Fannie Mae: The WSJ Continues to Cheerlead Govt’s Case vs Shareholders by Todd Sullivan, ValuePlays
So, here is the latest from a few days ago. I’ll skip the 1st paragraph because it is starting to degenerate into simple shareholder trolling on the part of the WSJ now and just get to the meat of the blog post.
After a U.S. District Court last month dismissed a handful of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) investor lawsuits, focus turned to similar actions before the Court of Federal Claims. Now, Justice Department lawyers are urging Judge Margaret Sweeney to put those cases on hold. In a filing Tuesday, government lawyers argued the lawsuits overlap so much that Judge Sweeney should issue a temporary stay to see how things shake out on the appeal of the District Court’s dismissal. If Judge Sweeney doesn’t stay the litigation, the government says it will move to dismiss the case on grounds the District Court’s decision legally bars the investors from bringing such a similar case in the Court of Claims.
The filing means Judge Sweeney will have to weigh in on the District Court’s decision. That could push a resolution of the case off for quite some time, awaiting a decision on the appeal. Or it could dash hopes of investors at Fannie Mae and Freddie Mac.
Now, it all looks well and dandy, the only problem is that it really isn’t accurate…..at all really.
Peter Chapman writes:
Judge Sweeney may not need to make any comment about her opinion about Judge Lamberth’s decision.
Judge Lamberth’s decision was appealed to the U.S. Court of Appeals for the D.C. Circuit. Appeals from the Court of Federal Claims go to the U.S. Court of Appeals for the Federal Circuit. Those are two separate courts. Judge Sweeney isn’t bound by anything that the appellate court reviewing Judge Lamberth’s decision may say.
I spent some time today looking for cases in which Judge Sweeney stayed proceedings in her court while an appeal from a related case in the District Court was pending. I couldn’t find one. That doesn’t mean one doesn’t exist, only that I’m unable to locate any as of today. Fairholme’s lawyers will do a better job of pointing Judge Sweeney to a case in which she denied a stay in a case in a similar procedural posture if one exists. This could well be her first time considering this particular issue.
He also adds:
The United States Court of Appeals for the Federal Circuit tells Judge Sweeney in Levi Strauss & Company v. Abercrombie & Fitch Trading Co., Case No. 2012-1495, slip op. — – at 7, (Fed. Cir. 2013), citing Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 1366 (Fed. Cir. 2000), that she should look at four things when examining whether Judge Lamberth’s ruling precludes her from deciding the cases before her:
(A) the identity of the issues in the prior proceeding;
(B) whether the issues were actually litigated;
(C) whether the determination of the issues was necessary to the resulting judgment; and
(D) whether the party defending against preclusion had a full and fair opportunity to litigate the issues.
Judge Lamberth received no evidence and held no hearings in the District Court. Shareholders did not have a full and fair opportunity to litigate much of anything. Judge Lamberth’s ruling doesn’t preclude Judge Sweeney from considering the shareholder complaints filed in her Court.
Back to me:
To be exact, the Appeals Court said:
Contrary to Abercrombie & Fitch Co. (NYSE:ANF)’s contention, the Board’s dismissal cannot be affirmed on the alternative ground that Levi Strauss’s challenges to the registrations are barred by claim preclusion. That is not for want of either identity of parties in the two forums or merits judgments in the district-court case: the 2009 Judgment on In- fringement and the 2011 Judgment on Dilution are both judgments on the merits in a case involving the same parties as the PTO proceedings. Rather, it is because the PTO and district-court proceedings do not involve the same transactional facts, pragmatically judged.
Because the Board erred in ruling that issue preclusion barred Levi Strauss’s challenges in related opposition and cancellation proceedings, and the result cannot rest in the alternative on claim preclusion, we reverse and remand
In other words, if the “facts” are not the same (and they have been ruled different in these cases, thus discovery) then Sweeney is under no obligation to stay or dismiss proceedings before her.
Now, I can guarantee you this, when plaintiffs answer this government filing with one of their own and make a very strong case as to why Sweeney should ignore defendants brief, the WSJ will give it lip service at best, assuming they cover it at all. How do I know this? When plaintiffs won discovery in Feb. 2014 before Sweeney, do you know how many articles the WSJ ran on it? One. Just one……….
In front of Judge Sweeney plaintiffs have won a string of rulings, are knee deep in a discovery that is far broader both in terms of time periods and the scope of what will be discoverable than what the government wanted. What discovery they were granted (link) does is it allows plaintiff lawyers to “discover” evidence that would undermine government claims in their motion to dismiss. It really is a big deal. This got one article…..
Do you know how many posts they have run about Lamberth’s recent decision? I get 16 here and probably missed a few. So, its more than a little clear the Journal has morphed from “reporting” to “advocating” in these cases.
On the Oct. 28th the Leadership Conference, who represents over 200 national organizations sent a letter to FHFA Head Mel Watt demanding an end to the “permanent conservatorship” of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s and to allow them to rebuild capital. This is a massive national organization which represents very powerful groups (NAACP, NOW, PTA, ACLU, AFL-CIO etc etc etc) that will get the attention of lawmakers. Do you want to know how the WSJ covered this? Well, as of this writing they haven’t….. maybe they are too busy.
This editorial from the editors of the WSJ congeals the organization’s view of the cases. It appears those working under them have received their marching orders and have done a fine job a falling in and towing the company line. I’m serious about that, the onslaught has been impressive. They can’t all feel this way which means many have simply sold out….sad. I’m sure most consider themselves “journalists” but really just copy producers if they are just following orders.
For that reason alone anything appearing in the WSJ ought to be treated with a heavy dose of skepticism. To put it differently, one has to KNOW they will be anti-shareholder and one should not treat anything written as such as noteworthy. This does go deeper into the very reason for the decline in relevance at major news organizations. People simply do not trust them anymore. They will claim they are