the conservator eliminated any risk that a cycle could continue where the enterprises obligations to treasury with themselves cause draws from treasuries capital commit the shareholder statutory and constitutional challenges to the rd amendment fail for many reasons but there are three key defects that i'll try to address today st both claims are barred by the recovery act succession clause which transfers to the conservator the authority to decide whether shareholders may bring derivative suits on behalf of the enterprise the type of shareholder injury alleged here that the corporations assets have been unlawfully dissipated to a particular shareholder is plainly derivative rather than direct the shareholders have not cited even a single case to the contrary nd the statutory claim is barred by the recovery act and by injunction clause which prevents courts from restraining exercises of the conservers powers or function the conservator acted well within its authority in deciding that the renegotiation of the enterprises financial obligations may have been appropriate to preserve and conserve treasuries capital commitment the shareholders cannot nd guess the wisdom or motives behind that business judgement rd the constitutional claim fails because president obama had unrestricted power to remove and thus to supervise both of the officials who signed the rd dependent treasury secretary geithner was of course removable at will and so too was acting f h a director demarco thus while the statutory restriction on the president's power to remove the f h a director is invalid it had no prejudicial effect on the rd amendment i welcome the court's question counsel you say that the common stockholders claims can't survive because  they're derivative really claims of the corporation and then barred by the succession clause but it seems to me that they're a little different according to the claims anyway that their stock value of their stock was completely wiped out in a unique way compared to the other holders of interests in the enterprises in other words that this action was directed at them as distinct from the corporation as a whole all of whom recognize that when corporate assets are dissipated that a derivative claim even aware the recipient is a shareholder does that the financial have what you have excuse me but when you have different categories of shareholders or people with financial interests and the complaint is that they were the one class was particularly targeted it does seem to me that that class has a unique claim that can't be characterized as just a claim of the corporation shareholders being treated differently but when the way you're being treated differently is that you're completely wiped out i mean make the corporation doesn't have any particular interest in the balance it seems to me at least not the same sort of interest as the  shareholders who are left out in the cold i think the the arm here is in the st instance to the corporation the claim is that the corporate assets have been dissipated so the corporation does have an injury and i guess one way of making the point i've been trying to make is i think the shareholders would have the exact same objection if fannie and freddie had entered into a contract with the treasury department where they bought a commemorative coin from the treasury department and paid them for that all of it or not more than perpetuity that would exactly like the claims that we cited in our reply before you had a side transaction and two of one shareholder to the disadvantage of all the other shareholders and that there is no difference for purposes of a derivative claim whether the harm to the but give us another example of what direct to apply rather than derivative so direct claims are claims where the injury to the shareholder doesn't turn on a harm to the corporation so for example if shareholders are injured and our right to vote that doesn't improve the rights of the corporation it is a direction holder a claim those and the cases that have recognized direct suits where shareholders are harmed tend to be in those sort of context where there is a dilution of for example voting power that's what the delaware supreme court laid out and it'll pass ok's harm to shareholders because the corporate assets have been dissipated is a derivative claim arms to the shareholders ability to do things that don't turn to harm to the corporation st those are directly whatever you had no the disagreement doesn't they are acting directly on the shareholders contractual rights to dividends that doesn't harm the corporation at all maybe one way of thinking about it is just a different between the size of the pie and the share of the pie the claim here is that the corporate assets have been dissipated that is a question about the shoe the size of the pie and that is the harm to the corporation and your hypothetical what is being changed is the share of the pie by the there's been a direct action on the shareholders rights to dividends that's been transferred to another shareholder but importantly that's not what's going on here it might be the fact when ever the corporation has less assets that's going to affect shareholders ability to get their hands no matter why the corporations assets have been wasted or stolen and you know the judge posner's any and in the th circuit laid this out of pretty clearly that when you have a harm to the corporate assets it just doesn't matter why the you i think in reading this you could do with trying to simplify as much as possible view the shareholders claim as saying we bought into this corporation and disposed of private as well as having a public side and then the government nationalized it that's what they do if you look at they're giving a net worth to try to jury it's nationalizing the company now whatever conservatories do and receivers do they don't nationalize company and when they ashen allies this company naturally they paid us nothing and our share became worthless and so what do you say more legal language but just saying look they nationalized it they gave a company away to the treasury who do you think the treasury is is the government of the united states and what i want to really look into this and you'll discover they didn't get enough money for they did it  to the federal government twenty billion dollars a year what the conservator did was say rather than that i mean that goes to the reasonableness of the agreement that say ok let's have a trial on that do you they think it's a very reasonable thing to did whatever label the plane just want to put on had no idea michael what the actual power that was exercised here was a renegotiation of financial obligations that is what conservatives do day in and day out now the terms of this  renegotiation are fairly unique but that's because the enterprises are in a fairly unique condition most companies don't owe twenty billion dollars a year to the federal government and so when they switch that and they switched it to ensure that there was no risk to the four trillion dollars of committed capital that treasury have committed to these enterprises that is the nature of the agreement here it is an unusual agreement but it is still at the end of the day the day we negotiate in a financial obligation that is a heartland exercise of conservatorship our and if they and i and judging clause means anything it means that you don't nd guess whether they could have done it a