Unknown case name

United States Court of Appeals
For the First Circuit

Nos. 03-1726
03-1784

IN RE KEEPER OF THE RECORDS
(GRAND JURY SUBPOENA ADDRESSED TO XYZ CORPORATION).
____________________

XYZ CORPORATION,
Appellant,

v.

UNITED STATES OF AMERICA,
Appellee.

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

Before

Selya, Lipez and Howard, Circuit Judges.

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.

October 22, 2003
 SELYA, Circuit Judge. Although the attorney-client

privilege may be the most venerable of the privileges for

confidential communications, its accouterments 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.

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.

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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

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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.

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

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.
2
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).

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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.

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

3
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.

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with the prosecutors to discuss the possible indictment of XYZ

and/or its officers. This meeting took place in May of 2002.

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

4
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.

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 The district court, acting ex parte, granted the motion

to compel. In a four-sentence 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").

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.

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 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

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

5
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.

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automatically to vary the standard of review depending on whether

a district court has taken the time to explain its rationale." Id.

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

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 (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.

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 (1981). Still, the privilege is not limitless,

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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 (1974).

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).

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

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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).

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.

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

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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.

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.").

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

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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).

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.

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

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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).

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.

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).

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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).

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.

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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).

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

6
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 narrow.
See 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).

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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.

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).

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

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own, would suffice to waive the privilege. Here, however, XYZ has

not made use of the call in any judicial proceeding.7

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

7
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.

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asserted); Abbott Labs. v. Baxter Travenol Labs., Inc., 676 F.

Supp. 831, 832 (N.D. Ill. 1987) (same).

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.

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, ___ (1st Cir. 2003) [No. 03-1056, 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.

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 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 (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.

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 attorney-client privilege vis-à-

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.

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.

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 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.

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.

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 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.

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

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without saying anything); Restatement (Second) of Contracts §

69(1)(a) (similar).

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.

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.

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., Nos. 144, 149, 2002 WL 1285126, at *6 (N.D. Cal. May

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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").

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.").

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

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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.

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

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attorney-client privilege by means of its pre-indictment

presentations.

IV. CONCLUSION

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.

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.

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