Baird v. BlackRock Institutional Trust Company, N.A.

Background

The parties submitted a joint discovery letter concerning the defendants’ privilege log. The plaintiffs sought production of 33 documents. The court ordered supplemental briefing on whether revisions to certain guidelines were covered by the fiduciary exception to attorney-client privilege and required the defendants to submit certain documents for private review by the court.

In an Employee Retirement Income Security Act (ERISA) case, the fiduciary exception generally prevents an employer acting as an ERISA fiduciary from asserting attorney-client privilege against plan beneficiaries about plan administration. The exception does not apply to legal advice about civil or criminal liability or to “settlor” functions, such as adopting, modifying, or terminating an employee benefit plan.

The defendants argued that the exception did not apply to documents concerning fee negotiations and revisions to investment guidelines because those changes became effective only after client approval. The plaintiffs argued that the defendants already owed fiduciary duties to the investing plans when the amendments were made.

Court’s analysis and rulings

The court concluded that the documents concerning fee changes and revisions to investment guidelines were discoverable under the fiduciary exception. It relied in part on the earlier ruling that there was a factual dispute about whether BlackRock Institutional Trust Company, N.A. had control and discretion in setting its compensation and whether the compensation came from plan funds. The court granted the plaintiffs’ request to compel production of privilege-log entries 89, 91, 280, 305, 346, 351, 380, 382, 422, 436, 454, 518, 535, and 536.

The court denied production of privilege-log entry 285 because it concerned discussions with in-house counsel about a 401(k) lawsuit and therefore appeared to involve civil liability. It denied production of entry 343 because the log described it as concerning settlor functions connected with an audit. After private review, the court granted production of entries 385, 401, 405, 450, and 451 because the redacted portions did not appear to contain legal advice, even though underlying data may have been compiled by a law firm.

The court denied production of entry 45 because it concerned legal advice about fiduciary-risk questions related to investment actions and potential legal liability. It also denied production of entries 83, 96, 118, 304, and 339 because the reviewed portions concerned legal advice, compliance, or legal advice about default notifications. The court granted production of entries 357 and 421 because the reviewed portions concerned publicly available mutual-fund fee information or presentation logistics and did not appear to seek or contain legal advice.

Regarding possible waiver of privilege, the plaintiffs argued that certain documents had been disclosed to a third party. The defendants responded that the documents were undistributed drafts. The court found that the privilege log did not provide enough information to determine whether the documents were privileged drafts or differed from materials ultimately given to the third party. The court therefore ordered the defendants to provide a revised privilege log with enough information for the plaintiffs to assess whether the documents were privileged.

Disposition

The court granted in part and denied in part the plaintiffs’ request to require production of the challenged documents. It ordered production of the specified entries and ordered a revised privilege log for the documents whose status could not be determined from the existing descriptions.