Court: District Court, D. Kansas; April 4, 2001; Federal District Court
Plaintiff Cirulis has initiated a lawsuit against Defendants under the Employee Retirement Income Security Act (ERISA), claiming denial of severance benefits from the UNUM Corporation Officer and Employee Severance Plans. Following a March 26, 2001 order from District Court Judge Carlos Murguia, portions of Cirulis's Motion for Enforcement of Discovery were referred to Magistrate Judge Waxse for a decision. Cirulis, employed by UNUM for approximately fourteen years, was informed on April 5, 1999, that his position was eliminated due to a merger. After demanding severance benefits under the 'Officer Plan' on June 30, 1999, he was later deemed ineligible for those benefits and redirected to an 'Employee Plan.' After exhausting administrative appeals, his claim was ultimately denied on December 13, 1999. The denial was reiterated on February 24, 2000, based on alleged violations of a non-solicitation agreement, which was a condition for receiving any severance benefits. Cirulis filed the ERISA lawsuit on April 24, 2000. During discovery, he requested documents concerning the decision to deny his benefits, but Defendants claimed some materials were protected by attorney-client privilege and the work product doctrine, leading to the current enforcement motion. A hearing on the matter took place on March 22, 2001, resulting in an order for Defendants to submit the disputed documents for in camera review. The Magistrate Judge received these documents on March 27, 2001, and is prepared to rule on the discovery dispute.
The Court reviewed documents withheld by Defendants and categorized them into six distinct groups: (1) minutes from the December 13, 1999, Benefit Administrative Committee meeting regarding Plaintiff's appeal; (2) written communications with in-house counsel, human resource representatives, and the Plan Administrator; (3) communications between in-house counsel and human resources; (4) correspondence between in-house counsels; (5) transcriptions of voice-mail messages for in-house counsel; and (6) communications from in-house counsel to a Kansas City Sales Office representative. Plaintiff contends he should access all documents, arguing that Defendants relied on them when denying his severance benefits, which is critical for him to demonstrate that the decision was arbitrary and capricious.
The attorney-client privilege, governed by federal law in this case, encompasses specific criteria: legal advice sought from a professional advisor, communications made in confidence, and the client's ability to protect these communications from disclosure unless waived. This privilege not only protects the advice given by attorneys but also the information provided by clients necessary for informed legal counsel. The privilege should not be interpreted too broadly; the asserting party carries the burden to prove its applicability.
The Benefit Administrative Committee meeting, held on December 13, 1999, aimed to address Plaintiff's appeal regarding the denial of severance benefits under the Officer Plan. Attendees included the Plan Administrator, Benefit Committee members, a UNUM HR representative, and both in-house and outside counsel for UNUM. Minutes of the meeting were taken and signed by in-house counsel.
Defendants claim that the meeting minutes sought by the Plaintiff are protected by attorney-client privilege, as they involve legal advice communications. However, mere attorney presence does not automatically confer privilege; only communications directly related to the provision of legal services and maintained in confidence are privileged. Notably, discussions among committee members at the meeting do not qualify for this protection. Conversely, communications from committee members to counsel seeking legal advice, and legal advice given to them, are protected. Furthermore, a 'fiduciary exception' to the attorney-client privilege arises in ERISA contexts, where an employer administering a benefit plan cannot invoke this privilege against plan beneficiaries. This exception is based on the principle that when an attorney advises a plan fiduciary, the beneficiaries, not the fiduciary, are considered the clients. Courts have generally ruled that the privilege does not apply to advice concerning plan administration but does apply to issues unrelated to the actual administration.
