In March 2006, Klingenschmitt appeared in his Navy uniform at a political protest at Lafayette Square in front of the White House, alongside Roy Moore. He was subsequently court-martialed at Naval Station Norfolk and in September 2006 was found guilty by the jury of one misdemeanor count of disobeying a lawful order (Klingenschmitt had been instructed by his commanding officers not to appear at media or political events in uniform). The jury recommended that Klingenschmitt receive a reprimand and forfeit $3,000 in pay over a twelve-month period, although the jury also recommended that the forfeiture be suspended.

Klingenschmitt was subsequently ousted from the Navy and filed a lawsuit in the Court of Federal Claims, claiming that he was wrongfully discharged from the Navy and seeking reinstatement, and arguing that his First Amendment rights were violated.

The court rejected Klingenschmitt's claims, and held that the order issued to Klingenschmitt was properly "based on Navy regulations that prohibit the wearing of a uniform in connection with political activities" and "did not limit Dr. Klingenschmitt's right to engage in any religious practices (including presenting an opening prayer at the event or invoking the name of Jesus in his prayer)." The Court ruled that the order "simply prohibited Dr. Klingenschmitt from engaging in this activity while wearing his uniform at what was clearly a political event and not, as Dr. Klingenschmitt seems to suggest, a bona fide religious service