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Sorry! We need a little comic relief! "Freddie Mac would be prejudiced if the email exchange is publicly disclosed and catchy snippets
used in a media campaign."
trouble on iphone app? anyone else? I keep getting closed out? :)
trouble on iphone app? anyone else? I keep getting closed out? :)
There may be a classification to that personality type. :) We need someone like David Boies to cross-examine!
Yes, it is!
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 1 of 35
Redacted Version
IN THE UNITED STATES COURT OF FEDERAL CLAIMS
?FAIRHOLME FUNDS, INC., et al., Plaintiffs,
v. THE UNITED STATES,
Defendant.
FEDERAL HOME LOAN MORTGAGE CORPORATION’S PUBLIC, REDACTED RESPONSE IN OPPOSITION TO PLAINTIFFS’ MOTION TO REMOVE THE “PROTECTED INFORMATION” DESIGNATION FROM CERTAIN DOCUMENTS PRODUCED BY FREDDIE MAC
) ) )
) No. 13-465C
) (Judge Sweeney) )
) ) ) ) ) ) )
??August 10, 2015
Graciela M. Rodriguez
Michael J. Ciatti
KING & SPALDING LLP
1700 Pennsylvania Ave., NW, Ste. 200 Washington, DC 20006
Telephone: (202) 737-0500 Facsimile: (202) 626-3737 mciatti@kslaw.com
Counsel for Federal Home Loan Mortgage Corporation
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 2 of 35
TABLE OF CONTENTS
TABLE OF AUTHORITIES .......................................................................................................... ii BACKGROUND .............................................................................................................................1
A. Protective Order .......................................................................................................1
B. The Email Exchange at Issue ...................................................................................3
C. Plaintiffs’ De-Designation Motion ..........................................................................3
ARGUMENT ...................................................................................................................................4
A. Plaintiffs Fail to Meet their Burden of Demonstrating that Disclosure Should be Allowed or that the Email Exchange was Improperly Designated................................................................................................................4
B. The Email Exchange is Protected Information ........................................................7
C. The Protective Order Does Not Specify a Process for the Partial De- Designation and Redaction of Documents Marked as Protected Information But Not Filed with the Court, and the First Amendment is Not Implicated Absent a Court Filing...........................................................................10
CONCLUSION..............................................................................................................................11 CERTIFICATE OF SERVICE
APPENDIX
Exhibit 1,
Ross Kari Deposition Transcript, July 10, 2015 (excerpts)..........................................A001
Exhibit 2,
FHLMC 00002452-3, CEO Don Layton, All-Employee Voicemail Script,
August 7, 2012, 1:17 p.m..............................................................................................A016
?i
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 3 of 35
TABLE OF AUTHORITIES
?Cases
Page(s)
??Arigbon v. Multnomah Cty.,
No. CV. 09-311-PK, 2009 WL 3335064 (D. Or. Oct. 15, 2009)........................................ 7
Armour of Am. v. United States,
73 Fed. Cl. 597 (2006) ........................................................................................................ 6
BLT Rest. Grp. LLC v. Tourondel,
855 F. Supp. 2d 4 (S.D.N.Y. 2012)..................................................................................... 8
Bond v. Utreras,
585 F.3d 1061 (7th Cir. 2009) ............................................................................................ 5
Castagna v. Sec’y of Health & Human Servs.,
No. 99-411V, 2011 WL 4348135 (Fed. Cl. Aug. 25, 2011)............................................... 8
City of Roseville Emps.’ Ret. Sys. v. Crain,
No. 11-CV-2919 JLL JAD, 2013 WL 4509970 (D.N.J. Aug. 22, 2013)............................ 9
Disney v. Walt Disney Co.,
No. CIV.A. 234-N, 2005 WL 1538336 (Del. Ch. June 20, 2005)...................................... 9
Hewlett-Packard Co. v. EMC Corp.,
330 F. Supp. 2d 1087 (N.D. Cal. 2004) .............................................................................. 7
In re Hawaii Corp.,
88 F.R.D. 518 (D.Hi. 1980) ................................................................................................ 7
In re Terrorist Attacks on Sept. 11, 2001,
454 F. Supp. 2d 220 (S.D.N.Y. 2006)................................................................................. 5
In re Violation of Rule 28(d),
635 F.3d 1352 (Fed. Cir. 2011)........................................................................................... 6
Lakeland Partners, L.L.C. v. United States,
88 Fed. Cl. 124 (2009) ........................................................................................................ 6
Marten v. Yellow Freight Sys., Inc.,
No. CIV. A. 96-2013-GTV, 1998 WL 13244 (D. Kan. Jan. 6, 1998) ................................ 7
New Castle Cty. v. Hartford Accident & Indem. Co.,
No. M8-85, 1987 WL 10736 (S.D.N.Y. May 1, 1987)....................................................... 9
Return Mail, Inc. v. United States,
107 Fed. Cl. 459 (2012) ...................................................................................................... 7
ii
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 4 of 35
Seattle Times Co. v. Rhinehart,
467 U.S. 20 (1984).............................................................................................................. 6
Other Authorities
Black’s Law Dictionary (10th ed. 2014)......................................................................................... 2
Chris Arnold, Morale Takes a Hit at Beleaguered Fannie, Freddie,
NPR (June 27, 2012)........................................................................................................... 9
Webster’s Unabridged Dictionary (2d ed. 2001)............................................................................ 2
?iii
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 5 of 35
Non-party Federal Home Loan Mortgage Corporation (“Freddie Mac”) respectfully files this Response in Opposition to Plaintiffs’ Motion to Remove the “Protected Information” Designation from Certain Documents Produced by Freddie Mac, Doc. 171 (the “De-Designation
Motion” or “Motion”).1 Only one document is subject to the De-Designation Motion: a confidential email
Plaintiffs fail to meet their burden to de-designate this document and their arguments in support of de-designation are disingenuous at best. This document does not require, as they claim, “a sophisticated understanding of financial markets, government housing policy, the tax code, congressional action” or any “other specialized areas of policy,” and it does not need to be shared “with scholars, professionals, and client representatives who could lend their expertise to Plaintiffs’ case.” De-Designation Motion at 7. It is far from crucial to Plaintiffs’ claim; the record is clear that Freddie Mac did not play any role in negotiating the Third Amendment and was not even made aware of it until shortly before it was signed and publicly announced. Rather, Plaintiffs want to use the document as a media sound bite even though using that sound bite could harm
Freddie Mac. The Court should reject Plaintiffs’ efforts and deny their Motion.
