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Did US Government Invoke “State Secrets” in Defamation Case Because Anti-Iran Organization Is Engaged in Graymail?

Attorney General Eric Holder, head of the Justice Department (US Government Photo from the Department of Education)

Attorneys for a business owner, who claims his company, Enterprises Shipping and Trading SA, was defamed by an anti-Iran advocacy group, are imploring a federal judge to not allow the United States government to invoke the state secrets privilege without making their reasons for doing so public. They suggest to the judge that the organization may be engaged in graymail.

Greek businessman and ship owner Victor Restis alleges that United Against Nuclear Iran (UANI) falsely and maliciously identified him as part of a the organization’s campaign to name and shame individuals and companies that do business in Iran. But the Justice Department moved to invoke the state secrets privilege in September.

The outcome of this case has the potential to drastically widen the state secrets privilege in a way that will make it even easier than it already is for the government to have lawsuits dismissed against private companies or organizations. Even worse, the government’s interest in this case remains very unclear, and the government is seeking to get away with not having to publicly present why it must step in and have the lawsuit dismissed.

As the latest filing [PDF] describes, “Everything about the government’s intervention is strange.”

Discovery requests were made in early 2014 for “documents in the computers and filing cabinets” of the “private non-profit” UANI, which attorneys believe are “relevant to its public allegations that the plaintiffs were ‘front-men’ for Iran who were violating the law.” UANI objected to nearly all of the requests and only produced a few documents “due to the government’s potential interest in the case.” The government subsequently asked “for time to consider tis interests, moved for stays of the private parties’ discovery, explained it was considering the ‘law enforcement’ privilege and ultimately sought dismissal of this private case based on the state secrets privilege.”

Restis’ attorneys do not know what “state secret(s)” the government is trying to protect. “Unless defendants violated the laws governing the handling of classified materials, nothing in their possession could properly be classified. If the refusal to disclose information is to protect a source of information to the government, then the original assertion of the law enforcement privilege, with its requirements for more public disclosure and a balancing of interest, would be appropriate. If the refusal is based on protecting a relationship defendants have with a foreign entity, then whatever the secret is would relate to a foreign country and not the US government.”

They have no idea if the secrets relate to the military, intelligence or diplomatic secrets.

It is an “odd case” in which to assert the state secrets privilege because it involves a “dispute between private parties with no apparent connection to the government or to traditionally protected classified information. And, unlike every other state secrets case, the government has refused to make any public declaration of the nature of its interest in the case, the subject matter of the state secrets, the relevance of any such ‘secret’ to the issues or request for information in the case or its theory for why it believes this case cannot proceed in any fashion due to the purported state secrets.”

The board of directors of UANI is filled with former US government officials. The organization, as UANI’s website recounts, “was founded in 2008 by Ambassador Mark D. Wallace, the late Ambassador Richard Holbrooke, former CIA Director Jim Woolsey and Middle East expert Dennis Ross.” It asserts that its campaigns have focused on “ending the economic and financial support of the Iranian regime by corporations 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.”

Defendants are accused of leaking “secret” information to the press while in the middle of this case. They “continue to say whatever they want and then, when their targets fight back, they run and hide behind the government without ever having to defend their words or actions.” The attorneys go on to suggest that the intervention by the government has given the organization a “license to defame.”

For example, the defendants are accused of providing false information about “an American company’s legal and humanitarian cargo of soya beans to Iran aboard Plaintiffs’ vessel” and how it violated sanctions against Iran. The “false allegations” were printed and later the Jerusalem Post “issued a retraction and apology.”

“In effect, defendants may be graymailing the government by using the information or relationship they have for their campaigns and then threatening to expose that information or relationship if the government does not end a case brought by those against whom their campaigns are directed,” Restis’ attorneys state.

As Georgetown Law University professor Laura Donohue warned in a paper written in 2010, “Many of these companies have access to information that would make the state politically and legally vulnerable to exposure.” Or, in this case, a non-profit organization may have access to such sensitive information.

“If the government refuses to intervene, the company may not just make the information it currently holds public, but it can begin subpoenaing internal government documents and reports allegedly necessary to its defense, thus spurring the government to act,” Donohue wrote. [For example, this appears to be how Blackwater founder Erik Prince has dodged criminal prosecution.]

Now, in these cases, the government can invoke “state secrets” and then claim to the judge that a defense could not be made so the case must be dismissed. But Restis’ attorneys has no idea “what the defense is or how the state secrets evidence would support it.” It is impossible to tell if not being able to present “state secrets evidence” would make it impossible for UANI to defend itself against defamation allegations.

A number of questions are posed by Restis’ attorneys if the government and defendants are making this claim:

…Do [defendants] maintain any classified information in their files (despite procedures that would seem to prevent that)? If defendants or their counsel do have classified information, how did they obtain that information, and do defendants and their counsel have adequate security clearances such that they can properly access that information? Why would this information constitute a valid defense against a defamation claim? What element of the defamation claim would this provide a valid defense against? Do defendants plan to even assert the defense that raises the government’s concern? Will defendants deny that they used whatever the government is trying to protect in their campaign against plaintiffs, such that the secret has not already been improperly used?…

Again, addressing the peculiarity of the case, the filing argues, “There does not seem to be a state secret in the actual libelous claims made by the defendants themselves because, rather than keep those claims a secret, defendants have shouted them everywhere they can. If the state secret lies in how the defendants got that information or why they made those libelous claims, this is an all the more unique case where the defendants are using the state secrets as both a sword (as the basis to attack the defendants) while also using the state secret as a shield (in seeking to dismiss this case).”

“It appears the government is contending it is not the libelous statements themselves that are state secrets, but that state secrets are somehow intertwined with the basis for why those false claims were made,” the filing additionally declares. “Still, it is not at all clear what the basis could be for the state secrets claims or why the government is comfortable sharing such secrets with the private party defendants, but not plaintiffs’ counsel with security clearances or perhaps even the court itself.”

Overall, the more attorneys for Restis articulate their frustration, the more outrageous the government’s decision to intervene on behalf of this anti-Iran advocacy organization becomes.

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Kevin Gosztola

Kevin Gosztola

Kevin Gosztola is managing editor of Shadowproof. He also produces and co-hosts the weekly podcast, "Unauthorized Disclosure."