Federal Courts Undertake Choice of Law Analyses

May 28, 2014

Under Fed. R. Evid. 501, federal courts sitting in diversity apply their host jurisdiction’s choice of law principles in determining which state’s privilege law applies. This contrasts with federal courts’ application of (1) federal common law of privilege in federal question cases, and (2) the Fed. R. Civ. P. 26(b)(3) work product rule when addressing work product claims.

Some courts seem to short-circuit the process – simply applying their host state’s privilege law without undertaking or even mentioning a choice of law analysis. Other courts properly recognize that “[t]o determine which state law is applicable, ‘the federal court applies the choice-of-law rules of the forum state,'” and carefully analyze its host state’s principles. Swortwood v. Tenedora de Empresas, S.A. de C.V., Case No. 13cv362-BTM (BLM), 2014 U.S. Dist. LEXIS 29247, at *28 (S.D. Cal. Mar. 6, 2014) (citation omitted). The Swortwood court dealt with a privilege claim by a company incorporated in Delaware but with its principal place of business in California. The court analyzed those two states’ varying common interest doctrine rules – ultimately concluding that California law should apply because that state’s “interests would be more significantly impaired if its privilege law was not applied in the instant matter.” Id. at *35. Some courts apply the law selected as controlling in transactional parties’ documents. In United States Surety Co. v. Stevens Family Ltd. P’ship, Case No. 11 C 7480, 2014 U.S. Dist. LEXIS 29438 (N.D. Ill. Mar. 7, 2014), the court relied on Fed. R. Evid. 501 in applying California’s privilege law, because the parties had chosen California law to govern their contract.

Most states generally follow the same basic attorney-client privilege principles, but lawyers should keep in mind that (1) federal courts might look to states other than their host state for the applicable privilege law, and (2) clients may have the power to choose the applicable privilege law in their contracts.