BACKGROUND
A. Protective Order
Freddie Mac is not a party to this case. Plaintiffs nevertheless sought limited discovery from Freddie Mac, and Freddie Mac produced documents that are subject to the Protective Order
1
????Plaintiffs also filed a Motion to Remove the “Protected Information” Designation from Certain Documents Produced by PricewaterhouseCoopers (“PwC”), Doc. 172. PwC is Freddie Mac’s independent auditor, and PwC produced certain Freddie Mac documents to Plaintiffs. The dispute with regard to the three Freddie Mac documents that were the subject of the PwC motion has been resolved, and that motion is now moot.
1
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 6 of 35
in this case. July 16, 2014 Protective Order, Doc. 73.2 As this Court knows, the Protective Order defines “Protected Information” as “proprietary, confidential, trade secret, or market- sensitive information, as well as information that is otherwise protected from public disclosure under applicable law.” Doc. 73 ¶ 2. “Confidential” is not separately defined in the Protective Order. As defined in Black’s Law Dictionary, something is “confidential” if it is “meant to be kept secret” or “imparted in confidence,” and “confidential information” is “[k]nowledge or facts not in the public domain but known to some. . . .” Black’s Law Dictionary (10th ed. 2014). See also Webster’s Unabridged Dictionary 429 (2d ed. 2001) (“limited to persons authorized to use information”).
The Protective Order provides that if a receiving party “desires to disclose Protected Information to a person not otherwise authorized under th[e] Protective Order to receive such information, or if it disagrees with the protected designation” then the receiving party should notify counsel for the producing party in writing to try and resolve the dispute pursuant to a set of procedures specified in the order. Doc. 73 ¶ 17. The only mechanism for redacting documents is included in Paragraph 11 of the Protective Order, and that relates only to “[d]ocuments [f]or the [p]ublic [r]ecord.” Id. ¶ 11. If the parties cannot resolve their disputes regarding de-designation, the receiving party may apply to the Court for relief. Id. ¶ 17.
The Protective Order is clear that “the burden of persuasion shall rest with the moving party,” in this case Plaintiffs. Id. Plaintiffs do not dispute that they bear the burden of persuasion in their De-Designation Motion. Motion at 2.
?2
amendments have no bearing on the instant dispute.
The Court entered an amended version of the protective order on July 29, 2015. The 2
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 7 of 35
B. The Email Exchange at Issue
The only document at issue with regard to this Motion is an August 17, 2012 email exchange between
FHLMC_00002429 (attached as Ex. 1 to Plaintiffs’ Motion). Plaintiffs want to de-designate the portion
This email exchange between two Freddie Mac senior officers was confidential, and Plaintiffs have
provided no evidence that the exchange was shared with anyone outside Freddie Mac.
C. Plaintiffs’ De-Designation Motion
Although Plaintiffs acknowledge that they have the burden of persuasion under the Protective Order, their arguments seek to re-write the Protective Order and implicitly shift that burden to Freddie Mac. They argue that Freddie Mac must show that it will be harmed by the disclosure of the email exchange in order for it to remain Protected Information. Motion at 5. Cutting and pasting arguments made in briefs filed against the Government, and without relating those arguments to the email exchange at issue here, Plaintiffs argue that they will be harmed if they cannot show this email to their clients, who are “sophisticated investors who could shed additional light on the information,” as well as to “scholars” and “professionals” who “could lend their expertise to Plaintiffs’ case.” Id. at 7. They argue that the email exchange is relevant to their claims in their District Court litigation, which is of no moment given that, by order of this Court, they are free to use the document in that proceeding (filed under seal). They also argue that keeping this document confidential has First Amendment implications and will
somehow lead to the “impoverishment of the debate over . . . crucial questions of public policy.” 3
?????
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 8 of 35
Id. at 9. Finally, they argue that the Protective Order permits the partial de-designation of materials even in the absence of the document at issue being part of a court filing. These arguments fail, as addressed below.
ARGUMENT
A. Plaintiffs Fail to Meet their Burden of Demonstrating that Disclosure Should be Allowed or that the Email Exchange was Improperly Designated
In issuing the Protective Order, the Court already determined that there is good cause for Freddie Mac to designate materials as Protected Information. Accordingly, the Court placed the burden on Plaintiffs to demonstrate that a document designated as Protected Information is “improperly designated or that disclosure [should be] allowed.” Doc. 73 ¶ 17. Plaintiffs fail to make either showing.
Plaintiffs argue that disclosure should be allowed because they are harmed in pursuing their claim by their inability to share the snippet from the email exchange with “scholars, professionals, and client representatives who could lend their expertise to Plaintiffs’ case.” Motion at 7. It is simply ludicrous to argue, as Plaintiffs do, that this email “requir[es] a sophisticated understanding of financial markets, government housing policy, the tax code, congressional action, and other specialized areas of policy” (id.) such that Plaintiffs are prejudiced if they cannot seek guidance on this email from those outside the bounds of the Protective Order. As Plaintiffs recognize, they are free to share the email exchange with their retained experts. Id.
Moreover, keeping the email exchange as Protected Information does not hamper Plaintiffs’ ability to use the document with this Court or in their D.C. Circuit appeal. By Order dated July 9, 2015, Doc. 194, the Court permitted Plaintiffs to file un-redacted documents
?4
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 9 of 35
discovered in this case under seal in Fairholme Funds, Inc. v. Federal Housing Finance Agency, No. 14-5254 (D.C. Cir.), and Plaintiffs have already done so.
It is clear, therefore, that none of Plaintiffs’ stated harms actually relate to this email exchange. Plaintiffs’ remaining argument regarding the importance of “public access” to the document best illustrates Plaintiffs’ real desire here: to create misleading sound bites as part of their on-going public relations campaign. Plaintiffs want to use
There is no evidence, however, that
To the contrary,
None of the Treasury or FHFA witnesses have testified that they shared their strategies and motives with anyone at Freddie Mac. That Plaintiffs know that any such interpretation of the email is flawed is evidenced by the fact that they did not include this email exchange in their recent Motion for Judicial Notice and Supplementation of the Record in the D.C. Circuit, wherein they sought to detail the evidence that they claim contradicts the Government’s position regarding the purpose of the Third
Amendment.
