Case: 20-2190

Document: 44

Page: 1

Filed: 07/23/2021

No. 2020-2190
UNITED STATES COURT OF APPEALSFOR THE FEDERAL CIRCUIT__________________________________________________WASHINGTON FEDERAL, MICHAEL MCCREDY BAKER, CITY
OF AUSTIN POLICE RETIREMENT SYSTEM, on behalfof themselves and all others similarly situated,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant-Appellee.
__________________________________________________On Appeal from the Court of Federal Claims
The Honorable Margaret M. Sweeney, Chief Judge
No. 1:13-cv-00385-MMS__________________________________________________APPELLANTS’ SUPPLEMENTAL BRIEF IN RESPONSE TO UNITEDSTATES ADDRESSING COLLINS v. YELLEN(Oral Argument set for August 4, 2021)__________________________________________________
Steve W. Berman
Principal Attorney
HAGENS BERMAN SOBOL SHAPIRO LLP
1301 Second Avenue, Suite 2000
Seattle, WA 98101(206) 623-7292
steve@hbsslaw.com

Robert M. Roseman
SPECTOR ROSEMAN & KODROFF P.C.
2001 Market Street
Suite 3420
Philadelphia, PA 19103(215) 496-0300
rroseman@srkattorneys.com

Attorneys for Plaintiffs-Appellants Washington Federal,
Michael McCredy Baker and City of Austin Police Retirement System

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TABLE OF CONTENTS
Page
I.

INTRODUCTION ...................................................................................1II.

ARGUMENT ......................................................................................... 2III.

A.

The Washington Federal Plaintiffs hereby abandon
claims grounded on the Third Amendment and also
withdraw their conditional request for leave to amend. .................... 2B.

The Government’s arguments only highlight additional
dimensions of Collins that support standing to pursue aFifth Amendment claim stemming from imposition of theconservatorships............................................................................ 21.

Shareholder constitutional claims are not nullified
by HERA’s Succession Clause when aconservatorship is imposed. .................................................. 22.

Claims grounded on the FHFA’s actions asregulator, not conservator, are unaffected by
HERA’s Anti-Injunction Clause. .......................................... 43.

Addressing only the Third Amendment, theSupreme Court did not hold that Board consent
was irrelevant. ..................................................................... 4

CONCLUSION ...................................................................................... 5

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TABLE OF AUTHORITIESPage(s)CASES
Cedar Point Nursery v. Hassid,
141 S. Ct. 2063 (2021) ................................................................................ 4
Collins v. Yellen,
141 S. Ct. 1761 (2021) ........................................................................passim
STATUTES
12 U.S.C. § 4617(a)(5)(A) ................................................................................ 4
12 U.S.C. § 4617(b)(2)(A) ............................................................................... 2OTHER AUTHORITIES
Brief of Amici Curiae Bryndon Fisher, Bruce Reid, and Erick
Shipmon in Support of Neither Party,
2020 WL 5898901 (U.S. Sept. 23, 2020) ....................................................... 5

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INTRODUCTION

Although seeking to draw upon Collins v. Yellen, 141 S. Ct. 1761 (2021), foraffirmance, the Government continues to evade the factual gravamen of this very
different case. The complaint alleges the FHFA exceeded its statutory authority as
regulator by forcing Fannie and Freddie into conservatorships in 2008 without
paying their shareholders just compensation as required by the Fifth Amendment.1
Yet the Government’s supplemental brief focuses, once more, almost exclusively
on the Third Amendment that the FHFA imposed as conservator in 2012. To
streamline the issues for decision, the Washington Federal Plaintiffs will abandon
their takings and illegal exaction claims to the extent grounded on the Third
Amendment, and will also withdraw their conditional request for leave to amend.
As narrowed, then, the sole question for decision is whether the Washington
Federal Plaintiffs have standing to assert direct claims arising out of the FHFA’sactions in compelling the conservatorships. The Government fails to identify any
holding or legal principles recognized in Collins that undermine the Washington
Federal Plaintiffs’ standing to challenge violation of their Fifth Amendment rights.
To the contrary, Collins signals that constitutional property rights may not be castaside on a standing rationale.
1Appx87-95¶¶1-16 (factual overview). Capitalized and abbreviated terms havethe same meaning as in Appellants’ Principal Brief (Corrected) (“PB”), Doc. No.
17 (Dec. 1, 2020).
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A.

