Source: http://openjurist.org/348/f3d/16
Timestamp: 2013-06-20 06:11:40
Document Index: 777818325

Matched Legal Cases: ['§ 2292', '§ 9', '§ 503', '§ 9', '§ 2327', '§ 2292', '§ 2311', '§ 503', '§ 69']

348 F3d 16 In Re Keeper of the Records | OpenJurist
348 F. 3d 16 - In Re Keeper of the Records	Home348 f3d 16 in re keeper of the records
348 F3d 16 In Re Keeper of the Records 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.
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.
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.
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 counter-arguments from the Smallco hierarchs (who wished to keep the device on the market). Unbeknownst to XYZ, Smallco recorded the call.
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.
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
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.
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.
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 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 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.").
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).
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).
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 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 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.
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.
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 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).
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").
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 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.
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.
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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