different way whether it was a bad deal whether they did it for bad motives at the end of the day what they did is they renegotiated financial obligations justice alito if we agree with you about the removal of the of an acting director and also agree with you that the only relevant action was one taken by the acting director would we have any reason to address the question whether the restriction on the removal of a confirmed director is a constitutional question but let me ask you this what is your response to the argument on the other side that confirms directors took actions pursuant to the amendment and therefore we have to consider the status of confirmed directors your honor i don't think they've actually ever challenged any action in forcing the rd amendment by confirmed our actors and i don't know what those actions would be to this there is a ministerial the rd amendment requires the dividends at most maybe they are big the only thing i can even think they might be talking about though i'd be curious what they have to say is whether to pay the dividends under the rd amendment in cash or instead kind through the liquidation preference that wouldn't do them any good either way so i be surprised that that's what they're touting but other than that i don't know what it would be that they would be referring to if we were to reach the issue of the removal of the conform director and if we were to agree with you on that question what basis do you have for distinguishing between the release that you think is appropriate in this case and the relief that was provided in lot an appointments clause cases where and appointments clause violation was found so i think that the most significant difference is the fact that the in this case the treasury secretary was a party to the action that's being challenged their constitutional claim is a claim that the agency action was unconstitutional insulated from presidential supervision and on like in all of the cases you just mentioned here one of the parties the contract is the treasury secretary who of course is removal of will by the president is the president's right hand man so no one can say that the president didn't have sufficient control over this agreement and that's why i just want to make sure that i get the gist of the argument that i think i have it right i know you and the shareholders disagree on whether this deal had a reasonable cause but let's to itself it did exactly what justice prior said it nationalized thing it nationalized the company your position is that there is no court review of a so we think i have set a goal like that we think you could we don't think the anti injunction clause would bar a claim that actions were taken that have no objective rational justification of being taken to preserve and conserve assets we do think that even that same boy would be barred by the succession clause because it would still be a derivative suit but if you if the court disagreed with us about the succession clause we don't we are arguing that they and i  clause means that there is no review of anything the conservator does we're just saying bad when the conservatives actions that mayn't be appropriate and necessary to preserve and conserve assets there is no nd guessing the business judgment and i think that's an important point here that high council let me just stop you there if the company is still in existence but owned by the f h a say there is no claim this my colleagues have positives to something close to this but it is the shareholders who have been kicked out for no business reason i don't see how that situation of suit that the succession clause w improperly in giving away the assets of the climate counsel i just want to get in one last question your argument is that the f a a a some constitutionally structured given this court's decision and she today is that they can put certain government affiliated companies under conservatorship conservatorships are are never thought of in my experience as it executive power to starkly been an adjunct to the judicial power so why isn't that and this is not a wide reaching power that affects many entities it's one company at a time  significant executive power thank you counsel justice kagan kagan sorry mr moviefone can i take you back to your answers to justice alito if i understood you right you said that the only final action that's being challenged here is the rd amendment  so i'm going to repeat his question to you because i wasn't quite sure i got your answer if that's the case that that's the only final action challenge here what basis would we have to do anything more is correct i know that they asked for it and usually if you bring an a p a challenge you know you have to point to a final agency action that you think is wrong and subsets and and here the rd amendment was done by the continue to be in conservatorship or not or whether they could be put into receivership the pushchair olders here have the ability to say died decision should be made only by a regulator that's constitutional structure  you're saying that that's true even if they are not they are not playing things to any particular actions in the period when there was a confirmed director and that they object to the prospect of shoot there are so if there are a point is that prospect of suit even though by then the investigation was basically done if the point is that you've got a regulator and a regular of entity or the shareholders or regulated entity can bring a claim to say that that regulat on the wall but not much else the plaintiffs here have sought to declaratory judgment in aid of further remedies retros retroactive remedies that might actually do them some good and that's the rd amendment and i guess i'm a little confused why we wouldn't proceed to hold that the rd amendment was void from the beginning by virtue of the appointments clause problem that's pretty much what we didn't see a as you'll a harmless error argument as i understand it but we don't do harm is there in instructional constitutional cases typically and if we did is a rather speculative to say what would have happened here if if we'd would have had a different director who is actually subject to presidential oversight and the political process especially when congress insulated this person in theory from that process is another degree of speculation that quite beyond us i don't think it reason and might have been to insulate them all from the blowback that might come who knows i don't know you don't know none of us knows and that is not the whole point and what we do again just to return to my fundamental question is true here so in addition to my point about the secretary of the treasury i guess i would say even from the other side of the coin this was done by an acting director and acting director is also removable and will by the prior stand that argument put that argument aside put justice cavanaugh thank you chief justice and good morning you were saying something there and wanted to continue on so i i would like saw a little bit about the acting director point because i think it is an important point in the void some of justice courts which is concerned about the treasury secretary side the statute does not expressly provide that the acting director is subject to the same cause protections of the confirmed director and this court should not read a statute to create constitutional statute to tell you the answer your honor but i guess is