A unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals said that a lower court judge wrongly tossed out the lawsuit after the government asserted the case was a "state secret" that would harm national security if allowed to go forward.

The trial court judge dismissed the case before the prisoners could present evidence allegedly showing that the company's participation in the program was illegal. The Bush administration and then the Obama administration argued that the lawsuit should be thrown out before the government turns over any evidence because the nature of the legal action is itself a classified matter.

The federal government inserted itself into the lawsuit on the company's side because it said feared top-secret information would be disclosed.

The appeals court, however, said the five prisoners suing San Jose-based Jeppesen Dataplan Inc. can try to prove their case without using top-secret information that legitimately needs protection from disclosure.

Seattle-based WaMu, which filed for Chapter 11 reorganization along with its Washington Mutual Investment Corp. affiliate in September, contends in the complaint that the funds are part of its bankruptcy estate.

The complaint was filed in U.S. Bankruptcy Court in Delaware on Monday, one month after New York-based JPMorgan filed its own adversary action asserting that the funds were included in its $1.9 billion purchase of substantially all of WaMu's banking assets from the Federal Deposit Insurance Corporation.

Mattel sued MGA in 2004, alleging that Bratz designer Carter Bryant developed the concept for the pouty-lipped doll while working for Mattel.

After a four-year legal dispute, a jury last year awarded Mattel $10 million for copyright infringement and $90 million for breach of contract.

After the verdict, Mattel sought to block MGA from ever making the Bratz dolls, and Larson ordered the company in December to end its sales in early 2009.

MGA argued that retailers would not order the toys unless the court could guarantee they would remain in stores through most of this year. MGA got a reprieve in January when Larson ruled that the dolls could remain in stores for the rest of the year.

He left open the possibility that Mattel or a court-appointed receiver could ultimately market the dolls this year.

A hearing is scheduled for May 18 to discuss whether the receivership should be made permanent.

The court will hear arguments Tuesday in an Oregon case in which a local school district contends that students should at least give public special education programs a try before seeking reimbursement for private school tuition.

A federal appeals court sided with a high-school student identified in court papers only as T.A. The student enrolled in a $5,200-a-month private program and sought reimbursement from the Forest Grove School District.

The Supreme Court heard a similar case from New York in 2007, but split 4-4 on the outcome.

The case is Forest Grove School District v. T.A., 08-305.

But the court, in a 5-4 decision Tuesday, is refusing to pass judgment on whether the Federal Communications Commission's "fleeting expletives" policy is in line with First Amendment guarantees of free speech. The justices say a federal appeals court should weigh the constitutionality of the policy.

The decision throws out a ruling by the 2nd U.S. Circuit Court of Appeals in New York. The appeals court had found in favor of a Fox Television-led challenge to the policy and had returned the case to the FCC to let the agency provide a "reasoned analysis" for its tougher line on indecency.

The commission appealed to the Supreme Court instead.

Charlotte, N.C.-based Bank of America is looking at a shortfall in the billions of dollars, the paper said, citing people familiar with the situation. Both banks plan to rebut the preliminary findings, according to the paper, with Bank of America expected to respond Tuesday ahead of its shareholder meeting Wednesday. Bank of America declined to comment.

Citigroup said in a statement, "Until the results of the stress tests are announced, our regulators have prohibited all financial institutions, including Citi, from making any comments related to the stress tests."

A Citi spokesman added that the bank is continuing with its plan to exchange debt for equity and shed assets as part of a program to further bolster its capital position.

Citi has reached a basic agreement to sell its Japanese brokerage unit, Nikko Cordial, to Sumitomo Mitsui Financial Group Inc. for 500 billion yen ($5.2 billion), according to The Nikkei business newspaper. Citi declined to comment on the potential sale of the unit.

Shares of Citigroup fell 18 cents, or 5.9 percent, to $2.89 in morning trading. Bank of America shares declined 59 cents, or 6.6 percent, to $8.33.

Treasury Department spokesman Andrew Williams said Treasury officials would not comment on whether regulators told Bank of America and Citigroup they may need to raise more capital.

The high court on Monday refused to hear James L. Andros III's appeal of a lower court decision throwing his lawsuit out.

Andros was arrested after an on-call medical examiner mistakenly listed the death of his wife, Ellen, as homicide through asphyxiation in 2001.

The charges were dropped a month before his trial after it was determined his wife had died of a rare heart condition. By that time, the veteran Atlantic City policeman had been suspended from his job and lost custody of his two young daughters.

Judges at the U.S. District Court and the U.S. Court of Appeals ruled that Andros could not sue because the prosecutors were acting in their official role in charging him and the investigators had probable cause to suspect him in his wife's death.