot "fairly be viewed as deceptive" to them.

"Deception" of the Trust

In Goldberg v. Meridor, supra, Judge Friendly, writing for himself and Judge Timbers, held that a corporation may be said to be deceived, even though all of its directors are fully informed as to all material facts:

[T]here is deception of the corporation (in effect, of its minority shareholders) when the corporation is influenced by its controlling shareholder to engage in a transaction adverse to the corporation's interests (in effect, the minority shareholders' interests) and there is nondisclosure or misleading disclosures as to the material facts of the transaction.

This concept, which some commentators and at least one court have labelled "constructive" deception, has evolved largely from the notion that a corporation is, in law if not in reality, a "person," an "entity" with numerous legal rights and liabilities ordinarily possessed by real persons. Since a corporation may sue and be sued in its own name, in some cases its "mental state" may be material: in a Rule 10b-5 action by a corporation, the question arises, "Was the corporation deceived?" But as one commentator has quipped, "a corporation's being 'deceived'" is as difficult to imagine "as a corporation's being in love."

The inquiry then must turn to the corporation's agents.

In general, if the corporation's agents have not been deceived, neither has the corporation. However, as in other situations governed by agency principles, knowledge of the corporation's officers and agents is not imputed to it when there is a conflict between the interests of the officers and agents and the interests of the corporate principal. Therefore, a corporation may be defrauded in a stock transaction even when all of its directors know all of the material facts, if the conflict between the interests of one or more of the directors and the interests of the corporation prevents effective transmission of material information to the corporation, in violation of Rule 10b-5(2).

The theory of constructive deception, therefore, is based upon the established rule of agency law that:

A principal is not affected by the knowledge of an agent in a transaction in which the agent secretly is acting adversely to the principal and entirely for his own or another's purposes.

Not every conflict negates an agency. An agent's duties depend upon his agreement with the principal, and the principal may consent to or ratify an agent's conflict of interest. Such conflicts should not serve to preclude imputation of knowledge from the agent to the principal, and hence should not give rise to constructive deception.

Similarly, the duties of a trustee depend upon the terms of the declaration of trust, and the settlor may retain control over the trustee, or create conflicting loyalties. Consequently, as with an agency, such control and conflicts should not per se occasion a finding of constructive deception.

In the instant case, the Agreement created only one duty running from the Committee members to the beneficiaries: to hold and invest Trust assets for the beneficiaries' "exclusive" benefit. But even this duty is limited by the Agreement's express permission to invest the Trust assets in the employer's capital stock, and by the employer's retention of control over the selection and removal of Committee members. Nevertheless, the plaintiff seeks to predicate a theory of constructive deception upon the following:

a. As controlling shareholders and/or officers of Kayser-Roth, the individual defendants owed an undivided loyalty to Kayser-Roth and its shareholders which included the obligation to do such things as would inure to the benefit of Kayser-Roth and the Kayser-Roth stockholders, and not to disclose any inside or confidential information which would adversely affect Kayser-Roth or its stock or which would constitute a violation of the insider disclosure requirements of the Securities Acts.

b. As individuals, the defendants had a self-interest in perpetuating their own control of Kayser-Roth with a minimum commitment of their own funds, as well as an interest in seeing to it that they received the maximum possible compensation as officers of Kayser-Roth, and in seeing to it that the "float" of the Kayser-Roth stock was in safe hands which would not be tempted to sell the stock and depress the market price at a time which would not be advantageous to the individual defendants.

c. As trustees and/or members of the Committee of the Trust, the individual defendants were required to have an undivided loyalty to the Beneficiaries of the Trust and to invest the assets of the Trust in a prudent and diversified manner to protect the retirement funds of the Beneficiaries and to dispose of such assets which were no longer prudent to hold and which were not in the best interest of the Trust Beneficiaries.

Complaint ¶ 25, at 8-9.

What the plaintiff has done, however, is to mischaracterize the individual defendants' duties of loyalty. Because of their dual positions, the Committee members owed neither Kayser-Roth nor the Trust their "undivided" loyalty. Their loyalties were divided from the outset, and such divided loyalties were built into the trust relationship by the terms of the Agreement. Therefore, neither their "conflicts of interest," nor their own desires to maintain control, see Falkenberg v. Baldwin, supra, give rise to a finding of constructive deception.

