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(District of New Jersey D.C. 01-cv-04183) - page 18 / 30

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Although the discussion in Riggs is focused on principles of trust law, American application of the fiduciary exception has not been limited to the trust context. Even before Riggs was decided, the Fifth Circuit held in Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970), that in a shareholder action, legal advice given to corporate managers by corporate counsel for the benefit of the corporation was not privileged. The court recognized that corporate managers, and even sometimes the corporate entity, may have interests adverse to some or all of the

shareholders,

particularly because

shareholders’

varying

ownership interests mean that shareholders’ interests often are not uniform. Id. at 1101. The court concluded that “when all is said and done the management is not managing for itself.” Id. Central to this conclusion was the fundamental fact that corporate managers in the ordinary course can have no legitimate personal interests for which the advice of corporate counsel (paid for from corporate funds) is needed. When a legitimate personal interest does emerge – such as when a corporate manager is sued by shareholders – the manager then becomes entitled to legal advice which is not discoverable by the shareholders. Thus, of central importance in both Garner and Riggs was the fiduciary’s lack of a legitimate personal interest in the legal advice obtained. Id.; 355 A.2d at 712.

B. Scope of the Fiduciary Exception under ERISA

In the early 1980s, federal courts began extending the principles of Garner and Riggs to apply against ERISA fiduciaries. First, in 1981, the fiduciary exception was used to render discoverable attorney-client communications by pension fund officials regarding the administration of the fund.

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