348 F.

3d 16

In re KEEPER OF THE RECORDS (GRAND JURY

SUBPOENA ADDRESSED TO XYZ CORPORATION).
XYZ Corporation, Appellant,
v.
United States of America, Appellee.
No. 03-1726.
No. 03-1784.

United States Court of Appeals, First Circuit.

Heard September 4, 2003.
Decided October 22, 2003.

COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL

OMITTED William F. Lee, with whom Robert D. Keefe, Stephen A.
Jonas, Mark D. Selwyn, Hale and Dorr LLP, Richard G. Taranto, and Farr
& Taranto were on brief, for appellant.
James E. Arnold, Trial Attorney, United States Department of Justice,
with whom Michael K. Loucks, Chief, Health Care Fraud Unit, and
Michael J. Sullivan, United States Attorney, were on brief, for appellee.
Before SELYA, LIPEZ and HOWARD, Circuit Judges.
SELYA, Circuit Judge.

Although the attorney-client privilege may be the most venerable of the

privileges for confidential communications, its accoutrements are not the most
clearly delineated. These appeals, which require us to answer delicate questions
concerning implied waivers of the privilege, bear witness to that point.

The appeals have their genesis in an investigatory subpoena duces tecum issued
by a federal grand jury (we use the adjective "investigatory" because no
indictments have yet eventuated from the grand jury probe). The subpoenaed
party, a corporation, refused to produce certain of the requested documents on
the ground that they were shielded by the attorney-client and work-product

privileges. The government sought to compel production, contending that any

attendant privilege had been waived. The district court, eschewing an
evidentiary hearing, ordered the corporation to produce the documents and
cited it for contempt when it declined to do so. These appeals there are two
because the corporation filed a notice of appeal after the court ordered
production of the withheld documents and another after the court adjudged it in
contempt followed.
3

After careful consideration, we conclude that the record fails to support the
lower court's finding of a broad subject matter waiver. Accordingly, we reverse
the turnover order and vacate the contempt citation.
I. BACKGROUND

We start with an abbreviated account of the events leading to the turnover

order. Consistent with the secrecy that typically attaches to grand jury matters,
see, e.g., Fed.R.Crim.P. 6(e), these appeals have gone forward under an order
sealing the briefs, the parties' proffers, and other pertinent portions of the
record. To preserve that confidentiality, we use fictitious names for all affected
parties and furnish only such background facts as are necessary to provide
ambiance.

In the fall of 1998, XYZ Corporation (XYZ) began distributing a neoteric

medical device. Soon after distribution began, XYZ learned that, on some
occasions, the device was not functioning properly. It conducted an internal
investigation and sought the advice of outside counsel to determine an
appropriate course of action.

In fairly short order, XYZ made a preliminary decision to withdraw the device
from the market (at least temporarily). Before doing so, however, XYZ's
existing supply agreement obligated it to consult with its co-venturer, Smallco.
Representatives of the two companies conferred telephonically. The
participants in that discussion included two officers of XYZ, outside counsel
for XYZ (Bernard Barrister), the principals of Smallco, and Smallco's medical
advisor.1 During this conversation, which we shall hereafter refer to as "the
call," Barrister advocated XYZ's position in the face of strong counterarguments from the Smallco hierarchs (who wished to keep the device on the
market). Unbeknownst to XYZ, Smallco recorded the call.

The next day, XYZ contacted the Food and Drug Administration (the FDA) to
discuss the emerging problems. A dialogue ensued. Less than one month after

its initial contact with the FDA, XYZ voluntarily withdrew the device from the
market.
8

The Department of Justice got wind of what had transpired and commenced an
investigation into the distribution of the device. As part of this probe, a federal
grand jury issued a subpoena requiring XYZ to produce an array of
documents.2 XYZ withheld certain of the documents, instead producing
privilege logs indexing what had been retained and the claims of privilege
applicable thereto. As early as April of 2001, the government requested XYZ to
waive its claims of privilege. XYZ refused.

