Litigation by Executives vs. Employers

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Claims Procedures and Precautions

Attorney-Client Privilege in ERISA Litigation

2013.Dec.30  401(k) Committee Minutes, and Attorney-Client Privilege 
It is generally smart to presume that the records of 401(k) and other ERISA plan committee meetings will be disclosed if plan participants commence litigation contesting plan administration or investments.  There are attorney-client exceptions, however, and those were discussed and applied in Kenney v. State. St. Corp. (D. MA). Consistently with the cases described below, the Massachusetts district court articulated two guiding principles for exceptions to the general rule that favors disclosure, to participants, of the minutes of plan committee meetings. 

  • First, the attorney-client privilege is available for settlor matters, such as "adopting, amending, or terminating an ERISA plan" because those decisions do not involve fiduciary functions of managing or administering the plan (PDF page 5).
  • Second, the attorney-client privilege is available to a plan fiduciary who seeks the advice of counsel in response to a threat of litigation by plan beneficiaries (or the government) against the fiduciary.

This case involves one more dimension that is instructive, namely: the presence of Watson Wyatt as an advisor to the committee, with attorney-client privilege being lost due to that because nothing in the minutes indicated that disclosure to Watson Wyatt was necessary for the legal advice that was provided at the meeting. Overall, the decision in this case highlights the difficulty of establishing attorney-client privilege, and thereby the prudence of anticipating that committee minutes will be discoverable in ERISA litigation. Plan committees should consequently consider having their ERISA counsel either attend meetings and draft the minutes, or oversee the process for the preparation and finalization of meeting minutes.

2012 Plan Claims and Attorney-Client Privilege (9th Cir.)
In Stephan v. UNUM (2012 WL 3983767), the 9th Circuit differentiates between attorney-client advice that plan fiduciaries or sponsors receive in connection with anticipated litigation (privileged), and advice concerning plan interpretation and administration (not privileged, even if part of handling an administrative appeal). Plan sponsors and fiduciaries should be careful to document and to justify attorney-client privilege whenever they face adverse claims by participants.
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Seminal Case: "an employer acting in the capacity of ERISA fiduciary is disabled from asserting the attorney-client privilege against plan beneficiaries on matters of plan administration." U.S. v. Mett, 178 F.3d 1058, 1063 (9th Cir. 1999).