UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 09-1973

LOUISIANA MUNICIPAL POLICE EMPLOYEES RETIREMENT SYSTEM, 

derivatively and on behalf of Federal Home Loan Mortgage 

Corporation; R.S. BASSMAN, derivatively on behalf of 

Freddie Mac aka Federal Home Loan Mortgage Corporation and 

its shareholders,

Plaintiffs - Appellants,

and

ADAMS FAMILY TRUST, derivatively on behalf of nominal 

defendant Federal Home Loan Mortgage Corporation; ELNA 

ADAMS, Trustee, derivatively on behalf of nominal defendant 

Federal Home Loan Mortgage Corporation; KEVIN TASHJIAN, 

derivatively on behalf of nominal defendant Federal Home 

Loan Mortgage Corporation,

Plaintiffs,

v.

FEDERAL HOUSING FINANCE AGENCY,

Plaintiff - Appellee,

and

RICHARD F. SYRON; PATRICIA COOK; ANTHONY PISZEL; EUGENE M. 

MCQUADE; STEPHEN A ROSS; SHAUN F. O’MALLEY; FEDERAL HOME 

LOAN MORTGAGE CORPORATION; PRICEWATERHOUSE COOPERS, LLP; 

FREDDIE MAC, nominal defendant also known as Federal Home 

Loan Mortgage Corporation; ROBERT R. GLAUBER; BARBARA T. 

ALEXANDER; MARTIN F. BAUMANN; WILLIAM M. LEWIS, JR.; 

JEFFREY M. PEEK; GEOFFREY T. BOISI; RONALD F. POE; MIKE 

PERLMAN; KIRK S. DIE; JAMES R. EGAN; PAUL G. GEORGE; 

MICHAEL MAY; HOLLIS S. MCLOUGHLIN; PAUL E. MULLINGS; ANURAG 

SAKSENA; JERRY WEISS; RALPH F. BOYD, JR.; JOSEPH A. 

SMIALWOSKI; ROBERT Y. TSIEN; ROBERT E. BOSTROM; MICHELLE 
2

ENGLER; THOMAS S. JOHNSON; NICHOLAS P. RETSINAS; JEROME P. 

KENNEY,

Defendants - Appellees.

Appeal from the United States District Court for the Eastern 

District of Virginia, at Alexandria. Leonie M. Brinkema, 

District Judge. (1:08-cv-00773-LMB-TCB)

Argued: January 28, 2011 Decided: May 5, 2011

Before TRAXLER, Chief Judge, and MOTZ and KEENAN, Circuit 

Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Matthew Evan Miller, CUNEO, GILBERT & LADUCA, LLP, 

Washington, D.C., for Appellants. Howard N. Cayne, ARNOLD & 

PORTER, LLP, Washington, D.C., for Appellees. ON BRIEF:

Jonathan W. Cuneo, CUNEO, GILBERT & LADUCA, LLP, Washington, 

D.C.; Steven E. Fineman, Daniel P. Chiplock, LIEFF, CABRASER, 

HEIMANN & BERNSTEIN, LLP, New York, New York; Richard D. 

Greenfield, Marguerite R. Goodman, GREENFIELD & GOODMAN, LLC, 

New York, New York, for Appellant R. S. Bassman; Kevin Oufnac, 

Lewis S. Kahn, Albert M. Myers, KAHN, SWICK & FOTI, LLC, New 

Orleans, Louisiana, Mark Hanna, MURPHY ANDERSON PLLC, 

Washington, D.C., for Appellant Louisiana Municipal Police 

Employees Retirement System. David B. Bergman, Ian S. Hoffman, 

Christopher A. Jaros, ARNOLD & PORTER, LLP, Washington, D.C.; 

Stephen E. Hart, FEDERAL HOUSING FINANCE AGENCY, Washington, 

D.C., for Appellee Federal Housing Finance Agency.

