Courts Examine the Fiduciary Exception’s Limitations

July 30, 2008

Under the so-called “fiduciary exception,” beneficiaries of a fiduciary’s duty sometimes may obtain access to communications between the fiduciary and its lawyer. However, the exception only applies to communications involving fiduciary functions.

In Fortier v. Principal Life Insurance Co., No. 5:08-CV-5-D(3), 2008 U.S. Dist. LEXIS 43108, at *6 (E.D.N.C. June 2, 2008), the court concluded that the fiduciary exception did not apply in an ERISA case, because “[a]ll of the communications to which Plaintiff seeks to apply the fiduciary exception related to the threatened litigation” against the fiduciary rather than the fiduciary’s administration of the ERISA plan. That same day, the Southern District of Illinois refused to apply the fiduciary exception to communications relating to “the decision to create the 401(K) Committee,” because that decision “constitute[d] plan amendment rather than plan management” and therefore was “not a fiduciary function.” Beesley v. Int’l Paper Co., Civ. No. 06-703-DRH, 2008 U.S. Dist. LEXIS 43258, at *8 (S.D. Ill. June 2, 2008).

Lawyers analyzing the “fiduciary exception” must carefully examine the nature of each communication at issue.