In late 2001, the government obtained a tape recording of the call. The
government thereafter asked XYZ for permission to audit the tape. XYZ replied
that it would not seek to prevent the government from listening but admonished
that this decision should not be viewed as a waiver of any privilege protecting
other communications. The government agreed in writing to this
condition. The investigation continued.

10

In February of 2002, federal prosecutors met with XYZ's new outside counsel
to inform XYZ of the direction of their investigation. Pursuant to the request of
a government attorney, XYZ's counsel authored two letters responding to
concerns voiced at the February meeting. Each contained a footnote on the first
page stating explicitly that the letter should not be construed as a waiver of the
attorney-client or work-product privileges.3 Following this correspondence,
representatives of XYZ again met with the prosecutors to discuss the possible
indictment of XYZ and/or its officers. This meeting took place in May of 2002.

11

In April of 2003 after persistently requesting a voluntary waiver of the

attorney-client privilege for two full years the government changed its tune.
It repaired to the federal district court and filed a motion to compel production
of the disputed documents. In its motion, the government argued in effect that
XYZ already had waived the attorney-client privilege as to the most important
documents described in the subpoena. The motion asserted that, during the call,
Barrister had given legal advice in the presence of third parties and had
disclosed legal advice previously provided to XYZ. In the government's view,
this conduct effected a waiver of the attorney-client privilege as to all
communications anent the marketing and withdrawal of the device for a period
extending from August 12, 1998 to October 8, 1998. As a fallback, the
government asseverated that XYZ had waived the attorney-client privilege by
means of the pre-indictment presentations made in response to the prosecutors'
requests. To close the circle, the government maintained that the work-product
doctrine, if applicable at all, likewise had been waived.4

12

The district court, acting ex parte, granted the motion to compel. In a foursentence order, the court ruled that XYZ had "waived its attorney-client
privilege with respect to the subject matter of the [call]." When the government
moved for an expedited hearing to clarify the order and XYZ sought
reconsideration, the district court again acted summarily. Without either
conducting an evidentiary hearing or entertaining argument, it ruled ore sponte
that XYZ's waiver of the attorney-client privilege applied both retrospectively
(i.e., to communications before the call relating to the "same matter") and
prospectively (i.e., to communications after the call relating to the "same
matter").

13

In its bench decision, the district court went well beyond the three-month
waiver window envisioned by the government; it declared, in effect, that the
waiver was to operate without limit of time (indeed, the court noted, as to future
communications, that the waiver would have effect "so long as people are
talking about that same subject," and might apply up to the time of trial). The
court exempted from the waiver any attorney-client communications about the
waiver issue itself and provided guidance as to the scope of the waiver by
referring to the "doctrine of completeness." The court declined to resolve any
additional issues, stating that it would cross those bridges as the need arose.

14

Notwithstanding the district court's order, XYZ refused to produce the

documents. The district court held the corporation in contempt (thus brushing
aside, inter alia, its claim of a work-product privilege),5 but stayed further
proceedings pending appellate review. We have jurisdiction over the ensuing
appeals because XYZ subjected itself to a citation for contempt. See In re
Grand Jury Subpoenas, 123 F.3d 695, 696-97 (1st Cir.1997).
II. STANDARD OF REVIEW

15

On an appeal concerning a claim of privilege, the standard of review depends

on the precise issue being litigated. See Cavallaro v. United States, 284 F.3d
236, 245 (1st Cir.2002); United States v. Mass. Inst. of Tech., 129 F.3d 681,
683 (1st Cir.1997). We review rulings on questions of law de novo, findings of
fact for clear error, and judgment calls such as evidentiary determinations
for abuse of discretion. Cavallaro, 284 F.3d at 245. The standard of review is
not altered by the fact that the district court granted the motion without much
elaboration of its thinking. FDIC v. Ogden Corp., 202 F.3d 454, 460 (1st
Cir.2000). "Although a lower court's elucidation of its reasoning invariably
eases the appellate task, motions often are decided summarily.... [W]e are
aware of no authority that would allow us automatically to vary the standard of
review depending on whether a district court has taken the time to explain its

rationale." Id.
16

With these background principles in mind, we proceed to the merits. In

undertaking that task, we are mindful that, on the facts of this case, the question
whether XYZ has waived the attorney-client privilege is governed by federal
common law. United States v. Rakes, 136 F.3d 1, 3 (1st Cir.1998).
III. ANALYSIS

