Consider the case of Maher Arar, a Canadian citizen who was rendered to Syria after being detained by U.S. authorities at New York's JFK airport in 2002. Arar was subsequently tortured by Syrians. He's suing the U.S. government for damages. (Read Jane Mayer's compelling account of Arar's experience here)
The government invoked the State Secrets Privilege to respond to certain requests by Arar's lawyer. A judge threw the case out on several grounds, only one of which was the assertion of the privilege. A three judge panel on the appeals court agreed, but now the full appeals court is now re-hearing the case.
What attracts the Obama Administration to this case is that the State Secrets Privilege was not asserted as the primary reason why the case shouldn't go forward, the courts so far have not dismissed it solely on those grounds, and the suit is against the government, not a private corporation. The Obama Justice Department could revoke the privilege claim on the grounds that it was improperly asserted, and they could still keep the case alive. Revoking the privilege in this case would not jeopardize the entire case and wouldn't necessarily set a standard that the administration would later regret. Or they could settle the case, providing a roadmap of sorts for future claims against the government.