Moreover, even if the email exchange somehow was relevant to the litigation (which it is
not), there is no presumptive right of public access to the document where, as here, the document has not been filed with the Court. Bond v. Utreras, 585 F.3d 1061, 1073 (7th Cir. 2009) (“Generally speaking, the public has no constitutional, statutory (rule-based), or common-law right of access to unfiled discovery.”); In re Terrorist Attacks on Sept. 11, 2001, 454 F. Supp. 2d
????????5
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 10 of 35
220, 222 (S.D.N.Y. 2006) (“[P]ublic interest in particular litigation does not generate a public right of access to all discovery materials. Indeed, no public right of access exists with respect to materials produced during the initial stages of discovery.”); Armour of Am. v. United States, 73 Fed. Cl. 597, 600 (2006) (“Pretrial discovery is not a public component of a civil trial.”); see also Seattle Times Co. v. Rhinehart, 467 U.S. 20, 33 (1984). Other than as part of this De- Designation Motion, the email exchange has not been used in any other court filing.
In short, Plaintiffs have not identified, and cannot identify, any legitimate reason for which they need to de-designate the document for use in their substantive case -- they just want to use it as a catchy sound bite in their public relations campaign. And that is not enough to meet Plaintiffs’ burden of persuasion.
Plaintiffs also fail to demonstrate that the email exchange was improperly designated as Protected Information. Their De-Designation Motion relies on the conclusory statement that “[t]here is no plausible argument that the [email exchange] is Protected Information” and cites to inapposite cases in an effort to shift the burden back to Freddie Mac. De-Designation Motion at 3-4. Plaintiffs rely on In re Violation of Rule 28(d), 635 F.3d 1352 (Fed. Cir. 2011) to assert that Freddie Mac “must show that specific prejudice or harm will result,” De-Designation Motion at 4, from the disclosure of the email exchange. In re Violation, however, is inapposite because that case dealt with “improper confidentiality markings in the [parties’ appellate] briefs,” and held that the markings involving “parts of [the] briefs that set forth [a party’s] legal argument” were improper as the legal arguments were not confidential. 635 F.3d at 1354, 1355-56. Plaintiffs’ reliance on Lakeland Partners, L.L.C. v. United States, 88 Fed. Cl. 124 (2009) for the same proposition is equally misplaced. Lakeland involves a motion for a protective order relieving the defendant of the obligation to produce discovery to the plaintiff, and importantly,
6
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 11 of 35
did not address a situation where a protective order was already in place, as is the case in this
action.3
Plaintiffs’ efforts to avoid having to satisfy their burden in this matter should be rejected
and the Court should deny Plaintiffs’ De-Designation Motion.
B. The Email Exchange is Protected Information
Even if Plaintiffs could demonstrate prejudice to their case (which they cannot) the email
exchange is “confidential” and thus qualifies as Protected Information.4 And this conclusion holds even if Freddie Mac was required make a specific showing of harm (and it is not). As noted above, Plaintiffs point to no evidence that the exchange was shared with others outside Freddie Mac.
See, generally, Arigbon v. Multnomah Cty., No. CV. 09-311-PK, 2009 WL 3335064, at *2 (D. Or. Oct. 15, 2009) (citing In re Hawaii Corp., 88 F.R.D. 518, 524 (D. Haw. 1980) (recognizing employee morale as a cognizable interest justifying confidentiality); Marten v. Yellow Freight Sys., Inc., No. CIV. A. 96-2013-GTV, 1998 WL 13244, at *1 (D. Kan.
Jan. 6, 1998) (same).
3
4
??????Plaintiffs also cite Hewlett-Packard Co. v. EMC Corp., 330 F. Supp. 2d 1087 (N.D. Cal. 2004) and Return Mail, Inc. v. United States, 107 Fed. Cl. 459 (2012), but those are expert disqualification cases that are inapplicable.
The De-Designation Motion incorrectly asserts that, during efforts to resolve this dispute, counsel for Freddie Mac did not previously explain that the email exchange contains Protected Information. Similarly, Plaintiffs’ allegation that Freddie Mac is maintaining the confidentiality of the email exchange to somehow defend claims made by the Government is completely baseless and non-sensical.
7
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 12 of 35
After execution of the Third Amendment, Treasury issued a press release describing it.
??????????The discussion
was intended to remain private, and falls within the definition of “confidential” in Black’s Law Dictionary and other authorities. See, e.g., Castagna v. Sec’y of Health & Human Servs., No. 99-411V, 2011 WL 4348135, at *12 (Fed. Cl. Aug. 25, 2011); BLT Rest. Grp. LLC v. Tourondel, 855 F. Supp. 2d 4, 26 (S.D.N.Y. 2012). Moreover, as demonstrated by Plaintiffs’ filing, the snippet from
given the continued uncertainty about the future existence of the company, and the fact that Freddie Mac has no
decision-making authority over its own future.
???????8
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 13 of 35
Freddie Mac would be prejudiced if the email exchange is publicly disclosed and catchy snippets
used in a media campaign.5
Fundamentally, internal discussions between Company executives regarding sensitive
and important company issues that are not meant to be shared are confidential. Courts recognize that allowing public disclosure of these types of internal deliberations can have a negative “chilling effect” on candid exchanges between executives on sensitive issues, and that this chilling effect should be avoided. See e.g., City of Roseville Emps’ Ret. Sys. v. Crain, No. 11- CV-2919 JLL JAD, 2013 WL 4509970, at *1 (D.N.J. Aug. 22, 2013) (holding that disclosure of internal company deliberations would unduly prejudice the company because, among other things, it would “have a chilling effect on internal company deliberations”); New Castle Cty. v. Hartford Accident & Indem. Co., No. M8-85, 1987 WL 10736, at *1 (S.D.N.Y. May 1, 1987) (noting potential “chilling effect”); Disney v. Walt Disney Co., No. CIV.A. 234-N, 2005 WL 1538336 (Del. Ch. June 20, 2005). Freddie Mac would be harmed if Plaintiffs are allowed to publicize confidential internal communications between its executives.
The email exchange is confidential and, thus, qualifies as Protected Information. Plaintiffs’ have not met their burden of persuasion to show otherwise.
