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:: The Fiduciary Exception To Attorney Client Privilege In ERISA Cases

In the context of ERISA, courts have found that an ERISA plan fiduciary generally may not assert the attorney-client privilege against plan participants with regard to matters of plan administration.

Tatum v. R.J. Reynolds Tobacco Co., 247 F.R.D. 488 (M.D.N.C. 2008)

For those that find chess insufficiently challenging, there is a variant, three-dimensional chess.  It’s played (evidently) using five boards to similate play through a cube.

Perhaps the analogy isn’t too strained when I compare that odd game to ERISA discovery jousts when the additional hazard of electronic discovery is added, and then further complicated by the various privacy issues and privilege concerns that often arise.

Stephen Rosenberg really prompted me to think about this with his post expressing concerns about the breadth of discovery obligations under the Federal Rules of Civil Procedure.   The article he posted about outlines significant risks of waiver of privilege by inadvertent disclosures.

Add to that the consideration that, when advising on fiduciary matters, there may be no attorney client privilege, and you have what comes close to the cubic chess game to my way of thinking.  The topic is an interesting one.  Here’s one take on the “fiduciary exception” by the district court quoted above:

A fiduciary exception to the attorney-client privilege has become “well established in federal jurisprudence” of some circuits. Geissal v. Moore Med. Corp., 192 F.R.D. 620, 624 (E.D. Mo. 2000); see, e.g., United States v. Mett, 178 F.3d 1058, 1063 (9th Cir. 1999); In re Long Island Lighting Co., 129 F.3d 268, 271-72 (2d Cir. 1997); [**12] Wildbur v. ARCO Chem. Co., 974 F.2d 631, 645 (5th Cir. 1992); Fausek v. White, 965 F.2d 126, 132-33 (6th Cir. 1992); Garner v. Wolfinbarger, 430 F.2d 1093, 1103-04 (5th Cir. 1970); Wash.-Balt. Newspaper Guild, Local 35 v. Wash. Star Co., 543 F. Supp. 906, 909 (D.D.C. 1982).

The fiduciary exception is rooted in English trust law, and has been applied in numerous contexts. Mett, 178 F.3d at 1063. In the context of ERISA, courts have found that an ERISA plan fiduciary generally may not assert the attorney-client privilege against plan participants with regard to matters of plan administration. See, e.g., Mett, 178 F.3d at 1063; Long Island Lighting, 129 F.3d at 271-72; Geissal, 192 F.R.D. at 624; Wash. Star, 543 F. Supp. at 909.

The challenge of the game remains even at this level, however, since:

courts have limited the fiduciary exception, recognizing that “not all acts of the plan administrator which relate to the plan involve the administration of the plan.”

From Stephen’s native Bay State, a district court found the fiduciary exception applicable, stating:

In conclusion, this court finds that the fiduciary exception recognized by the majority of courts that have analyzed the fiduciary exception in the ERISA context should apply in the instant case. Privileged communications between the insurer and its in-house counsel should be protected to the extent they are not related to fiduciary matters, but must be disclosed where they concern matters of plan administration. This application of the fiduciary exception is most consistent with the disclosure requirements and fiduciary obligations established by ERISA, even where, as here, the fiduciary is an insurer.

Smith v. Jefferson Pilot Fin. Ins. Co., 245 F.R.D. 45 (D. Mass. 2007)

Thus, for the ERISA lawyer, the question is not only avoiding waiver of the privilege, but whether there is a privilege – and that will depend on the further question of what court your case happens to be in.

Tip - Communications prior to benefit decisions are more likely to be subject to the exception than subsequent communications.

See also - :: Exhibit A: Your “Confidential” E-Mail – Old E-Mails Prove Damaging To Plaintiffs And Defendants Alike

Comments

  1. Smith v. Jefferson Pilot Fin. Ins. Co., 245 F.R.D. 45 (D. Mass. 2007). That’s my case. I represent Christopher Smith. A real interesting follow up to the opinion is that even after the Magistrate Judge and the District Court ordered documents turned over, and even after the First Circuit dismissed Jefferson Pilot’s interlocutory appeal, Jefferson Pilot still wouldn’t turn over the documents.
    We went back to the District Court to have it enforce its order. We now have the documents under a protective order. We only agreed to a protective order to get the documents and to save some time while Jefferson Pilot was considering being held in criminal contempt so it could appeal again to the First Circuit.

    You have to concede that it is perplexing that an insurance company would rather be held in criminal contempt rather than turn over documents when it was acting as a purported fiduciary.

    We cannot talk about the documents, but you do have to ask yourself, what does a fiduciary and its in-house attorneys have to hide in a making a decision to pay long term disability benefits? I cannot tell you the answer in this matter, because of the protective order, but I ask that you use your imagination. Jonathan M. Feigenbaum
    http://www.erisaattorneys.com