Unpublished opinions are not binding precedent in this circuit.
3

PER CURIAM:

This appeal arises out of consolidated derivative actions 

that shareholders filed on behalf of the Federal Home Loan 

Mortgage Corporation (“Freddie Mac”) against former directors 

and officers.1 The shareholders allege that the defendants 

breached their fiduciary duties, wasted company assets, and 

grossly mismanaged the company, resulting in significant 

financial losses. Acting as conservator of Freddie Mac pursuant 

to federal law, the Federal Housing Finance Agency successfully 

moved in the district court to substitute itself as plaintiff in 

those actions. The shareholders appeal this ruling. We affirm.

I.

In 1970, Congress established Freddie Mac to promote 

homeownership by competing with the Federal National Mortgage 

Association (“Fannie Mae”) in the secondary residential mortgage 

market. See Fed. Home Loan Mortgage Corp. Act, Pub. L. No. 91-

351, § 301, 84 Stat. 450, 451 (1970) (codified as amended at 12 

 1 Two of the actions -- Adams Family Trust v. Syron, and 

Louisiana Municipal Police Employees Retirement System v. Syron

-- were filed in the Eastern District of Virginia in July and 

August 2008, respectively, and consolidated on October 15, 2008. 

The third action -- Bassman v. Syron -- was originally filed in 

the Southern District of New York in March 2008, ordered 

transferred to the Eastern District of Virginia on November 20, 

2008, and consolidated with the other two cases on December 12, 

2008.
4

U.S.C. §§ 1451 et seq.); Fed. Nat’l Mortgage Ass’n Charter Act, 

ch. 847, § 301, 48 Stat. 1246, 1252 (1934) (codified as amended 

at 12 U.S.C. §§ 1716 et seq.). Although both enterprises are 

structured as private corporations, Freddie Mac and Fannie Mae 

are government-sponsored institutions. Id. They “have an 

affirmative obligation to facilitate the financing of affordable 

housing for low- and moderate-income families in a manner 

consistent with their overall public purposes, while maintaining 

a strong financial condition and a reasonable economic return.” 

12 U.S.C. § 4501(7).

To provide “more effective Federal regulation” of Freddie 

Mac and Fannie Mae, Congress created the Office of Federal 

Housing Enterprise Oversight (the “Office”) in 1992. See Pub. 

L. No. 102-550, §§ 1302, 1311, 106 Stat. 3672, 3941-44 (1992); 

12 U.S.C. § 4501(2). The Office was responsible for making

annual reports to Congress on “the financial safety and 

soundness” of Freddie Mac and Fannie Mae. Pub. L. No. 102-550,

§§ 1317, 1319B, 106 Stat. at 3949, 3950. In 2007 and 2008, the 

Office conveyed positive reports on the fiscal health of both 

enterprises, describing them as “adequately capitalized.” See

In re Fed. Home Mortgage Corp. Derivative Litig., 643 F. Supp. 

2d 790, 792 (E.D. Va. 2009) (“In re Freddie Mac”). In reality, 

however, Freddie Mac was poised to report considerable losses: 

$3.1 billion in 2007 and $50.1 billion in 2008. See id.
5

In 2008, amid these extensive losses, Congress passed and 

President George W. Bush signed the Housing and Economic 

Recovery Act of 2008 (the “Act”). The Act abolished the Office

and another government entity, the Federal Housing Finance 

Board, and in their stead created the Federal Housing Finance 

Agency (the “Agency”). See Pub. L. No. 110-289 §§ 1301-1314, 

122 Stat. 2654, 2794-99 (2008). The shareholders allege, and 

the Agency does not dispute, that the Agency’s leadership and 

staff is “substantially unchanged” from that of the Office. See

Appellants’ Br. at 10. Indeed, the Agency’s director, James 

Lockhart, is the former director of the Office.

The Act grants the Agency’s director the authority to 

appoint the Agency as conservator or receiver of Freddie Mac in 

the event the enterprise becomes “critically undercapitalized.” 