5
?See also Chris Arnold, Morale Takes A Hit at Beleaguered Fannie, Freddie, NPR (June 27, 2012), available at http://www.npr.org/2012/06/27/155761696/morale-takes-a-hit-at- beleaguered-fannie-freddie (“[E]ver since their government bailout four years ago, both companies have suffered from image problems, they’re under the threat of being dismantled by Congress, and many key people are leaving. . . . [W]ith a lot of talent leaving, the worry is that Fannie and Freddie could make more mistakes, lose more money and bungle their mission: to responsibly foster homeownership by supporting the mortgage market.”).
9
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 14 of 35
C. The Protective Order Does Not Specify a Process for the Partial De- Designation and Redaction of Documents Marked as Protected Information But Not Filed with the Court, and the First Amendment is Not Implicated Absent a Court Filing
In addition, the Court should deny the De-Designation Motion because the relief the Plaintiffs seek is not provided for in the Protective Order. The Protective Order does not set forth a procedure of partial de-designation of documents not filed with the Court in the manner Plaintiffs propose, and with good reason. First, as discussed above, if the document has not been filed with the Court, there is no presumptive right of public access to the document. See 5-6, infra. Second, while a presumably finite set of relevant materials may be filed with the Court, Plaintiffs will continue to seek to de-designate potentially misleading snippets from a much larger set of unfiled materials for their media campaign. This places an unreasonable burden on non-parties like Freddie Mac, as well as this Court. Third, absent the context of a court filing, portions of documents that contain Protected Information may be misleading when disclosed without any context. Again, this is particularly troubling when documents produced by non-
parties are used solely to generate media attention.6
?6
Freddie Mac incorporates by reference as if fully stated herein the arguments presented in Defendant’s Response to Plaintiffs’ Sealed Motions to Remove the “Protected Information” Designation from Certain Discovery Materials and the arguments presented in the Non- Parties Federal National Mortgage Association and Deloitte & Touche LLP’s Sealed Opposition to Plaintiffs’ Motion to Remove the “Protected Information” Designation from Non-Party Production.
10
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 15 of 35
CONCLUSION
For the reasons set forth above, Plaintiffs have not met their burden of persuasion, and their motion to de-designate the internal Freddie Mac email exchange should be denied.
Respectfully submitted, this the 10th day of August 2015.
/s/ Michael J. Ciatti
Graciela M. Rodriguez
Michael J. Ciatti
KING & SPALDING LLP
1700 Pennsylvania Avenue NW, Ste. 200 Washington, DC 20006
Telephone: (202) 737-0500 Facsimile: (202) 626-3737 mciatti@kslaw.com
Counsel for Federal Home Loan Mortgage Corporation
??11
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 16 of 35
CERTIFICATE OF SERVICE
I hereby certify that on August 10, 2015, I electronically filed a copy of the foregoing with the clerk of the Court using ECF system, which will send notification of such filing to all ECF participants.
/s/ Michael J. Ciatti
Michael J. Ciatti
??12
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 17 of 35
APPENDIX
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 18 of 35
APPENDIX TABLE OF CONTENTS
REDACTED
REDACTED
?Exhibit 1,
Exhibit 2,
FHLMC 00002452-3,
A001
A016
Case 1:13-cv-00465-MMS Document 234 Filed 08/21/15 Page 19 of 35
EXHIBIT 1
A001
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REDACTED
A002
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REDACTED
A003
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REDACTED
A004
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REDACTED
A005
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REDACTED
A006
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REDACTED
A007
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REDACTED
A008
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REDACTED
A009
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REDACTED
A010
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REDACTED
A011
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REDACTED
A012
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REDACTED
A013
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REDACTED
A014
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EXHIBIT 2
A015
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??REDACTED
A016
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???????REDACTED
??????????????????????????????????????????????????????????????A017
08/21/2015 234 REDACTED DOCUMENT, filed by FEDERAL HOME LOAN MORTGAGE CORPORATION redacting 225 Response, In Opposition To Plaintiffs' Motion To Remove The "Protected Information" Designation From Certain Documents Produced By Freddie Mac. (Ciatti, Michael) (Entered: 08/21/2015)
I agree. You don't bring in the big guns, unless something is up! Just hope we get to see it!!!!
They probably want to see what DeMarco said. :)
Case 1:13-cv-00465-MMS Document 233 Filed 08/21/15 Page 1 of 5
IN THE UNITED STATES COURT OF FEDERAL CLAIMS
FAIRHOLME FUNDS, INC., et al., ) ) Plaintiffs, ) )
) THE UNITED STATES, ) ) Defendant. )
(Judge Sweeney)
APPLICATION FOR ACCESS TO PROTECTED INFORMATION
Pursuant to paragraph 7 of this Court’s Amended Protective Order dated July 29, 2015 (ECF No. 217), defendant, the United States, respectfully requests that Jennifer O’Connor, James Walsh, and Allison Murphy be permitted access to information protected by the Protective Order. All of the applicants are attorneys representing the United States within the meaning of Paragraph 4 of the Protective Order, and work in the Office of the White House Counsel. Counsel for the United States has consulted with counsel for plaintiffs, Fairholme Funds, Inc., et al. (Fairholme), who has indicated that Fairholme does not oppose these applications for access to protected information.
Respectfully submitted,
BENJAMIN C. MIZER
Principal Deputy Assistant Attorney General
s/ Robert E. Kirschman, Jr. ROBERT E. KIRSCHMAN, JR. Director
s/ Kenneth M. Dintzer KENNETH M. DINTZER Deputy Director
Commercial Litigation Branch Civil Division
U.S. Department of Justice P.O. Box 480
???
August 21, 2015
Ben Franklin Station
Washington, D.C. 20044 Telephone: (202) 616-0385 Facsimile: (202) 307-0973 Email: Kenneth.Dintzer@usdoj.gov
Attorneys for Defendant
Item 8.01
On August 14, 2015, we granted an option to purchase up to 1,000,000 shares of our common stock to each of two employees. The options have a strike price of $1.50 per share, have a term of five years from the date of grant, vest evenly over 24 months and have a cashless exercise feature.
On August 14, 2015, we granted a warrant to purchase up to 150,000 shares of our common stock to each of two consultants. The warrants have a strike price of $2.00 per share, have a term of five years from the date of grant, were vested entirely on the grant date and have a cashless exercise feature. Additionally we issued 100,000 shares of our common stock to each of these two consultants. The grants of warrants and issuances of our common stock were issued in consideration of consulting contracts between our Company and the two consultants.
