Thomas E. Johnston and Thomas E. Johnston, Successor in Interest to Shirley L. Johnston, Deceased, et al. - Page 12




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          1992); see also United States v. Zolin, 491 U.S. 554, 562 (1989);           
          United States v. Mass. Inst. of Tech., 129 F.3d 681, 684 (1st               
          Cir. 1997); United States v. Blackman, 72 F.3d 1418, 1423-1424              
          (9th Cir. 1995); Gannet v. First Natl. State Bank, 546 F.2d 1072,           
          1075-1076 (3d Cir. 1976).  Conversely, State attorney-client                
          privilege rules apply where the underlying cause of action rests            
          on State law.  Rhone-Poulenc Rorer, Inc. v. Home Indem. Co., 32             
          F.3d 851, 861-862 (3d Cir. 1994).                                           
               Petitioners argue that the cases at bar involve the latter             
          situation.  Petitioners claim:                                              
                    The issue here is not whether Petitioner has                      
               waived his attorney-client privilege in the within U.S.                
               Tax Court proceeding involving federal statutes of the                 
               Internal Revenue Code.  The issue here is whether                      
               Petitioner waived his attorney-client privilege in                     
               Fitzsimon v. S.C.Equestrian, et al, a 1994 State Court                 
               proceeding involving causes of action under the laws of                
               the State of California. * * *                                         
               We, however, disagree.  The matter before us is a                      
          redetermination of petitioners’ Federal income tax liabilities              
          under Title 26 of the United States Code.  It therefore falls               
          squarely within the above-described parameters for an                       
          adjudication of Federal law.                                                
               Moreover, contrary to petitioners’ suggestion, the issue               
          here is precisely whether the privilege has been waived for                 
          purposes of this Tax Court proceeding, regardless of whether it             
          was waived for purposes of earlier litigation in California.                
          Although certain of respondent’s bases for contending that the              





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