June 3 (Bloomberg) -- President Obama’s administration won dismissal of lawsuits accusing AT&T Inc. and other companies of aiding a domestic-spying program after a judge ruled Congress had shielded telecommunications firms from such claims.

U.S. District Judge Vaughn Walker in San Francisco said today that a law passed by Congress in July provided retroactive immunity to lawsuits claiming the companies violated privacy laws by giving information about customers’ telephone and e-mail communications to the government without court permission.

The cases have been at the center of a controversy over whether the government can block lawsuits over anti-terrorism programs on grounds that they may reveal national security secrets. The Bush administration sought to dismiss the cases, citing “state secret privilege,” and the Obama administration took the same position. Walker refused to throw out the cases in 2006, saying parts of the program were no longer secret.

Walker ruled today that the immunity law is constitutional, rejecting arguments by the Electronic Frontier Foundation, a San Francisco-based free-speech advocacy group that sued on behalf of customers. He also ruled that the immunity law prevents New Jersey and four other states from investigating the telephone companies.

‘Intended Target’

There’s “no room for doubt that these cases were the intended target of the new immunity provisions,” Walker said in his ruling. “It creates a retroactive immunity for past, completed acts committed by private parties acting in concert with governmental entities that allegedly violated constitutional rights.”

Tracy Schmaler, a Justice Department spokeswoman, said the ruling was “appropriate.”

“The court correctly held that Congress did not exceed its constitutional authority under the separation of powers doctrine or improperly usurp the authority of courts when it passed this provision,” Schmaler said in a phone interview. President Barack Obama voted for the immunity bill when he was in the Senate.

AT&T and Verizon Communications Inc., the two largest U.S. phone companies, and Sprint Nextel Corp. were accused of assisting in a U.S. domestic-surveillance program launched after the September 11, 2001, terrorist attacks. At least 30 lawsuits were pending against the companies when the bill passed.

“We are gratified by the court’s decision and we look forward to continuing our focus on serving our customers’ needs,” Walt Sharp, an AT&T spokesman, said in an e-mail.

First Lawsuit

The first lawsuit was filed in 2006 in federal court in San Francisco on behalf of three Californians. A former AT&T technician provided evidence in the lawsuit, saying cables and equipment installed at an AT&T office in San Francisco for the National Security Agency “were tapping into” circuits carrying customers’ dial-in services.

Following the Sept. 11 terrorist attacks, former President George W. Bush ordered the National Security Agency to intercept phone calls to the U.S. from suspected terrorists overseas. Phone company customers sued after the surveillance, conducted without court review, was publicly disclosed in 2005.

The Justice Department sought to dismiss the cases, saying they might reveal classified information about how the government tracks potential terrorists.

Cindy Cohn, an attorney for the Electronic Frontier Foundation, said the group will appeal today’s ruling.

Congress ‘Punted’

“Our argument here is that by giving the attorney general free reign to decide whether our cases go to court, Congress has punted the hard questions to the executive branch,” Cohn said in a phone interview. “All of us have a Fourth Amendment right to be free of indiscriminate searches and Congress can’t take away that right.”

Walker today also declined to sanction the Obama administration in a related spying case in which he previously ordered the government to propose a way for attorneys representing a defunct Islamic charity to review a classified document. The government says it can’t comply because doing so would weaken U.S. control over secret information.

Jon Eisenberg, an attorney for the Al-Haramain Islamic Foundation, had sought sanctions. He is suing the government for allegedly wiretapping him and other lawyers in the case without a warrant. A classified government document allegedly shows that the surveillance took place.

Walker said today at a hearing that sanctioning the government would be a distraction in the three-year-old case. Over objections from the government, he said Eisenberg can file papers asserting that his clients were spied on without relying on classified documents. A hearing is scheduled for Sept. 1 in that case.

The case is In Re. National Security Agency Telecommunications Records Litigation, 06-0672, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net.

Last Updated: June 3, 2009 20:08 EDT