If you've been worried about government overreach in the years since 9/11, you've probably heard about the "state secrets" privilege. As Henry Lanman explained it in Slate six years ago, the privilege blossomed over the past decade from a quirky little judge-made rule for keeping some classified material out of the courts into a broad claim that whole suits against the government should be dismissed outright. Despite some feints toward reining it all back in, the Obama Administration has generally continued to invoke the privilege to dismiss lawsuits in which government actors are on the hook for the Bush-era secret rendition program and warrantless eavesdropping. When the Supreme Court agreed to hear General Dynamics v. United States (consolidated with Boeing v. United States), the first major state secrets case since the Court established the privilege in United States v. Reynolds in 1953, court-watchers hoped the justices would seize this opportunity to clarify the scope of the privilege and the consequences to the government of invoking it.
Instead, the court today seized the opportunity to conduct a rollicking roller-derby smash-up on American contract law. The justices seem to begin and end with the proposition that the state secrets doctrine is uncontroversial. The only question left to them is what to do with the still-squabbling parties to a 20-year old contract dispute over some fancy aircraft.
In 1986, government contractors—McDonnell Douglas, (now merged with Boeing Co.) and General Dynamics Corp—agreed to build the Navy a state-of-the-art stealth airplane, the "A-12 Avenger." The contractors had trouble meeting various benchmarks, and in 1991, the Navy cancelled the program altogether, claiming the contractors had defaulted. Then they sought repayment of $1.35 billion spent, plus more than $2.5 billion in accumulated interest.
The contractors sued the government, claiming that they couldn't deliver the A-12 Avenger in part because the Navy failed to share crucial information about stealth technology with them, leaving them to "reinvent the wheel." The government invoked the state secrets privilege to protect that classified information. The lower courts then ruled in favor of the Pentagon, leaving the contractors to argue that it was impossible for them to defend themselves against the government's claim they had defaulted, if the government also chose to keep key evidence secret. As their lawyer Carter Phillips explains it this morning, if the lower court's decision is allowed to stand, the U.S. government can "reach into the government contractor's pocket, withdraw $1.35 billion that were spent by the United States … and when the contractor seeks to defend against the claim, the government can assert the state secrets privilege," hobbling the defense completely.
I will pause just briefly to note that at a moment in which many Americans are feeling a little queasy about corporate greed and profits, it's not always wise to paint one's defense contractor clients as walking around town with $1.35 billion jingling away in their pockets. Justice Ruth Bader Ginsburg makes a similar point when she accuses Boeing and General Dynamics of trying to get the courts to award them funds over and above the $1.35 billion they have already been paid, by asking for another $1.2 billion for work done designing the aircraft. She tells Phillips he seems to want to "emerge as a total winner, that is to get from this contract what you would have gotten if it had been successfully completed, including any profit." Justice Antonin Scalia adds that since the state secrets privilege makes it impossible for a court to determine who is in the wrong, the best possible solution is "to leave the parties where they are … . That would mean you would keep your $1.35 billion, but you wouldn't be entitled to sue for the additional amount."
Phillips goes for candor. The $1.35 billion "is the minimum that we should be entitled to, and maybe to some extent you could say we're sort of being a little greedy," he confesses.
Justice Sonia Sotomayor takes him up on that offer: "Mr. Phillips," she says, "Give us a reasoned way to reach the result Justice Scalia is suggesting, because you are being greedy. You admitted it."
Sotomayor then adds, "Explain to me why it's unfair, given that you're two sophisticated contracting parties, to say you entered a contract knowing the government could invoke state secrets, it has, and so you bear the risk of that. You always knew the government could do this."