State law supplies the rules of decision for all the claims in this case, therefore, this Court must apply the Kentucky law regarding attorney client privilege. Jewell v. Holezer Hosp. Found., Inc., 899 F.2d 1507, 1513 (6th Cir. 1990) ("In a civil case involving claims based on state law, the existence of a privilege is to be determined in accordance with state, not federal, law.") see alsoBrown v. Tax Ease Lien Servicing, LLC, Case No. 3:15-CV-208-CRS, 2017 WL 6939338, at *11 (W.D. Ky. Feb. 16, 2017). Analysis
See id.; see also Babcock & Wilcox Power Generation Grp., Inc. v. Cormetech, Inc., --- F. Supp. 3d ---, No. 5:14CV514, 2015 WL 350392, at *5 (N.D. Ohio Jan. 23, 2015) (applying Ohio privilege law in diversity case, noting that "Goodyear did not discuss why it applied federal common law to the privilege asserted"). Indeed, to hold otherwise would run counter to the Sixth Circuit's "unexamined point" precedent and also its longstanding precedent that state-law privileges apply in diversity cases. See Jewell v. Holzer Hosp. Found., Inc., 899 F.2d 1507, 1513 (6th Cir. 1990) ("In a civil case involving claims based on state law, the existence of a privilege is to be determined in accordance with state, not federal, law.") (citing Fed. R. Evid. 501); see also Surles ex rel. Johnson v. Greyhound Lines, Inc., 474 F.3d 288, 296 (6th Cir. 2007) (noting that Rule 501 "direct[s] federal courts sitting in diversity to apply state evidentiary laws" regarding privileges). Instead of explaining Goodyear's silence on Rule 501, Defendants point to a number of non-binding district court decisions that apply Goodyear's settlement privilege in diversity cases.
Fed. R. Evid. 501. See also Jewell v. Holzer Hosp. Found., Inc., 899 F.2d 1507, 1513 (6th Cir. 1990) ("[I]n any civil action, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision."). Where federal jurisdiction is premised upon diversity and each of the claims arises under Kentucky law, Kentucky law "supplies the rule of decision."
But in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision. Fed.R.Evid. 501 (emphasis supplied); see also Jewell v. Holzer Hosp. Found., Inc., 899 F.2d 1507, 1513 (6th Cir.1990) (“In a civil case involving claims based on state law, the existence of a privilege is to be determined in accordance with state, not federal, law[,]” citing Rule 501 ). Here, the Court's jurisdiction is premised upon diversity of citizenship, 28 U.S.C. § 1332, and Babcock's claims, breach of warranty and indemnity, are based on state law.
Barnhart v. Dollar Rent A Car Sys., Inc., 595 F.2d 914, 919 (3d Cir. 1979); see also 9 Charles A. Wright Arthur R. Miller, Federal Practice and Procedure § 2513, at 530-31 (1971) (collecting cases). Even where the answers to interrogatories and the verdict do conflict, a court should uphold the verdict if there exists a legal basis, supported by the evidence, upon which the verdict could be based. Jewell v. Holzer Hosp. Found., Inc., 899 F.2d 1507, 1510-11 (6th Cir. 1990) (citing Arnold v. Panhandle Santa Fe Ry., 353 U.S. 360, 361, 77 S.Ct. 840, 841, 1 L.Ed.2d 889 (1957) (stating that answers do not present a square conflict where they do not exhaust all possible grounds on which verdict could be based)). Even the failure to answer interrogatories is not fatal where the general verdict is supported by other facts or where answers to such questions, favorable to the party against whom judgment is rendered, would not necessarily render the judgment erroneous.
This argument fails because Rule 49 is not the appropriate vehicle for claims of insufficient evidence. See Jewell v. Holzer Hosp. Found., Inc., 899 F.2d 1507, 1511 (6th Cir.1990). We do not reach the merits of Defendants' inconsistent verdict argument, however, because Defendants waived their Rule 49(b) objection.
"Federal law favors the harmonization of verdicts and answers to interrogatories wherever that is reasonably possible." Jewell v. Holzer Hosp. Found., Inc., 899 F.2d 1507, 1510 (6th Cir. 1990) (citation omitted). "[E]ven if the answers to jury interrogatories and the verdict do conflict, federal law favors upholding the verdict if there exists some legal basis, supported by the evidence, upon which the verdict could be based."
In a diversity case, the court applies federal law to resolve work product claims and state law to resolve attorney-client claims. Baker v. General Motors Corp., 209 F.3d 1051, 1053 (8th Cir. 2000); see also Fed.R.Evid. 501; Jewell v. Holzer Hosp. Found., Inc., 899 F.2d 1507, 1513 (6th Cir. 1990). A. Attorney-Client Privilege
In a diversity case, federal law governs most issues surrounding the utilization of special interrogatories and the problem of inconsistent answers, including the effect of inconsistency between a general verdict and one or more special interrogatories. See Jewell v. Holzer Hosp. Found., Inc., 899 F.2d 1507, 1510 (6th Cir. 1990). However, federal courts look to state law to determine whether a verdict is inconsistent.
Fed.R.Evid. 501 "dictates that we look to state law to determine whether a court must allow a jury to draw a negative inference from a party's invocation of a privilege." Jewell v. Holzer Hosp. Found., Inc., 899 F.2d 1507, 1514 (6th Cir. 1990). Therefore, we find that the district court properly applied Alaska Rule of Evidence 512 in barring Lane Powell from raising negative inferences before the jury based on Home's assertion of the attorney-client privilege and in instructing the jury not to draw such inferences.