The opinion of the court was delivered by: Royce C. Lamberth United States District Judge
This matter comes before the Court on defendants' motion for a protective order regarding the application of attorney-client privilege and work-product doctrine , which was filed on November 5, 2002. Upon consideration of this motion, the opposition thereto, defendants' reply brief, the oral arguments of counsel, and the applicable law, the Court finds that defendants' motion should be denied.
Defendants seek to prevent discovery relating to "(1) communications to or from their attorneys concerning anticipated or ongoing litigation between beneficiaries and defendants in their capacity as trustees, and (2) documents prepared with, for or by their attorneys because of this litigation." Defs.' Mot. for Protective Order at 1. Although defendants have referenced no specific document or communication with respect to which they are asserting any privilege in their motion, both during oral argument and in their reply brief, defendants indicated that they brought the instant motion in response to a particular question posed by plaintiffs to Associate Deputy Secretary James E. Cason.
On November 5, 2002, while deposing Mr. Cason, plaintiffs' counsel inquired about his understanding of the nature and scope of the Interior Department's fiduciary duty in the management of the trust after discussing the duties and responsibilities of a trustee with counsel. Defense counsel instructed Mr. Cason not to answer the question, and the Special Master-Monitor, sitting as referee, overruled the instruction and directed Mr. Cason to respond. Transcript of Deposition of James E. Cason, November 5, 2002 ("Depo. Tr.") at 40-41. *fn1 The parties subsequently brought the issue before this Court, seeking a determination that would provide guidance not only regarding that single question, but also with respect to anticipated future deposition questions by plaintiffs relating to communications between defendants and their trust counsel.
Defendants assert that the question posed by plaintiffs' counsel to Mr. Cason requires disclosure of information that triggers the attorney-client privilege because all, or virtually all, of the communications between the trustee and counsel, whether related to trust administration or otherwise, occurred during litigation, and thus are "litigation-related" communications. Additionally, defendants claim that although the communications relate to trust administration, they also involve matters other than trust administration. Plaintiffs respond that the so-called "fiduciary exception" to the attorney-client privilege defeats the applicability of those privileges; defendants counter that such a proposition is appropriate only to the extent that the communication exclusively embodies issues related to trust administration.
It is apparent from defendants' motion and from their oral argument that they do not seek a determination of privilege with respect to any particular discovery requests other than the question posed to Mr. Cason. Rather, defendants seek a broad ruling as to the "scope of the defendants' common law litigation privileges." *fn2 Transcript of Motions Hearing, November 5, 2002 ("Hearing Tr."), at 2. Before the Court rules upon the issues raised by defendants' motion, it will be necessary to set forth an explication of the law of privileges as it relates to fiduciaries.
A. Attorney-Client Privilege
"The attorney-client privilege protects confidential communications made between clients and their attorneys when the communications are for the purpose of securing legal advice or services." In re Lindsey, 148 F.3d 1100, 1103 (D.C. Cir. 1998). Defendants assert that all communications made between their attorneys and them during the pendency of litigation are protected under this privilege. Generally speaking, this would be true; however, as defendants concede, communications between a trustee and its attorneys concerning the administration of the trust fall within the "fiduciary exception" to the privilege.
The "fiduciary exception" to the attorney client privilege was first recognized in this country by the Delaware Court of Chancery in a seminal 1976 opinion holding that trust beneficiaries are entitled to inspect opinions of counsel procured by the trustee to guide him in administration of the trust. See Riggs National Bank v. Zimmer, 355 A.2d 709, 712 (Del. Ch. 1976) (quoting 2 SCOTT ON TRUSTS § 173, at 1407 (3d ed. 1967)). Since that time, federal courts, including this Court, have uniformly recognized the existence of a fiduciary exception. *fn3
The case of Washington-Baltimore Newspaper Guild, Local 35 v. Washington Star Co., 543 F. Supp. 906 (D.D.C. 1982) explained the rationale behind this exception:
As a representative for the beneficiaries of the trust which he is administering, the trustee is not the real client in the sense that he is personally being served. And, the beneficiaries are not simply incidental beneficiaries who chance to gain from the professional services rendered. The very intention of the communication is to aid the beneficiaries. The trustee here cannot subordinate the fiduciary obligations owed to the beneficiaries to their own private interests under the guise of attorney-client privilege. Id. at 909 (quoting Zimmer, 355 A.2d at 713-14).
The party that asserts the existence of the attorney-client privilege possesses the burden of demonstrating its applicability. Federal Trade Commission v. TRW, Inc., 628 F.2d 207, 213 (D.C. Cir. 1980). Not only the privileged relationship but all essential elements of the privilege must be shown "by competent evidence and cannot be 'discharged by mere conclusory or ipse dixit assertions.'" See Martin v. Valley National Bank of Arizona, 140 F.R.D. 291, 302 (S.D.N.Y. 1991) (internal citation omitted). It follows that where the ...