Two Federal Court Decisions in Three Days Misapply the General Choice of Laws Rules in Diversity Cases: Part I

InKJ-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 inCooley 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’schoice of laws rules— which may result inanotherstate’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.