Not surprisingly, federal courts handling federal question cases apply federal common law privilege principles (essentially textbook-type generic rules). Federal courts sitting in diversity cases must comply with Federal Rule of Evidence 501: “[I]n a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” Surprisingly, most federal courts seem to get this twenty-two word Rule wrong.
In KJ-Park, LLC v. Match Group, LLC, Case No. 23-cv-02346-VKD, 2024 U.S. Dist. LEXIS 11024, at *3 (N.D. Cal. Jan. 22, 2024), the court started its privilege discussion by stating: “[b]ecause the sole basis for federal jurisdiction in this case is diversity jurisdiction, California state law supplies the rule of decision in this action, and California state law governs application of the attorney-client privilege” — then immediately applied California privilege law. Three days later, the court in Cooley v. C.R. Bard, Inc., Case No. 3:22-cv-1754-MMA-KSC, 2024 U.S. Dist. LEXIS 13722, at *10 (S.D. Cal. Jan. 25, 2024), did the same thing — stating that “[t]his is a diversity case . . . [a]ccordingly, California law, not federal common law, controls this [privilege] issue” — then immediately applied California privilege law. Courts properly applying Fed. R. Evid. 501 do not automatically apply their host state’s privilege law — they apply their host state’s choice of laws rules — which may result in another state’s privilege law applying. Surprisingly, many federal courts seem to get this wrong.
Wise lawyers should be on the lookout for federal courts’ knee-jerk application of their host state’s privilege law — if the host state’s choice of laws rules would result in application of another state’s more favorable privilege standard. Next week’s Privilege Point will describe a court which got it right — with a surprising result.