A federal judge in California ruled Thursday evening that Defense Secretary Pete Hegseth's designation of Anthropic as a supply chain risk was unlawful, ordering the Pentagon to lift the label that had barred federal agencies and contractors from using the company's Claude models.
Ruling Cites First And Fifth Amendment Violations
U.S. District Judge Rita Lin wrote that Hegseth's labeling of Anthropic as a threat to national security was “arbitrary and capricious” and constituted “unlawful retaliation” in violation of the First Amendment. She added that Anthropic had also been denied due process guaranteed under the Fifth Amendment. The government's “words and deeds confirm that the challenged actions were based on a desire to make a public example out of Anthropic for its ‘arrogance’ in criticizing the government,” she wrote.
Dispute Over Autonomous Weapons And Domestic Surveillance
The confrontation began earlier this year after Anthropic refused to accept a Pentagon contract that would have overridden the safety guardrails the company applies to Claude, including bans on fully autonomous weapons and mass surveillance of American citizens. In March the Defense Department designated Anthropic a supply chain risk, a label previously reserved for firms tied to foreign adversaries, and directed federal agencies to stop working with the maker of Claude. Lin noted the label was inconsistent with the department's simultaneous efforts to buy Anthropic technology, including its expanding infrastructure partnerships.
Second Case Continues In D.C.
The California decision wraps up one of Anthropic's two lawsuits against the Defense Department; a separate case is still pending in the D.C. Circuit Court of Appeals, where a three-judge panel heard arguments in May. Government agencies retain the right to appeal the California ruling. The decision arrives as Anthropic simultaneously scales up commercial deals, including its $45 billion compute agreement with Nscale and its Claudeforce launch with Salesforce.
Reporting based on coverage from TechCrunch, CNBC, CNN and The Hill.