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32 / JOURNAL OF PENSION PLANNING & COMPLIANCE Lewis because these consolidated lawsuits include a count against the [plan fiduciary] personally for breach of fiduciary duty.” 117 Mutual Versus Divergent Interests Some cases have suggested that the fiduciary exception to the privilege only applies where there is a mutuality of interest between the parties, and therefore does not apply to fiduciary communications with plan counsel after the interests of the fiduciary and plan beneficiaries diverge. For example, the Fifth Circuit affirmed the findings of a magistrate judge that the attorney-client privilege barred disclosure of communications between the administrator of a plan and outside trial counsel for the plan sponsor, reasoning that there had never been the “mutuality of interests” between the parties required for the fiduciary exception to apply, as all the communications with trial counsel were made for the purpose of defending the lawsuit and did not deal with plan administration. 118 In the same case, the magistrate found that, while the fiduciary exception to the attorney-client privilege permitted disclosure of communications between the sponsor’s regular in-house counsel and the plan administrator that occurred before suit was filed, the exception was inapplicable to similar communications that occurred after suit was filed, because the interests of the parties diverged at that point. 119 In another case, a district court held that the fiduciary exception to the privilege permitted disclosure of communications between a bank that was serving as plan trustee and a law firm that represented the bank, but that the exception was applicable only to communications about matters of plan administration, and would not apply to matters on which there was a potential conflict or divergence of interests between the bank trustee and the beneficiaries. 120 These cases were all decided prior to Mett and would appear to be subsumed in its rationale, where it applies. 121 A post- Mett case, in which the plaintiffs had noted that they did not seek to impose personal liability on the plan administrator, held that the fiduciary exception to the attorney-client privilege was warranted when the documents sought by plan beneficiaries were created in the predecisional phase of the plan administrator’s decision and because the administrator invoked the attorney-client privilege against the plan beneficiaries. 122 The magistrate judge had declined to apply the fiduciary exception on two grounds: (1) “Plaintiffs [were] former employees of the Defendant employer who had already begun to receive pension benefits, so that they and the plan administrator would invariably be in an ‘adversarial’ posture as soon as the plan administrator commenced the inquiry whether these benefit payments were erroneous and should be recalculated”; and (2) “at least some of Plaintiffs were
ATTORNEY-CLIENT PRIVILEGE ISSUES IN EMPLOYEE BENEFITS PRACTICE / 33 not merely plan participants but, while still employed, had played roles in the administration and operation of the plan.” 123 The district court held that neither of these considerations was sufficient to overcome the applicability of the fiduciary exception: [I]n this case, even if the plan administrator viewed it as likely that the recalculation of Plaintiffs’ benefits would result in litigation, and even if the decision to consult with counsel was motivated in part by this likelihood of eventual litigation, this Court finds that this prospect, standing alone, is insufficient to preclude a plan beneficiary’s access to predecisional communications between a plan administrator and counsel concerning matters of plan administration. 124 Courts also have considered the mutuality of interests when deciding on the application of the fiduciary exception to communications between insurers and their attorneys. The Third Circuit, in a case involving communications between insurers and their attorneys with respect to health insurance benefit determinations, held that the fiduciary exception did not apply, distinguishing an insurer fiduciary from other ERISA fiduciaries to which the fiduciary exception has been applied. 125 District courts in different circuits have disagreed about the validity of this distinction: two have followed Wachtel , 126 one held that the fiduciary exception did apply to communications between an insurer’s in-house counsel and claims personnel in connection with processing a claim for benefits and before a final benefits determination was made, 127 and another ordered the defendant to brief the issue of whether the fiduciary exception applied before it made a final determination as to whether an internal memorandum created by the insurerdefendant’s in-house attorney at the request of a claim analyst should be turned over to the plaintiff. 128 CONCLUSION A lawyer engaging in entity representation must take care to clarify to constituents that the organization, and not the constituent, is the client, so as not to inadvertently establish an attorney-client relationship with a constituent which may jeopardize the entity’s attorney-client privilege. A lawyer who undertakes joint representation should inform the prospective co-clients that the attorney-client privilege does not protect communications of co-clients with the lawyer with respect to “matters of common interest” from disclosure to the other co-clients, unless the co-clients have agreed otherwise. A lawyer engaging in representation of
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