Fannie Mae: Lamberth and “Unambiguous” Statutes…He’s Been Wrong Before

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Fannie Mae: Lamberth and “Unambiguous” Statutes…He’s Been Wrong Before

Fannie Mae

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Fannie Mae: Lamberth and “Unambiguous” Statutes…He’s Been Wrong Before by Todd Sullivan, ValuePlays

A lot has been written over the past two days that because of Lamberth’s decision, all plaintiff cases v FHFA/Treasury are effectively over. This is despite the fact Judge Sweeney has rejected to date government arguments to dismiss the case before her and has allowed discovery to proceed. They further ignore the very real possibility that plaintiffs appeal Lamberth’s decision and seem to think Lamberth’s decision is etched in stone not to be touch by an appellate court. Their opinion seem to ride on his statements that:

The Court does, however, find that HERA’s unambiguous statutory provisions….

His claim that the statute passed by Congress in “unambiguous” and his then interpretation of that statute is the basis for his reasoning to throw out the case. It is a theme repeated throughout his ruling

Fannie Mae: Lamberth has erred on whether a statute passed by Congress is unambiguous

For proof Lamberth has in the past erred on whether a statute passed by Congress is “unambiguous” and how that statute is then interpreted, one need not go back further than Shirley v Sebelius  and his comedy of judicial errors in it.

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A brief history of the case: In Shirley v Sebelius:

Plaintiffs Drs. James L. Sherley and Theresa Deisher, Nightlight Christian Adoptions (“Nightlight”), Embryos, Shayne and Tina Nelson, William and Patricia Flynn, and ChristianMedical Association (“CMA”) brought this suit for declaratory and injunctive relief to prevent defendants’ Guidelines for Human Stem Cell Research (“Guidelines”) from taking effect. Specifically, plaintiffs sought “an order (a) declaring that the Guidelines are contrary to law, were promulgated without observing the procedures required by law, and constitute arbitrary and capricious agency action; and (b) enjoining [d]efendants from applying the Guidelines or otherwise funding research involving the destruction of human embryonic stem cells.” (Id. ¶ 4.) On October 27, 2009, this Court dismissed plaintiffs’ suit, finding that plaintiffs lacked standing, and denied plaintiffs’ motion for a preliminary injunction as moot. Sherley v. Sebelius, 686 F. Supp. 2d 1, 5-7 (D.D.C. 2009). Plaintiffs appealed.

The Court of Appeals reversed (link) concluding that Drs. Sherley and Deisher had standing under the competitor standing doctrine. Sherely v. Sebelius, – F.3d –, 2010 WL 2540358, *5 (D.C. Cir. 2010). Because the Nightlight, the Embryos, the Nelsons, the Flynns, and CMA did not contest this Court’s finding that they lacked standing, the Court of Appeals treated “their lack of standing as conceded.” Id. at *2. The Court of Appeals then remanded this matter back to this Court for consideration of plaintiffs’ motion for a preliminary injunction. Id. at *6.

Fannie Mae: Lamberth’s ruling for injunction

Later in his ruling for injunction:

Congress has spoken to the precise question at issue—whether federal funds may be used for research in which an embryo is destroyed. The Dickey-Wicker Amendment provides that no federal funds shall be used for “research in which a human embryo or embryos are destroyed, discarded, or knowingly subjected to risk of injury or death greater than that allowed for research on fetuses in utero under 45 C.F.R. § 46.204(b) and section 498(b) of the Public Health Service Act (42 U.S.C. 289g(b)).” Pub. L. No. 111-8, § 509(a)(2) Thus, as demonstrated by the plain language of the statute, the unambiguous intent of Congress is to prohibit the expenditure of federal funds on “research in which a human embryo or embryos are destroyed.”

Lamberth then issued the injunction…..

Then:

In September 2010, a court temporarily lifted the injunction issued by Judge Lamberth, allowing federally funded embryonic stem cell research to continue pending the outcome of the federal government’s appeal in the case.

In April 2011 (link),

The appeals court overturned Judge Lamberth’s ruling, saying:  “Two scientists brought this suit to enjoin the National Institutes of Health from funding research using human embryonic stem cells (ESCs) pursuant to the NIH’s 2009 Guidelines. The district court granted their motion for a preliminary injunction, concluding they were likely to succeed in showing the Guidelines violated the Dickey-Wicker Amendment, an appropriations rider that bars federal funding for research in which a human embryo is destroyed. We conclude the plaintiffs are unlikely to prevail because Dickey-Wicker is ambiguous and the NIH seems reasonably to have concluded that, although Dickey-Wicker bars funding for the destructive act of deriving an ESC from an embryo, it does not prohibit funding a research project in which an ESC will be used.  We therefore vacate the preliminary injunction.

Fannie Mae: Lamberth has been very wrong

The point of this is NOT to draw a direct line from case A to Case B (as those claiming all is now lost for plaintiffs vs FHFA/Treasury are doing) but to simply state that Lamberth has been wrong, VERY wrong in the past when its comes to Congress’s “intent” and the “unambiguity” of a statute before him.  Further, the appeals court held that indeed the statute was “ambiguous” and a similar ruling in the Perry case effectively vacates every point of Lamberth’s decision (for the record plaintiffs argue HERA is not unambiguous among other thing).  I am also not claiming the arguments in Shirley are the same as Perry although the reasoning for his decision in both cases is very similar. What I am saying is that Lamberth’s conclusions on the statute and the intent of those who wrote was wrong at almost every turn in the Shirley case, to assume his infallibility in Perry I think is a huge and unwarranted leap of faith.

Think about it, he threw out the Shirley case, the appeals court overturned that, he then issued and injunction in it that an appeals court temporarily set aside and then permanently set aside and at every point cited “court errors” for the reason.

There is no reason to assume Lamberth “got this right” in Perry until this has gone through the appeals process.

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.

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