Location of the Courtroom Determines Privilege Rules

At least in the state of New York, the law where the courtroom sits determines the scope or existence of any privilege.  Companies should not assume that courts in other locations will respect the privilege rules of their home state.  They must also consider the privilege rules in locations where they may face litigation, rules that may be far less receptive to assertions of privilege.

New York AG’s Climate Change Investigation

I discussed this issue in a prior Alert.  The underlying case relates to an investigation by the New York Attorney General (“AG”) of ExxonMobil’s actions and statements relating to climate change.  The AG had issued a subpoena to PricewaterhouseCoopers (“PWC”) for certain documents held by PWC relating to PWC’s accounting work for ExxonMobil.  PWC refused to provide the documents, based on ExxonMobil’s assertion that the documents were subject to the accountant-client privilege recognized by Texas law.  The trial court ordered production of the documents.

In May, a mid-level New York appellate court upheld the production order and rejected any consideration of an accountant-client privilege, because New York did not recognize this privilege.

New York’s Highest Court Refuses to Consider ExxonMobil’s Appeal

Last week, the New York Court of Appeals refused to consider ExxonMobil’s appeal of the mid-level court’s decision.  Thus, despite ExxonMobil having its headquarters in Texas, and Texas law recognizing an accountant-client privilege, ExxonMobil cannot protect communications with its accountants in a New York proceeding.

Think Beyond the Privilege Rules in Your Home State

Courts in other jurisdictions, including foreign countries, may point to the New York decision in their analysis of cross border privilege.  With a Texas headquarters, ExxonMobil reasonably expected that its communications with its accountants would be privileged.  Companies that conduct business across state and international borders should bear in mind that communications expected to be privileged may be subject to different rules in courts where they are actually sued.


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