According to the article, they are suing related to FOIA record requests. Whether or not the fbi is doing something illegal with encryption sounds pretty unrelated to whether their response to the foia request was legal.
I don't see how that has any legal merit. There's a FOIA exemption for "Information compiled for law enforcement purposes that . . . Would disclose techniques and procedures for law enforcement investigations or prosecutions, or would disclose guidelines for law enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circumvention of the law".
Ianal