Court Opinion

ID: 4540958
Source: CourtListenerOpinion
Date Created: 2020-06-12 12:01:41.377515+00
Date Added: 2024-06-11T12:48:10.495385
License: Public Domain

In the United States Court of Federal Claims
                                            No. 13-608C
                                       (Filed: June 11, 2020)

*************************************
BRYNDON FISHER et al.,              *
                                    *
            Plaintiffs,             *
                                    *                 Certification of Interlocutory Appeal; 28
v.                                  *                 U.S.C. § 1292(d)(2)
                                    *
THE UNITED STATES,                  *
                                    *
            Defendant.              *
*************************************

Robert C. Schubert, San Francisco, CA, for plaintiffs.

Kenneth M. Dintzer, United States Department of Justice, Washington, DC, for defendant.

                                              ORDER

       Plaintiffs request that the court certify for interlocutory appeal its May 8, 2020 opinion
denying defendant’s motion to dismiss. Defendant opposes plaintiffs’ motion on the ground that
the questions plaintiffs seek to certify were already certified for interlocutory appeal in a related
matter. For the reasons explained below, the court grants the motion and will modify the May 8,
2020 opinion to include the language necessary for an interlocutory appeal.

                                       I. BACKGROUND

        Plaintiffs challenge actions taken in connection with the conservatorship of the Federal
National Mortgage Association (“Fannie”). 1 In their complaint, plaintiffs aver that the Federal
Housing Finance Agency in its role as conservator (“FHFA-C”) for Fannie infringed on
plaintiffs’ rights when the FHFA-C executed the third amendment to the Preferred Stock
Purchase Agreement. Plaintiffs allege three claims: a taking, an illegal exaction, and a breach of
fiduciary duty. Each claim is styled as a derivative claim on behalf of Fannie.

       1
         For the sake of brevity, this order recites only the facts and background necessary for
the purpose of resolving plaintiffs’ motion. Additional information on the genesis of this suit
and the underlying facts is set forth in the May 8, 2020 opinion on defendant’s motion to
dismiss. See Fisher v. United States, No. 13-608C, 2020 WL 2764191, at *1-6 (Fed. Cl. May 8,
2020).
        Defendant moved to dismiss the complaint on the bases that the court lacked subject-
matter jurisdiction over the claims, plaintiffs lacked standing to pursue their claims, and
plaintiffs failed to state a claim on which relief may be granted. The court, after reviewing
hundreds of pages of briefing and hearing nearly nine hours of oral argument, denied defendant’s
request to dismiss plaintiffs’ claims.

        Plaintiffs now request that the court certify its May 8, 2020 opinion for interlocutory
review. That motion is fully briefed. The parties in a related matter, Fairholme Funds, Inc. v.
United States, No. 13-465C, are pursuing interlocutory appeals in the United States Court of
Appeals for the Federal Circuit (“Federal Circuit”) of the court’s ruling in that case on an
identical motion to dismiss. Fairholme Funds, Inc. v. United States, 147 Fed. Cl. 1 (2019)
(“Fairholme II”), motion to certify interlocutory appeal granted, 147 Fed. Cl. 126 (2020)
(“Fairholme III”). The Fairholme plaintiffs have moved to file an amicus brief in this matter on
the topic of plaintiffs’ instant motion. Although the court grants that motion, the amicus brief
attached to the motion, which is neutral on the question of whether plaintiffs’ motion should be
granted, does not affect the court’s analysis.

          Plaintiffs identify two questions that they contend should be certified for an interlocutory
appeal:

          (1) Whether plaintiffs have standing to assert derivative claims notwithstanding
              the Housing and Economic Recovery Act of 2008’s (“HERA”) succession
              clause, 12 U.S.C. § 4617(b)(2)(A)(i) (2018).

          (2) Whether the FHFA-C’s actions are attributable to the United States such that
              the court possesses subject-matter jurisdiction to entertain plaintiffs’
              derivative takings and illegal exaction claims.

It is undisputed that these two questions have already been certified for interlocutory appeal in
the Fairholme matter. 2 Fairholme III, 147 Fed. Cl. at 131. As explained below, certification is
appropriate under the applicable legal standard.

