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prior to claiming the privilege; and (3) the crime-fraud
exception, applicable due to participation by Mr. O’Keefe in Mr.
Johnston’s scheme to defraud Mr. Fitzsimon of his interest in the
Shorecliffs golf course.
A. Applicable Law
As a threshold matter, we address the question of governing
law. In general, section 7453 and Rule 143(a) provide that Tax
Court proceedings are to be conducted in accordance with the
rules of evidence applicable in trials without a jury in the
United States District Court for the District of Columbia.
Consistent with this directive, we observe the Federal Rules of
Evidence. Rule 501 of the Federal Rules of Evidence controls
issues of privilege and specifies as follows:
Except as otherwise required by the Constitution
of the United States or provided by Act of Congress or
in rules prescribed by the Supreme Court pursuant to
statutory authority, the privilege of a witness,
person, government, State, or political subdivision
thereof shall be governed by the principles of the
common law as they may be interpreted by the courts of
the United States in the light of reason and
experience. However, in civil actions and proceedings,
with respect to an element of a claim or defense as to
which State law supplies the rule of decision, the
privilege of a witness, person, government, State, or
political subdivision thereof shall be determined in
accordance with State law.
The foregoing rule establishes a structure where “Issues
concerning application of the attorney-client privilege in the
adjudication of federal law are governed by federal common law.”
Clarke v. Am. Commerce Natl. Bank, 974 F.2d 127, 129 (9th Cir.
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