On August 14, 2015, we granted a warrant to purchase up to 50,000 shares of our common stock to a former consultant of our Company in satisfaction of consideration previously owed to him. The warrant has a strike price of $1.50 per share, a term of three years from the date of grant and were vested entirely on the date of the grant.
On August 17, 2015, we issued 110,000 shares of our common stock to a former consultant of our Company.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits.
Exhibit Description
10.9 Form of Option Agreement granted to employees on August 14, 2015
10.10 Form of Warrant Agreement granted to consultants on August 14, 2015
10.11 Form of Warrant Agreement granted to consultant on August 14, 2015
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NUGENE INTERNATIONAL, INC.
Dated: August 20, 2015 By:
/s/ Ali Kharazmi
Ali Kharazmi, Chief Executive Officer
Trunkmonk, remember this? Can you imagine being in the industry 30 years and having Demarco give you your job review? No wonder Hornsby was later found not guilty. That's just something that would drive anyone bonkers. :)
http://www.housingwire.com/articles/29927-fhfa-coo-arrested-charged-with-threatening-ed-demarco
lol!
appeals case
08/20/2015 Open Document JOINT RESPONSE IN OPPOSITION FILED [1569025] by Edward Demarco and FHFA in 14-5254, FHFA and Melvin L. Watt in 14-5243, Edward Demarco, Federal Home Loan Mortgage Corporation, FHFA and Federal National Mortgage Association in 14-5260, 14-5262 to motion for judicial notice [1565601-2] [Service Date: 08/20/2015 by CM/ECF NDA] Pages: 16-20. [14-5254, 14-5243, 14-5260, 14-5262] (Cayne, Howard)
Sweeney court
232
08/20/2015 **SEALED**REPLY to Response to Motion re 166 MOTION to Remove the "Protected Information" Designation from Certain Treasury and FHFA Documents , 170 MOTION to Remove the "Protected Information" Designation from Certain Unredacted Information in Documents Produced by Fannie Mae , 171 MOTION to Remove the "Protected Information" Designation from Certain Unredacted Information in Documents Produced by Freddie Mac , 162 MOTION to Remove the "Protected Information" Designations from Depositions , 165 MOTION to Remove the "Protected Information" Designation from Certain Grant Thornton Documents , 169 MOTION to Remove the "Protected Information" Designation from Certain Unredacted Information in Documents Produced by Deloitte , filed by All Plaintiffs. (Attachments: # 1 Exhibit 1 - Fairholme's Public, Redacted Motion for Judicial Notice and Supplementation of the Record (D.C. Cir.))(Cooper, Charles)
In Fairholme/Sweeney court
231
08/20/2015 RESPONSE to 227 Response Reply in Support of Application for Access to Protected Information, filed by PERRY CAPITAL LLC. (Chesley, John)
Funny!
deals made on the golf course?
That's what I was thinking!
"LSF9 Mortgage Holdings was also the winning bidder in a deeply delinquent loan sale earlier this year from Freddie Mac. In that sale, LSF9 Mortgage Holdings purchased 1,052 deeply delinquent Ocwen-serviced non-performing loans that carried an aggregate unpaid principal balance of $201 million."
http://www.housingwire.com/articles/34827-fannie-mae-finds-familiar-buyer-for-second-non-performing-loan-sale?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire
I'm just going to start going on vacation with them. I'm a taxpayer. :)
What do they get paid in a settlement? It seems they get paid if it drags on, with some nice vacations in between. Fairholme/Sweeney case is 2 years old now...
I believe they have some more responses due today. "Sorry for the delay. Our main attorney just returned from the Hamptons." :)
I agree, Oy vey, Dios mìo! enough already, show us the docs! :)
I wish they would solve it before congress returns from vacation. Sometimes, you can get a lot done while they are away. :)
Paula, sailing term, "In a changing wind, the boom can swing wildly, leaving one at risk of being struck."
Knock 'em all overboard! :)
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 1 of 16
[NOT YET SCHEDULED FOR ORAL ARGUMENT]
IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
FAIRHOLME FUNDS, INC., et al., Plaintiffs-Appellants,
v. No. 14-5254
FEDERAL HOUSING FINANCE AGENCY, et al.
Defendants-Appellees.
TREASURY’S OPPOSITION TO FAIRHOLME’S SEALED MOTION FOR JUDICIAL NOTICE AND SUPPLEMENTATION OF THE RECORD
INTRODUCTION AND SUMMARY
In four lawsuits, institutional and individual shareholders of government- sponsored enterprises Fannie Mae and Freddie Mac (the enterprises) sought to challenge actions taken by the Federal Housing Finance Agency (FHFA) as conservator of the enterprises. In claims under the Administrative Procedure Act (APA), plaintiffs sought to set aside a 2012 amendment to 2008 preferred stock purchase agreements between FHFA and the Department of the Treasury. Plaintiffs also sought monetary relief.
???1
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 2 of 16
The district court granted defendants’ motions to dismiss. The court held that the claims for equitable relief are barred by the Housing and Economic Recovery Act of 2008 (HERA), which empowered FHFA to place the enterprises into conservatorship and which provides that “no court may take any action to restrain or affect the exercise of powers or functions of [FHFA] as a conservator or a receiver.” 12 U.S.C. § 4617(f). The district court rejected plaintiffs’ contention that the applicability of the HERA bar depends on FHFA’s motives for entering into the 2012 amendment, Op.21-22, and also rejected plaintiffs’ contention that they could circumvent the HERA bar by suing FHFA’s contractual counterparty, Treasury. Op. 15-16. The court explicitly rejected plaintiffs’ contention that it needed a “full administrative record” to determine whether the HERA bar applies. Op. 22. The court dismissed plaintiffs’ claims for monetary relief on threshold grounds including ripeness, HERA’s bar on shareholder suits, and failure to state a claim. Op. 32-51.
Plaintiffs appealed and on June 29, 2015, the institutional plaintiffs filed their opening brief on appeal.1 A month later, on July 29, one set of the institutional plaintiffs—the Fairholme Funds plaintiffs—filed a “Sealed Motion for Judicial Notice and Supplementation of the Record.” That motion asks this Court to consider approximately 500 pages of sealed materials they obtained through discovery in their separate takings action that is pending before the Court of Federal Claims (CFC).
