A federal appeals court on Wednesday upheld a contempt of court ruling against Ladar Levison and his now-defunct encrypted e-mail service provider, Lavabit LLC, for hindering the government's investigation into the National Security Agency leaks surrounding Edward Snowden.

In the summer of 2013, Lavabit was ordered to provide real-time e-mail monitoring of one particular user of the service, believed to be Snowden, the former NSA contractor turned whistleblower. Instead of adequately complying with the order to turn over the private SSL keys that protected his company's tens of thousands of users from the government's prying eyes, Levison chose instead to shut down Lavabit last year after weeks of stonewalling the government.

Levison reluctantly turned over his encryption keys to the government, although not in a manner that the government deemed useful—he provided a lengthy printout in tiny type, a move the authorities said was objectionable. The company had treated the matter "as if it was a contract negotiation," rather than a "lawful court order,” Assistant US Attorney Andrew Peterson, who represented the government, told the appellate court.

Levison said, “I have only ever objected to turning over the SSL keys because that would compromise all of the secure communications in and out of my network, including my own administrative traffic.”

In the opinion, Judge G. Steven Agee of the Fourth US Circuit Court of Appeals didn't rule on the merits of Levison's claims and found that a procedural error on his part forced the court’s hand.

Judge Agee, who was joined in his ruling by Judge Paul Niemeyer and Judge Roger Gregory, ruled that Levison should have brought his claims that the government allegedly exceeded its authority under the US “pen register” and “trap and trace” statutes prior to the district judge holding him in contempt of court last year.

Agee explained, "Lavabit proposes that we hear its challenge to the Pen/Trap Order because Lavabit views the case as a matter of 'immense public concern.'" (Reply Br. 6.) Yet there exists a perhaps greater "public interest in bringing litigation to an end after fair opportunity has been afforded to present all issues of law and fact.”

Agee concluded that “Lavabit neither ‘plainly’ nor ‘properly’ identified these issues for the district court.” He continued, “We decline to hear Lavabit’s new arguments merely because Lavabit believes them to be important.”

Attorney Brian Hauss from the ACLU, which filed an amicus brief in the case, told Ars:

The court focused its decision on procedural aspects of the case unrelated to the merits of Lavabit’s claims. On the merits, we believe it’s clear that there are limits on the government’s power to coerce innocent service providers into its surveillance activities. The government exceeded those limits when it asked Lavabit to blow up its business—and undermine the encryption technology that ensures our collective cybersecurity—to get information that Lavabit itself offered to provide.

Levison did not immediately comment on the contempt order, which carries a fine of thousands of dollars.

UPDATE 1:20pm CT: Levison told Ars: "I haven't read the court's opinion, nor sought advice from lawyers on any possible legal strategy, so that is still pending. My focus as of late has been on building a technological solution [in the form of the DarkMail Alliance]; which would take the decision away from the will of man."