it true is your principle that you're asserting there and acting officials are presumptively removable and will by the president and last the statute with respect to the acting director or acting official themselves or herself specifically points restrictions on the removable or remove only yes i i why our general position is that you should not  leap from any cause restriction for a confirmed official and assume that that extends to an acting official you have to always look at this provisions that govern the acting official and see whether there is a motion for that that can both better matter of boyfriends and as a matter of the short lived clear statement requirement as a matter of simple common sense and congress might have very good reasons for why it wouldn't impose a removal restriction on an acting official that it did for a confirmed official namely that the senate has actually confirmed the person so then at that point they might be willing to give them tenure protection but someone that has never gone through the gauntlet of senate confirmation congress might well be unwilling to provide them with tenure protection so both as a matter of taxed and common sense and structural constitutional provisions and constitutional avoidance you shouldn't read the statute to create a constitutional problem let alone to set aside a multi billion dollar contract those are good points and i guess the one point that about cause restrictions it's one thing to say that they're independent when they've got a confirmed director it doesn't necessarily mean that they're independent when they have an acting director and we know that for this statute itself because if you look at this statute before the st confirmed director there was a transitional period and the head of the f h a during that transitional period was an officer in the hyde who was not subject to any cause restriction just as parents mr mcmahon let's say that we agree with you that the rd amendment was entered into by an acting director who was removable at will by the president and so the entry into the rd amendment let's say is was valid there is no constitutional problem with it the rd amendment by an unconstitutional executive official contaminate it with structural errors such that the whole rd amendment would have to be set aside i don't think so your honor really and the only d there is not some discretionary decision within the rd amendment  and winding down their assets although you know it's been characterized not as a receivership but as a conservatorship could be confirmed director had said ok listen now this is no longer serving to make the g s t solvent and so it's time to shift arrangements did they confirm director have that authority under the rd amendment yes just like the nd amendment and the st amendment and everything else that they have that's why we think that they're entitled to relie all of the capital that is backstop that that's not the claim they brought in it would be disastrous let me just ask you one last quick question this is shifting gears to the distinction between direct and derivative i'm having a hard time understanding why that corporate law distinction is year history of the a p a plaintiffs haven't been able to do the single case that has allowed the shareholder bring what would otherwise be a derivative you have a minute to wrap up counsel the rd amendment should not be set aside if the a prejudicial ever rule means anything at all courts cannot set aside a multi billion dollar contract on the grounds that it was an constitutionally insulated from presidential supervision even though both of the officials who signed it were removable at will by the president if the recovery by injunction clause means anything at all courts cannot satisfy the conservatives renegotiation of complex financial obligations by nd guessing the conservators statutory exercise of business judgment and then all of and the recovery act succession cause bars both claims no case in the history of the a p a or american corporations law appears to allow a shareholder to claim direct rather than derivative injury merely because the corporations assets allegedly were dissipated unlawfully to another shareholder accordingly this court should reject the challenges to the rd amendment but uphold the determination that the average if a director's removal restriction is unconstitutional you have several thank you councils mr niels mr chief justice and may i please the court there is a very easy way to answer the constitutional question in this case the court should hold that i was congress says so in a statute and acting director does not have tenure or stop i agree with the solicitor general on this in all respects but one because in acting director is removable will this part of the case should be over as the united states explained below plaintiffs do not in fact challenge ongoing action by th say that rather the government's latest position is correct i urge the court to reach a one hundred and seventeen there is no reference to any prospective suit or anything like that and the complaint here if the court chooses to tackle the harder conservatorship is not an exercise of executive power by itself this is another reason to reverse regardless neither party undermines state a lot of observation that the ad page essay isn't in the same league as a c s v when it comes to policy disagreement with the president the parties say that even back is unconstitutional but their argument makes a hash of the take care clause and would also have far reaching consequences under their logic the social security administration the office of special take the question a number of my colleagues have been asking say i agree with you that the acting director is constitutional because removable at will and he enters into the  amendment but the rd amendment provides for payments in an ongoing way and including payments under a regular director who is is not constitutionally appointed how does that work what are the consequences particularly for the payments that take place under the jurisdiction of the unconstitutionally appointed director i agree with solicitor general answer on this point the rd amendment is not i'm going the interest of the plaintiffs here if they're trying to track and that contract is what governs well there were contracts before the rd amendment too and they were significantly altered but i guess my question is what if the complaining stockholders here you know sent a letter to the director of the confirmed one and said we want to do get out of this agreement because it's unfair to us and the director said no that would be action by the regular director and certainly do i know you want to keep us out of the sort of the initial stages of amendment three or the rd amendment but there are as justice barrett noted what about the administration of it now it's still in existence of the facts ma'am and what about the future administration that was could have a continuing effect this is not on like other agency actions how do you address that well it again plays according to the actual complaint here is on page days when seventeen is the relevant count and there's no ongoing pain area here so all of this is hypothetical but again this is  contract and with a contract sure you might be unhappy with it but was entered into to a by conservator who wasn't even exercising executive power and the advantage of a as regulator can't just do a contract