                                             II. ANALYSIS

        “Courts have long understood that ‘[i]nterlocutory appeals are reserved for exceptional or
rare cases . . . .’” White Mountain Apache Tribe v. United States, No. 17-359, 2018 WL
6293242, at *2 (Fed. Cl. Dec. 3, 2018) (quoting Starr Int’l Co. v. United States, 112 Fed. Cl. 601,
603 (2013)); accord Coast Fed. Bank, FSB v. United States, 49 Fed. Cl. 11, 13 (2001); see Zoltek
Corp. v. United States, 672 F.3d 1309, 1328 (Fed. Cir. 2012) (Dyk, J., dissenting) (discussing the
legislative history of the statute authorizing interlocutory appeals). The trial court has discretion
on whether to certify an issue for an interlocutory appeal. Starr, 112 Fed. Cl. at 603. The court
certifies issues by “includ[ing] in the [interlocutory] order a statement that a controlling question
of law is involved with respect to which there is a substantial ground for difference of opinion
and that an immediate appeal from that order may materially advance the ultimate termination of

          2
              The court has modified plaintiffs’ first question to provide a full citation to HERA.
                                                    -2-
the litigation.” 28 U.S.C. § 1292(d)(2) (2018). In short, there is a three-part test for certifying
issues for interlocutory appeal: The court must conclude that (1) there is a controlling question
of law; (2) there is a substantial ground for difference of opinion with respect to that question;
and (3) an immediate appeal may materially advance the ultimate termination of the litigation. 3
Id.; accord United Launch Servs., LLC v. United States, 139 Fed. Cl. 721, 723 (2018).

        In Fairholme III, the court held that the first two factors were met on precisely these two
questions; that holding applies here as well. See 147 Fed. Cl. at 130 (concluding that
defendant’s legal questions, upon appeal, might end the Fairholme litigation, and that the court’s
holdings in Fairholme II addressed difficult legal issues that were the subject of differing results
before other courts). The court finds, and defendant does not dispute, that the first two factors
for certification have been met for plaintiffs’ questions.

        The third factor is whether an interlocutory appeal will materially advance the
termination of the litigation. The focus here is, “in large part[,] on considerations of ‘judicial
economy’ and the need to avoid ‘unnecessary delay and expense’ and ‘piecemeal litigation.’”
Coast Fed. Bank, 49 Fed. Cl. at 14 (quoting Northrop Corp., Northrop Elecs. Sys. Div. v. United
States, 27 Fed. Cl. 795, 798-99 (1993)); see also Lummi Tribe of the Lummi Reservation, Wash.
v. United States, 870 F.3d 1313, 1315 (Fed. Cir. 2017) (“[T]his court granted the government’s
petition for interlocutory appeal to ‘ensure that the [United States Court of Federal Claims] is the
court of proper jurisdiction before requiring it and the parties to undergo extensive unnecessary
proceedings.’” (quoting appellate order)). In Fairholme III, the court’s determination on the third
factor was based on the following analysis:

       The court and other parties will preserve their resources with an interlocutory
       appeal because a definitive ruling on the issues identified by the parties will offer
       clear guidance on the materially similar claims in seventeen related cases pending
       before the undersigned. And the parties in the instant case will also benefit from
       an expedited appellate ruling. Without an interlocutory appeal, the parties will
       likely begin costly discovery that would be unnecessary if an appellate court
       reverses this court’s decision that it possesses jurisdiction over the derivative
       claims. . . . Thus, the third factor also weighs in favor of certification.

147 Fed. Cl. at 130-31. The reasons that the third factor for certification was met in Fairholme
III also apply here.

        There are, however, two main differences between plaintiffs’ motion and the request for
similar relief in Fairholme. First, plaintiffs here are prevailing parties in the sense that the court
denied defendant’s motion to dismiss in its entirety, whereas the court’s decision in Fairholme II
granted the motion to dismiss in part and dismissed many of those plaintiffs’ claims. Second,
plaintiffs here raise legal questions that are already before the Federal Circuit, which was not a
circumstance that applied to the Fairholme litigants when the court certified its ruling in that case

       3
          Even if this court certifies its opinion for interlocutory appeal, the Federal Circuit may
decide not to entertain the appeal. 28 U.S.C. § 1292(d)(2); accord AD Glob. Fund, LLC ex rel.
N. Hills Holding, Inc. v. United States, 68 Fed. Cl. 663, 665 (2005).

                                                 -3-
for interlocutory appeal. Defendant argues that it is not proper to send the same questions to the
Federal Circuit in two different appeals. The court addresses each of these differences in turn.

