Source And Choice Of Privilege Law In Diversity Cases — Part III

June 19, 2019

The last two Privilege Points (Part I and Part II) addressed federal courts’ identification of and choice of the appropriate state’s privilege law in diversity cases. The latter process should start with federal courts’ application of their host state’s choice of law rules, but some courts seem to erroneously skip that process and automatically apply their host state’s privilege law.

And there is another possible source of guidance for federal courts handling privilege issues in diversity cases. In Aerojet Rocketdyne, Inc. v. Global Aerospace, Inc., No. 2:17-cv-01515 KJM AC, 2019 U.S. Dist. LEXIS 40911 (E.D. Cal. Mar. 12, 2019), the court may have mistakenly applied California privilege law without making the necessary choice of law analysis. But the court correctly concluded that “in diversity cases, federal law governs procedure.” Id. at *11. The court then recognized that “[t]he use of in camera review to determine whether attorney-client privilege is properly claimed is a procedural matter.” Id.

Here is the choice of law breakdown in federal courts: (1) federal work product rules apply in all federal cases; (2) federal privilege common law applies in federal question cases; (3) federal law governs procedural issues; (4) state privilege law applies in federal diversity cases. Federal courts should choose the governing state privilege law after applying their host state’s choice of law rules – not short circuit the process and automatically apply their host state’s privilege law.