it takes a decision from callous that raises another and other courts even raise this as an issue because it just didn't have anything to do with that thank you justice brier thank you probably you well this is different because the thing that is being challenged here leaving aside the acting point is an act of a conservator and that and even executive power at the department of justice which is about the most big arrest offender a presidential power on my guide says it's non sovereign power because it's an agency they don't get it but a private person can do it the government can do it too and that doesn't take executive power to get there no different than that and ordering books or anything i got of the court does that didn't make ordering folks a judicial power it's just something the government can do to function thank you justice alito said many times that structural provisions of the constitution why the appointments clause and rules about the removal of executive officers are ultimately important because they affect ordinary people they affect liberty as you just mentioned they affect democratic accountability the argument against your position here includes the proposition that the way in which the agency carries out its responsibility as conservator has a profound effect on the housing market and therefore a profound effect on the word our people what's your answer to that for me it's to decide what type of power conservatorship is and once you more consequential than this but it was an executive power as banking was not understood as executive power so to hear especially being a conservative or for a government insurer is not executive power it's just outside of article t director an executive appointment they presumably have executive decision making but it seems to be that you're shy and to say that we should not be looking at the agency agency as an executive agency but we should see whether the power of the thing or wielding in individual situations is executive for not and i'm getting your argument correct mostly correct i think that you  look at that high power for a broader range of things so we're talking about the agency as regulator you would look at the i think one of my colleagues asked this is the sh a is not an executive agency what is put aside as a conservatorship part of it is it or is it not it's an executive agency yes that h s a is an executive agency and that has a regulatory function to this case aren't so if it's an executive agency then i think we do have to look at the constitutionality of its structure and and if we have to do that how do we get to a subdivision of discretion that the sciatic needed that's actually the point that i was raising with the government earlier but i still see that as a different argument so if the shareholders if the shareholders have argued that the directors for cause removal is a structural error that has to do with justice alito is question and justice course which is earlier question include government if they're correct do we have discretion against them joining the theory that how do we get from a structural error to a harmless error what do we consider to do that in which situations are we permitted to do that certainly would be the case when you're talking about conservatorship i know that that isn't exactly the question but here we're talking about a straight ag which is the thing that they have a challenge and that act and not require any executive power whatsoever it's hard for me to see how you can get and just a question of you know is it harmless error there was no cost again my ass or to this would be i understand all of that i think you're always safe going with the majority in the majority says that it's not a lot of power but your point is well taken i think the way that you reconcile the senate and the majority is that the senate is saying look how much effect it has in the real world and a majority saying well look at how much power it actually exercises the difference between this agency and the c f p is to see if they have fast discretion whereas if you go through the statute here it's true they can do certain things but only in a very very limited way congress in the sensually said here is the instruction manual go forth and do it and for something ridiculous as bad if the agency doesn't do a correctly the president can say that because that's the easiest type of cause there is you're supposed to have a report i don't have a report you're out the door but adoption i'd like to highlight two potential difficulties with that and as for your thoughts the st is the assumption that the acting director is answerable to the president while the director is not  under the statutes creating this outfit the director appoints deputy directors the director not the president it appears that those deputy directors would be insulated from the president therefore and when the director steps aside he named the acting director rather he gives approve three of his deputies and the president chooses which of those three but the director appointed all three of them so i'm not sure in what sense where we get the inference or how we generate from some penumbra emanating somewhere that the president has the removal power over this acting director that's one dollar and two  that let's assume that's the case so what the the plaintiffs here challenged actions after the during this whole period including after a period in which the acting director disappeared and we now have a director you say well that doesn't matter because the amendment is a thing that was adopted by the acting director of the plants are challenging the director's actions as void because he isn't answerable to the president so why wouldn't we at least be able to provide relief for getting the director's actions once we had a senate confirmed director and to read it and then now this circumstances but even beyond that merely because assuming that the president could only pick among those three that says nothing about whether the president and or move ordinarily the power to designate dine or something like that but that's not even plated and the idea that agency an action or merely defending something that was constitutional when done becomes an constitutional really has no limiting principle thank you counsel justice makes is that the president can use the acting to try to get away from ever having senate confirmation and that there's two reasons why that isn't so why is the congress has many tools to try to stop presidential unconstitutional and so too would be the social security administration the office of special counsel which are also headed by single directors and i think the solicitor general agrees on that but then you went on to name multi member agencies and the federal civil service and my understanding of the principle that would be applicable here would be that single director independent agencies are not historically rooted as the courts and  seal along that's all we would be saying and applying here though in my brief i make the point what do you do with the chair of the federal reserve which is separately nominated separately confirmed and has his or her own statutory duties that is not controlled by a multimeter for entity that hair care she has her own duties under under under law i have a theory for why that is an unconstitutional i don't think that power is  two exceptions to this rule humphrey's executor and larson versus ellison but