AT&T told an appeals court in a written brief in March that the case against it for allegedly helping the government spy on its customers should be thrown out, because it cannot defend itself — even by showing a signed order from the government — without endangering national security.

A government brief filed simultaneously backed AT&T’s claims and said a lower court judge had exceeded his authority by not dismissing the suit outright. Because plaintiffs’ entire action rests upon alleged secret espionage activities, including an alleged secret espionage relationship between AT&T and the Government concerning the alleged activities, this suit must be dismissed now as a matter of law,” the government argued.

The telecom giant and the government are appealing a June ruling in a federal district court that allowed the suit brought by the Electronic Frontier Foundation against the telecom to proceed, despite the government’s invocation of a powerful tool called the “states secrets privilege,” which allows it to have civil cases dismissed when national secrets are involved.

California Northern District Court Chief Judge Vaughn Walker ruled, however, that since the government had admitted it was wiretapping Americans without a warrant and that AT&T had to be involved, the case could go forward tentatively. The Ninth Circuit Court of Appeals will hear the government and AT&T’s’ appeal in the coming months.
Read more: http://blog.wired.com/27bstroke6/2007/03/its_too_secret_.html