An administrator must justify or defend against a beneficiary’s claims not in the beneficiary's interests but in their own or the interests of other beneficiaries. Legal precedents establish a spectrum regarding the attorney-client privilege in the context of ERISA trustees: if a trustee seeks legal advice for plan administration that does not involve personal risk, they cannot invoke privilege against beneficiaries. Conversely, if a fiduciary retains counsel to defend against beneficiary claims, the privilege remains intact. In this case, the Defendants assert that legal advice obtained was to support their decision to deny severance benefits to the Plaintiff, while the Plaintiff contests this. The Court must determine if the advice was for plan administration or for defense against prospective litigation. If it concludes the advice was defensive, the privilege would apply, potentially shielding all pre-decisional legal advice from beneficiary review. However, this would conflict with the principle that the administrator acts in beneficiaries' best interests, as denying benefits is part of plan administration. The Court finds that the attorney-client privilege does not protect discussions among committee members during a specific meeting, their related opinions, or communications with counsel for legal advice, under the fiduciary exception. Furthermore, after reviewing withheld documents, the Court concludes that the attorney-client privilege was waived due to the disclosure of privileged communications to third parties, regardless of whether the disclosure was intentional or inadvertent.
Confidentiality of attorney-client communications must be strictly maintained to avoid waiver of privilege, as emphasized by the court's ruling in United States v. Ryans. In this case, the attorney's advice was disclosed to the Plan Administrator, which indicated an intentional waiver of the privilege. Most written communications explicitly identified the Plan Administrator as the recipient, demonstrating a lack of confidentiality. Although one document did not clearly show it was sent to the Plan Administrator, it was referenced in a memorandum as being sent for review in preparation for a Benefit Administrative Committee meeting regarding a denied benefits appeal. The court highlighted that the burden of proving the applicability of attorney-client privilege lies with the parties objecting to discovery, requiring a clear demonstration that all elements of the privilege are met. The defendants failed to establish that the privilege was not waived when documents related to the definition of 'officer' were shared with the Plan Administrator. Consequently, the court ruled that the attorney-client privilege was waived not only for communications with the Plan Administrator but also for related documents involving in-house counsel and human resources.
The Court conducted an in camera review of documents withheld by the Defendants, specifically communications between in-house counsel and human resources, inter-office communications among in-house attorneys, transcriptions of voicemails from a company representative, and other related correspondence. The Court determined that these documents are protected under attorney-client privilege as they pertain to legal advice sought by the client.
Regarding the work product doctrine, although Defendants did not clearly indicate the basis for each privilege claimed in their privilege log, they argued that meeting minutes and communications involving in-house counsel and company representatives were protected because they were prepared in anticipation of litigation. The Court noted that Defendants bear the burden of proving work product protection and that a mere blanket claim is insufficient; they must provide clear evidence supporting their assertions.
To establish work product protection, Defendants must demonstrate that the materials are documents prepared in anticipation of litigation by or for a party. The Court found that the first and third elements were satisfied, as the items are documents created by Defendant's employees. However, the second element—whether the documents were prepared in anticipation of litigation—was contested. This aspect was previously analyzed in a related case, which outlined that the work product standard includes a causation requirement and a reasonableness limit on the anticipation of litigation.
Litigation is often foreseeable from the time of an incident, prompting courts to require a higher level of anticipation for work product immunity. The court evaluates whether documents were created with litigation in mind, as materials generated for ordinary business purposes are not protected. The mere potential for litigation does not qualify for work product protection; the threat must be "real and imminent." Courts typically seek more than just assertions that documents were created in anticipation of litigation.
In this case, the actions of the Plan Administrator in seeking legal advice before making a benefits decision were not conducted in anticipation of litigation, as these actions occurred prior to the final decision and the emergence of conflicting interests. Subsequent litigation does not retroactively render the legal advice as anticipatory of litigation. Consequently, the court determined that the pre-decisional legal advice documented in the December 13, 1999 Benefit Administrative Committee meeting minutes and communications with in-house counsel are not protected by the work product doctrine.
The court granted part of the Plaintiff's motion for discovery enforcement regarding specific meeting minutes and communications but denied the motion for other documents on the basis of attorney-client privilege. It clarified that there is no significant conflict between federal and Kansas law concerning attorney-client privilege, and that the fiduciary exception does not apply here since no fiduciary was involved in the communications. As several communications were deemed protected under attorney-client privilege, the court found it unnecessary to rule on their protection under the work product doctrine.
