In Solis v. The Food Employers Labor Relations Association and United Food and Commercial Workers Pension Fund, 2011 WL 1663597 (4th Cir. 2011), the Fourth Circuit ruled that the "fiduciary exception" to the attorney-client privilege applied to DOL subpoenas seeking documents relating to investments managed by Bernie Madoff's firm. The fiduciary exception rule, which has been accepted in other circuits, generally prohibits fiduciaries who obtain legal advice in the course of plan administration from invoking attorney-client privilege against plan beneficiaries.
The DOL served subpoenas on two multiemployer benefit funds as part of an investigation under ERISA section 504(a)(1) into possible mismanagement of fund assets. The funds objected to the production of certain documents claiming attorney-client privilege. The DOL in turn sought judicial enforcement of the subpoenas and the district court held that the fiduciary exception applied and ordered the funds to comply with the subpoenas.
The Fourth Circuit agreed with the district court and held that the fiduciary exception rule applied to the production of documents in response to a DOL administrative subpoena. The Fourth Circuit was not persuaded by the fund's arguments that a DOL investigative action under ERISA section 504 differed fundamentally in terms of evidentiary support, scope, and the availability of procedural safeguards from an enforcement action under ERISA section 502, and therefore, the fiduciary exception should not apply. In upholding the district court's decision, the Fourth Circuit has joined several sister circuits (the Second, Third, Fifth, Seventh and Ninth Circuits) in determining that the fiduciary exception to the attorney-client privilege applies in the context of ERISA plans.