Atif F. Bhаtti; Tyler D. Whitney; Michael F. Carmody v. Federal Housing Finance Agency; Department of the Treasury; Sandra L. Thompson
No. 18-2506
United States Court of Appeals For the Eighth Circuit
October 6, 2021
Submitted: September 23, 2021
Appeal from United States District Court for the District of Minnesota
Before SMITH, Chief Judge, GRUENDER and BENTON, Circuit Judges.
Three shareholders in the Federal National Mortgage Association (“Fannie Mae“) and the Federal Home Loan Mortgage Corporation (“Freddie Mac“) challenge the structure of the regulatory agency overseeing them, the Federal Housing Finance Agency (“FHFA“). The shareholders allege the FHFA‘s leadership structure and appointments violate the Appointments Clause, the separation of powers,
I.
In August 2009, the original FHFA director resigned. President Obama replaced him with Acting Director Edward J. DeMarco, under
The shareholders sued the FHFA аlleging the third amendment violated three Constitutional doctrines: the Appointments Clause, separation of powers, and the nondelegation doctrine. The district court dismissed.
While this case was pending, the Supreme Court granted certiorari in a nearly identical case, Collins v. Mnuchin, 938 F.3d 553, 586 (5th Cir. 2019) (en banc), cert. granted, 141 S. Ct. 193 (2020) (mem op.). The Court recently issued its opinion in Collins v. Yellen, 141 S. Ct. 1761 (2021), which resolves most of the issues here.
II.
The shareholders argue the district court improperly dismissed for lack of standing.
The Supreme Court agrees. “To establish Article III standing, a plaintiff must show that it has suffered an ‘injury in fact’ that is ‘fairly traceable’ to the defendant‘s conduct and would likely be ‘redressed by a favorable decision.‘” Collins, 141 S. Ct. at 1779, quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). “[T]he relevant action in this case is the third amendment, and because the shareholders’ concrete injury flows directly from that amendment, the traceability requirement is satisfied.” Id. The Court rejected arguments that the fourth amendment to the governing agreement mooted retrospective relief—although it does moot prospective relief. Id. at 1780. The Court held that the presence of an Acting Director in the chain of leadership did not prevent the shareholders from tracing their injury to the process for appointing a Director. Id. at 1781. Finally, the Court rejected FHFA‘s argument that the Recovery Act‘s “succession clause,”
III.
The shareholders argue that the appointment of Acting Director DeMarco was initially valid, but became invalid after two years, which they believe is longer than reasonable under the circumstances. The district court disagreed.
The de facto officer doctrine bars any relief here. “The de facto officer doctrine confers validity upon acts performed
Even if the de facto officer doctrine did not control here, the shareholders are not entitled to relief. Assuming they are сorrect that the Acting Director overstayed some limit implied in the Appointments Clause, they would not be entitled to any relief based on that fact. See Collins, 141 S. Ct. at 1787-88 (explaining if the director was properly appointed, then “there is no basis for concluding that any head of the FHFA lacked the authority to carry out the functions of the office“). Any defect was resolved when the subsequent FHFA directors—none of whose appointments were challenged—ratified the third amendment. See id. at 1787 (“[T]here was no constitutional defect in the statutorily prescribed method of appointment to that office. As a result, there is no reason to regard any of the actions taken by the FHFA in relation to the third amendment as void.“). This court affirms.
IV.
The shareholders argue that the FHFA leadership structure impermissibly limits the President‘s removal authority, violating the separation of powers.
The Supreme Court agrees. “Congress could not limit the President‘s power to remove the Director of the Consumer Finanсial Protection Bureau (CFPB) to instances of ‘inefficiency, neglect, or malfeasance.‘” Collins, 141 S. Ct. at 1783, citing Selia Law, LLC v. CFPB, 140 S. Ct. 2183, 2197 (2020). The Court did not “‘revisit our prior decisions allowing certain limitations on the President‘s removal power,’ but we found ‘compelling reasons not to extend those precedents to the novel context of an independent agency led by a single Director.‘” Id., quoting Selia Law, 140 S. Ct. at 2192. “[T]he Constitution prohibits even ‘modеst restrictions’ on the President‘s power to remove the head of an agency with a single top officer.” Id. at 1787. “[T]herefore the removal restriction in the Recovery Act violates the separation of powers.” Id.
Determining the appropriate remedy for this Constitutional harm, however, is less clear. The shareholders request this court vacate the third amendment. But, “the Acting Director who adopted the third amendment was removable at will,” defeating the “argument for setting aside the third amendment in its entirety.” Id. The only question is about remedy “with respect to only the actions that сonfirmed Directors have taken to implement the third amendment during their tenures.” Id. “All the officers who headed the FHFA during the time in question were properly appointed. . . . there was no constitutionаl defect in the statutorily prescribed method of appointment to that office. As a result, there is no reason to regard any of the
Still, the shareholders argue they sustained actual, compensable harm. They request that this court “issue an injunction” putting them “in the position they would be in but for the constitutional violation.” In Collins, the Court prescribed remand to determine whether the unconstitutional removal restriction caused compensable harm to shareholders. Id. at 1788-89. This court also reverses the dismissal of the separаtion-of-powers claim and remands to the district court to determine if the shareholders suffered “compensable harm” and are entitled to “retrospective relief.” Id. at 1789.
V.
The shareholders argue that Congress impermissibly delegated authority to the FHFA in the Recovery Act,
Congress‘s delegation here meets the low threshold for validation under the nondelegation doctrine. “[S]tatutory dеlegation is constitutional as long as Congress ‘lay[s] down by legislative act an intelligible principle to which the person or body authorized to [exercise the delegated authority] is directed to conform.‘” Gundy v. United States, 139 S. Ct. 2116, 2123 (2019) (plurality op.), quoting Mistretta v. United States, 488 U.S. 361, 372 (1989). “The constitutional question is whether Congress has supplied an intelligible principle to guide the delegee‘s use of discretion.” Id. “The Court has found an intelligible principle, although аdmittedly broad, even when an act simply stated that an agency should promulgate regulations encouraging the effective use of radio in the ‘public interest, convenience, or neсessity,’ noting that the meaning of ‘public interest’ was limited in light of the larger aim of the Act.” S. Dakota v. U.S. Dep‘t of Interior, 423 F.3d 790, 795 (8th Cir. 2005), quoting Nat‘l Broad. Co. v. United States, 319 U.S. 190, 215-17 (1943).
Congress‘s delegation of authority directs the FHFA to act as a “conservator,” with clear and recognizablе instructions.
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The judgment is affirmed in part, reversed in part, and remanded for proceedings consistent with this opinion.