Section 17(a)

The absence of deceptive conduct does not dispose of all the securities law claims, because section 17(a) of the 1933 Act is in many respects broader than section 10(b) of the 1934 Act. In one respect, however, it is narrower. Whereas section 10(b) applies to conduct "in connection with the purchase or sale of any security," section 17(a) applies only to conduct "in the offer or sale." Although this latter phrase is "expansive enough to encompass the entire selling process, including the seller/agent transaction," United States v. Naftalin, ___ U.S. ___, ___, 99 S.Ct. 2077, 2081, 60 L.Ed.2d 624 (1979), it cannot reasonably be held to encompass transactions between a trust beneficiary and a trustee who purchased securities, unless it be held that there is no distinction at all between the two phrases. Neither the sellers of Kayser-Roth stock nor their agents are parties to this lawsuit. The Court concludes, therefore, that the complaint alleges no conduct by the defendants "in the offer or sale of securities."

STATE LAW CLAIMS

Claim VI

Claim VI of the complaint is based upon section 10.01 of the Agreement:

Although this is intended to be a permanent Plan and Trust for the exclusive benefit of the Members thereof, established with the bona fide intention and expectation that the Company will be able to make its contributions indefinitely, the Company is not and shall not be under any obligation or liability whatever to continue its contributions or to maintain the Plan and Trust for any given length of time, but may, at any time in its sole and absolute discretion, discontinue such contributions and terminate this Plan and Trust.

The plaintiff contends that by discontinuing company contributions as of November 1, 1968, without concomitantly terminating the Trust, the defendants breached this provision. The defendants respond that section 10.01, as drafted, permitted the discontinuance of contributions without termination. Even if it did not, they argue, it was superseded by the amendment of February 13, 1970, authorizing such action. The plaintiffs counter that the amendment, too, was impermissible.

The Court finds material questions of fact going to the merits of Claim VI, and, accordingly, denies the motion for summary judgment. As stated in a prior memorandum in this case, section 10.01 is "ambiguous as to whether the board was obligated to terminate the Trust when it effected the discontinuance of company contributions." Memorandum Decision at 4-5, No. 75 Civ. 1507 (S.D.N.Y Oct. 20, 1977). Moreover, Article 3 of the Agreement provided that Sandler could amend the Plan and Trust without the consent of the beneficiaries "to effectuate the purposes" of the Plan and Trust, so long as the amendment did not divest a beneficiary of his or her interest, or allow the Trust assets to be "used for or diverted to purposes other than for the exclusive benefit of" the beneficiaries. Thus, whether the amendment was a valid one under the Agreement also raises questions of fact which may not be resolved on a motion for summary judgment.

As a further defense to Claim VI, the defendants raise the statute of limitations, asserting it to be three years under N YC.P.L.R. § 214 (McKinney 1978) The Court finds, however, that Claim VI is in essence an, action on a contract; consequently, the appropriate period of limitations is six years. N.Y.C.P.L.R. § 213(1), (2) (McKinney 1978). Since the defendant admits that the plaintiff commenced his action on Claim VI within five years of its accrual, it is not time barred.

The Defendant Zimring

In a previous decision, this Court denied a motion virtually identical to the one now advanced on behalf of the defendant Robert Zimring, stating:

Robert Zimring, the other moving defendant, was Secretary to the trustees and members of the Committee. He claims that summary judgment should be granted in his favor because, as Secretary, he had only clerical and administrative duties and was completely subject to the instructions of the Committee members and trustees. The Court disagrees. Plaintiff should not be bound by Zimring's affidavit but should be afforded the opportunity to take discovery on the scope of Zimring's authority and his connection with the alleged wrongdoing.

Memorandum Decision at 5, No. 75 Civ. 1507 (S.D.N.Y. October 20, 1977). All that has changed since then is that the plaintiff has taken Zimring's deposition, and, as might have been expected, Zimring testified that his duties were purely ministerial. Accordingly, this motion must again be denied. The defendant's implied suggestion that the material facts are now undisputed defies common sense.

CLASS CERTIFICATION

Prerequisites

Rule 23(a) of the Federal Rules of Civil Procedure lists four prerequisites for class action certification:

One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

As to the first prerequisite, the defendant agrees that there are at least seventy beneficiaries of the Plan who would be members of the class. This is sufficient, especially in light of the substantial identity of claims. See Marcera v. Chinlund, 595 F.2d 1231 at 1238 (2d Cir. 1979).