17

Despite a grand jury's vaunted right to every man's evidence, it must,

nevertheless, respect a valid claim of privilege. United States v. Calandra, 414
U.S. 338, 346, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974). But the party who invokes
the privilege bears the burden of establishing that it applies to the
communications at issue and that it has not been waived. See State of Maine v.
United States Dep't of the Interior, 298 F.3d 60, 71 (1st Cir.2002); United
States v. Bollin, 264 F.3d 391, 412 (4th Cir.2001). Thus, XYZ must carry the
devoir of persuasion here.

18

The attorney-client privilege is well-established and its rationale

straightforward. By safeguarding communications between client and lawyer,
the privilege encourages full and free discussion, better enabling the client to
conform his conduct to the dictates of the law and to present legitimate claims
and defenses if litigation ensues. See Upjohn Co. v. United States, 449 U.S.
383, 389, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981). Still, the privilege is not
limitless, and courts must take care to apply it only to the extent necessary to
achieve its underlying goals. In re Grand Jury Subpoena (Custodian of
Records, Newparent, Inc.), 274 F.3d 563, 571 (1st Cir.2001). In other words,
the attorney-client privilege must be narrowly construed because it comes with
substantial costs and stands as an obstacle of sorts to the search for truth. See
United States v. Nixon, 418 U.S. 683, 709-10, 94 S.Ct. 3090, 41 L.Ed.2d 1039
(1974).

19

The dimensions of the privilege itself are reasonably well honed. The privilege
protects only those communications that are confidential and are made for the
purpose of seeking or receiving legal advice. See Bollin, 264 F.3d at 412; see
also 8 John Henry Wigmore, Evidence 2292, at 554 (John T. McNaughton
ed. 1961). The idea that the attorney-client privilege may be waived is a direct
outgrowth of this well-established construction. When otherwise privileged
communications are disclosed to a third party, the disclosure destroys the
confidentiality upon which the privilege is premised. See 2 Paul R. Rice,
Attorney-Client Privilege in the U.S. 9:79, at 357 (2d ed. 1999).

20

Waivers come in various sizes and shapes. The easy cases tend to be those of
express waiver. See, e.g., United States v. Lussier, 71 F.3d 456, 462 (2d
Cir.1995); United States v. Kingston, 971 F.2d 481, 490 (10th Cir.1992);
Catino v. Travelers Ins. Co., 136 F.R.D. 534, 536-37 (D.Mass. 1991). The
more difficult cases tend to involve implied waivers. While it is generally
accepted that conduct can serve to waive the attorney-client privilege by
implication, see, e.g., Jack B. Weinstein & Margaret A. Berger, Weinstein's
Federal Evidence 503.41 (Joseph M. McLaughlin ed.1997) (collecting cases),
the case law does not offer much assistance as to how broadly such implied
waivers sweep. Like most courts, this court has yet to develop a jurisprudence
clarifying the scope of such implied waivers. See United States v. Desir, 273
F.3d 39, 45 (1st Cir.2001).

21

In approaching these unanswered questions, we start with the unarguable

proposition that the attorney-client privilege is highly valued. Accordingly,
courts should be cautious about finding implied waivers. See In re Grand Jury
Proceedings, 219 F.3d 175, 186 (2d Cir.2000). Claims of implied waiver must
be evaluated in light of principles of logic and fairness. See 2 Rice, supra
9:79, at 357. That evaluation demands a fastidious sifting of the facts and a
careful weighing of the circumstances. Desir, 273 F.3d at 45-46. Considering
the need for this precise, fact-specific tamisage, it is not surprising that the case
law reveals few genuine instances of implied waiver. See 8 Wigmore, supra
2327, at 635.