1 A separate opening brief was filed by individual plaintiffs on June 30, 2015. 2
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USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 3 of 16
The motion should be denied. The principal issue on appeal is whether plaintiffs’ claims are barred by HERA. Sealed documents obtained through discovery in other ongoing litigation have no bearing on that issue. Thus, the district court emphasized that the facts plaintiffs sought to establish were immaterial to the legal questions before the court. Op. 21-22.
Moreover, the sealed materials on which plaintiffs seek to rely are not “facts” that could be appropriate for judicial notice; instead, plaintiffs seek to submit deposition excerpts and other documents that, they contend, would create issues of fact. Nor do plaintiffs offer any basis for supplementing the administrative record with selected deposition excerpts and documents. Even when—unlike here—the reasonableness of an agency’s decision is subject to APA review, judicial review is based upon “the administrative record already in existence.” Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985) (quoting Camp v. Pitts, 411 U.S. 138, 142 (1973)).
Introducing hundreds of pages of materials at this juncture would also substantially prejudice defendants. Plaintiffs’ opening briefs have already been filed, and defendants would have no opportunity to respond to whatever use plaintiffs may put the discovery materials in their reply brief, compounding the problems created by injecting untested deposition excerpts and other documents into these appeals.
STATEMENT
1. Congress created Fannie Mae and Freddie Mac in order to (among other
goals) “promote access to mortgage credit throughout the Nation.” 12 U.S.C. 3
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 4 of 16
§ 1716(3). To that end, the enterprises purchase mortgage loans from lenders, thus relieving lenders of default risk and freeing up lenders’ capital to make additional loans. Op. 3. To finance those operations, the enterprises pool many of the mortgage loans they purchase into mortgage-backed securities and sell the securities to investors. Op. 3-4.
In 2008, turmoil in the housing market left the enterprises on the brink of collapse. Op. 4, 24. Given the danger that a Fannie Mae or Freddie Mac collapse posed to the already fragile economy, Congress enacted the Housing and Economic Recovery Act on July 30, 2008. Op. 4. HERA established the FHFA as an independent agency to supervise and regulate the enterprises, and granted FHFA authority to act as conservator or receiver of the enterprises, at its discretion. Op. 4-5 (citing 12 U.S.C. §§ 4511, 4617(a)). HERA empowered FHFA, as conservator or receiver, to “immediately succeed to—(i) all rights, titles, powers, and privileges of the [enterprises] and of any stockholder, officer, or director of such [enterprises] with respect to the [enterprises.] ” Op. 5 (quoting 12 U.S.C. § 4617(b)(2)(A)(i)). And, as particularly relevant to these appeals, HERA set forth a “limitation on court action” that provides: “Except as provided in this section or at the request of the Director, no court may take any action to restrain or affect the exercise of powers or functions of [FHFA] as a conservator or a receiver.” Op. 5 (quoting 12 U.S.C. § 4617(f)).
Congress also recognized that Treasury (i.e., taxpayer) funds would be needed
to capitalize the struggling enterprises. Op. 5. HERA amended the enterprises’ 4
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 5 of 16
charters to temporarily authorize Treasury to “purchase any obligations and other securities issued by” the enterprises. Op. 5 (quoting 12 U.S.C. § 1455(l)(1)(A)). HERA also provided that the “Secretary of the Treasury may, at any time, exercise any rights received in connection with such purchases.” Op. 5 (quoting 12 U.S.C. § 1719(g)(2)(A)). Treasury’s authority to purchase new securities from the enterprises expired on December 31, 2009. Op. 5 (citing 12 U.S.C. § 1719(g)(4)).
Following the enterprises’ unsuccessful effort to raise capital in the private markets, FHFA placed the enterprises into conservatorship on September 6, 2008. Op. 5. One day later, Treasury entered into Senior Preferred Stock Purchase Agreements with each of the enterprises. Op. 5. Under the initial agreements, Treasury committed to provide up to $100 billion in public funding to each enterprise to ensure that their assets were equal to their liabilities—i.e., to cure the enterprises’ negative net worth—at the end of any fiscal quarter. Op. 5-6. In May 2009, FHFA and Treasury entered into the first amendment to the preferred stock purchase agreements, whereby Treasury doubled its funding cap to up to $200 billion for each enterprise. Op. 6. In December 2009, FHFA and Treasury amended the agreements for a second time to permit the enterprises to continue to draw unlimited sums from Treasury as required to cure any quarterly negative net worth until the end of 2012, when the Treasury’s funding cap would be fixed by an agreed-upon formula. Op. 6.
In exchange for its funding commitment, Treasury received senior preferred
stock in each enterprise, which entitled Treasury to four principal rights under the 5
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 6 of 16
initial preferred stock purchase agreements. Op. 6. First, Treasury received a senior liquidation preference of $1 billion plus a dollar-for-dollar increase each time the enterprises drew upon Treasury’s funding commitment. Op. 6. Second, the agreements entitled Treasury to dividends equal to 10% of Treasury’s existing liquidation preference, paid quarterly. Op. 6. Third, Treasury received warrants to acquire up to 79.9% of the enterprises’ common stock at nominal price. Op. 6-7. Fourth, beginning on March 31, 2010, Treasury would be entitled to a periodic commitment fee to fully compensate Treasury for the support provided by the ongoing funding commitment. Op. 7. Treasury reserved the right to waive that fee for one year at a time based on adverse conditions in the United States mortgage market, and Treasury waived the commitment fee in 2010 and 2011. Op. 7.
As of August 8, 2012, Treasury had provided $187.5 billion in funding to the enterprises, and thus held a total of $189.5 billion senior liquidation preference between both enterprises. Op. 7-8. Therefore, under the terms of the initial preferred stock purchase agreements, the enterprises’ dividend obligations to Treasury were nearly $19 billion per year. Op. 7-8.
On August 17, 2012, FHFA and Treasury agreed to a third amendment to the preferred stock purchase agreements, which is the subject of plaintiffs’ claims. The third amendment replaced the previous dividend formula with a requirement that the enterprises pay, as a dividend, the amount by which their net worth for the quarter
exceeds a capital buffer that would gradually decline over time. Op. 8. In other 6
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 7 of 16
words, the amount of the enterprises’ dividend obligations would depend on whether the enterprises had a positive net worth in excess of the capital buffer during a particular quarter, rather than being fixed at 10% of Treasury’s existing (and increasing) liquidation preference. The third amendment also suspended Treasury’s entitlement to receive a commitment fee from the enterprises. Op. 7.
