Collins v. Lew, 4:16-cv-03113

Fannie Mae and Freddie Mac were placed into conservatorship by the FHFA Director in September 2008; Treasury entered into Preferred Stock Purchase Agreements (PSPAs) to provide capital in exchange for senior preferred stock and warrants.
The PSPAs were amended several times (notably the Third Amendment in August 2012) to change the dividend formula so dividends equaled excess net worth, resulting in large payments to Treasury and limiting capital accumulation by the companies.
Plaintiffs are shareholders who sued in October 2016, alleging (1) FHFA and Treasury exceeded statutory authority and acted arbitrarily and capriciously in adopting the Third Amendment (APA claims) and (2) the FHFA Director’s for-cause removal protection is unconstitutional (separation-of-powers claim).
Defendants moved to dismiss the APA claims based on HERA’s § 4617(f) bar on judicial actions that would “restrain or affect” FHFA’s exercise of conservatorship powers; both sides moved for summary judgment on the constitutional claim.
The court followed the D.C. Circuit’s reasoning in Perry Capital that the Third Amendment falls within FHFA’s broad conservatorship powers and that § 4617(f) bars judicial relief that would affect FHFA’s actions; it also held that the FHFA Director’s for-cause removal protection is constitutional.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether FHFA exceeded its statutory conservatorship authority by adopting the Third Amendment (APA)	The Third Amendment contravened HERA duties to rehabilitate and preserve assets and benefited taxpayers at shareholders’ expense	§ 4617(f) precludes judicial relief because the Third Amendment is within FHFA’s broad conservatorship powers	Dismissed: § 4617(f) bars APA relief; FHFA action falls within conservatorship authority
Whether Treasury’s role in the Third Amendment was reviewable under the APA	Treasury acted arbitrarily and capriciously and exceeded statutory authority	Any relief against Treasury would effectively affect FHFA and thus is barred by § 4617(f)	Dismissed: § 4617(f) also bars relief aimed at Treasury because it would affect FHFA
Whether the FHFA Director’s for-cause removal protection violates separation of powers	Removal-for-cause impermissibly limits the President’s ability to supervise the Executive Branch	For-cause protection is permissible for agencies performing non‑purely executive, quasi‑legislative/judicial functions and does not unduly impede the President	Denied plaintiff’s summary judgment; for-cause removal provision is constitutional

Perry Capital, LLC v. Mnuchin, 848 F.3d 1072 (D.C. Cir.) (reasoning that FHFA’s Third Amendment is within conservatorship powers and § 4617(f) bars judicial relief)
Humphrey’s Executor v. United States, 295 U.S. 602 (1935) (upholding for‑cause removal for officials performing quasi‑legislative or quasi‑judicial functions)
Myers v. United States, 272 U.S. 52 (1926) (recognizing limits on congressional restrictions on the President’s removal power in certain contexts)
Morrison v. Olson, 487 U.S. 654 (1988) (upholding removal restrictions where they do not unduly interfere with presidential duties)
Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 561 U.S. 477 (2010) (holding dual layers of for‑cause protection impermissibly limit presidential oversight)
PHH Corp. v. Consumer Fin. Prot. Bureau, 839 F.3d 1 (D.C. Cir.) (panel decision questioning single‑director, for‑cause removal structure; later vacated en banc)