General Dynamics Corp. v. United States

General Dynamics Corp. v. United States, 563 U.S. 478 (2011), is a U.S. Supreme Court case in which the State Secrets Privilege prevented the plaintiff from using the evidence it needed to protect itself from an expensive judgement.
Background.
In 1988 the U.S. Navy ordered a new stealth aircraft, the A-12 Avenger, to be built by contractors General Dynamics and McDonnell Douglas. In 1991 the Navy gave up and cancelled the contract, saying too little progress had been made, and asked the contractors to return payments already made. The contractors refused, saying the government had kept too much information secret under the "state secrets privilege" for there to be adequate progress.
The manner in which the program was canceled led to years of litigation between the contractors and the Department of Defense over breach of contract. On 1 June 2009, the U.S. Court of Appeals for the Federal Circuit ruled that the U.S. Navy was justified in canceling the contract. The ruling also required the two contractors to repay the U.S. government more than US$1.35 billion, plus interest charges of US$1.45 billion. Boeing, which had merged with McDonnell Douglas, and General Dynamics vowed to appeal the ruling.
In September 2010, the U.S. Supreme Court said it would hear the arguments of the two companies that the government canceled the project improperly and that the use of a state secrets claim by the U.S. prevented them from mounting an effective defense.
Opinion of the Court.
In May 2011, the Supreme Court set aside the Appeals Court decision and returned the case to federal circuit court. The court unanimously held that "when litigation would end up disclosing state secrets, courts may not try the claims and may not award relief to either party."
In January 2014, the case was settled with Boeing and General Dynamics agreeing to pay $200 million each to the U.S. Navy.