There is little dispute that the second and third prerequisites are also met. Whether the defendants actually committed the acts alleged in the complaint are questions of fact common to all beneficiaries of the Plan. Moreover, all of the remaining legal claims based upon these alleged facts are common to all beneficiaries. Proof of conduct constituting a breach of fiduciary duty or a breach of the Trust Agreement is likely to be the same for all beneficiaries' claims. In short, Klamberg's claims arise solely from acts of the defendants directed towards all of the beneficiaries, and are not merely typical of the claims of other beneficiaries, but are the same.

As to the fourth prerequisite, the defendants raise three points, none of which attack the competence of plaintiff's counsel. First, they charge that in 1974 Klamberg offered to settle his claim. The Court finds that this offer, made before this action was brought, was rejected, and that since the commencement of this action, has not been resurrected. It does not, therefore, constitute a conflict that would disable the plaintiff from acting as representative. As Judge Gagliardi stated in De Milia v. Cybernetics International Corp., 15 F.R. Serv.2d 1385 (S.D.N.Y. 1972): "That [the representative plaintiff] attempted to settle his individual claim before commencing a protracted lawsuit is not unusual. More importantly, now that an action has been commenced in class form it cannot be settled without court approval. . . ." Id. at 1389 (citing Fed.R.Civ.P. 23(e)).

Second, the defendants argue that one of the plaintiff's demands — distribution of the Trust assets to the beneficiaries — may not be in the best interests of all beneficiaries. What the complaint basically seeks, however, is an approximately $500,000 increment to the Trust assets, in which each beneficiary has an interest. It is difficult to see how such a recovery would affect any beneficiary adversely. Moreover, the remote possibility that relief may have to be tailored to meet the differing needs of individual beneficiaries does not preclude class certification. See, e.g., Marcera, supra, at 1239.

Third, and finally as to the adequacy of representation, the defendants argue that the plaintiff is subject to a defense not common to other members of the class, namely, that the plaintiff had access to the Plan's books and records, and could have ascertained the status of the Plan's investments sooner than he did. Even if this were a legally sufficient defense to the remaining claims, it would not, by itself, establish plaintiff's inadequacy. See, e.g., Huff v. N.D. Cass Co., 485 F.2d 710 (5th Cir. 1973); Mersay v. First Republic Corp., 43 F.R.D. 465, 469 (S.D.N.Y. 1968). It does not appear at present that this particular defense "will so focus the representative and his counsel on unique and untypical aspects of the common claim that the representation of absentee class interests will be inadequate in fact." 3B Moore's Federal Practice ¶ 23.07[1], at 23-214 (2d ed. 1978). And should the issue become especially significant, the Court can try it separately. Fed.R.Civ.P. 23(c)(4), (d)(1); see, e.g., Berland v. Mack, 48 F.R.D. 121, 128 (S.D.N.Y. 1969).

Type of Class Action

Besides the four prerequisites of subsection 23(a), at least one of the subdivisions of subsection 23(b) must be satisfied before an action may be maintained as a class action. See, e.g., Marcera, supra, at 1237. The Court finds that the instant action satisfies the requirements of subdivision 3. Virtually every legal and factual issue is common to all class members, with the possible exceptions of each beneficiary's actual knowledge or lack of due diligence, and each beneficiary's actual damages. While it is true that the members of the instant class have claims substantial enough to warrant bringing individual actions, this factor does not outweigh the advantages of having the defendants' liability determined in one proceeding, especially since each member will have the opportunity to opt out. Fed.R.Civ.P. 23(c)(2). Finally, there is no evidence of any similar litigation already commenced, of any undesirability of having all claims consolidated in this forum, or of any peculiar problems likely to arise in the management of this litigation.

CONCLUSION

In accordance with the foregoing, plaintiff's federal securities law claims are dismissed for failure to state a claim upon which relief may be granted. Fed.R.Civ.P. 12(b)(6), 56.

All other motions by the defendants are denied.

Pursuant to Fed.R.Civ.P. 23(c), the Court finds that this action may be maintained as a class action. Plaintiff is directed to submit a proposed order, on notice to all parties, describing the class and providing for notice to all class members pursuant to Fed.R.Civ.P. 23(c)(2).

SO ORDERED.

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