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Government Asserts State Secrets Privilege in Defamation Suit Against Non-Profit

Lauren Bateman
Monday, September 22, 2014, 11:30 AM
Last week---and in a somewhat unusual development---the Department of Justice filed a motion to intervene, stay, and dismiss a private lawsuit against a non-profit organization, citing the state secrets privilege.

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Last week---and in a somewhat unusual development---the Department of Justice filed a motion to intervene, stay, and dismiss a private lawsuit against a non-profit organization, citing the state secrets privilege. In short, the United States believes that the litigation's further progress might risk the release of national security information. 
United Against Nuclear Iran (UANI) is a private non-profit group that describes its core mission as "ending the economic and financial support of the Iranian regime by corporations, firms, entities, and individuals at a time when the international community is attempting to compel Iran to abandon its illegal nuclear weapons program, support for terrorism and gross human rights violations."  In May 2013, the organization accused Victor Restis, a Greek businessman, of providing "shipping and financial services to the Iranian regime and facilitating the expansion of its oil industry."  Restis filed suit against UANI in the Southern District of New York for defamation.
The lawsuit swiftly attracted the attention of the Department of Justice. Last month, Matt Apuzzo from the New York Times reported that "a federal law enforcement official who was briefed on the case and was not authorized to discuss confidential matters" disclosed that the government was "concerned enough about [the release of UANI's internal documents] that government lawyers are quietly mediating settlement talks to try to end the lawsuit."  Against this backdrop, the government has written letters and filed motions with S.D.N.Y. Judge Edgardo Ramos in an effort to halt discovery and dismiss the suit.
In a letter dated April 9, 2014,  the government requested time to determine whether a special evidentiary privilege for law enforcement matters might protect information at issue in discovery of the case.  Mr. Restis' attorney responded five days later, writing:
[There are] three possible categories of documents in UANI's possession: (1) those created by UANI itself; (2) those received from third parties other than the Government; and (3) those received from the Government itself. No privilege can apply to the first two categories, and Defendants cannot manufacture a privilege simply by providing these privately created documents to the Government. And with respect to the third category, any privilege that could have applied has been waived if the Government gave them to Defendants.
On September 12, the United States ratcheted up its case by filing a motion invoking another evidentiary protection, the state secrets privilege.  Without revealing the identity of the agency concerned with the potentially-privileged information, the type of information at issue, or the basis for assertion of the privilege, the Department of Justice asked that the case be dismissed, claiming that any further discovery or litigation would risk disclosure of national security secrets. The government also noted that an ex parte, classified submission to assist the court in determining whether the state secrets privilege had been properly invoked would accompany the unclassified motion.
In a letter dated September 17, Mr. Restis' attorney wrote Judge Ramos:
Absent further disclosure from the Government, the Plaintiffs cannot meaningfully respond to the Government’s claim. The Plaintiffs cannot test whether the supposed evidence at issue is a state secret, and they also cannot test the relevance of that evidence to its case. That is incredibly important, as the Government has sought dismissal. But “[o]nly when no amount of effort and care on the part of the court and the parties will safeguard privileged material is dismissal warranted.” Fitzgerald v. Penthouse Int’l, Ltd., 776 F.2d 1236, 1244 (4th Cir. 1985). The Plaintiffs plan to advance their claims without using any state secrets, and it is not clear how state secrets could be relevant to the defense. Are the supposed state secrets relevant to all of Plaintiffs’ claims, or could some proceed without implicating state secrets? What element of the claims do the state secrets relate to, and could that be addressed through a stipulation as to that element or by limiting the evidence in some manner? Are state secrets relevant to an affirmative defense and, if so, are Defendants even asserting that defense? Is the relevance of the supposed state secrets to this case so weak, or have the Defendants misused information in their possession, such that the burden of not utilizing that evidence should be shouldered by them? Are alternative remedies to dismissal sufficient?
Giving context to the proceedings, Steven Aftergood from Secrecy News reports that:
Although an assertion of the state secrets privilege in private litigation is unusual, it is not unheard of. A 2011 review of pending cases by the Department of Justice said that “Several of the cases in which the privilege was invoked involved purely private litigation — not challenges to Executive Branch conduct.”
(Hat tip to Mr. Aftergood, for his always excellent reporting and for compiling documents relevant to the case.)

Lauren Bateman is a student at Harvard Law School, where she is an editor of the Harvard Law Review. She previously worked as a National Security Legislative Correspondent for Senate Majority Leader Harry Reid, and she takes a special interest in legislative procedure. She also interned for the United States Attorney's Office for the District of Nevada, and was a Research Fellow for the Project on National Security Reform. She graduated with a B.A., magna cum laude, in History and Government from The College of William & Mary in 2009.

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