U.S. State Secrets Privilege Debated. Justice Scalia Suggests a ‘Go Away’ Rule

  By ADAM LIPTAK   Jan. 18, 2011

 WASHINGTON — It has been almost 60 years since the Supreme Court last had a hard look at the state secrets privilege, which can allow the government to shut down litigation by invoking national security. In the years since the attacks on Sept. 11, 2001, the government has invoked the privilege frequently to scuttle cases, saying they would frustrate its efforts to combat terrorism.

The privilege was at the center of an argument at the court on Tuesday. But the justices did not seem inclined to use the opportunity to give the lower courts guidance about its contours.

The case arose from a 1988 contract between the Navy and two companies, General Dynamics and McDonnell Douglas, to develop a stealth aircraft called the A-12 Avenger.

Three years later, dissatisfied with the contractors’ progress, the Navy declared them in default and demanded the return of $1.35 billion.

The contractors sued, asking to keep the money and seeking $1.2 billion more. They said their work had been frustrated by the government’s failure to share classified technology. The government disputed that, but would not explain why, invoking the state secrets privilege.

An appeals court repeatedly ruled against the companies, saying at one point that national security interests trumped the companies’ rights under the Constitution’s due-process clause.

There was no dispute during the argument on Tuesday that the government was entitled to invoke the privilege. The question was what should have happened when it did.

The two sides also seemed to agree that the answer to that question could be found in a passage in the leading state-secrets decision, United States v. Reynolds. That decision, from 1953, dismissed a case brought by the widows of men who died when a B-29 bomber crashed in Waycross, Ga., during a secret mission.

But the court in Reynolds said the case might have turned out differently if the government had been using the privilege as a litigation shield rather than as a sword. Writing for the majority, Chief Justice Fred M. Vinson said that in criminal cases, for instance, it would be unconscionable to allow the government “to undertake prosecution and then invoke its governmental privileges to deprive the accused of anything which might be material to his defense.”

“Such rationale,” Justice Vinson continued, “has no application in a civil forum where the government is not the moving party.”

At the argument on Tuesday, Neal K. Katyal, the acting United States solicitor general, said the government was not the moving party referred to in Reynolds here because of the way the contract was designed and the way claims against the government must be litigated.

Chief Justice John G. Roberts Jr. told Mr. Katyal that the government’s proposed approach “is a pretty convenient rule for you.”

Justice Elena Kagan agreed, saying “that really does sound like a tails you win, heads you win.”

Carter G. Phillips, a lawyer for the contractors, said the passage in Reynolds meant that the government was not free both to demand money from his clients and to invoke the privilege when they sought to present a defense.

But Justice Stephen G. Breyer said the statement in Reynolds did not fit the circumstances of the new case particularly well.

“If we accept as a principle of law what was said in Reynolds, a criminal case or whatever, and apply it to government contracting, where sophisticated contractors are perfectly capable of negotiating their own contract, we are not just throwing a monkey wrench into the gears of government contracting,” Justice Breyer said. “We’re throwing the whole monkey.”

Justice Antonin Scalia proposed to resolve the case based on what he called “the ‘go away’ principle of our jurisprudence.”

That principle means, he explained, that the courts should do nothing when they cannot determine which side is right because of the state-secrets privilege.

“So to say ‘go away’ means everybody keeps the money he has,” Justice Scalia said.

Mr. Phillips, representing the contractors, seemed open to Justice Scalia’s approach. “Maybe to some extent you could say we’re sort of being a little greedy,” he said, in asking for $1.2 billion on top of the $1.35 billion his clients hope to keep.

Justice Sonia Sotomayor seemed both intrigued by Justice Scalia’s proposal and uncertain about whether it represented a principled way to resolve the two consolidated cases, General Dynamics v. United States, No. 09-1298, and the Boeing Company v. United States, No. 09-1302. (Boeing has merged with and is the corporate successor to McDonnell Douglas.)

“Mr. Phillips,” Justice Sotomayor said, “give us a way, a reasoned way, to reach the result Justice Scalia is suggesting, because you are being greedy. You admitted it.”

He did not respond directly, but Justice Kagan expressed doubts about having multibillion-dollar disputes turn on the happenstance of which side was holding the other’s money.

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