2. In four lawsuits filed in district court, institutional and individual shareholders of Fannie Mae and Freddie Mac sought to set aside the third amendment to the preferred stock purchase agreements; they also sought monetary relief. In claims under the APA, they alleged that the third amendment exceeded the agencies’ authority and was arbitrary and capricious. They also alleged claims for breach of contract, breach of an implied covenant of good faith and fair dealing, breach of fiduciary duty, and taking without just compensation.
After the district court coordinated the cases for resolution, defendants moved to dismiss the claims. In response, the Fairholme Funds plaintiffs moved for “supplementation of the administrative record” and for “limited discovery into the completeness of the administrative records produced by [Treasury and FHFA.]” (No. 13-cv-1053 (D.D.C.), Dkt. 32, at 1).
The district court granted the motions to dismiss on threshold legal grounds and denied plaintiffs’ motion for supplementation of the record and limited discovery as moot. (Dkt. 57, 58). The court ruled that the claims for equitable relief are barred
by HERA’s anti-injunction provision, which provides that “no court may take any 7
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 8 of 16
action to restrain or affect the exercise of powers or functions of [FHFA] as a conservator or receiver.” 12 U.S.C. § 4617(f). The court explained that this provision “does indeed effect a sweeping ouster of courts’ power to grant equitable remedies.” Op. 12 (quoting Freeman v. FDIC, 56 F.3d 1394, 1399 (D.C. Cir. 1995) (interpreting the nearly identical language of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)). The court ruled that the HERA bar precludes review of plaintiffs’ claim that the third amendment should be set aside as arbitrary and capricious. Op. 13-15. It rejected plaintiffs’ contention that they can circumvent the HERA bar by suing Treasury as FHFA’s contractual counterparty, Op. 15-16, and also rejected their contention that the third amendment amounted to a purchase of new securities by Treasury in contravention of HERA, Op. 17-19.
The district court rejected plaintiffs’ contention that the applicability of the HERA bar depends on FHFA’s motives or justifications for entering into the third amendment to the preferred stock purchase agreements. Op. 21-22. It noted that such an inquiry “would render the anti-injunction provision hollow, disregarding Congress’ express intention to divest the Court of jurisdiction to restrain FHFA’s ‘exercise of [its] powers or functions’ under HERA.” Op. 22 (alteration in original) (quoting 12 U.S.C. § 4617(f)). The court explained that it “need not look further than the current state of the [enterprises] to find that FHFA has acted within its broad statutory authority as conservator.” Op. 24. “Four years ago, on the brink of
collapse, the [enterprises] went into conservatorship under the authority of FHFA.” 8
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 9 of 16
Op. 24. “Today, both [enterprises] continue to operate, and have now regained profitability.” Op. 24. The court concluded that “plaintiffs plead no facts demonstrating that FHFA has exceeded its statutory authority as conservator,” Op. 26, and it rejected plaintiffs’ contention that it was required to “view the full administrative record to determine whether the Third Amendment, in practice, exceeds the bounds of HERA.” Op. 22 (emphasis omitted).2
ARGUMENT
On June 29, the institutional plaintiffs filed their opening brief on appeal. A month later, on July 29, the Fairholme Funds plaintiffs filed a “Sealed Motion for Judicial Notice and Supplementation of the Record.” That motion asks this Court to consider 500 pages of sealed materials that they obtained through discovery in their separate takings action before the Court of Federal Claims. The motion should be denied. The sealed materials that plaintiffs seek to introduce in the midst of appellate briefing have no bearing on legal issues before this Court. Moreover, those sealed materials are not “facts” that could properly be the subject of judicial notice, but select deposition excerpts and other documents that, plaintiffs contend, would create issues of fact. Nor is there any basis to supplement the record. An administrative record consists of materials that were considered by an agency at the time of its
2 The district court dismissed plaintiffs’ monetary claims on various threshold grounds including ripeness, HERA’s bar on shareholder suits, 12 U.S.C.
§ 4617(b)(2)(A)(i), and failure to state a claim. See Op. 33-51.
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USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 10 of 16
decision, not deposition excerpts or other documents that were not part of the agency’s decisionmaking process. And, in any event, the district court accepted as true the allegations in the complaint and granted the motion to dismiss on threshold legal grounds, rendering Fairholme’s request to supplement the record moot.
A. Sealed Documents From Other Ongoing Litigation Have No Bearing On the Resolution Of The Legal Issues Presented On Appeal.
The principal issue on appeal is whether the district court correctly held that plaintiffs’ attempts to set aside FHFA’s third amendment to its preferred securities purchase agreements with Treasury are barred by HERA’s anti-injunction provision, which provides that “no court may take any action to restrain or affect the exercise of powers or functions of [FHFA] as a conservator or a receiver.” 12 U.S.C. § 4617(f). Interpreting the nearly identical provision of FIRREA, this Court held that this language “does indeed effect a sweeping ouster of courts’ power to grant equitable remedies.” Freeman v. FDIC, 56 F.3d 1394, 1399 (D.C. Cir. 1995).
Contrary to Fairholme’s premise, sealed documents obtained through discovery in other ongoing litigation have no bearing on the resolution of the legal issues presented on appeal. As the district court explained, the applicability of the HERA bar does not depend on the rationale for actions taken by FHFA as conservator of the enterprises. “The extraordinary breadth of HERA’s statutory grant to FHFA as a conservator or receiver for the [enterprises], likely due to the bill’s enactment during
an unprecedented crisis in the housing market, Cf. Freeman, 56 F.3d at 1398, coupled 10
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 11 of 16
with the anti-injunction provision, narrows the Court’s jurisdictional analysis to what the Third Amendment entails, rather than why FHFA executed the Third Amendment.” Op. 21 (emphases in original). The court noted, for example, that “FHFA’s underlying motives or opinions—i.e., whether the net worth sweep would arrest a downward spiral of dividend payments . . . increase payments to Treasury, or keep the GSEs in a holding pattern . . . do not matter for the purposes of § 4617(f).” Op. 22. Similarly, the court declared that “contrary to the [Fairholme] plaintiffs’ assertion . . . the Court need not view the full administrative record to determine whether the Third Amendment, in practice, exceeds the bounds of HERA.” Op. 22.