A. The Call.
22

With these considerations in mind, we turn first to the government's contention

that XYZ impliedly waived the attorney-client privilege when it "sought,
obtained, and discussed legal advice" from Barrister in the presence of
outsiders. Appellee's Br. at 26. The district court not only found such a waiver
but also concluded that it extended, without limit of time, to all past and future
communications on the subject matters discussed during the call. We think that
the court erred as a matter of law in making these determinations.

23

For the attorney-client privilege to attach to a communication, it must have

been made in confidence and for the purpose of securing or conveying legal
advice. See Cavallaro, 284 F.3d at 245; see also 8 Wigmore, supra 2292, at
554. The privilege evaporates the moment that confidentiality ceases to exist.
With isthmian exceptions not pertinent here, the presence of third parties is
sufficient to undermine the needed confidentiality. See 8 Wigmore, supra
2311, at 601-03 & nn. 6-8 (collecting cases). So here: XYZ knew that third
parties representatives of Smallco were participating in the call. Thus, it

could not have had any expectation of confidentiality as to matters discussed

therein. The lack of such an expectation shattered the necessary confidentiality.
See In re San Juan Dupont Plaza Hotel Fire Litig., 859 F.2d 1007, 1016 n. 6
(1st Cir.1988) ("Absent an expectation of confidentiality, none accrues.").
24

The short of it is that Barrister, regardless of his professional relationship with

XYZ, did not provide confidential advice during the call but, rather, merely
helped to advocate XYZ's position to its co-venturer. Consequently, the
communications made during the call were not confidential (and, therefore, not
subject to a colorable claim of privilege).

25

The fact that no privilege attached to the call brings the government's waiver
argument into sharper focus. It is crystal clear that any previously privileged
information actually revealed during the call lost any veneer of privilege. See,
e.g., von Bulow v. von Bulow (In re von Bulow), 828 F.2d 94, 102-03 (2d
Cir.1987); In re Sealed Case, 676 F.2d 793, 817-18 (D.C.Cir.1982). XYZ does
not contest the occurrence of such a waiver (indeed, it never listed the call on
its privilege log). Rather, the bone of contention is whether that waiver had a
ripple effect, i.e., whether it reached anything beyond that which was actually
disclosed. We think not.

26

There was no express waiver, so the question is one of implied waiver. It is

well accepted that waivers by implication can sometimes extend beyond the
matter actually revealed. See, e.g., In re Grand Jury Proceedings, 219 F.3d at
182-83; Sedco Int'l, S.A. v. Cory, 683 F.2d 1201, 1206 (8th Cir.1982). Such
waivers are almost invariably premised on fairness concerns. See von Bulow,
828 F.2d at 101-03. As one respected treatise explains, "[t]he courts have
identified a common denominator in waiver by implication: in each case, the
party asserting the privilege placed protected information in issue for personal
benefit through some affirmative act, and the court found that to allow the
privilege to protect against disclosure of that information" would have been
unfair to the opposing party. 3 Weinstein, supra 503.41[1]. See also Sedco,
683 F.2d at 1206 (noting that courts have found waiver by implication when a
client (i) testifies concerning portions of an attorney-client communication, (ii)
places the attorney-client relationship itself at issue, or (iii) asserts reliance on
an attorney's advice as an element of a claim or defense).

27

A paradigmatic example of this phenomenon is a case involving an advice of

counsel defense. When such a defense is raised, the pleader puts the nature of
its lawyer's advice squarely in issue, and, thus, communications embodying the
subject matter of the advice typically lose protection. See, e.g., United States v.
Bilzerian, 926 F.2d 1285, 1292 (2d Cir.1991). Implying a subject matter waiver

in such a case ensures fairness because it disables litigants from using the
attorney-client privilege as both a sword and a shield. Were the law otherwise,
the client could selectively disclose fragments helpful to its cause, entomb
other (unhelpful) fragments, and in that way kidnap the truth-seeking process.
28

Virtually every reported instance of an implied waiver extending to an entire

subject matter involves a judicial disclosure, that is, a disclosure made in the
course of a judicial proceeding. See von Bulow, 828 F.2d at 103 (collecting
cases). This uniformity is not mere happenstance; it exists because such a
limitation makes eminently good sense. Accordingly, we hold, as a matter of
first impression in this circuit, that the extrajudicial disclosure of attorney-client
communications, not thereafter used by the client to gain adversarial advantage
in judicial proceedings, cannot work an implied waiver of all confidential
communications on the same subject matter. Accord von Bulow, 828 F.2d at
102-03; Yankee Atomic Elec. Co. v. United States, 54 Fed. Cl. 306, 316 (2002).

