Tenet v. Doe, Supreme Court of the United States, March 2, 2005 [ruling that two former spys for the CIA could not sue the agency for support after it had backed out of an alleged agreement to provide them with permanent stipends]. Excerpt from the court's opinion by Chief Justice Rehnquist:

We reverse because this holding contravenes the longstanding rule, announced more than a century ago in Totten, prohibiting suits against the Government based on covert espionage agreements….

The state secrets privilege and the more frequent use of in camera judicial proceedings simply cannot provide the absolute protection we found necessary in enunciating the Totten rule. The possibility that a suit may proceed and an espionage relationship may be revealed, if the state secrets privilege is found not to apply, is unacceptable: "Even a small chance that some court will order disclosure of a source?s identity could well impair intelligence gathering and cause sources to 'close up like a clam.' CIA v. Sims, 471 U. S. 159, 175 (1985). Forcing the Government to litigate these claims would also make it vulnerable to "graymail," i.e., individual lawsuits brought to induce the CIA to settle a case (or prevent its filing) out of fear that any effort to litigate the action would reveal classified information that may undermine ongoing covert operations. And requiring the Government to invoke the privilege on a case-by-case basis risks the perception that it is either confirming or denying relationships with individual plaintiffs.

Read the full text of the opinion [PDF]. Reported in JURIST's Paper Chase here.