Peter Schuman v. Microchip Technology Incorporated

Background

The order concerns two cases captioned with Peter Schuman and Robin Berman as plaintiffs against Microchip Technology Incorporated and other defendants. The parties submitted a joint discovery letter asking the court to conduct an in-camera review, meaning a private review by the judge, of documents identified on privilege logs maintained by Microchip and Wilson Sonsini. The court had previously directed the parties to select approximately ten to fifteen representative emails. They selected twelve, which the defendants submitted to the court.

Legal standard

The court explained that attorney-client privilege generally protects confidential communications between a lawyer and client made for obtaining or providing legal advice. In cases involving the Employee Retirement Income Security Act, or ERISA, the fiduciary exception can prevent an employer acting as a plan fiduciary from asserting that privilege against plan beneficiaries concerning plan administration.

The court relied on Ninth Circuit precedent stating that the exception applies when the communications concern determining benefits or interpreting the plan. It does not apply to communications prepared for litigation. The court also rejected an expansive approach that would reach any legal advice merely related to fiduciary matters. Because privilege exceptions should remain limited and clear, doubts should be resolved in favor of protecting the privilege.

Analysis of the emails

The court found that Wilson Sonsini privilege-log items 180 and 187 were not clearly at either end of the relevant spectrum. But, viewed in context, their purpose was not to interpret the plan or determine entitlement to benefits. The subject line instead suggested litigation preparation. The court therefore did not apply the fiduciary exception to those emails.

The court similarly analyzed Wilson Sonsini privilege-log items 59, 130, 131, 150, and 152, and Microchip privilege-log items 309 and 310. Those communications did not appear to be prepared for litigation, but they also did not provide advice about benefits owed or plan interpretation. The court characterized them as merely related to plan administration, which was not enough to trigger the fiduciary exception.

The remaining emails were Microchip privilege-log items 272, 273, and 274. Most of their discussion involved preparing for litigation, although each contained one paragraph involving plan interpretation. The court held that the exception did not apply because the plan-interpretation discussion occurred in the context of litigation preparation rather than advice about plan administration.

The court also found that Microchip was not an ERISA fiduciary when it received those emails on March 11, 2016. The acquisition closed on April 4, 2016, and the court noted that Judge Haywood Gilliam had previously found that the plaintiffs had not alleged facts showing Microchip exercised discretionary authority or responsibility in administering the plan before the merger. The court reasoned that privilege must be determined based on the facts existing when the communications occurred. Applying the fiduciary exception to pre-acquisition communications could create uncertainty and chill legal advice during corporate acquisition due diligence.

Disposition

Judge Thomas S. Hixson held that all twelve emails were protected by attorney-client privilege and that the fiduciary exception did not apply to any of them.