29

The rationale behind our holding is self-evident. When an attorney participates

in an extrajudicial meeting or negotiation, his participation alone does not
justify implying a broad subject matter waiver of the attorney-client privilege.
There is a qualitative difference between offering testimony at trial or asserting
an advice of counsel defense in litigation, on the one hand, and engaging in
negotiations with business associates, on the other hand. In the former setting,
the likelihood of prejudice looms: once a litigant chooses to put privileged
communications at issue, only the revelation of all related exchanges will allow
the truth-seeking process to function unimpeded. In the latter scenario,
however, such concerns are absent. The party has introduced its lawyer into the
negotiations, but that act, in and of itself, does nothing to cause prejudice to the
opposition or to subvert the truth-seeking process. Furthermore, a rule that
would allow broad subject matter waivers to be implied from such
communications would provide perverse incentives: parties would leave
attorneys out of commercial negotiations for fear that their inclusion would
later force wholesale disclosure of confidential information. This would strike
at the heart of the attorney-client relationship and would do so despite the
absence of any eclipsing reason for the implication of a waiver. Where a party
has not thrust a partial disclosure into ongoing litigation, fairness concerns
neither require nor permit massive breaching of the attorney-client privilege.6
See In re Grand Jury Proceedings, 219 F.3d at 188-89 (finding no broad waiver
when disclosure occurred in grand jury testimony and government did not show
sufficient prejudice).

30

Viewed against this backdrop, the district court's turnover order cannot be
sustained. Although plotting the precise line that separates judicial disclosures

from extrajudicial disclosures sometimes can be difficult, no such difficulties

are presented here. The call took place entirely outside the judicial context. The
parties to it were co-venturers bent on ironing out wrinkles and reaching a joint
business decision. Given these facts, it would be fanciful to suggest that the
disclosures cited by the government were made in anticipation of litigation.
31

That gets the grease from the goose. Because the call was plainly extrajudicial,
the district court erred in using it as a fulcrum for the implication of a broad
subject matter waiver of the attorney-client privilege. See von Bulow, 828 F.2d
at 103; Electro Scientific Indus. v. Gen. Scanning, Inc., 175 F.R.D. 539, 543-44
(N.D.Cal. 1997).

32

The government argues that even extrajudicial disclosures should be given

broad scope when the waiving party seeks later to use that disclosure to its
advantage. We agree in part: if confidential information is revealed in an
extrajudicial context and later reused in a judicial setting, the circumstances of
the initial disclosure will not immunize the client against a claim of waiver. See
Electro Scientific, 175 F.R.D. at 544 (explaining that a past extrajudicial
disclosure will not cause any prejudice in subsequent litigation as long as the
disclosing party "does not try to use [the disclosure] in this litigation"); cf.
United States v. Workman, 138 F.3d 1261, 1263-64 (8th Cir.1998) (finding
subject matter waiver after client placed attorney's advice in issue in court
case). The key is that the subsequent disclosure, on its own, would suffice to
waive the privilege. Here, however, XYZ has not made use of the call in any
judicial proceeding.7

