Southern District of New York Analyzes Choice-of-Laws Issue in Dealing with Privilege

November 23, 2005

Federal courts hearing diversity cases look to their host state’s choice-of-law rules in deciding privilege issues (in contrast to work product issues, which are governed by a specific federal rule). Unfortunately for lawyers who like certainty, state choice-of-law rules can point in numerous unpredictable directions.

In G-I Holdings, Inc. v Baron & Budd, No. 01 Civ. 0216 (RWS), 2005 U.S. Dist. LEXIS 14128, at *7 (S.D.N.Y. July 13, 2005), the court followed New York’s choice-of-law rules, which “generally apply the law of the place where the evidence in question will be introduced at trial or the location of the discovery proceeding itself.” The court applied New York privilege law, because the evidence would be introduced there.

Lawyers representing national companies might justifiably worry that some distant court will apply its privilege law rather than the privilege law the company would expect to apply (such as the company’s home state’s privilege law). Although most states agree on the basic contours of the privilege, there is at least one enormous variation – some states (including Illinois) only protect communications with a company’s “control group” and those who assist them in making decisions.