it seems to me and this goes back to some of the questions the justices sotomayor again pressing you on it seems to me that you're kind of arguing for a rd ground here which is well and then we take a look at what is the executive official really doing doesn't really seem like a lot of executive power a little executive power something that looks more like private power strikes me as a pretty hard time to administer something you say a little bit it plain that significant captures the liberty and accountability concerns that require plenary control or focus on two things whether private citizens are being regulated and whether there is substantial policy discretion here no let's talk control this type of agency thank you mr nelson minute to wrap up mr nielsen thank you your honor i would like to return to the point that justice cavanagh made about you know the parade of clause well that's so why didn't the logic of that and all the way with the civil service is that the take care clause if so how could a provision that allows for removal for insubordination prevent the president from faithfully execut likewise just how relaxed is standing in these cases and you know more than that how far apart really willing to go without clear constitutional facts to guide it is are all hard questions  worsley sweep leaves fannie and freddie with no reasonable prospect of becoming adequately capitalized and so long as it remains in place the company's best case scenario is to operate was so little capital that under  a for nationalizing fannie and freddie is contrary to this court's decision in american power decades of precedent on the lenient sona ventris test and a strong presumption favoring judicial review of agency action congress an act of the a p a to make judicial review widely available to anyone with a grave within the meaning of the relevant statute and shareholders are the network but even under ordinary principles of state corporation law our claims may proceed because they are direct there are two distinct injuries caused by the network sweep one suffered by the companies which cannot rebuild capital and return to a sound condition and another suffered by private shareholders who were moved were removed from the company's capital structures to see this consider a hypothetical rd amendment there were choir the companies to pay their net worth the plaintiffs rather than treasury that action would have entered the company is no less than the real rd amendment but it would not have visited an injury on plaintiffs the networks we've needlessly dissipated the assets of the companies f h f a is charged with rehabilitating and f a jeff a sweeping claims to unlimited standardless discretion and powerfully illustrate the framers wisdom and refusing to basically that the common shareholders are your clients were were left out in the cold in their holdings rendered worthless but i checked this morning and fannie mae was trading at two dollars sixty nine cents  two dollars fifty six cents and your shares are not worthless they're worth something presumably largely based on judgments about what the future holds so doesn't that run render your sort value in the shares but that attributable to two factors number one there's a lawsuit and number two that there is a ongoing political discussion about what to do with these companies and maybe one day in the future the government will   in your shares now it's maybe a gamble on the future but that's that has value in itself and on the other side of that we can't lose sight of the fact that you know this was a memo this was a lifeline  thrown to your clients and that has to be worth something to well your honor so st of all respectfully i don't think the court should put aside to the lawsuit that's an important driver obviously in the value of the stock but in terms of the life line your honor i would just point out that the networks we've exposed that line of commitment to maximum banner ability because the companies can never build up capital to absorb the losses so if there had not been a network suite there'd be  hundred and twenty four billion dollars of capital on the balance sheet today standing between future losses and the line of commitment that the networks we took away that ability to rebuild capital and has exposed that lifeline to maximum point one two a and b not a penny it can be paid to the treasury without the approval of the director and since two thousand and fourteen there's been a senate confirmed director with for cause removal protection and on j and eighteen dollars we're asking that all those future payments be enjoined well so your theory is that even if an acting director approved the instrument under which payments are going to be made that when those payments are made if there's an which handcuffs the president and so that even if there is an acting director the president can't put the person that he wants in there he had to pick one of the three deputy directors who were in turn picked by the prior director implementation of the amendment when you only complain of the adoption of the amendment thank you your honor we do complain about the adoption but we also know that throughout the compliant the overpayments that were being made we calculate those overpayments to be one hundred and twenty four billion dollars and each one of those overpayments was an implementation of the networks wait so that team really runs throughout our complaint we also complain about how over time the commitment itself has been exposed to vulnerability and so the implementation issues are important and that's one of the reasons on jay want to eighteen why we ask for an injunction in the future so that there aren't any more dividend payments to the treasury at the expense of the private shareholders would have affected your separation of powers argument if the president  together with the director sachs a future of subsequent director and the secretary of the treasury fully endorse amendment three openly endorse the dorsett in writing of the things that's printed about the structure is it reduced the president in the real world to the controller in chief where this was as one of my friends on the other side said it takes two to tango and so this wasn't a reflection of what the president wanted it was a reflection of what the president was able to negotiate in your hypothetical justice thomas if they were all to have done that simultaneously on day one that might have changed things but the other thing to realize is if we were creating a bug for world in which there was no for cause removal protection we have to go back to the beginning of the agency at least to the beginning of the obama administration and see how the companies in the conservatory were different in two thousand and twelve at the time of the sweep the administration had ongoing fights with mr de marco it led away put this in our read briefing page seventy two to calls for mr demarco to be fired in the administration said we don't have the authority to fire him  but how would we scramble be a hero how do we put the parties back into the position they were in prior to amendment three thank you your honor our preferred remedy that we articulated to the th circuit court of appeals on balik is that the overpayments measured against the eighteen billion nine hundred million dollars of dividends that were being paid that anything above that be treated as a pay down of principal on the government's