        With respect to the first difference, although prevailing parties do not generally obtain
certification of a court’s ruling for interlocutory appeal, there are exceptions. British Steel PLC
v. United States, 127 F.3d 1471, 1473 n.* (Fed. Cir. 1997) (citing cases). The first compelling
exception that applies here is when a party obtains a favorable general ruling, but that ruling also
includes unfavorable subsidiary holdings that could harm the party. See id. (citing LaBuhn v.
Bulkmatic Transp. Co., 865 F.2d 119, 122 (7th Cir. 1988)). Plaintiffs identify a number of
holdings in the court’s May 8, 2020 opinion which, if unchallenged, might prove deleterious to
the survival of plaintiffs’ claims as these related cases move forward at the trial court level and at
the appellate level.

         The second compelling exception is the substantial risk of the application of collateral
estoppel to plaintiffs’ claims. See id. (citing Dolenc v. Love, 40 F.3d 656, 657 (3d Cir. 1994)).
Because many of the claims in these related cases could be viewed to be either of the same
nature or identical, the Federal Circuit’s ruling in other cases might prevent plaintiffs here from
fully litigating the merits of their derivative claims. In other words, plaintiffs have a very real
“stake” in an appeal of the court’s denial of defendant’s motion to dismiss in this case. See
Deposit Guar. Nat. Bank, Jackson, Miss. v. Roper, 445 U.S. 326, 334 (1980) (“In an appropriate
case, appeal may be permitted from an adverse ruling collateral to the judgment on the merits at
the behest of the party who has prevailed on the merits, so long as that party retains a stake in the
appeal . . . .”). The court finds that plaintiffs’ status as generally prevailing parties, in the context
of the court’s denial of defendant’s motion to dismiss, does not prevent the certification of the
court’s rulings for an interlocutory appeal.

        Turning to the topic of multiple appeals presenting the same question, or questions, for
appellate review, the court notes, first, that defendant points to no authority to support its
position that such a procedure would be improper. Indeed, although defendant states that “no
basis exists to re-certify those questions here,” not one case is cited for this proposition. Def.’s
Resp. to Pls.’ Mot. to Certify the Court’s May 8, 2020 Decision for Interlocutory Appeal 4.
Instead, defendant surmises that plaintiffs’ claims, if the Federal Circuit agrees to proceed with
interlocutory appeals in Fairholme, will be fully represented by counsel for the Fairholme
plaintiffs and/or by plaintiffs’ counsel in an amicus brief.

        The court agrees with plaintiffs that the consideration of multiple appeals presenting the
same legal issues is not disfavored and may even be advantageous in certain circumstances. The
court also agrees with plaintiffs that an amicus brief, even if permitted by the Federal Circuit,
would not provide plaintiffs with the opportunity to defend their claims with the zeal that is
otherwise available to an appellant. The court need not address plaintiffs’ contentions that there
is a lack of identity between the plaintiffs’ interests in Fairholme and their interests, or on the
discussion of this topic in the amicus brief tendered by the Fairholme plaintiffs. In the court’s
view, plaintiffs’ derivative claims are best represented by plaintiffs’ counsel. For all of the
above reasons, the resolution by the Federal Circuit of plaintiffs’ request for an interlocutory
appeal would “materially advance” the resolution of plaintiffs’ claims in this litigation. 28
U.S.C. § 1292(d)(2).

                                                  -4-
                                       III. CONCLUSION

       Because all of the factors that the court must consider under 28 U.S.C. § 1292(d)(2)
weigh in favor of certification, the court concludes that it is appropriate to certify its May 8, 2020
opinion for interlocutory appeal. The court, therefore, GRANTS plaintiffs’ motion to certify the
May 8, 2020 opinion for interlocutory appeal. The court also GRANTS the Fairholme plaintiffs’
motion for leave to file an amicus brief in support of neither party.

       The court will amend its May 8, 2020 opinion by appending the following language to
the end of the opinion:

       The court finds that this opinion involves the following controlling questions of
       law with respect to which there is a substantial ground for difference of opinion
       and that an immediate appeal from the opinion may materially advance the
       ultimate termination of the litigation:

       (1) Whether plaintiffs have standing to assert derivative claims notwithstanding
           HERA’s succession clause.

       (2) Whether the FHFA-C’s actions are attributable to the United States such that
           the court possesses subject-matter jurisdiction to entertain plaintiffs’
           derivative takings and illegal exaction claims.

The court CONTINUES the stay in this case pending the completion of the interlocutory appeal
process. By no later than 14 days after the completion of that process, the parties shall file a
joint status report in which they propose further proceedings, if any are necessary.

       IT IS SO ORDERED.

                                                       s/ Margaret M. Sweeney
                                                       MARGARET M. SWEENEY
                                                       Chief Judge

                                                 -5-