33

At the risk of carting coal to Newcastle, we add that a prospective waiver will
very rarely be warranted in extrajudicial disclosure cases. Courts have generally
allowed prospective waivers in discrete and limited situations, almost
invariably involving advice of counsel defenses. See, e.g., Minn. Specialty
Crops, Inc. v. Minn. Wild Hockey Club, 210 F.R.D. 673, 679 (D.Minn. 2002);
Chiron Corp. v. Genentech, Inc., 179 F.Supp.2d 1182, 1187 (E.D.Cal.2001).
Every case the government cites in support of the district court's imposition of a
prospective waiver involves precisely this scenario. See Minn. Specialty Crops,
210 F.R.D. at 679 (finding a prospective waiver effected "by the adoption of
[an] advice-of-counsel defense"); Chiron Corp., 179 F.Supp.2d at 1188 (same);
Gabriel Capital, L.P. v. Natwest Finance, Inc., No. 99-Civ.-10488, 2001 WL
1132050, at *1 (S.D.N.Y. Sept. 21, 2001) (same); Dunhall Pharms., Inc. v.
Discus Dental, Inc., 994 F.Supp. 1202, 1209 n. 3 (C.D.Cal.1998) (finding
subject matter waiver throughout the time period of alleged patent infringement
when putative infringer asserted advice of counsel defense); see also Glenmede
Trust Co. v. Thompson, 56 F.3d 476, 486 (3d Cir.1995) (finding broad waiver

where advice of counsel defense had been asserted); Abbott Labs. v. Baxter
Travenol Labs., Inc., 676 F.Supp. 831, 832 (N.D.Ill. 1987) (same).
34

Enforcing a prospective waiver in such a case makes sense: once a litigant puts
the legal advice given to him at issue, the opposing party should be entitled to
all the information on that same subject regardless of when it was compiled.
This ensures that a litigant is not able to present only selected bits of the story
and thus distort the truth-seeking process. The case at hand is not one in which
an advice of counsel defense has been asserted indeed, there is no pending
proceeding to serve as a vehicle for such a defense and no such ends would
be served by implying a broad prospective waiver.

B. Presentations to the Government.

35

Our odyssey is not yet finished. Even though the district court did not reach the
issue, the government invites us to consider, as an alternative basis on which to
uphold the turnover order, its argument that XYZ's pre-indictment proffers
waived the attorney-client privilege. See Intergen N.V. v. Grina, 344 F.3d 134,
142 (1st Cir.2003) [slip op. at 13] (explaining that the court of appeals can
affirm a judgment on any ground made manifest by the record). The parties
have briefed this issue, the facts pertaining to it are essentially uncontradicted,
and an adjudication will expedite matters. These factors convince us to accept
the government's invitation.

36

Many years ago, Justice Holmes warned that those who deal with the
government must turn square corners. Rock Island, Ark. & La. R.R. Co. v.
United States, 254 U.S. 141, 143, 41 S.Ct. 55, 65 L.Ed. 188 (1920). That advice
cuts both ways: those who deal with the government have a right to expect fair
treatment in return. The principle that the government must turn square corners
in dealing with its constituents is dispositive here.

37

The facts are these. At the time the government filed the motion to compel, it
had been engaged in discussions with XYZ for over two years. During that
span, the government repeatedly had requested that XYZ waive the attorneyclient privilege vis--vis communications concerning the device's withdrawal
from the market, and XYZ steadfastly had refused. When the government
sought permission to audit the tape recording of the call, XYZ agreed on the
express condition that leave "was not to be viewed as a waiver of any applicable
privilege protecting other communications." The government acceded to this
condition.

38

In February of 2002, government attorneys met with XYZ's outside counsel to

38

In February of 2002, government attorneys met with XYZ's outside counsel to

discuss the threatened indictment of the corporation and/or its officers. The
government acknowledges that it solicited a response from XYZ in hopes of
gaining information so that an indictment, if one eventuated, would be based on
a fully informed account of the product-withdrawal decision.

39

Initially, this solicitation went unheeded. In late April, however, the

government wrote to XYZ's outside counsel, formally identifying the
corporation as a target of the grand jury investigation. That letter apparently got
XYZ's attention. The next month, its counsel responded to the government's
earlier request. This epistle, dated May 10, 2002, began with a clear and explicit
statement, quoted supra note 3, that nothing contained therein should be
deemed a waiver of the attorney-client privilege. The letter set forth various
reasons why the government should forgo an indictment. It contained only one
glancing mention of an attorney-client communication a reference to the call
(a communication to which the attorney-client privilege never attached). In all
events, the government never replied either to this letter or to the privilege
reservation contained therein.

