Opinion
No. 03 C-8561
December 12, 2003
MEMORANDUM ORDER
This Court's brief November 26, 2003 memorandum order ("Order") directed counsel for plaintiff Datren Williams ("Williams") to explain the predicate on which Williams could bring a derivative shareholder claim not only on behalf of Large Capital Growth Fund and Equity Index Fund (in each of which funds Williams says he is a shareholder) but also "on behalf of . . . the One Group Investment Trust and each of the One Group Funds." Although the Order gave counsel ample time to provide such submission (until December 8), that date came and went without any filing — but one has now been tendered on December 10.
That minor delay of course involves no prejudice to anyone, and if a request for such a brief extension had been made this Court would surely have granted it with alacrity. But what is troublesome is the report by this Court's minute clerk that one of Williams' lawyers has represented to her that "his partner had spoken personally with Judge Shadur, who agreed to an extension." This Court has no recollection of any such conversation, and some further explanation is called for as to who engaged in the asserted conversation, when, and under what circumstances.
In any event, Williams' counsel now says that Complaint ¶ 20 (referred to in the Order) was mistaken — that instead (quoting from a filing made before the MDL Panel in MDL No. 1586, In re Mutual Funds Investment Litigation):
One Group Mutual Funds is a Massachusetts business trust.
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Each of the One Group Funds . . . are [sic] not separately incorporated, but instead each represents a separate series of beneficial interests in One Group Mutual Funds.
Even so, that correction does not justify what Williams and his counsel seek to do here.
There is no precise parallel to the described arrangement in the corporate world, but the closest analogy still seems to be that of separate subsidiaries (the various mutual funds) that share a common parent (the Massachusetts business trust). What controls over the other factors identified in counsel's submission is the total separateness of the beneficial interest in the funds, with Williams being a shareholder in only two of them. Williams' small holdings in those two funds provide no justification for using them as a springboard for him to act on behalf of the umbrella Massachusetts trust — indeed, any allegation of Williams' ownership interest in that entity is conspicuously absent from the Derivative Complaint. And as for the other One Group Funds, any notion of Williams being able to bootstrap upstream to the business trust and thence downstream to the other separate funds clearly has nothing at all to commend it.
Accordingly, any purported derivative action "on behalf of the One Group Investment Trust and each of the One Group Funds," as asserted in the Derivative Complaint's opening paragraph, is rejected. Just how that may impact on other allegations in the Derivative Complaint, or on the propriety of Williams' having included one or more of the named defendants as targets in this litigation, will remain for future resolution as and when defendants are served and become represented by counsel.