On February 25, 2026, the U.S. Supreme Court affirmed the U.S. Court of Appeals for the Tenth Circuit, effectively rejecting GEO Group’s invocation of derivative sovereign immunity in pretrial appeal. The case, which centered on claims of forced labor and unjust enrichment, was brought by a former detainee at a private detention facility in Aurora, Colorado, operated by GEO Group under a contract with U.S. Immigration and Customs Enforcement (“ICE”).

The Supreme Court heard oral arguments on November 10, 2025, during which a majority of the justices evidenced skepticism regarding GEO Group’s derivative sovereign immunity invocation. Fluet has been helping clients prepare for this ruling, including by warning, at the start of this week, of the likelihood that the Court’s ruling would curb the appealability of derivative sovereign immunity for government contractors. Now that the Supreme Court has done so, it is imperative that government contractors prepare to operate in this environment, including by considering the following:

This landmark ruling carries significant implications for government contractors across multiple dimensions:

  • Sovereign Immunity Belongs Only to Government: In its decision, the Supreme Court determined that GEO Group’s claim of derivative sovereign immunity is contrary not only to “the general rule that sovereign immunity is not transferrable to government agents” but also previous Supreme Court holdings that “the Government’s immunity from suit ‘does not extend to those that act[] in its name[.]’” Ultimately, the Court found that “sovereign immunity belongs alone to the Government.” This is a blow to government contractors that had relied on sovereign immunity as a jurisdictional shield from liability while performing work on behalf of the U.S. Government for which the U.S. Government would enjoy immunity. It may also be a preview to how the Court will decide in cases we are still waiting for decisions on (Chevron and Flour).
  • Yearsley Provides Potential Merits Defense, Not Immunity from Suit: In evaluating GEO Group’s reliance on Yearsley v. W. A. Ross Constr. Co., in which the Supreme Court held that a federal contractor cannot be held liable for conduct that the Government has lawfully “authorized and directed” the contractor to perform, the Supreme Court held that “Yearsley provides federal contractors a potential merits defense rather than an immunity from suit.” Accordingly, a pretrial order “is not immediately appealable.”
  • Emboldened Plaintiffs: Buoyed by the Supreme Court’s ruling, prospective plaintiffs who might previously have hesitated before bringing suits against government contractors out of concern that their claims would have struggled to overcome derivative sovereign immunity defenses at early stages of litigation may now adopt a different stance, placing strain on such contractors’ legal departments and budgets.
  • Litigation to Take Longer to Resolve: Whereas government contractors previously could have immediately appealed a U.S. District Court’s denial of derivative sovereign immunity under the collateral-order doctrine, such contractors generally must now wait until the court renders a final decision on the merits before appealing, dragging out the litigation and delaying a final resolution of the case.

As part of preparing for the increased likelihood and cost of litigation, government contractors should speak with counsel knowledgeable about compliance and risk mitigation in federal contracting. Fluet’s Government Contracts team is uniquely positioned to provide this guidance, having closely followed both this case and related legal developments affecting federal contractors.

Although circumstances vary, strategic decisions informed by experienced counsel can help mitigate potential liability, make overwhelming situations more manageable, and preserve relationships with government customers.