United States District Court, D. Minnesota
Nolan, Nolan Thompson & Leighton, counsel for plaintiff
Terrence Wagener, Messerli & Kramer P.A., counsel for
Katherine Menendez United States Magistrate Judge
February 14, 2018, following an in camera review,
the Court found that six documents Unum withheld or redacted
contained information protected by the attorney-client
privilege. [Order, ECF No. 53.] As indicated, the parties
then filed letter briefs to address the issue whether Unum is
nevertheless required to provide Mr. Christoff the
undisclosed information pursuant to the so-called
“fiduciary exception” to the privilege.
[Pl.'s Letter, ECF No. 54; Def.'s Letter, ECF No.
55.] Having reviewed these letters and the relevant caselaw,
and for the reasons discussed below, the Court concludes that
the fiduciary exception is applicable to Unum and the
documents at issue fall within that exception.
several years, Michael Christoff was an employee of Spencer
Stuart, Inc. Spencer Stuart offered its employees, an
employee benefit plan. The plan, which is governed by the
Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001, et seq.,
provided disability benefits to the plan participants
including Mr. Christoff. Unum Life Insurance Company of
America insured the plan under a group insurance policy. Mr.
Christoff participated in the plan and alleges that he became
disabled due to severe fibromyalgia in November 2001. Unum
paid long term disability benefits to Mr. Christoff for more
than fifteen years, but terminated those benefits on November
22, 2016. Mr. Christoff appealed the termination of benefits
and Unum upheld its decision on June 15, 2017.
November 22, 2016, when Unum first terminated Mr.
Christoff's long-term-disability benefits, and June 15,
2017, when Unum made its final decision resolving Mr.
Christoff's appeal, Mr. Christoff's counsel sent Unum
several requests for disclosure of information. On the heels
of those requests, Unum claims analyst, Stephanie Tuck, sent
several communications to Dan Flynn and Oliver Murray, who
are in-house counsel for Unum. Ms. Tuck asked Messrs. Flynn
and Murray for legal advice about Mr. Christoff's
this litigation, Unum produced an Amended Privilege/Redaction
Log that identified each of the communications between Ms.
Tuck and Unum's in-house counsel. The Log also identified
a partial redaction of a March 22, 2017 document that
reflects Murray's advice with respect to a request from
Mr. Christoff's counsel. Unum asserts that each of these
items is protected by the attorney-client privilege, and as
noted above, the Court has concluded after an in
camera review that they contain confidential
communications between an attorney and client for the purpose
of procuring legal advice.
Christoff now argues that the “fiduciary
exception” to the attorney-client privilege applies to
each of the communications that Unum is withholding. Because
these communications occurred before he submitted his appeal
and before Unum made its final decision on that appeal, Mr.
Christoff asserts that they are matters of plan
administration and the fiduciary exception defeats Unum's
claim of privilege.
contends that the Eighth Circuit Court of Appeals has not
adopted the “fiduciary exception” and would be
unlikely to apply it to an ERISA insurer like Unum. Unum
argues that the Eighth Circuit would “likely follow the
well-reasoned decision of Wachtel v. HealthNet,
Inc., 482 F.3d 225 (3rd Cir. 2007), exempting insurers
like Unum from the fiduciary exception.” [Def.'s
Letter at 1.] Alternatively, Unum argues that even if the
fiduciary exception were adopted, it would not apply in this
case because Unum relationship to Mr. Christoff was already
adverse at the time the Ms. Tuck requested legal advice from
Unum's in-house counsel.
The “Fiduciary Exception”
common law governs questions of privilege in cases like this
where the Court's jurisdiction is based on a federal
question. Fed.R.Evid. 501; Hollins v. Powell, 773
F.2d 191, 196 (8th Cir. 1985). The party claiming the benefit
of the attorney-client privilege has the burden of
establishing that it applies. Diversified Indus., Inc. v.
Meredith, 572 F.2d 596, 609 (8th Cir. 1978). Generally
speaking, the attorney-client privilege protects from
disclosure confidential communications between a client and
his or her attorney made for the purpose of obtaining legal
advice or legal services. United States v. Yielding,
657 F.3d 688, 707 (8th Cir. 2011). However, the protection
from disclosure of such communications is not absolute.
courts have recognized an exception to the attorney-client
privilege where a fiduciary relationship is concerned, such
as when a beneficiary of a trust is attempting to obtain
otherwise privileged documents from the trustee. See
United States v. Jicarilla Apache Nation, 564 U.S. 162,
167 (2011) (“Under [the fiduciary] exception, which
courts have applied in the context of common-law trusts, a
trustee who obtains legal advice related to the execution of
fiduciary obligations is precluded from asserting the
attorney-client privilege against the beneficiaries of the
trust.”). Generally, the fiduciary exception exists
because a trustee has a common law duty to disclose
information to the beneficiaries of the trust when the
trustee receives legal advice “relating to his
administration of the trust.” Wachtel, 482
F.3d at 231. The exception has also been explained by the
rationale that a trustee is not the “real client”
receiving the advice because the trustee acts as a
representative of the beneficiaries' interests.
