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(District of New Jersey D.C. 01-cv-04183) - page 26 / 30

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with its beneficiaries. Were the insurer’s counsel to also represent the beneficiaries who seek to maximize their benefit

payments, under any

that counsel would face standard of legal ethics.

a direct conflict of interest It would be odd indeed if

ERISA

were

to

force

lawyers

into

precisely

this

conflicted

role.

2. Duty of Disclosure

Even though we conclude that HN-NJ and its corporate parents are the sole and direct clients of their retained counsel, we must also consider a second rationale for applying the fiduciary exception – the fiduciary’s duty of disclosure. The obligation of a trustee to disclose to beneficiaries the advice of counsel retained by the trust has been recognized in each of three Restatements of Trusts. See RESTATEMENT (FIRST) OF TRUSTS § 173 (1935); RESTATEMENT (SECOND) OF TRUSTS § 173 (1959); RESTATEMENT (THIRD) OF TRUSTS § 82 cmt. f (Tentative Draft No. 4, 2005). Some courts have used language broad enough to suggest that every ERISA fiduciary has an obligation to disclose counsel’s statements to its beneficiaries. E.g., LILCO, 129 F.3d at 271-72 (“An ERISA fiduciary has an obligation to provide full and accurate information to the plan beneficiaries regarding the administration of the plan.” (empasis added)); Washington Star, 543 F. Supp. at 909.

We conclude that such broad language does not represent an intentional expansion of the fiduciary exception. Because fiduciary duties under ERISA “draw much of their content from the common law of trusts,” Varity, 516 U.S. at 496, it is appropriate to apply a trustee’s disclosure obligations to ERISA plan administrators who operate as trustees. When Congress

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