On Monday in United States v. Jicarilla Apache Nation, the Court – by a vote of seven to one (with Justice Kagan recused) – held that the fiduciary exception to the attorney-client privilege does not apply to the general trust relationship between the United States and the Indian tribes. Justice Alito wrote the opinion for the Court, which reversed the decision of the Federal Circuit and remanded the case to the Court of Federal Claims.
The Jicarilla Apache Nation occupies a 900,000-acre reservation in northern New Mexico, which contains various natural resources. The Department of the Interior develops these resources and, pursuant to the American Indian Trust Fund Management Reform Act of 1994, the federal government holds the revenues from that development in a trust fund, which it manages for the Tribe.
In 2002, the Tribe filed a breach-of-trust action against the United States, alleging that – in violation of several statutes – the government had mismanaged the funds held in trust. For the next six years, the Tribe and the federal government engaged in alternative dispute resolution, during which time the government withheld over two hundred potentially relevant documents on the ground that they were privileged. After the case was restored to active litigation at the Tribe’s request, the Tribe sought disclosure of the documents for which the government claimed a privilege. The government, for its part, disclosed seventy-one documents, but it maintained that the remaining documents were protected under the attorney-client privilege or the work-product doctrine.
The Court of Federal Claims (CFC) granted the Tribe’s motion to compel in part. It held that communications relating to the management of trust funds fall within a “fiduciary exception†to the attorney-client privilege, which precludes a trustee who obtains legal advice “related to the execution of fiduciary obligations . . . from asserting the attorney-client privilege against beneficiaries of the trust.â€Â The Federal Circuit denied the government’s subsequent petition for a writ of mandamus directing the CFC to vacate its order; the government then filed a petition for certiorari, which the Court granted.
In its opinion, the Court began by tracing the evolution of the fiduciary exception to the attorney-client privilege from its roots in the English common law to its widespread acceptance among American courts. In the United States, one of the leading cases on the issue is Riggs National Bank of Washington, D.C. v. Zimmer, 355 A.2d 709 (Del. Ch. 1976), in which the Delaware Chancery Court granted a motion by the beneficiaries of a trust to compel the trustees to disclose a legal memorandum concerning administration of the trust. In doing so, that court identified two principles underlying the exception.  First, the trustees were “mere representatives†of the beneficiaries, who in turn were the “real clients†of the attorneys who authored the legal memorandum. This was so because there was no reason for the trustees to seek legal advice other than in a fiduciary capacity and, indeed, the memorandum was created for the purpose of benefiting the trust and paid for with trust assets. Second, the trustees owed a common-law fiduciary duty to furnish trust-related information to the beneficiaries. The Court then noted that “[t]he Federal Courts of Appeals apply the fiduciary exception based on the same two criteria.â€
As an initial matter, the Court rejected the analogy – drawn by the Federal Circuit – between a private trustee and the role of the government in this case. In doing so, the Court highlighted the Court’s precedents distinguishing the government’s relationship with the Indian Tribes from that of a private trustee with its beneficiaries. Thus, the Court reasoned, “Congress may style its relations with the Indians a ‘trust’ without assuming all the fiduciary duties of a private trustee.â€Â Moreover, the government holds a “unique position . . . as a sovereign,†has “sovereign interests†in managing the trust at issue in this case, and “has often structured the trust relationship to pursue its own policy goals.â€Â In light of these interests, the ordinary common-law principles governing trusts should not apply. Rather, the Court explained, to compel the government to disclose the documents it seeks, the Tribe would have to point to a right conferred by statute or regulation.
The Court concluded that the statutes establishing the trust relationship between the government and the tribe conferred no such right. To the contrary, it emphasized, the two principles “justifying the fiduciary exception – the beneficiary’s status as the ‘real client’ and the trustee’s duty to disclose information about the trust – are notably absent in the trust relationship Congress has established between the United States and the Tribe.â€Â For one thing, the government cannot be considered the “mere representative†of the Tribe in light of its independent policy interests in managing the trusts. What is more, the government simply “does not have the same common-law disclosure obligations as a private trustee†because the trustee relationship was statutorily created, and the Court declined to read the statutes to contain a common-law duty to disclose.
Justice Ginsburg, joined by Justice Breyer, filed an opinion concurring in the judgment in which she emphasized that the government is not analogous to a private trustee. However, she disputed the majority’s claim “that the Government ‘assumes Indian trust responsibilities only to the extent it expressly accepts those responsibilities by statute.’â€Â In her view, it was unnecessary for the Court to go beyond the attorney-client privilege issue and decide what other information the government may withhold in these circumstances.
Justice Sotomayor dissented, arguing that “the governing statutory scheme establishes a conventional fiduciary relationship†between the government and the Tribe. Moreover, she continued, the Court’s prior decisions indicate that “the Government’s duties include fiduciary obligations derived from common-law trust principles.â€Â And although she agreed that the majority correctly identified the two principles justifying the application of the fiduciary exception, Justice Sotomayor disagreed with the Court’s characterization and application of those standards.
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