liquidation preference and if you do the math the government's been paid back in toto plus ten percent interest and there's twenty nine billion five hundred million dollars left over the fiscal court of appeals as the parties to address three questions they gave the government so go so far with the companies who are really hurt and the shareholders are destroyed bring in takings klein but as long as there's a colorable plenty of long as there's a colorable defense forget it apply ordinary derivative law well your honor two points number one principles of constitutional avoidance would counsel in favor of not reading the congress as having authorized nationalization there is no reason to think congress would bad taxpayers with a big tab for a takings verdict in the court of federal claims but also if the court were to apply traditional measures of derivative direct we say we when we would point to the allegheny i say that but you have a rather special company which your shareholders brought into brought into with knowledge and that is a company that has a public as well as more of a public aspect than ordinary there are there in both parts are relevant benefit of the company of the corporation well again your honor constitutional avoidance we don't think the court should depart from its precedents in allegheny to create a mass of taking thought ability if i have his time for one more question i don't  know on your a p a climb my cousin joe whom i love dearly i give to him a piece of land and i assign to him though i can retain ownership by assigned to him all rights to bring any lawsuit defend lawsuits i have no rights left in respect to that land i gave my all to joe and if bill comes along and cuts the tree on leave the illegally it's joe who can sue not me right and as long as that that is right how is this any different well because your honor here would be joe suing joe because they would have to sue themselves and it's a succession clause not a terminations clause congress knew how to terminate claims they did so  or i'm thinking of both clauses book joe can't sue because i assigned to joe i mean i can't do because i gave all those rights to joe is the a p a any different that joe's claim it is different here are a look at the language of of the statute it said it doesn't say just all right sco it says all with respect to the regulated entity and its assets and that's been understood not take include direct claims only the derivative claims and not the derivative claims that would be terminated counsel let me give you this hypothetical situation a director is appointed and upon appointment the director and the president have a joint news conference the president says i know the statute says that you are removable only for cause but that's unconstitutional under the constitution i can remove you will and i will proceed on that basis and the director says great i will conduct myself on that understanding and in fact i will verify every single morning that you still want me in office and you don't as a matter of women want me to we women follow that everything done they are after by the director  concern that well the director my changes mind and then he's got this legal protection and so there's still by some issues about accountability and liberty but it certainly would be a much less problematic situation than what we have here well i do think we have to answer that question in order to determine whether a follows that the identification of an unconstitutional restriction on removal or necessarily means because it is a structural defect that everything done by that officer is void out of an issue well your honor we do think that this qualifies under waiver for being a structural error for two reasons number one their interests beyond the outcome that is produced there's the interest in accountability and also it's hard to measure the effects that's why this quarter presumably and feel a lot and free enterprise said plaintiffs don't have to create four world federal courts are well suited to psychoanalyze and coordinate branches of government and what they would do in a hypothetical world and where it's hard to measure the effects and that's particularly true here where again it was a negotiation between a republican appointee and the can't be distinguished from the head of the social security administration or suppose we were to overrule humphreys an executor of some members of the court have suggested do you think it was follow that everything ever done by a social security administrator or everything by the f c c when one of the other multi member commissions was void ab initio they would all be wiped off the books your honor as i understand it in free enterprise the court left open the question of if it's a lower level employee who made the determination that the social security administration whether that would have to be voided but certainly yes our position is everything done by the principal officers of those agencies would would be void of course there'd be the statute of limitations in article three a that would limit what would have to be thrown out and of course a no canning this court invalidated twenty months of the broad prophylactic protections that separation of powers protect your justice sotomayor i want to follow up a little bit on justice alito those questions it does seem  counter intuitive perhaps illogical to say that assuming you're right that the f h a if a director of must be  you should get anything more than a gent that had to clap to declaratory judgment to that effect st the argument is that if this decision was entered into by two entities under the complete control of the president there is no dispute that the treasury has treasurer is removeable at will so we know what the president could be we will and trying it can no president has ever tried to remove the director acting or otherwise asked the so given those circumstances i am not sure why structural how this agreement or even the little how the at will terminations affected you well your honor why you're entitled to a non winding of an agreement that was entered into assuming again the suing a rule against you that had a valid  reasonable business reason for being intruded into your honor respectfully we don't know what the president wanted we know the president was willing to sign this deal otherwise the secretary of treasury one of signed it but as my friends on the other side said it took two to tango this was a negotiation and it was a negotiation with a republican appointee with whom things that relationships are gotten so bad that on our read brief it page seventy two dollars we point out there was open calls for him to be fired and the administration said is an acting director and we can't fire him and presumably that's because of four thousand five hundred and eleven dollars a that says it shall be an independent agency of the federal government and under this interpretation that the acting director can be fired it would toggle back from being a radically independent agency to a radically dependent agency my friend on the other side points to the swan case but there that was the n c usa and there were three board members and the fact that one of them became de transform the agency radically here when you have a single director and you say that the acting director can be fired as well then you just radically transform the nature of it in addition even if i'm wrong about that under and