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Duncan v. Minnesota Life Insurance Co.

United States District Court, S.D. Ohio, Western Division, Dayton

July 10, 2019

CHARLIE DUNCAN, Executor of the Estate of Paul W. McVay, et al., Plaintiffs,

          District Judge Thomas M. Rose



         This case arose from the fact that Defendant Minnesota Life Insurance Company (an ERISA plan administrator and fiduciary) denied Plaintiff Janet Freel's (an ERISA beneficiary's) claim for accidental-death benefits under an insurance policy purchased by her brother.

         Previously, after an in-camera review, the Court concluded that the attorney-client privilege justified Minnesota Life's decision not to produce certain communications to Plaintiffs.[1](Doc. #40). Plaintiffs presently argue-for the first time-that ERISA's “fiduciary exception” applies to those communications and requires Minnesota Life to disclose them.

         Plaintiffs start by reasoning that the attorney-client privilege does not apply at all in ERISA cases such as this because ERISA fiduciaries are charged with administering plans “solely in the interests of the participants and beneficiaries, ” 29 U.S.C. § 1104(a)(1), and because ERISA fiduciaries have broad-disclosure requirements designed to provide beneficiaries with a full and fair review of decisions to deny benefits.

         Minnesota Life relies on the historic strength of the attorney-client privilege, remembering that it is “‘the oldest of privileges for confidential communication known to the common law.'” (Doc. #17, PageID #880 (quoting Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)). Minnesota Life urges the Court to consider this and the attorney-client privilege's rationales: (1) it promotes full and frank communications between attorneys and their clients, “thereby promoting the broader public interest in the administration of justice…” id. (citing Baxter v. C.A. Muer Corp., 941 F.2d 451, 455 (6thCir. 1991)); and (2) it provides “‘certainty to litigants that information relayed to one's attorney will not be disclosed….'” Id. (quoting In re Columbia/HCA Healthcare Billing Practices, 293 F.3d 289, 304 (6th Cir. 2002)). With these rationales in force, Minnesota Life argues that the fiduciary exception to the attorney-client privilege is limited and does not apply in this case. It finds further efficacy in the generality that “‘hard cases should be resolved in favor of the privilege, not in favor of disclosure.'” Id. (quoting United States v. Mett, 178 F.3d 1058, 1064 (9th Cir. 1999)).

         As an initial matter, it is tempting to delve into Plaintiff's somewhat theoretical argument that the attorney-client privilege does not apply in the first instance in this case. After all, Plaintiffs are essentially proposing a standalone discovery rule based on fealty to a statute, while Minnesota Life invokes the attorney-client privilege based on fealty to federal common law, see Reed v. Baxter, 134 F.3d 351, 355 (6th Cir. 1998) (“Questions of privileged are to be determined by federal common law in federal question cases.”). And there is case law validating each view. See Moss v. Unum Life Ins. Co., 495 Fed.Appx. 583, 595 (6th Cir. 2012) (ERISA case treating the fiduciary exception as an exception to the attorney-client privilege); see also Mett, 178 F.3d at 1064 (“the fiduciary exception is not an ‘exception' to the attorney-client privilege at all….”). But, temptation aside, a decision favoring one approach over the other is unnecessary for two practical reasons. First, the Court in this case previously applied the attorney-client privilege to the communications at issue. Consequently, an exception to the privilege would need to apply for Plaintiff to gain access to those communications. Second, each view leads to the same destination: “On either rationale…, it is clear that the fiduciary exception has its limits-by agreeing to serve as a fiduciary, an ERISA trustee is not completely debilitated from enjoying a confidential attorney-client relationship….” Mett, 178 F.3d at 1063.

         How, then, does the fiduciary exception operate?

         In the ERISA arena, the fiduciary exception says, “a fiduciary of an ERISA plan ‘must make available to the beneficiary, upon request, any communications with an attorney that are intended to assist in the administration of the plan.'” Moss, 495 Fed.Appx. at 595 (quoting, in part, Bland v. Fiatallis N. Am., Inc., 401 F.3d 779, 787 (7th Cir. 2005) (other citation omitted). “This is because ‘[w]hen an attorney advises a plan administrator or other fiduciary concerning plan administration, the attorney's clients are the plan beneficiaries for whom the fiduciary acts, not the plan administrator.'” Id. (quoting, in part, Wildbur v. ARCO Chem. Co., 974 F.2d 631, 645 (5th Cir. 1992) (other citation omitted). “The fiduciary exception generally applies only to communications related to plan administration and not to communications after a final decision or ‘addressing a challenge to the plan administrator in his or her personal capacity.'” Id. at 595-96 (citing Redd v. Bhd. of Maint. of Way Emps. Div. of the Int'l Bhd. of Teamsters, No. 08-11457, 2009 WL 1543325, at *1 (E.D. Mich. June 2, 2009)).

         The present case does not involve communications that occurred after Minnesota Life's final denial of benefits and does not involve claims against a fiduciary in his or her personal capacity. This narrows the focus to the communications between Minnesota Life's claims-department personnel and its in-house counsel before Minnesota Life reached its final decision on August 15, 2016. Some of these communications occurred in 2011, at or near the time of Minnesota Life's initial decision to deny benefits on April 15, 2011; others occurred in 2013 at or near the time of Plaintiff's pending appeal; and the remaining occurred in 2016 near the date (again, August 15, 2016) Minnesota Life made its final decision to deny benefits.

         Minnesota Life contends that throughout this time period, its in-house counsel assisted in preparing for anticipated litigation, rather than helping to process Ms. Freel's benefits claim or helping to decide whether to grant or deny her claim. It finds that none of its redacted communications involved the administration of the plan. (Doc. #42, PageID #882).

         Plaintiffs contend:

[Minnesota Life] employees have testified the company's legal department plays a critical role in the administration of the plan. Claims specialists rely on the advice of its attorneys to determine whether a claimant is entitled to benefits under the terms of the plan. [Minnesota Life] is bound to provide Plaintiffs a full and fair review of the denial of their claim, and the ability to review the reasoning of those who played a role in the denial is vital to that process. By lending their opinion to claim decisions, members of the [Minnesota Life] legal department took part in plan administration, thus acting for the sole benefit of Plaintiffs. Therefore, to the extent that [Minnesota ...

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