40

The May 10 letter advised the prosecutors that XYZ's counsel would be
sending additional material within the next few weeks in order to complete the
response that the government had solicited. As promised, XYZ's counsel sent a
follow-up letter eleven days later. This missive contained the same privilege
reservation (again conspicuously displayed on the first page). In the body of the
letter, counsel discussed communications between XYZ and the FDA during
September of 1998 (some of which involved Barrister). Once again, the
privilege reservation evoked no response.

41

Both of counsel's letters referred to an anticipated meeting with the

government. That meeting occurred on May 22, 2002. As the first order of
business, XYZ's counsel renewed the privilege reservation, stating that any
disclosures made during the meeting should not be interpreted as waiving the
attorney-client privilege. The government's representatives received this
announcement in stony silence. XYZ's presentation proved fruitless and the
colloquy between the parties apparently ground to a halt. That was the state of
affairs when the government endeavored to subpoena the disputed documents.

42

The government now claims that these presentations resulted in a waiver of the
attorney-client privilege as to the subjects discussed therein. But the
circumstances, and particularly the government's own conduct, belie that claim.
XYZ was careful to condition each and every disclosure on a clearly stated
privilege reservation. The government did not raise the slightest question when

these reservations were stated, but, rather, kept the dialogue going and invited
additional disclosures. In the circumstances of this case, we think that XYZ
reasonably interpreted the government's silence as an acceptance of the
reservations. Cf. McGurn v. Bell Microprods., Inc., 284 F.3d 86, 90 (1st
Cir.2002) (stating that silence can serve as acceptance of a condition when the
offeree, despite having a reasonable opportunity to reject the condition, takes
the benefit of the offer without saying anything); Restatement (Second) of
Contracts 69(1)(a) (similar).
43

To be sure, the government now says that XYZ, if it wanted to guarantee

preservation of the attorney-client privilege, should have secured a written
agreement to that effect. In the absence of such a step, the government suggests,
the unilaterally imposed privilege reservation was impuissant. This argument
lacks force.

44

As we have said, in some cases silence can be the basis of acceptance. See, e.g.,
McGurn, 284 F.3d at 90. In this case, the undisputed facts show that the
government knew of XYZ's intention to operate under a privilege reservation
from the time that it first secured a tape recording of the call. It unquestionably
accepted the reservation at that time. XYZ then repeated the reservation on the
occasion of each of the three succeeding pre-indictment presentations (two
written and one oral). The government voiced no objection to the privilege
reservation at any of these times. Its silence encouraged (indeed, allowed) the
disclosures to go forward.

45

Here, moreover, the government does not deny that it knew of the oft-repeated
privilege reservations. Hence, the government's long delay in raising a claim of
waiver is itself an indication of such knowledge. See Akamai Techs., Inc. v.
Digital Island, Inc., No. C-00-3509CW, 2002 WL 1285126, at *6 (N.D.Cal.
May 30, 2002) (finding privilege reservation valid, in part because opposition
waited eight months after supposed waiver before seeking to compel
production of documents). In turn, the government's ready acceptance of the
proffers' benefits, notwithstanding its knowledge of the privilege reservations,
makes its current position untenable. Cf. 3 A's Towing Co. v. P & A. Well Serv.,
Inc., 642 F.2d 756, 758 n. 3 (5th Cir.1981) (finding ratification where delay in
repudiating was long and failure to repudiate was "accompanied by acts
indicating approval... such as receiving and retaining the benefits").