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ARGUMENT

The Washington Federal Plaintiffs hereby abandon claims grounded on
the Third Amendment and also withdraw their conditional request forleave to amend.
At the trial level, the Washington Federal Plaintiffs preserved claims basedon, in addition to imposition of the conservatorships, the Third Amendment.
Appx25 n.10. With Collins still pending when this case went on appeal, thePrincipal Brief continued to preserve Third Amendment claims. PB at 18-20, 41.
To narrow the issues for this Court, the Washington Federal Plaintiffs
hereby abandon any claims arising from the Third Amendment (or Net WorthSweep). Appx146-154¶¶172-186; Appx162¶¶204-205; Appx166¶¶218, 220;
Appx166-167¶222. The Washington Federal Plaintiffs also hereby withdraw theirconditional request, framed as a proposed alternative disposition, for leave toamend. PB at 41-47; Appellants’ Reply Brief at 22-24, Doc. No. 27 (Mar. 8,2021). Especially after Collins, sufficient facts are alleged for standing to assert a
direct constitutional claim for damages in this case.
B.

The Government’s arguments only highlight additional dimensions ofCollins that support standing to pursue a Fifth Amendment claim
stemming from imposition of the conservatorships.
1.

Shareholder constitutional claims are not nullified by HERA’sSuccession Clause when a conservatorship is imposed.

The Government contends that “pursuant to the Succession Clause,” 12U.S.C. § 4617(b)(2)(A), “shareholders are barred from asserting derivative claims-2-Case: 20-2190

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under any circumstances.” Supplemental Brief for the United States (“SB”) at 9,Doc. No. 41 (July 16, 2021). Standing to pursue a derivative claim arising from
imposition of the conservatorships, however, no longer presents an issue. Because
the conditional request for leave to amend has been withdrawn, the Washington
Federal Plaintiffs no longer seek, alternatively, to plead a derivative claim.
Appx31-32 (dismissal order addressing this issue).
There is no dispute that direct claims do not pass through the Succession
Clause to the FHFA as conservator. In particular, as the Government recognizes,
the Supreme Court rejected the proposition that the Succession Clause “transferredto the FHFA the shareholders’ right to bring their constitutional claim” and barred“the shareholders from asserting that claim on their own behalf.” Collins, 141 S.
Ct. at 1780 (emphasis added). The constitutional claim in Collins, not foreclosedby the Succession Clause, was the shareholders’ separation-of-powers argument.
Id.
Given the paramount nature of constitutional protections, especially those
personal to individuals under the Bills of Rights, the Supreme Court’s rationale
dictates the same if not greater respect for the Fifth Amendment takings claim at
issue here. The constitutional right the Washington Federal Plaintiffs seek toenforce on their own behalf—even more direct than in Collins—would bemeaningless if they lack standing to assert it. As the Supreme Court reiterated on-3-Case: 20-2190

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the same day Collins was decided, “the protection of private property isindispensable to the promotion of individual freedom.” Cedar Point Nursery v.
Hassid, 141 S. Ct. 2063, 2071 (2021) (regulation was per se physical taking).
2.

Claims grounded on the FHFA’s actions as regulator, notconservator, are unaffected by HERA’s Anti-Injunction Clause.

The Government reiterates its argument that the Anti-Injunction Clause, 12U.S.C. § 4617(a)(5)(A), bars this case. By the Government’s own description,
however, the 30-day time limit in that provision governs “challenges to theconservator’s appointment.” SB at 7. This stringent deadline does not apply here
because the Washington Federal Plaintiffs are not objecting to appointment of theconservator and do not seek to unwind anything since the appointment. Instead,they seek damages for the Government’s failure to comply with the Fifth
Amendment mandate of just compensation for takings of private property.
Appx165-168¶¶217-225. Hence, the Government is mistaken that “millions oftransactions” occurring “in the intervening years” will be called into question ifthis case goes forward on the merits. SB at 7.
3.

