Federal courts hearing federal question cases apply federal common-law privilege principles. Federal courts handling diversity cases apply state privilege law, but picking the appropriate state’s privilege law can involve a very subtle analysis.
In Gateway Senior Housing, LTD v. MMA Financial, Inc., No. 1:06-CV-458, 2008 U.S. Dist. LEXIS 98770 (E.D. Tex. Dec. 4, 2008), a Texas federal court properly looked to its forum’s choice of law rules. Under Texas law, “claims of attorney-client privilege are determined by the law of the state with the most significant relationship to the communication.” Id. at *22. Because the privilege issues involved e-mails sent to Florida, the Texas federal court applied Florida privilege law. It is no wonder that federal courts seem to look for ways to avoid this difficult analysis. In In re Human Tissue Products Liability Litigation, Civ. A. No. 06-135 (WJM), 2008 U.S. Dist. LEXIS 104298, at *47 (D.N.J. Dec. 12, 2008), a court overseeing multidistrict litigation acknowledged that “in the context of a multidistrict litigation such as this one, the law of the transferor court applies to cases transferred here.” In other words, the court had to examine the choice of laws rules of the states from which all of the individual cases were transferred, and then apply those rules to select the applicable privilege law. Not surprisingly, the court ultimately concluded that “[i]t is . . . unclear, whether the law of New York, Pennsylvania, New Jersey (or Florida) should be applied” — but that the court “need not reach this potentially thorny issue because the law as to the attorney-client privilege in New York does not differ in any material way from that in New Jersey, Pennsylvania, or Florida for purposes of the instant motion.” Id. at *48.
Lawyers involved in privilege issues arising during federal diversity litigation should become familiar with these subtle choice of laws principles.