journal of pension planning & compliance - Kluwer Law International

ATTORNEY-CLIENT PRIVILEGE ISSUES IN EMPLOYEE BENEFITS PRACTICE / 27
Newspaper Guild, Local 35 v. Washington Star Co., 73 where the court
permitted disclosure to plan participants of communications between
the plan fiduciaries and counsel, because “when an attorney advises a
fiduciary about a matter dealing with the administration of an employees’
benefit plan, the attorney’s client is not the fiduciary personally
but, rather, the trust’s beneficiaries.” 74 The plan participants in that case
had alleged that the plan, its trustees, and the employer had illegally
amended the trust agreement to provide for a reversion of surplus assets
to the employer rather than to the participants. In support of their
claim, the participants relied on an affidavit of former legal counsel to
the plan. The defendant fiduciaries claimed that the affidavit was privileged
because the attorney worked for the outside general counsel to
the plan sponsor and provided legal services to the plan, related trusts,
and the plan sponsor, without any separation of services between these
various activities. The court rejected the claim, finding that, as the true
clients of the firm, the participants had a right to the information, even
without a showing of good cause. 75
The Restatement follows Washington Star . Under the Restatement ,
in a suit brought by a beneficiary charging breach of fiduciary duty by a
trustee or similar fiduciary, a communication is not privileged if it is (1)
relevant to the claimed breach, and (2) was between a fiduciary and its
lawyer “who was retained to advise the trustee concerning the administration
of the trust.” 76 No showing of “good cause” is required. 77
Several circuits also have adopted the theory advanced in Washington
Star that the attorney-client privilege is inapplicable to attorneyfiduciary
communications in suits by participants and beneficiaries
because they are the ultimate clients. For example, in In re Grand Jury
Proceedings (United States v. Doe), 78 the Ninth Circuit approved an
order compelling a fund lawyer to testify regarding conversations he
had with a fund trustee concerning alleged kickbacks from prospective
investment managers. The court found that the attorney-client privilege
was inapplicable because “the ultimate clients of the attorney are as
much the beneficiaries of the plan as the trustees,” and the “need for
beneficiaries to have access to all the details of the plan’s administration
outweighs the needs of the trustees to keep their communications with
attorneys private from their beneficiaries.” 79 The Second Circuit 80 and
Fifth Circuit 81 also have indicated their approval of this theory.
In addition, district courts in a number of circuits have found that
plan participants, as the true clients, may overcome the attorney-client
privilege without requiring a showing of good cause. In most, 82 but
not all, 83 of those cases, the courts have simply omitted any mention
of a good cause requirement. One district court held that the fiduciary
exception applies with equal force to plan trustees and plan fiduciaries