Court Upholds State Secrets in Narrow Ruling

The Supreme Court today unanimously ruled in General Dynamics Corp. v. United States that the state secrets privilege protected certain information from disclosure in a suit against the government by a contractor alleging that the government possessed "superior knowledge" as to the subject of the contract.  The Court ruled that the when a superior knowledge defense would inevitably reveal state secrets, neither party can obtain judicial relief, and the proper remedy is to leave the parties where they were on the day they filed suit.  We previously posted on the case here.

This long-running dispute involved the ill-fated A-12, a planned stealth aircraft that General Dynamics contracted to build for the Navy.  After development delays, the Navy cancelled the program, terminated the contract for default, and demanded $1.35 billion dollars in progress payments for work the government never accepted.  General Dynamics sued in the Court of Federal Claims to challenge the default decision, arguing that the government possessed, but failed to share, "superior knowledge" relating to the aircraft's development.  (The superior knowledge was the stealth technology that the government used for earlier aircraft but that General Dynamics did not have.)  The government claimed that litigation of General Dynamics's superior knowledge claim would inevitably lead to the disclosure of state secrets.

The Court agreed and ruled that "neither party can obtain judicial relief."  Op. at 8.  Thus General Dynamics cannot use protected evidence to prove lack of default; and the government cannot use protected evidence to prove default.  Instead, the proper remedy is to leave the parties where they were when General Dynamics filed suit.  The Court remanded to the Federal Circuit to determine whether and how the case can move forward without the protected evidence.

The unanimous ruling, written by Justice Scalia, clarifies the state secrets privilege in at least this context, secret government contracts, and may shed light on its application beyond this context.

The ruling is narrow by its own terms.  Justice Scalia seems to go to lengths to limit the ruling to government contract disputes involving secret evidence, even to that sub-category involving superior knowledge claims.  He's clear that this case falls within that narrow line of authority applying the state secrets privilege to secret government contracts--Totten v. United States and Tenet v. Doe--and not a broader line applying the privilege more generally (as in United States v. Reynolds) or to a principle that the privilege has no application when the information is necessary to a criminal defense.  Underscoring the narrowness of the ruling, he concludes with this:

In Reynolds, we warned that the state-secrets evidentiary privilege "is not to be lightly invoked."  345 U.S., at 7.  Courts should be even more hesitant to declare a Government contract unenforceable because of state secrets.  It is the option of last resort, available in a very narrow set of circumstances.  Our decision today clarifies the consequences of its use only where it precludes a valid defense in Government-contracting disputes, and only where both sides have enough evidence to survive summary judgment but too many of the relevant facts remain obscured by the state-secrets privilege to enable a reliable judgment.

Op. at 13-14.

But even with this limiting language, the ruling may shed some light on the Court's view of the privilege outside of the narrow facts of this case.  For example, the Court sharply distinguishes between the Totten version of the privilege and the Reynolds version of the privilege--a distinction that has become increasingly murky in the lower courts' rulings and in the government's positions in cases involving, e.g., extraordinary rendition and torture, and that has resulted in an expanded state secrets privilege.  Today's ruling maintains and underscores the traditional distinction between the two versions of the privilege, at least in secret government contracts.  This could lend fodder to those who argue for the traditional distinction between the two privileges (and thus a relatively narrower privilege, at least in relation to the government's position in recent cases) outside secret government contracts.

Another example: The Court emphasizes that the privilege, whether the Totten version or the Reynolds version, is merely an evidentiary privilege--not a constitutional separation-of-powers principle--and that a case can (at least potentially) move forward even absent privileged evidence.  This, too, could lend fodder to those who argue for a more limited privilege--at least more limited than the expansive, separation-of-powers-mandated version that has appeared in recent litigation. 

On the other hand, the opinion also recognizes the need for a state secrets privilege.  Justice Scalia at one point recounts the secret information that mistakenly came out in this case, prompting the Navy to assert the privilege in the first place. 

Given the explicitly narrow ruling, it's not clear how much, if any, of this will guide the Court outside this specific context.

The narrowness of today's ruling allows the Court to dodge the harder questions about the state secrets privilege--questions that it also dodged when it recently declined to hear an appeal of the sharply divided Ninth Circuit's en banc decision affirming the dismissal of Mohamed's claim against Jeppesen for its role in his extraordinary rendition and torture under the state secrets privilege.  But the Court at the same time gave us a glimpse of its answers, at least in the context of government contracting:  The Totten privilege and the Reynolds privilege are different; they are both evidentiary privileges (and not constitutional separation-of-powers privileges); and a case might move forward even after a successful invocation of the privilege.  Whether these answers also apply in cases outside government contracting: We'll have to wait.

SDS