Limits on the Attorney-Client Privilege: ERISA

The first post in this series discussed the limits of the attorney-client privilege in the context of attorney-fee agreements with class representatives. What limits exist in an ERISA context?

In Haigh v. Constr. Indus. & Laborers Joint Pension Tr. for S. Nev. the plaintiff alleged his pension benefits were improperly terminated and sued the trustee administrating the pension.  He subpoenaed the pension’s third-party administrator and sought “among other items, emails that were sent or received by Wilson-McShane that mentioned Haigh’s name.”  The TPA hired the pension’s lawyers to respond to the subpoena and “disclosed some documents, but withheld others under the attorney-client privilege and work product doctrine.”  A motion to compel followed.

“In an ERISA action, a ‘fiduciary exception’ to the attorney-client privilege exists.”  There are two reasons for this exception.  “[E]ither (1) the attorney-client privilege must give way to the ERISA trust beneficiaries’ need for information or (2) the ERISA trust’s attorney’s client is the trust beneficiaries, rather than the trustee.”[1]  This means that “ERISA fiduciary is disabled from asserting the attorney-client privilege against plan beneficiaries on matters of plan administration.”[2]  For example, “‘Matters of plan administration’ embrace communications between trust counsel and the trust regarding the interpretation of the terms of the pension plan.  Legal opinions in advance of the initial decision to deny or terminate ERISA-protected benefits also fall within the ‘fiduciary exception.’”[3]

“On the other hand, where a plan fiduciary retains counsel in order to defend herself against the plan beneficiaries … the attorney-client privilege remains intact.”[4]  What is the line?  Once

“the interests of the Plan fiduciary and beneficiary diverge” the “fiduciary exception” no longer applies and the ERISA plan fiduciary may reassert the attorney-client privilege against the plan beneficiary. In the Ninth Circuit, “it is not until after the final determination—that is, after the final administrative appeal—that the interests of the Plan fiduciary and the beneficiary diverge for purposes of application of the fiduciary exception.”

In the end, this leads to an expensive mess.  Applied in Haigh, some of the emails were still privileged, but others were not.  To my colleagues protecting ERISA investments; may you never need to have this discussion.

[1] No. 2:14-cv-1545, 2015 U.S. Dist. LEXIS 165031, 2015 WL 8375150 (D. Nev. Dec. 9, 2015) (citing U.S. v. Mett, 178 F.3d 1058, 1062-63 (9th Cir. 1999)).

[2] Mett, 178 F.3d at 1063.

[3] Haigh.

[4] Id. at 1064.