Opinion ID: 200700
Heading Depth: 2
Heading Rank: 2

Heading: Presentations to the Government.

Text: 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 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. 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  (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.