twelve f the president has hands are handcuffed in terms of him he can designate and we do challenge the actions of the regulator so for all those reasons we were entitled to relieve certainly backward looking relief was given in the bas well you argue that the a p a eliminating the need to look into whether shareholders injury is derivative of an injury suffered by the corporation too i take it that you're taking the position that anyone holding a single share in a company can challenge any agency action or rule making that affects the company's stock price well your honor i would see the same to me as a sea change in how it ministry the flaw challenges are litigated your honor this was a concern that the american power dissent articulated and seventy five years later it hasn't come to fruition and i think because of cases like air courier there you have the postal service with a monopoly on international air routes the employees came forward when that monopoly was lost and said that's going to hurt us economically and the court said these employees are within the zone of interest but a fair is different because it's highly protective of shareholders rights we see that in the conservator to maximize the net present value of asset sales that protect shareholders more than anyone because they're at the bottom of the water of justice kagan having a look at johnson and i will back to  question about the social security administration put some scary sounding numbers on this essay has been led by a single commissioner says nine hundred and ninety four dollars and ever since then it's rendered six hundred and fifty thousand decisions do let's assume which i think is probably the truth is that all of those decisions are rendered pursuant to guidance and rules and the s s a commissioner has been forced to be really going to avoid all of those decisions difference but if it has much more limited jurisdiction it's not running multi trillion dollar companies and so to the extent the court wants to try to preserve the social security administration it could potentially try to do that we don't think it should we agree with solicitor general that it's unconstitutional and that yes its actions over the within the statute of limitations should be void if they have done by principle of a little bit because i mean none of us really think that any of the decisions would be different say if they were at will remove all of the social security administration the seventeen million decisions would come out differently or indeed any of them would your honor i understand and highly likely that they would not but the same was true when stern and marshall was very unlikely that the bankruptcy judge who had that article three protection would have come out a different way on that state law counterclaim and still relief was provided and likewise and remedy i mean it's kind of equitable question isn't it and we're trying to figure out what position you would have been absent a constitutional violation why isn't that the right question i think footnote twelve of free enterprise and see the law just last term rejected that they said plaintiffs don't have to try to recreate about four world and here shows why we have to go back to two thousand and nine and see what would have happened if a director was for example had been there throughout the entire time and you know with the president have preferred to keep the money at fannie and freddie and spend it on affordable housing rather than send it all to the republican controlled house of representatives from the treasury well your honor we've focused on the rd amendment because that's the feature of this that rearrange the capital structure but as we make clear to the circuit court of appeals we are perfectly content with all of these arrangements which as we say in the complaint we're a concrete life preserver it's like getting a credit card with a double digit interest rate that you can't repay the debt on the debt but you can't pay the money back and so we would be perfectly content with it being thrown out just as gorsuch council amendment which took place during the pendency of a prior director i'd like your i'd like to understand your thoughts about that st and nd whether the new constitutionally correct director that we ordain today could ratify the actions of an unconstitutional arrangement previously why would it have to be void yes your honor so on the st question we do complain about the implementation we are complaining about each and every one of the decisions under the networks way by the director every one of these dividend payments gets declared quarterly and none of them can be paid to the treasury under twelve c f r twelve thirty seven  a unless the director blesses those and so we've complained in the complaint that bought for each and every one of those payments there'd be one hundred and twenty four billion dollars of extra capital at the company's obviously the implication of that calculation in our complaint is we're not satisfied that any of these payments were made now as for the courts nd question with respect to ratification we don't believe this could be ratified in large part because the government is coming in and trying to justify this by saying well there was a desk birol we didn't know the companies were going to do so well well now we know we know that they're freising and terms of their profitability not found us because all the money's being five and off t treasury but we don't believe that could be ratified now your honor i guess i don't understand that latter answer a lot of facts in there but what legally would constitutionally would prohibit a ratification well when the underlying rationale that the government has proffered is now eight years later been totally exposed to have no validity then we don't see how the government set aside of course with due account being taken for the rule of prejudicial error but as we've talked about earlier today this is structure a not harmless error thanks i knew that that really wasn't my question ok i'm sorry find if you have any further thoughts about the why couldn't be ratified i welcome the but let me just pose you one last question and that is the argument that of course the president could have fired the acting director because the vacancy act would normally apply and that would permit him to do so well at this point the vacancies acted on apply because it had been more than two hundred and ten days since the senate had rejected the nominee that president obama had sent up and so look at the nature of the function of the office vested in the officer and i know some i think winner wasn't correctly decided as an original matter but congress is entitled to legislate against the backdrop of this court's precedents and so the winner  justice kavanagh thank you and good morning mr thompson picking up on the st part of justice course which is questions on the solicitor general in the reply brief on the remedies question starts with more memory and some sense more memory this court has continued to subject structural constitutional claims to the general law from of these and said courts may do so not relief on such claims as a result of the stoppel de facto officer doctrine ratification failure to make a timely objection or the grant of a stay and then since that you've cited other cases where the court  vacated actions taken by unconstitutionally structured agencies but the solicitor general says