Piszel v. United States
2016 U.S. App. LEXIS 15151
| Fed. Cir. | 2016Background
- Anthony Piszel was CFO of Freddie Mac with an employment agreement that promised a $1.3M lump-sum termination payment plus restricted stock vesting (part of a larger compensation package worth > $7M).
- After HERA created the FHFA and authorized the Director to prohibit “golden parachute” payments, FHFA placed Freddie Mac into conservatorship and directed Freddie Mac to terminate Piszel and not pay his severance under the new golden-parachute authority.
- Piszel sued the United States in the Court of Federal Claims (filed ~6 years after termination), alleging a Fifth Amendment taking and an illegal exaction; the Claims Court dismissed for failure to state a claim.
- On appeal, the Federal Circuit considered whether Piszel had a cognizable property interest, whether government action amounted to a regulatory (or categorical) taking, whether failure to sue Freddie Mac barred the takings claim, and whether an illegal exaction was alleged.
- The Federal Circuit held Piszel had a cognizable contract-based property interest but that he failed to plead facts showing the government action substantially deprived him of the contract right (breach remedies against Freddie Mac remained possible); it affirmed dismissal of both the takings and illegal-exaction claims.
Issues
| Issue | Piszel's Argument | Government's Argument | Held |
|---|---|---|---|
| Whether FHFA’s prohibition and instruction not to pay severance effected a regulatory taking of Piszel’s contract rights | Prohibition and directive destroyed Piszel’s contractual property (total deprivation); constitutes a taking | No taking: Piszel retained contract remedies against Freddie Mac; regulation did not eliminate contractual property | No taking: dismissal affirmed — plaintiff failed to allege substantial deprivation of contractual rights |
| Whether Piszel had a cognizable Fifth Amendment property interest in his employment contract | Contract rights are property; Piszel possessed a vested property interest | Because Freddie Mac operated in a heavily regulated area, Piszel assumed regulatory risk and lacked a vested expectation | Court: Piszel did have a cognizable property interest in his contract rights |
| Whether Piszel had to first pursue breach of contract remedies against Freddie Mac before suing the government for a taking | Not required to sue private counterparty first; takings claim can proceed | Argued Piszel should have pursued breach remedies and that surviving contract remedies undermine takings claim | Court: No absolute requirement to sue Freddie Mac first, but existence/viability of breach remedies is relevant; here breach remedy survived, undermining takings claim |
| Whether FHFA’s action supports an illegal exaction claim | FHFA’s action effectively diverted Piszel’s severance, amounting to an exaction | No exaction because Piszel did not pay money to the government and no governmental collection occurred | No illegal exaction: claim dismissed because no money was paid to government (no exaction alleged) |
Key Cases Cited
- Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005) (regulatory takings framework and ad hoc Penn Central analysis)
- Penn Central Transp. Co. v. New York, 438 U.S. 104 (1978) (multi-factor test for regulatory takings)
- Lynch v. United States, 292 U.S. 571 (1934) (contracts are property for Fifth Amendment purposes)
- A & D Auto Sales, Inc. v. United States, 748 F.3d 1142 (Fed. Cir. 2014) (takings claim can proceed when government-directed breaches of private contracts are alleged)
- Cienega Gardens v. United States, 331 F.3d 1319 (Fed. Cir. 2003) (recognizing property interests in contract rights despite pervasive regulation)
- Concrete Pipe & Prods. v. Constr. Laborers Pension Trust, 508 U.S. 602 (1993) (background regulation relevant to investment-backed expectations)
- Williamson County Regional Planning Comm’n v. Hamilton Bank, 473 U.S. 172 (1985) (ripeness/need to obtain final administrative decision before takings claim)
- Castle v. United States, 301 F.3d 1328 (Fed. Cir. 2002) (retention of contract remedies militates against finding a taking)