Addressing only the Third Amendment, the Supreme Court did
not hold that Board consent was irrelevant.

Finally, the Government doubles down on its effort to construct its own
factual narrative but, unless well-pled allegations are ignored on a motion todismiss, this attempt cannot succeed. Even if, as the Government insists, the-4-Case: 20-2190

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Supreme Court relied on “facts not subject to dispute,” the factual focus in Collins
differed fundamentally from that here. SB at 1, 4, 6. As the Government
acknowledges, the Supreme Court addressed only “the reasonableness andlegitimacy of the conservator’s actions in entering into the Third Amendment.” Id.
at 1. There is accordingly no basis to conclude from Collins, contrary to the mostfoundational precepts governing pleading, that the “FHFA had ample reason toplace the enterprises into conservatorship, with or without the enterprises’consent.” Id. at 8 (emphasis added).
All of this, including consent, is hotly contested and was not decided inCollins. See PB at 7-16. Indeed, the Supreme Court noted that other lawsuits had
been filed related to the Third Amendment. Collins, 141 S. Ct. at 1770.
Shareholders in one of the related actions, who faced the same omnibus motion todismiss leading to this appeal, filed an amicus curiae brief alerting the SupremeCourt to the cases now on review before this Court. See Brief of Amici Curiae
Bryndon Fisher, Bruce Reid, and Erick Shipmon in Support of Neither Party, 2020
WL 5898901, at 1 (U.S. Sept. 23, 2020). As would be presumed, Collins therefore
did not prejudge other litigation that might generate its own petitions for certiorari.
III.

CONCLUSION

Collins underscores that the Washington Federal Plaintiffs have standing tolitigate their claims on the merits.

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DATED: July 23, 2021

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Respectfully submitted,
HAGENS BERMAN SOBOL SHAPIRO LLP
By: /s/ Steve W. Berman
Steve W. Berman
Principal Attorney1301 Second Avenue, Suite 2000
Seattle, WA 98101(206) 623-7292
steve@hbsslaw.com
OF COUNSEL:Kevin K. GreenHAGENS BERMAN SOBOL SHAPIRO LLP
533 F Street, Suite 207
San Diego, CA 92101(619) 929-3340
keving@hbsslaw.com
Robert M. Roseman
SPECTOR ROSEMAN & KODROFF P.C.
2001 Market Street, Suite 3420
Philadelphia, PA 19103(215) 496-0300
rroseman@srkattorneys.com
Attorneys for Plaintiffs-Appellants
Washington Federal, Michael McCredy
Baker and City of Austin Police Retirement
System-6-Case: 20-2190

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FORM 19. Certificate of Compliance with Type-Volume Limitations

Form 19
July 2020

UNITED STATES COURT OF APPEALSFOR THE FEDERAL CIRCUITCERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATIONS
Case Number: 2020-2190
Short Case Caption: Washington Federal v. USInstructions: When computing a word, line, or page count, you may exclude any
items listed as exempted under Fed. R. App. P. 5(c), Fed. R. App. P. 21(d), Fed. R.
App. P. 27(d)(2), Fed. R. App. P. 32(f), or Fed. Cir. R. 32(b)(2).
The foregoing filing complies with the relevant type-volume limitation of theFederal Rules of Appellate Procedure and Federal Circuit Rules because it meets
one of the following:
the filing has been prepared using a proportionally-spaced typeface
and includes __________ words.
the filing has been prepared using a monospaced typeface and includes__________ lines of text.
✔

5
the filing contains __________
pages / __________ words / __________
lines of text, which does not exceed the maximum authorized by this38
court’s order (ECF No. __________).

07/23/2021
Date: _________________

Signature:/s/ Steve W. Berman

Name:

Steve W. Berman

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