Let’s discuss conflicts-of-laws—privilege style. I know you want to.
Here is the scenario—NY client emails her SC-based attorney—which state’s privilege law applies? In Wellin v. Wellin, 211 F. Supp. 3d 793 (D.S.C. 2016), the USDC SC provided an informative analysis of the often-ignored conflict-of-privilege-law issue, and applied the Second Restatement’s paradigm in holding that SC privilege law applied. You may read the opinion here. Now, let’s break it down.
The Wellin case involves multiple lawsuits over the distribution of the substantial assets of Keith Wellin, a former Wall Street executive who died in 2014. Read his obituary here. Wellin’s eight grandchildren, non-parties to the litigation but contingent beneficiaries of one of Wellin’s Irrevocable Trusts, lawyered up with South Carolina counsel.
One of the grandchildren, Ann Plum, a New York-based otolaryngologist, sought a protective order to prevent deposition questions about communications she had with her South Carolina-based attorneys, her brother, cousins, and mother, and her mother’s attorney.
To determine the privilege issues, the court had to decide whether NY or SC law applied to the putatively privileged communications. In this diversity action, the court looked to FRE 501, which provides that “state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” FRE 501, however, does not answer which state’s privilege law applies—the forum state or some other state.
Applying Erie and Klaxon principles, courts do not automatically apply the forum state’s privilege law; instead, they look to the forum state’s choice-of-law rules to determine which state’s privilege law applies. So, in Wellin, the South Carolina federal court “look[ed] to South Carolina’s choice of law rules to determine what privilege law applies.”
The problem? South Carolina has never adopted “a choice of law doctrine applicable to privilege issues,” so the federal court had to predict how the state would handle the issue.
First Restatement Approach?
The court noted that SC traditionally follows the choice-of-law rules of the first Restatement of Conflict of Law, but that the First Restatement did not address the issue in the case. The First Restatement, rather, divides matters into procedural and substantive, with the forum state’s law applying to procedural issues.
But after some analysis, the court determined that the First Restatement’s procedural/substantive distinction did not adequately answer the conflict-of-law question and turned its attention to Second Restatement, which specifically addresses the conflict-of-privilege-law rules.
Second Restatement Approach?
In § 139, the Second Restatement advocates first determining which state has the “most significant relationship” with the putatively privileged communication, and then applies a decisional framework to decide whether the privilege law of the forum state or the state with the most significant relationship governs.
Noting that the “Second Restatement test is considered representative of the prevailing approach among states that have established a choice of law doctrine regarding privileges,” the court predicted that SC would adopt the § 139 framework, and used this framework to determine whether NY or SC privilege law applied to the NY-based Dr. Plum’s communications with her SC-based lawyer and other family members.
How do Courts Apply the Second Restatement Approach?
Under § 139, courts look to state where the communication occurred to determine which state has the most significant relationship to the communication. This means looking to “where an oral interchange between persons occurred” or “where a written statement was received.” Alternatively, courts can look to the state of the most significant relationship between the parties to the communication.
The court noted, correctly, that determining where a communication “took place” is often unclear. Here, Plum, from NY, talked by telephone with her attorneys in SC—where did the communication take place? And what about email—it is a written communication, of course, but where was it “received.” Emails to multiple recipients are received in multiple places simultaneously.
With these issues, the court could not see how it could assign a telephone call or email to a specific location. So, it looked to “the state where the relationship between the parties was centered.” And even though Dr. Plum resided in NY and was not a party to the litigation, the court found SC to be the center of her relationship with her attorneys. The court thus applied SC law to the privilege issues.
Two issues are worth some additional discussion. First, SC is like many states—no court has issued an opinion on the appropriate conflict-of-privilege-law analysis. There is a dearth of case law on this important issue, but parties and their lawyers have little guidance. See my article, The Application of Conflict of Laws to Evidentiary Privileges, available here, for additional insight on this topic.
Second, while the court’s analysis leading to a Second Restatement prediction is sound, one may question the court’s application. If Dr. Plum had retained NY counsel—rather than SC counsel—would that have “centered” the attorney–client relationship in NY? By choosing SC counsel, which seems a reasonable decision given the lawsuit was pending there, didn’t the court apply a rule that defaults to the forum state’s privilege law? If so, why the § 139 analysis?