In a 2-1 decision with Republican-appointed judges in the majority, a three-judge panel of the 6th U.S. Circuit Court of Appeals said the plaintiffs had no standing to sue because they couldn't prove their communications had been monitored by the government.
The decision underscored the difficulty of challenging the anti-terrorism program in court because its secret nature prevents plaintiffs from obtaining surveillance information. The National Security Agency had refused to turn over information about the warrantless wiretapping that would have bolstered the court case.
"This is a Catch-22," said Steven R. Shapiro, legal director of the American Civil Liberties Union, which filed the lawsuit. "I think what in effect they're saying is that we can't tell you whether you have been wiretapped because that's a secret. And unless you know you've been wiretapped, you can't challenge that program."
The appeals court vacated a 2006 order by a lower court in Detroit, which had concluded that the warrantless surveillance authorized after the September 11, 2001, terrorist attacks was unconstitutional.
President Bush authorized warrantless monitoring of international telephone calls and e-mails to or from America when one party is believed to be a terrorist or to have terrorist ties. The government has kept details confidential, saying the case involved state secrets whose disclosure would threaten national security.
While sidestepping the question of constitutionality, Judge Alice M. Batchelder and Judge Julia Smith Gibbons wrote that the plaintiffs lacked standing to sue without proof they were monitored by the government.
"The plaintiffs are ultimately prevented from establishing standing because of the state secrets privilege," Mr. Gibbons wrote.
Judge Ronald Lee Gilman, a Democratic appointee, disagreed, saying the plaintiffs were within their rights to sue and that it was clear the surveillance program violated the Foreign Intelligence Surveillance Act of 1978. The government had said it sometimes needed to act without waiting for the secret Foreign Intelligence Surveillance Court, established by the 1978 law.
Earlier this year, the Bush administration said the eavesdropping program is now overseen by a special federal intelligence court, so the case was moot. But, by sidestepping the constitutionality of the surveillance program, the appeals court left open the possibility that Mr. Bush or another president could restart the program, and opponents contend that means the case remains relevant.
The appellate decision didn't address the legality of the wiretapping program or absolve the administration of complying with a congressional subpoena seeking more information, said Senator Leahy, Democrat of Vermont, who is head of the Senate Judiciary Committee.
"There is a dark cloud over the White House's warrantless wiretapping program, and a full response to the outstanding subpoena from the Senate Judiciary Committee by this Administration would be a good start to clearing the air," Mr. Leahy said in a statement.
The Justice Department and the White House were pleased with the outcome.
"We have always believed that the District Court's decision declaring the terrorist surveillance program unconstitutional was wrongly decided," White House spokesman Tony Fratto said.
Department of Justice spokesman Brian Roehrkasse said the surveillance program was "a vital intelligence program that helped detect and prevent terrorist attacks. It was always subject to rigorous oversight and review."
The ACLU pursued the lawsuit on behalf of other groups, including lawyers, journalists and scholars who asserted that the government monitoring prevented them from doing their jobs properly. The suit was filed in January 2006, a month after the program's existence became known publicly.
Others have filed court challenges to the program, but none has gotten as far in the court system.
Mr. Shapiro said the ACLU is considering all its legal options, including asking for a full-court hearing in the 6th Circuit or asking the Supreme Court to consider it. If the ACLU doesn't pursue an appeal, the case would go back to the U.S. District Court in Michigan for dismissal.
A law professor who has closely followed the case thinks it will be dropped.
"The case is not moot because the government could continue the program at any time," a law professor at Wayne State University, Robert A. Sedler, said. "But because it's not now in effect, the Supreme Court is not likely to hear it. It's simply not an important case anymore."