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State Secrets and Today’s Supreme Court Decision in General Dynamics Corp. v. United States

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Monday, May 23, 2011 at 11:31 AM

The Supreme Court today issued a unanimous opinion in General Dynamics Corp. v. United States, bringing to a close (for now) a long-running dispute between GD and the US Government concerning a contract to build stealth aircraft for the Navy.  In brief, GD contracted to build the A-12 as a stealth plane, but fell behind schedule and ultimately suffered termination of the contract.  GD argued that it fell behind only because the government failed to share its superior knowledge of stealth technology, and sought relief under the contract terms.  For its part, the government sought recovery of the progress payments it previously had made to GD.  At the heart of the matter, of course, were highly-sensitive secrets relating to stealth technology, and perhaps not surprisingly the question eventually arose whether the case as a whole, or at least certain issues, could be litigated at all.  In today’s ruling, written by Justice Scalia, the Court concluded that (i) litigation of GD’s “superior knowledge” defense would result in disclosure of state secrets; (ii) the superior knowledge defense therefore cannot be litigated; (iii) that defense is inseparable from the larger question of liability on the contract; (iv) the contract claim as a whole therefore cannot be litigated; and (v) the proper remedy in this situation is to leave parties precisely where they stood at the time the suit was filed.  The underlying theory of it all is that this is a risk that the parties did or at least should have assumed when they contracted in relation to a matter so obviously implicating state secrets.

I’ve already fielded a few inquiries from reporters who want to know if this bears on any of the far-more controversial cases involving state secrets, such as those relating to torture or warrantless wiretapping.  The answer is no.  To be sure, Justice Scalia (writing for the unanimous Court) goes out of his way to state that this case is controlled by Totten and Tenet rather than Reynolds, describing the latter as an evidentiary privilege case and the former as cases involving the justiciability of contracts.  I caution against reading too much into this distinction, however, and in particualr against assuming that it somehow implies the view that application of Reynolds in a non-contract setting somehow cannot result in dismissal of a suit rather than just exclusion of evidence.  At the same time, it is only fair to note that the opinion speaks very expressly in terms of the Court’s “common-law authority to fashion contractual remedies in Government-contracting disputes,” (slip op. at 7), and hence cannot reliably be cited for the proposition that the Court has expressly affirmed the legitimacy of dismissing suits at the threshold on state-secrets grounds in other, non-contractual settings.  The underlying logic certainly points in that direction, of course, but the Court appears to be eager not to weigh in on that issue explicitly at this point.

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