Fairholme Funds, Inc. v. United States
681 F. App'x 945
Fed. Cir.2017Background
- In 2008 FHFA placed Fannie Mae and Freddie Mac into conservatorship; Treasury purchased preferred stock and later, in 2012, amended agreements to sweep 100% of the companies’ profits (replacing a prior 10% dividend).
- Preferred-stock shareholders (including Fairholme Funds) sued the United States in the Court of Federal Claims in 2013, alleging the 2012 amendment effected a Fifth Amendment taking.
- The government moved to dismiss for lack of jurisdiction and failure to state a claim; discovery and jurisdictional proceedings have occurred in the Court of Federal Claims.
- In September 2016 Michael Sammons (a preferred-stockholder) sought to intervene as of right under Rule 24(a) solely to argue that the Court of Federal Claims (an Article I court) lacks constitutional authority to adjudicate a Fifth Amendment takings claim.
- The Court of Federal Claims denied intervention as untimely and because Sammons could protect his interests through independent litigation; Sammons then filed a separate district-court action raising the Article III forum argument and seeking damages.
- The Federal Circuit affirmed the denial of intervention, holding Sammons would not be impaired (he can litigate his claims elsewhere) and that his motion was untimely given the multi-year delay and advanced state of the case.
Issues
| Issue | Sammons' Argument | Government/Shareholders' Argument | Held |
|---|---|---|---|
| Whether Sammons may intervene as of right under Rule 24(a) to raise a constitutional challenge to the Court of Federal Claims’ jurisdiction | Sammons: He has an interest as a preferred-stockholder and needs to intervene to press that the Court of Federal Claims (Article I) cannot constitutionally adjudicate takings claims | Government/Shareholders: Denial appropriate because Sammons can litigate his claim separately and intervention is untimely and prejudicial to existing parties | Denied — Sammons’ interest would not be impaired because he can pursue his claims independently; intervention also untimely |
| Timeliness of the intervention motion under Rule 24 | Sammons: Motion timely despite delay; constitutional question warrants intervention | Government: Motion untimely — filed years after suit and after substantial proceedings; would prejudice existing parties | Denied as untimely — three-year delay, extensive docket and discovery, and no unusual circumstances justify late intervention |
| Whether denial of intervention requires addressing Sammons’ constitutional Article III challenge on appeal | Sammons: Court should decide the constitutional issue | Government/Shareholders: The appeal concerns denial of intervention; constitutional challenge can be litigated elsewhere | Court declined to address the constitutional merits here; noted jurisdictional challenges can be raised by parties and courts even if intervenor is denied |
| Appropriate review standard for denial of intervention | Sammons: (implied) contest denial on merits | Government: Denial reviewed for abuse of discretion | Affirmed — applied timeliness and impairment analysis under abuse-of-discretion review |
Key Cases Cited
- Stern v. Marshall, 564 U.S. 462 (2011) (limits on Article I adjudication of certain claims implicating private rights)
- NAACP v. New York, 413 U.S. 345 (1973) (denial of intervention for untimeliness reviewed for abuse of discretion)
- Belton Indus., Inc. v. United States, 6 F.3d 756 (Fed. Cir. 1993) (timeliness factors for intervention)
- Doe v. United States, [citation="44 F. App'x 499"] (Fed. Cir. 2002) (procedural treatment of intervention timeliness under Court of Federal Claims rule)
- Defenders of Wildlife v. Perciasepe, 714 F.3d 1317 (D.C. Cir. 2013) (declining to reach jurisdictional challenge when intervention denied)