46

In short, the privilege reservations were not unilaterally imposed, but, rather,
were accepted by the government's consistent course of conduct. That course of
conduct signaled clearly the government's intention to acquiesce in the privilege
reservations. We conclude, therefore, that the reservations were fully effective

here. Having lured XYZ into making a series of proffers, the government
cannot now be allowed to contradict that reasonable understanding by arguing,
after the fact, that it never acceded to the reservations. Cf. United States v.
Tierney, 760 F.2d 382, 388 (1st Cir.1985) ("Having one's cake and eating it,
too, is not in fashion in this circuit.").
47

Although we ground this result in equitable principles, it also comports with

sound policy. Arm's-length negotiations between the government and private
parties, in advance of an indictment, aid the truth-seeking process. Such
negotiations are to everybody's advantage. They give potential defendants an
opportunity to explain away suspicious circumstances, give the government an
opportunity to avoid embarrassing and wasteful mistakes, and give the public a
greater likelihood of a just result. Requiring the government to turn square
corners in such negotiations will make potential defendants more willing to deal
with the government in the future. Conversely, refusing to hold the government
to such a standard will send a signal to future litigants to negotiate with the
government only at their peril. That is not a message that we wish to send
nor is it one that would serve the government's interests.

48

In a perfect world, of course, XYZ would have secured a written

acknowledgment of its privilege reservation in advance of each and every
disclosure. But XYZ did secure one such written acknowledgment, and its
failure to do so on subsequent occasions is clearly outweighed by two facts: (i)
it repeatedly set forth its position, and (ii) the government failed to question the
privilege reservation in a timely manner. Under the circumstances of this case,
we find that the proffers were made in the course of ongoing plea negotiations;
that XYZ explicitly reserved all claims of attorney-client privilege with respect
thereto; that the government effectively acquiesced in these reservations; and
that the government is bound by them. Consequently, XYZ reserved the
attorney-client privilege by means of its pre-indictment presentations.
IV. CONCLUSION

49

We need go no further.8 We hold that XYZ's extrajudicial disclosure did not

give rise, by implication, to a broad subject matter waiver. We further hold that
the government's seeming acquiescence in XYZ's privilege reservations
precludes any claim that XYZ's pre-indictment presentations worked a waiver
of any applicable privilege. Accordingly, we reverse the order appealed from,
vacate the contempt citation, and remand to the district court for further
proceedings not inconsistent herewith.
Reversed.

50

Reversed.

Notes:
1

There is some suggestion in the record that two other employees of XYZ were
on the line during the call. We need not resolve this uncertainty as the presence
or absence of these individuals would not affect our analysis

The grand jury also caused subpoenas duces tecum to be served on Barrister
and Barrister's law firm. Those subpoenas are not before us (although we note
parenthetically that neither recipient has surrendered the documents)

The language, in its entirety, read:

We submit this letter pursuant to Rule 11(e)(6) of the Federal Rules of Criminal
Procedure. This letter may not be used as evidence against [XYZ] or any
subsidiary, affiliate, successor or assign, employee or agent, in any civil or
criminal proceeding. This letter describes certain facts as we understand them
from the record developed during the Government's investigation. It is not
intended to, and should not be interpreted to, constitute admissions on behalf of
[XYZ] or any related entities or persons. It also is not intended, and should not
be construed, as any waiver of the attorney-client, the attorney work product, or
any other applicable privilege.

In addition, the government claimed that the crime-fraud exception to the

attorney-client and work-product privileges abrogated any protections that had
not been waived. Because the district court did not reach this claim, we express
no opinion on it. The government remains free, if it so chooses, to reassert this
claim in the district court

This implied dismissal of the work-product privilege was fully consistent with
comments made by the court in the course of its earlier bench decision

Nothing in this opinion is intended to suggest that extrajudicial disclosures can

never work an implied waiver of anything beyond that which actually was
disclosed. But such cases will be rare, and the scope of any ensuing waiver will
be narrowSee von Bulow, 828 F.2d at 102 n. 1. For today, it suffices that the
government has neither argued for a narrow waiver nor identified any particular
document to which such a waiver might extend. See United States v. Zannino,
895 F.2d 1, 17 (1st Cir.1990) (explaining that arguments not made in a party's
briefs need not be considered).

To the extent that the government implies that XYZ used the call in its pre-

indictment proffers, that argument fails for the reasons discussed in Part
III(B),infra.
8

In view of the fact that the attorney-client privilege remains intact, we need not
address the work-product doctrine. Nor do we need to reach the government's
contention that the inadequate detail on the privilege logs resulted in a waiver.
If this is a line of attack that the government wishes to pursue, the district court
should consider it in the first instance