Padillawas arrested in Chicago. His lawyers filed a petition for habeas corpus in New York. The federal court in New York, and the U.S. Court of Appeals for the Second Circuit, both held that a U.S. citizen arrested on American soil cannot be held as an enemy combatant. The Government appealed to the Supreme Court, which reversed, 5-4, solely on the ground that the federal courts in New York had no jurisdiction over Padilla's habeas petition because Padilla was not being held in New York (he is being held in a Navy brig in South Carolina).
Padilla's lawyers then re-filed his habeas in South Carolina. The Fourth Circuit held (contrary to the Second Circuit's earlier ruling) that Padilla could lawfully be held as an enemy combatant. Padilla asked the Supreme Court to hear the case again, and, the day before its answer in the Supreme Court was due, the Government asked the Fourth Circuit to release Padilla from military custody so it could try him in a civillian court (on different charges, not the "dirty bomb" allegations that led them to seize him initially).
The Fourth Circuit refused, saying that Padilla was entitled to have the Supreme Court consider the issue which the Fourth Circuit had already ruled on.