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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: September 23, 2019

First Department Recognizes Narrow Exception to Rule that Privilege Rules Applied to Evidence Are Those of Forum in Which Evidence Will Be Used

On September 17, 2019, the First Department issued a decision in Ambac Assur. Corp. v. Nomura Credit & Capital, Inc., 2019 NY Slip Op. 06574, recognizing a narrow exception to the rule that the law regarding the attorney-client privilege applied to evidence is that of the forum in which the evidence will be used, explaining:

New York courts routinely apply the law of the place where the evidence in question will be introduced at trial or the location of the discovery proceeding when deciding privilege issues. However, there are circumstances in which an interest-balancing analysis is properly undertaken to decide whether another state’s law should govern the evidentiary privilege. This is a case that presents such circumstances.

Moreover, as in Bay Area Toll Auth., in this case, the balance of interests favors the application of the statutory privilege. Contrary to defendant’s argument, Supreme Court correctly found that, in these circumstances, New York’s interest in the full disclosure of information needed to allow a defendant to mount a defense in court is outweighed by Wisconsin’s interest, embodied in Wisconsin Statutes ยง 601.465, in its regulation of insurance. The communications at issue, while relevant to the underlying litigation to the extent they relate to the securitization trusts, certificates and insurances policies, were generated as part of OCI’s investigation, regulation, and rehabilitation of Ambac.

Contrary to defendant’s contentions, this Court’s decision in Matter of People v PriceWaterhouseCoopers, LLP (150 AD3d 578 [1st Dept 2017], lv denied 29 NY3d 1117 [2017]) should not be read as rejecting any requirement of an interest-balancing analysis in deciding which state’s law governs privilege issues where New York is the place of trial and the discovery proceeding. Further, it is distinguishable from the instant case in that it involved the interests of the New York State Attorney General but not those of a governmental agency of a different state, and thus did not implicate real issues of interstate comity.

(Internal quotations and citations omitted).

An issue that arises in almost all complex commercial litigation is identifying evidence that should be withheld from production in evidence because it is subject to the attorney-client or other privilege. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding the attorney-client, common interest, work product or other privileges or exemptions from production of evidence.

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