United States v. Mett, 172 F.3d 1058, 1063 (9th Cir.
number of circuit courts have applied the fiduciary exception
to ERISA fiduciaries. Bland v. Fiatallis N. Am.,
Inc., 401 F.3d 779, 787-88 (7th Cir. 2005);
Mett, 172 F.3d at 1062; Becher v. Long Island
Lighting Co., 129 F.3d 268, 272 (2d Cir. 1997);
Wilbur v. ARCO Chemical Co., 974 F.2d 631, 645 (5th
Cir. 1992). “[I]n the ERISA context, the fiduciary
exception provides than an employer acting in the capacity of
ERISA fiduciary is disabled from asserting the
attorney-client privilege against plan beneficiaries on
matter of plan administration.” Mett, 178 F.3d
at 1063; Krueger v. Ameriprise Fin., Inc., LLC, No.
11-cv-2781 (SRN/JSM), 2014 WL 12597432, at *11 (D. Minn. May
7, 2014) (same). However, even when the exception is
recognized, it does not defeat the attorney-client privilege
where the fiduciary communicates with its attorneys “on
non-fiduciary matters.” Smith v. Jefferson Pilot
Fin. Ins. Co., 245 F.R.D. 45, 48 (D. Mass. 2007). For
example, an ERISA fiduciary that obtains legal advice to
defend itself against plan beneficiary claims can maintain
the confidentiality of otherwise privileged
communications. See Id. (citing Mett,
178 F.3d at 1064).
the line between matters of plan administration (which are
not protected from disclosure) and communications involving
legal advice on non-fiduciary matters (which remain
protected) requires “a fact-specific inquiry, examining
both the content and context of the specific
communication.” Smith, 245 F.R.D. at 48
(internal quotations omitted). A “key question”
is often “whether the communication was made before or
after the final decision to deny benefits.”
Id. (internal quotations omitted). This demarcation
makes sense as courts attempt to discern whether the
interests of the fiduciary withholding the information and
those of beneficiary seeking its production have diverged and
a threat of litigation has arisen such that the fiduciary is
justified in obtaining confidential advice from counsel for
its own protection. See Cottillion v. United Refining
Co., 279 F.R.D. 290, 301 (W.D. Pa. 2011); Allen v.
Honeywell Retirement Earnings Plan, 698 F.Supp.2d 1197,
1201 (D. Ariz. 2010) (“The interests of plan
participants and plan administrators undoubtedly diverge
sufficiently upon the final denial of an administrative claim
or upon the initiation of litigation.”).
a sufficiently adversarial relationship may arise before the
final decision denying benefits. See Olsen v. Standard
Ins. Co., No. 13-cv-576 (SRN/TNL), Doc. No. 33 at 6 (D.
Minn. Oct. 17, 2013) (Order denying motion to compel). In
Olsen, for example, United States Magistrate Judge
Tony N. Leung found that the fiduciary exception did not
require disclosure of a plan administrator's
communications with its attorneys that occurred after the
plaintiff's counsel sent a letter in response to the
administrator's initial unfavorable benefits
determination. Id. at 7. In light of the particular
language used in the plaintiff's counsel's letter,
Judge Leung found it reasonable to conclude that there was a
sufficient threat of future litigation that an adversarial
relationship had developed. Id.
Eighth Circuit has not officially held that the fiduciary
exception to the attorney-client privilege applies in ERISA
cases or to insurers who act as ERISA fiduciaries. However,
in Carr v. Anheuser-Busch Cos., Inc., 495 Fed.
App'x 757, 767-68 (8th Cir. 2012), the court upheld a
district court's ruling that an ERISA plan administrator
could not be compelled to produce emails between the plan
administrator and its in-house counsel. The Eighth
Circuit held that the district court did not abuse its
discretion where it determined that the fiduciary exception
only applied to one of the communications the plaintiff tried
to compel. Id. at 768 (citing Mett, 178
F.3d at 1064). The other three emails remained protected by
the attorney-client privilege because the plaintiff's
“interest had become sufficiently adverse to that of
the plan administrator's interest because the final
decision to deny benefits had effectively been made.”
summarize, a fiduciary exception to the attorney-client
privilege is widely accepted in federal courts. The exception
has also been fairly consistently applied in the ERISA
context. Courts applying the exception in ERISA cases attempt
to differentiate between situations in which an ERISA
fiduciary obtains legal advice about matters of plan
administration, which must be disclosed, and those where the
fiduciary seeks advice for non-fiduciary matters, which
remain privileged. The focus in that inquiry is often the
point at which an adversarial relationship between fiduciary
and beneficiary materialized such that the fiduciary is
justified in seeking legal advice for its own benefit.
Finally, although the exception has not been expressly
adopted by the ...