Last week's Privilege Point explained that federal courts handling
diversity cases must find the source or sources of the appropriate state's
privilege law – sometimes a mixture of statute, common law and court rules.
In determining which state's privilege law applies, federal courts should
apply their host state's choice of law rule. That analysis often results in
the host state's privilege law applying, but not always.
Unfortunately, federal courts sometimes seem to reflexively apply their
host state's privilege law – rather than applying their host state's choice
of law principles. For instance, in Aerojet Rocketdyne, Inc. v. Global Aerospace, Inc. , the court
properly held that "[t]he law of the forum state governs claims of
attorney-client privilege in diversity cases." No. 2:17-cv-01515 KJM AC,
2019 U.S. Dist. LEXIS 40911, at *10 (E.D. Cal. Mar. 13, 2019). That
governing "law" includes the forum state's choice of law principles --
which may lead the court to apply some other state's privilege law. But the
court immediately followed that correct statement with this blunt
conclusion: "[a]ccordingly, California law controls here" – meaning its
privilege law. Id. A couple weeks later, another court
undertook the proper analysis. In Argos Holdings Inc. v. Wilmington N.A., No. 18cv5773 (DLC), 2019
U.S. Dist. LEXIS 53104, at *5-6 (S.D.N.Y. Mar. 28, 2019), the court applied
its host state's privilege law, but explained its reasoning: "because this
is a diversity action regarding a claim for which New York law supplies the
rule of decision."
Federal courts usually apply their host state's privilege law in diversity
cases, but it can be difficult to tell if they have: (1) erroneously done
so by short-circuiting the proper approach; or (2) correctly applied their
host state's choice of law rules. Next week's Privilege Point will address
another choice of law issue.