General Dynamics Corp. v. United States; Boeing Company v. United States

This case considers whether the government can maintain a claim against a contractor for breaching a government contract if the government’s use of the state secrets privilege bars the contractor’s defense to that claim. The contractors argue that the government cannot use the state secrets privilege in this context. The United States responds that courts should not dismiss its claim against the contractors because the government is not the moving party. The United States further argues that even if it was the moving party, courts should not penalize the government for invoking the state secrets privilege to protect national security.

Can the Government Maintain a Claim Against a Party if It Invokes the State Secrets Privilege to Deny a Defense to That Claim?

Boeing and General Dynamics argue that the United States cannot maintain a claim against a private party and then use the state secrets privilege to preclude a defense to that claim. Boeing explains that the state secrets privilege prevents the government from disclosing “military, intelligence, and diplomatic secrets” if disclosure would “harm national security.” In United States v. Reynolds, the Supreme Court held that the government could not use the state secrets privilege to prevent the other party from asserting a defense where the government was the moving party. General Dynamics and Boeing argue that Reynolds should apply here. Boeing explains that the United States is the moving party because it raised the underlying claim for relief under the contract. It adds that the United States has the burden of proof to show that Boeing defaulted on the contract.

General Dynamics adds that although the contractors are the plaintiffs, a claim to terminate a government contract on the grounds of default is essentially a government claim. General Dynamics also asserts that if the Court holds that the contractor was the moving party, it would create unfair results; contractors would be subject to severe monetary penalties if they were unable to defend against government claims. General Dynamics argues that if the United States was allowed to terminate the contract, General Dynamics and Boeing would owe the government monetary damages and could even be prevented from receiving future government contracts because they would be considered irresponsible. General Dynamics contends that since the United States is the moving party, and its use of the state secrets privilege precludes the contractors’ defense, the court must enter judgment for the contractors.

The United States responds that “the government is not the ‘moving party.’” It argues that under Reynolds, the moving party is a party that is seeking affirmative judicial relief against the other party. The government asserts that Boeing and General Dynamics are the only parties seeking judicial relief because they are requesting money damages. In contrast, United States argues that it is only requesting termination of the contract. The United States refutes General Dynamics and Boeing’s arguments that an action to terminate a government contract on the grounds of default is a government claim. It argues that only the contractor can commence an action in the Court of Federal Claims. The United States argues that the contractors are the moving parties because the information for which the government raised the state secrets privilege was relevant to the contractors’ claims that they defaulted on the contracts due to the government’s failure to share information. The United States responds that even if it were the moving party, it should not be penalized for invoking the privilege because courts have never dismissed a civil case in response to the government’s use of the state secrets privilege.

Does it Violate Due Process Clause of the Fifth Amendment to Permit the Government to Maintain a Claim if it Uses the State Secrets Privilege to Bar a Party’s Defense to that Claim?

Boeing and General Dynamics contend that allowing the government to maintain its claim after evoking the state secrets privilege violates the Due Process Clause of the Fifth Amendment. General Dynamics contends that an opportunity to defend against liability is part of the “fairness” of the judicial system. General Dynamics also argues that allowing the government to proceed with its claim is inequitable because the government used the state secrets privilege to prevent General Dynamics and Boeing’s defense when they could support their defense without using classified information. Boeing cites cases where courts dismissed claims where the invocation of other privileges, such as the privilege against self-incrimination and the attorney-client privilege, violated the Due Process Clause.

The United States counters that courts cannot penalize a party by dismissing a claim when the party properly invokes a privilege. The government argues that the cases Boeing cites involving other privileges do not apply because courts rarely dismiss claims even when the invocation of these privileges preclude defenses. The United States further asserts that it should not be penalized for invoking the privilege because it cannot waive the privilege and disclose information that would harm national security. The United States argues that it would not be inequitable to allow the government to proceed with its claim because it does not seek harsh penalties from the contractors.