those cases show only the date caters permissible in appropriate case not that it is mandatory in every case and that those principles i just mentioned  can apply your response to that well number one they haven't invoked for example a de facto officer dr and they haven't invoked that in this court so they've they've waive that they only they are your reaction to the general  work under the a p a but when the a p a says shall set aside but do account for the rule of prejudicial error that we have suicided aquittal doctrines and tells this court that it shall set aside and then switching gears on the some of the arguments made by the amicus the forceful arguments made in distinguishing c o law and other presidents i want to get your reaction to a couple of those the amicus points out that use the phrase significant executive power your response to that was that a descriptor or a descriptive language or or is that a necessary condition before we can say that a for cause removal restriction on the executive officer is unconstitutional the amicus says the latter well we certainly did not understand this court to be creating a sliding scale which would require lower courts to go and try to figure out how which is moral failing so it's different but in some ways it's even a higher standard than what was before the court and see a lot moral failing as a smaller subset and they collected malfeasance and then they  implications for other agencies could be significant and that the court could not limit its holding here to single director independent agencies and leave those for another day whether those follow or not it would still be an open issue do you would your reaction to amicus is point that this would necessarily carry over into multimedia member agencies at least with chair designations and things like that we disagree with your honor we think we've all comfortably within the seal a law framework and there would be no reason for the court to go back and redo that framework so that we disagree with it thank you just search times and i want to just make sure i understand the breadth of your argument for a structural error let's assume that we think that the acting director was removable well there was no constitutional problem with the acting director let's further imagine that the acting director is the one who is in charge for say you know up until six months ago up until last year and then we had a confirmed actor does that mean that everything that happened in the course of was an acting director all of our arguments are rejected about four thousand five hundred and twelve staff as well and so that the court concludes there was no structural problem whatsoever at the agency until just six out how much participation by the unconstitutional officer matters because here we didn't have constant one hundred percent of the time control by can i confirm director but you're arguing i mean and i'm saying let's assume that we it certainly it affected the implementation the other that would invalidate any implementation by that illegal director illegally director but only for those asking for are you asking us say if we agreed with you on the whole thing do you want an injunction ordering treasury to pay back the billions of dollars you know your honor so this is very important or is taking two things number one we're seeking prospect of relief so that that in your hypothetical the senate confirm director would be enjoined from making any future sweet dividend approving any future sweet dividend payments and number two are asking to go back and have the thompson for decades the federal conservators and receivers have exercised powers under statutory schemes that are indistinguishable from the one issue here yet no conservative or receiver has ever been for before been permitted to operate its ward for the exclusive benefit of the federal government and so i will close with the words of mark a labor f h f a's current director quote fair and predictably applied solvency rules allow investors and creditors to judge the risks of investing in a company  office can be manipulated to favor one creditor as f h a f a has favored treasury then there is no basis to judge what could happen if a company failed given the important role that government bodies play in the resolution of many financial institutions it is essential that the performance of this roller shore all stakeholders of fairness and predictability close quote we agree thank you thank you council rubato mr move my colleague hasn't shown any presidential insulation on either side of the rd about and with respect to the acting director hasn't shown any reason why this quarter would construe the statute to create a constitutional problem rather than to avoid one the only point he really made was to say that once the acting director was removed by the president well the president had limited options for who could replace him that's not a problem about presidential remove all it's not the claim they made and it's actually not even correct because the f e r s is available out on the other side of the transaction it's a undisputed indisputable that the treasury secretary signed the agreement and of course as for movable it well by the president is only argument on that side to say well maybe the contract wouldn't have happened because of other things that happened earlier but that can't be right either because on that theory the agency could never act going forward think about for example the c f p be on his theory even though this court decided that the c f e b is now removable it will b be can take no further action going forward because someone could always walk into court and say well the circumstances would have been different if they hadn't been subject to removal restriction in the past that's not the way this court judicial review works the question is was whether the agency action that's being challenged was insulated from the president and here because the secretary of the treasury and the acting director are the one to it and entered into the rd amendment it was so then if we assume the rd amendment is valid as a constitutional matter has fallback suggest well the implementation of the rd amendment at least can be challenged and the reason that doesn't work is because once the rd amendment is valid the money is owed the only question is how the money is paid is it paid in cash or is it paid  whether or not the funds legally available for the payment of such dividends and whether or not dividends are declared a simple analogy to make the point imagine a cabinet secretary entered into a contract to buy a property that it would pay for for five years or a one million dollars a year and then imagine two years and congress imposed a removal restriction no one would say that the last three years worth of payments could be challenged that money is owed as a legal matter under a valid contract and there's no discretionary decision being made in paying the money that's legally owed finally on the anti injunction cause if we didn't have too much time to discuss this morning i guess the key point i would try to make is that this wasn't a national counsel mr nielsen this court appointed you to brief and argue the case as an amicus curiae in support of the position that the structure of the federal housing finance agency does not violate the separation of powers you have ably discharged that responsibility for which we are grateful the case is submitted