Fannie Mae: Sweeney’s Words by Todd Sullivan, ValuePlays
It has been postured that Judge Sweeney may be influenced by the decision by Judge Lamberth in DC District Court (currently under appeal). I’d say the best predictor of her future behavior is her past behavior and comments. Below are portions of her statements from a 6/19 discovery hearing before her (full transcript at end). Now, nothing she said in that conference can possibly give anyone an indication she would even consider staying her proceedings. She is bound by Lamberth’s decision and his court hold no sway over hers. Just because he issued a ruling in parallel litigation in no way precludes her from continuing the case before her.
Fannie Mae: Judge Sweeney’s ruling
But read what she says…… Is it possible she does an about face here? Sure, but I think given the statements she makes below it is highly unlikely. Just read the second sentence:
I know you’re going to say that the Court has no ability to have any — to, in any way, impact FHFA, and I disagree with that. I don’t believe that is a blanket insulation.
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Now the rest
THE COURT: Yes, I don’t agree. I know you’re going to say that the Court has no ability to have any — to, in any way, impact FHFA, and I disagree with that. I don’t believe that is a blanket insulation. If FHFA enters into contracts and there’s a dispute and there’s a breach of contract — and the agency breaches the contract, I don’t think they can invoke that — the agency can invoke that provision to insulate itself. And, also, I think here — I’m not trying to control the conservatorship, I’m not trying to influence it in any way, I’m just trying to allow citizens to have every opportunity to meet the jurisdictional hurdle that the Plaintiff — excuse me, that the Government has asserted. The Government has said that the conservators are not part of the United States and, therefore, the Defendant is not implicated here. Now, on the other hand, by requesting these documents, the Government is saying, no, I’m sorry, you’re not entitled to any of these documents because the conservators are part of the United States. So, it’s a government entity and, therefore, you’re asking for deliberative process documents. So, it seems to me the Government is trying to have it both ways and, so, I don’t accept that argument. And as I said, you know, I understand and can appreciate the bar of –or the — not the bar, but the — that Congress intended that courts do not meddle in the business of the conservators. That’s not my goal or desire. I have enough on my plate without trying to run the conservatorships. But I do want the Plaintiffs to have an opportunity to meet the jurisdictional challenge that’s been raised by the Government.
Fannie Mae: Sweeney asks to explain the litigation position
The after Government Attorney Ms. Hosford explains their position in a long argument covering several pages of the transcript, Sweeney asks, “Anything else?” when he replies “No”, Sweeney says:
THE COURT: I just have a question for you. Could you please explain the litigation position or what I see as a conflict with — or an inconsistency with, on the one hand, the Government are saying Plaintiffs lack standing, this Court lacks jurisdiction because the conservatorship is not part of the Government, it’s not a Government entity. And, yet, when Plaintiffs seek discovery, it’s the position of the United States that any documents generated by the conservatorship are subject to the deliberative process privilege?
After plaintiff attorney Cooper states his case in an equally long argument before Sweeney, she says:
THE COURT: And so far, I haven’t gotten — I haven’t received a good answer from the Government. Counsel is very able. But counsel has expressed concern of what could happen if certain documents are released, which I do not want to see happen, but counsel didn’t answer to my satisfaction the discrepancy between sort of using the deliberative process as sword and shield. On one hand, FHFA is a government entity, you know, for purposes of booting the Plaintiffs out of court and not part of the Government, but for purposes of forwarding discovery, all of a sudden deliberative process is appropriate because they are part of the Government. So, it’s a schizophrenic approach and I’m just waiting to hear a reasonable explanation.
Fannie Mae’s discovery request
Sweeney then spends the next several transcript pages working through discovery request with Cooper. Then following a very long exchange between both sides on dates, breadth etc, Sweeney ends with this:
I mean, there’s got to be — for purposes of the nature of this inquiry and this discovery request, it’s going to be more narrowly focused. We’re taking a surgical approach. But I want the Plaintiffs to have — I mean, their day in court may be that they’d prevail all the way to the Supreme Court. I’m not coming down one way or the other, but it’s important for the Plaintiffs to have access to information so that they have the ability, if possible, to establish this Court’s jurisdiction. And that’s all I’m dealing with at the moment. Merits from the Government — Plaintiffs’ perspective will come later; from the Government’s perspective, we won’t need to go there. So, we’ll just have to see who prevails. But the Plaintiffs will have the ability to make the best case they can to establish the Court’s jurisdiction. And with that, I’ll say good afternoon. Thank you.
Hearing transcript On 7/16 the order was granted (link), Now, was is narrower than the “everything ever produced” scope that plaintiffs wanted? Of course it was as it should have been. But if we step back the government did not want ANY discovery and then wanted discovery that was far narrower than was actually granted so again, this can only be seen, when taken in addition to what was said above as very very positive for plaintiffs. As opposed to Lamberth who punted (perhaps because he knew Sweeney was going to get into this) Sweeney seems determined to hear plaintiffs out….. that is all one can ask .
Richard Epstein gets deeper into it
Late Friday Ackman’s Pershing Square withdrew their action before Lambreth. Why not? It is clear he was going to rule against them anyway and Pershing has joined Fairholme before Sweeney and they can always re-file when the appeals court throws in back in Lamberth’s lap .