Roberts v. Federal Housing Finance Agency
243 F. Supp. 3d 950
N.D. Ill.2017Background
- FHFA placed Fannie Mae and Freddie Mac into conservatorship in September 2008; Treasury entered into stock purchase agreements providing large capital commitments in exchange for senior preferred shares and warrants.
- The original agreements required quarterly dividends tied to Treasury’s liquidation preference; Treasury and FHFA later executed three amendments, culminating in the August 2012 Third Amendment that required dividends equal to essentially the companies’ net worth (less a shrinking capital reserve).
- Plaintiffs (shareholders) sued FHFA and Treasury under the Administrative Procedure Act, alleging FHFA exceeded its conservatorship authority and Treasury exceeded its purchase authority and acted arbitrarily and capriciously. They sought declaratory and injunctive relief (no money damages).
- Defendants moved to dismiss, invoking 12 U.S.C. § 4617(f) (statutory anti-injunction/anti-review provision applicable to FHFA’s exercise of conservatorship powers) as barring relief, and arguing Plaintiffs lacked standing and failed to state claims.
- The court treated § 4617(f) as a merits-based bar (not jurisdictional for practical purposes), concluded the statute bars equitable relief so long as FHFA acted within its statutory conservator authority, and found Plaintiffs failed to plausibly allege FHFA or Treasury acted ultra vires.
- The amended complaint was dismissed with prejudice because § 4617(f) precluded the relief sought and plaintiffs offered no viable amendment to evade that bar.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 12 U.S.C. § 4617(f) bars judicial relief | Roberts/Fischer: § 4617(f) does not bar review here because FHFA/Treasury acted beyond statutory authority | FHFA/Treasury: § 4617(f) forbids any court action that would restrain or affect FHFA’s conservatorship functions | Court: § 4617(f) bars equitable relief unless FHFA acted ultra vires; on pleadings FHFA acted within authority, so claims barred |
| Whether FHFA acted outside its conservator authority (ultra vires) | Plaintiffs: FHFA ceded control to Treasury and improperly entered Third Amendment, violating duties to preserve assets and restore solvency | Defendants: FHFA’s actions fall within discretionary § 4617(b) powers; statute permits acting in the entity’s or Agency’s best interests and agreeing to Treasury terms | Court: Plaintiffs failed to allege facts showing FHFA exceeded statutory powers; § 4617(b) confers permissive powers and FHFA did not act ultra vires |
| Whether Treasury exceeded its purchase authority in adopting the Third Amendment | Plaintiffs: Treasury’s statutory purchase authority expired; Third Amendment exceeded rights from prior purchases and ignored fiduciary duties to minority shareholders | Defendants: Third Amendment exercised rights tied to earlier purchases (not a new purchase); no statutory fiduciary duties to shareholders | Court: Treasury acted within rights received from prior purchases; no basis to treat amendment as unauthorized new purchase |
| Whether plaintiffs’ allegations about motive or bad faith overcome § 4617(f) | Plaintiffs: Treasury’s motive to keep companies in conservatorship supports review and relief | Defendants: Motive irrelevant; § 4617(f) looks to scope of authority, not motive | Court: Motive irrelevant for § 4617(f); only statutory authority matters |
Key Cases Cited
- Heckler v. Chaney, 470 U.S. 821 (1985) (APA does not apply where statute precludes judicial review)
- Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547 U.S. 71 (2006) (repetition of statutory language generally carries prior judicial interpretations)
- McDermott Int’l, Inc. v. Wilander, 498 U.S. 337 (1991) (presumption that statutory terms carry customary meaning unless context indicates otherwise)
- Silha v. ACT, Inc., 807 F.3d 169 (7th Cir. 2015) (pleading standards when defendant mounts facial challenge to subject matter jurisdiction)
- Courtney v. Halleran, 485 F.3d 942 (7th Cir. 2007) (anti-injunction provision for FDIC interpreted as barring equitable relief where agency acted within authority)
- Veluchamy v. F.D.I.C., 706 F.3d 810 (7th Cir. 2013) (discussing treatment of anti-injunction provision and jurisdictional framing)
- Perry Capital LLC v. Mnuchin, 848 F.3d 1072 (D.C. Cir. 2017) (treated § 4617(f) as merits limitation and held remedies barred where FHFA acted within authority)
- Leon County v. Fed. Hous. Fin. Agency, 700 F.3d 1273 (11th Cir. 2012) (distinguishing actions as conservator vs. regulator; courts may consider purpose to decide that question)
- Cty. of Sonoma v. Fed. Hous. Fin. Agency, 710 F.3d 987 (9th Cir. 2013) (interpreting § 4617(f) to bar relief unless FHFA acted ultra vires)
- Perry Capital LLC v. Lew, 70 F. Supp. 3d 208 (D.D.C. 2014) (district court decision analyzing § 4617(f) and Treasury/FHFA actions; persuasive authority)
- Robinson v. Fed. Hous. Fin. Agency, 223 F. Supp. 3d 659 (E.D. Ky. 2016) (district court holding § 4617(f) bars claims when FHFA acted within statutory authority)