12 U.S.C. § 4617. Pursuant to this authority, on September 6, 

2008, Lockhart appointed the Agency as conservator of Freddie 

Mac. See In re Freddie Mac, 643 F. Supp. 2d at 793. As such, 

the Agency “succeed[ed] to all rights, titles, powers, and 

privileges of [Freddie Mac], and of any stockholder, officer, or 

director of [Freddie Mac] with respect to [Freddie Mac] and the 

assets of [Freddie Mac],” and is empowered to “take over the 

assets of and operate [Freddie Mac] with all the powers of the 

shareholders, the directors, and the officers of [Freddie Mac] 

and conduct all business of [Freddie Mac].” 12 U.S.C. 
6

§ 4617(b)(2)(A)(i), (B)(i). The Act further provides that, 

except under limited circumstances not at issue here, “no court 

may take any action to restrain or affect the exercise of powers 

or functions of the [Agency] as a conservator or a receiver.” 

Id. § 4617(f).

After its appointment as conservator, the Agency 

successfully moved to substitute itself as plaintiff in the 

consolidated actions in place of the shareholders. Thereafter, 

upon the Agency’s motion, the district court dismissed the 

actions without prejudice.

II.

The district court, interpreting the Act, concluded that 

“the plain meaning of the statute is that all rights previously

held by Freddie Mac’s stockholders, including the right to sue 

derivatively, now belong exclusively to the [Agency].” In re 

Freddie Mac, 643 F. Supp. 2d at 795 (emphasis in original). The 

court found support in the Act’s provision explicitly granting 

conservators and receivers “all rights, titles, powers, and 

privileges” of “any stockholder,” 12 U.S.C. § 4617(b)(2)(A)(i), 

and the provision barring courts from “restrain[ing] or 

affect[ing] the exercise of powers or functions of the [Agency] 

as a conservator or receiver,” id. § 4617(f). See In re Freddie 

Mac, 643 F. Supp. 2d at 797 (“This language clearly demonstrates 
7

Congressional intent to transfer as much control of Freddie Mac 

as possible to the [Agency], including any right to sue on 

behalf of the corporation.”). Further, the district court 

relied on case law interpreting the Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989, which has similar 

provisions transferring stockholders’ “rights, titles, powers, 

and privileges” to federal bank receivers and conservators. See

12 U.S.C. § 1821(d)(2)(A)(i), (B)(i); see also Pareto v. FDIC, 

139 F.3d 696, 700 (9th Cir. 1998) (“Congress has transferred 

everything it could to the FDIC, and that includes a 

stockholder’s right, power or privilege to demand corporate 

action or to sue directors or others when action is not 

forthcoming.”).

III.

The shareholders appeal the substitution order, contending 

that under the Act the appointment of a receiver or conservator 

does not preclude a shareholder’s derivative action. Our 

jurisdiction to hear this appeal arises under 28 U.S.C. § 1291. 

See Chao v. Rivendell Woods, Inc., 415 F.3d 342, 345 (4th Cir. 

2005) (explaining voluntary dismissal of entire action without 

prejudice is a final decision appealable under § 1291). We 

review questions of statutory interpretation de novo. United 

States v. Abuagla, 336 F.3d 277, 278 (4th Cir. 2003).
8

Having carefully considered the record, the briefs and 

arguments of the parties, and the controlling and persuasive

authorities, we conclude that the district court’s analysis was 

correct. Accordingly, we affirm on the basis of the district 

court’s well reasoned opinion. See In re Freddie Mac, 643 F. 

Supp. 2d 790.2

AFFIRMED

 2 The shareholders originally sought immediate review of the 

substitution order, noting their appeal before the district 

court entered the dismissal order. The Agency moved to dismiss 

the appeal, contending this court lacked jurisdiction to review 

the merits of the interlocutory order. Because, during the 

pendency of this appeal, the district court entered a final 

order dismissing the action, we deny as moot the Agency’s motion 

to dismiss the appeal. See Digital Equip. Corp. v. Desktop 

Direct, Inc., 511 U.S. 863, 868 (1994) (describing “general 

rule” that “claims of district court error at any stage of the 

litigation may be ventilated” upon entry of final judgment).