Foreign Communications Subject to New York Privilege Rules When Discovery Order Provides that Discovery Will be Conducted Under the CPLR

On December 4, 2014, the First Department issued a decision in Sebastian Holdings, Inc. v. Deutsche Bank AG, 2014 NY Slip Op. 08472, holding that where the parties agree to conduct discovery under the CPLR, US privilege rules apply.

In Sebastian Holdings, "the motion court, on consent of the parties, entered two orders" relating to the taking of discovery under the Hague Convention. One appointed "a Swiss attorney" to transmit documents to the parties' counsel "in accordance with the New York Civil Practice Law and Rules." The other required the defendant to "prepare a privilege log 'in accordance with the standards of the New York Civil Practice Law and Rules for determination by the Court upon application as to such privilege designations and redactions.'" When a dispute arose over which law to apply to the privilege claims, the trial court ruled that New York law applied. The First Department agreed, explaining:

We agree with the motion court that the stipulated orders, directing that discovery is to proceed under the CPLR, are dispositive. Indeed, the Request specifically states that Deutsche Bank would prepare a privilege log "in accordance with the standards of the New York Civil Practice Law and Rules for determination by the Court upon application as to such privilege designations and redactions." We reject plaintiff's assertion that this language creates a reservation of rights on privilege challenges; on the contrary, the language merely allows plaintiff to challenge Deutsche Bank's privilege designation and redactions. Accordingly, the motion court properly concluded that privilege determinations are governed by New York law, as the parties stipulated.