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January 01, 2013

Privilige: The Government Exception to the Fiduciary Exception

Edna Selan Epstein

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Rarely does the U.S. Supreme Court weigh in on issues of attorney-client privilege. They are evidentiary in nature, not constitutional. Indeed, it has been 30 years since the Court did so in a case of substantial precedential value, in Upjohn Co. v. United States, 449 U.S. 383, 393, 101 S. Ct. 677, 66 L. Ed. 2d 584 (1981). That seminal opinion kick-started the explosive growth of attorney-client privilege discovery disputes.

Nothing comparable is likely to occur as a result of the opinion in United States v. Jicarilla Apache Nation, 131 S. Ct. 2313, 180 L. Ed. 2d 187 (2011), upholding the privilege of government lawyers to withhold information from an American Indian tribe. The opinion was delivered by Justice Alito, joined by Justices Scalia, Kennedy, and Thomas, and concurred in by Justices Breyer and Ginsberg. It drew a vigorous dissent by Justice Sotomayor. Justice Kagan took no part in the consideration.

The opinion will offer you no ideas for arguments in your next attorney-client privilege dispute. Its precedential value is not likely to extend beyond the context in which it was decided: the fiduciary management of the assets of tribes for which the United States government is a statutory guardian. It is worth study in any event because of the way the majority elided clear precedent to reach a protectionist result for government lawyers.

To find that privilege applied to the government, acting as a trustee for the funds of the Jicarilla tribe, the court had to reverse the opinion of the Court of Appeals for the Federal Circuit. That court, in In re United States, 590 F.3d 1305 (Fed. Cir. 2009), had sustained the Court of Federal Claims’ holding that the fiduciary exception required the United States to disclose attorney-client privileged communications dealing with its administration of tribal funds.

Anglo-Saxon law has long held that a trustee enjoys no privilege in the communications with legal counsel with respect to the administration of funds on behalf of beneficiaries. This fiduciary exception to privilege has been widely adopted and applied in American courts.

We all forget just how recently privilege law began to explode in the courts. In Riggs National Bank of Washington, D.C. v. Zimmer, 355 A2d 709 (Del. Ch. 1976), the Delaware Chancery Court permitted trust beneficiaries to compel trustees to produce a legal memo related to the trust’s administration for two reasons: The trustees had obtained the legal advice as “mere representative[s]” of the beneficiaries, who were the “real clients” of the attorney; and the fiduciary duty to furnish trust-related information to the beneficiaries outweighed the trustees’ interest in the attorney-client privilege. Later cases held that where the trustee seeks legal advice on an issue of trust administration, no privilege applies.

What is unusual about the holding in Jicarilla is that the majority did not dispute the basic Riggs criteria. The tribe was seeking trust-related information from the United States to determine whether the guardian and trustee of its funds had properly administered tribal assets.

Nonetheless, the majority held that the United States undertakes its role as a sovereign, under statutory authority. The competing interests for the sovereign might involve environmental or conservation obligations, or the interests of other tribes. Of course, there was no indication in this litigation that such was the case. Indeed, the majority did not believe a court needed to determine whether any of these conflicting interests were present—to do that in each instance, the Court said, would be too inefficient. The Court also gave great weight to the fact that congressional appropriations pay the legal bills.

What most troubled Justice Sotomayor, as she wrote in her long dissent, is that the majority overturned long-standing principles of governmental accountability to its “wards” in order to sustain a claim of privilege that, in other contexts, would not have been available to the fiduciary.

Jicarilla is therefore remarkable—and contrary to precedent—for its considerations of judicial efficiency and the identity of the payor as valid criteria for the determination of privilege issues.

Edna Selan Epstein

The author, an associate editor of Litigation, is with the Law Offices of Edna Selan Epstein in Chicago. She is the author of Attorney-Client Privilege and the Work-Product Doctrine , Fifth Edition, published by the American Bar Association.