journal of pension planning & compliance - Kluwer Law International

26 / JOURNAL OF PENSION PLANNING & COMPLIANCE
participants in fiduciary litigation. 68 The plan administrator, which was
also the plan sponsor, had claimed that the fiduciary exception to the
attorney-client privilege applied only to matters where the administrator
was acting in its capacity as plan administrator, not to matters where
it was acting in its capacity as plan sponsor, and that as a result, the
district court should have examined all the documents before ordering
production to determine which ones related to fiduciary functions and
which ones to settlor functions. The Fifth Circuit concluded, however,
that even if some of the documents concerned matters for which the
company was acting as plan sponsor, the participants could obtain
the documents upon a showing of good cause under the exception to
the attorney-client privilege afforded to shareholders of a corporation
in suits against the corporation’s board of directors. 69
In a case brought in the Second Circuit, a magistrate judge also
found that ESOP participants could be viewed as indirect stockholders
in a derivative suit and, as such, could obtain access under Garner
to otherwise privileged communications. 70 In that case, two ESOP
participants had sued multiple defendants, alleging that the ESOP purchased
overvalued employer stock. The judge rejected the defendants’
claim that the number of participants who had sued was inadequate
to establish good cause for disclosure, explaining that the ESOP the
participants represented owned 30% of the company’s stock and that,
in any event, the most important consideration in the Garner analysis is
that there be a fiduciary relationship, which the court found to exist by
virtue of the derivative suit. 71
In a third case, a district court in the Fifth Circuit also acknowledged
the applicability of the Garner doctrine where plan participants
are stockholders of a company, at least indirectly through their interest
in an ESOP. In that case, however, the court found that the participants
had not satisfied the requirement in Garner that good cause be shown
for overcoming the company’s attorney-client privilege. The court noted
that: (1) according to their ESOP account balances, the number of
shares of company stock attributable to the participants who had sued
equaled less than 5,000 out of approximately 14 million shares of outstanding
stock; (2) two of the participants displayed a history of personal
animosity and grudges against the defendants; (3) the participants
could find out what they needed to know about the fiduciaries’ motives
through depositions and discovery without the privileged information;
and (4) the participants’ requests were extremely broad. 72
Cases Where Good Cause Was Not Required
Another theory for recognizing an exception to the attorney-client
privilege in fiduciary litigation was advanced in Washington-Baltimore