Also contrary to Fairholme’s suggestion, this suit is not the “exception[al]” case in which supplementation of the record is necessary because “injustice might otherwise result.” In re AOV Indus., 797 F.2d 1004, 1012 (D.C. Cir. 1986) (citing Singleton v. Wulff, 428 U.S. 106, 121 (1976)). Unlike in the cases Fairholme cites, see Mot. 18-19, the extra-record materials do not “go to the heart” of the issues contested on appeal. AOV Indus., 797 F.2d at 1012-13 (law firm’s time sheets, obtained by the appellant during the appeal, went to the “heart” of the disputed issue on appeal— whether the law firm performed services for a client after a particular date); Colbert v. Potter, 471 F.3d 158, 165-66 (D.C. Cir. 2006) (postmarked envelope definitively resolved whether the plaintiff’s suit had been timely filed, the central question on appeal). Rather, as noted above, the materials Fairholme asks this Court to introduce
11
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 12 of 16
into the appellate record are irrelevant to the threshold legal questions decided by the district court and under review by this Court.3
For the same reason, there is no basis for Fairholme’s alternative request that this Court “remand this case so that (1) Fairholme can amend its complaint in light of the CFC discovery materials and (2) the district court can consider the materials in resolving Fairholme’s unaddressed motion to take discovery into the sufficiency of Treasury’s administrative record.” Mot. 19-20. The district court concluded that, even accepting plaintiffs’ allegations as true, the HERA bar applies. Accordingly, the district court granted the motions to dismiss and denied plaintiffs’ motion for supplementation of the record and limited discovery as moot. (Dkt. 57, 58).
In any event, the materials that Fairholme seeks to introduce would not form part of the administrative record even if the HERA bar did not apply. An administrative record consists of materials that were considered by the decision- maker, and Fairholme falls far short of rebutting the “presumption of regularity” that attaches to an agency’s compilation of the record. See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 420 (1971). Moreover, even when an administrative
3 Although the district court did not reach the question, see Op. 26 n.24, plaintiffs’ APA claims are also precluded by HERA’s bar on shareholder suits, 12 U.S.C. § 4617(b)(2)(A)(i). See Kellmer v. Raines, 674 F.3d 848, 850-51 (D.C. Cir. 2012). The materials Fairholme seeks to introduce are irrelevant to the purely legal question whether their APA claims are barred by § 4617(b)(2)(A)(i). Thus, Fairholme’s extra- record materials also have no bearing on an alternate, threshold ground for affirmance.
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USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 13 of 16
record is inadequate to permit effective judicial review, the appropriate course is to obtain supplemental affidavits from the agency, not to engage in a de novo evaluation. Camp v. Pitts, 411 U.S. 138, 142-43 (1973).
B. The Sealed Materials that Fairholme Seeks To Introduce Are Not Subject To Judicial Notice.
Even if the sealed materials that Fairholme seeks to introduce were relevant to the dispositive legal issues, those materials would not be subject to judicial notice. Under Rule 201(b) of the Federal Rules of Evidence, a court may take judicial notice of “a fact that is not subject to reasonable dispute because it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” See also Almerfedi v. Obama, 654 F.3d 1, 10 n.3 (D.C. Cir. 2011).
Fairholme’s sealed materials do not establish “facts” that could be appropriate for judicial notice; instead, Fairholme seeks to submit deposition excerpts and other documents obtained through discovery that, they contend, would create issues of fact with respect to FHFA’s reasons for entering into third amendments and the reasonableness of the agencies’ determinations. Even in the CFC, these discovery materials have not been the subject of findings of fact. Moreover, any ruling by the CFC would be subject to appellate review.4
4 Although nothing here turns on the issue, we respectfully note that the CFC erred in allowing discovery on Fairholme’s takings claim before acting on the government’s dispositive motions. Cf. Op. 43-51 (identifying threshold defects in plaintiffs’ takings claim).
?13
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 14 of 16
The cases on which Fairholme relies provide no support for its attempt to introduce discovery materials from other litigation into these appeals. For example, in Yellow Taxi Co. Of Minneapolis v. NLRB, 721 F.2d 366, 375 (D.C. Cir. 1983), this Court took notice of a map showing geographical boundaries. In California Valley Miwok Tribe v. United States, 515 F.3d 1262, 1265 n.5 (D.C. Cir. 2008), this Court took judicial notice of the number of potential members in a Tribe. And in Nebraska v. EPA, 331 F.3d 995, 998 n.3 (D.C. Cir. 2003), this Court took judicial notice of data contained in an EPA database. This Court has also taken judicial notice of official court records. See Dupree v. Jefferson, 666 F.2d 606, 608 n.1 (D.C. Cir. 1981) (record indicating that another lawsuit had been filed); United States v. Hopkins, 531 F.2d 576, 581 n.38 (D.C. Cir. 1976) (hearings); United States v. Dancy, 510 F.2d 779, 787 (D.C. Cir. 1975) (same); Gomez v. Wilson, 477 F.2d 411, 416 n.28 (D.C. Cir. 1973) (affidavits filed in other lawsuits where appellees conceded that the experiences recounted therein were consistent with police practice); Xydas v. United States, 445 F.2d 660, 667 (D.C. Cir. 1971) (using transcripts in another case to show that counsel was aware of information conveyed at the hearing); Veg-Mix, Inc. v. U.S. Dep’t of Agric., 832 F.2d 601, 606-07 (D.C. Cir. 1987) (debts listed in a bankruptcy proceeding).
Those cases provide no support for Fairholme’s attempt to introduce deposition excerpts and other materials to which Treasury and FHFA have had no opportunity to respond. Indeed, the introduction of hundreds of pages of materials
in the midst of appellate briefing would substantially prejudice defendants, which 14
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 15 of 16
would have no opportunity to address whatever use plaintiffs might put the discovery materials in their reply brief.
CONCLUSION
For the foregoing reasons, Fairholme’s “Sealed Motion for Judicial Notice and Supplementation of the Record” should be denied.
Respectfully submitted,
s/ Gerard Sinzdak
MARK B. STERN (202) 514-5089 ALISA KLEIN ABBY C. WRIGHT GERARD SINZDAK (202) 514-0718
Attorneys, Appellate Staff Civil Division, Room 7242 U.S. Department of Justice 950 Pennsylvania Ave., N.W. Washington, D.C. 20530
?AUGUST 2015
15
USCA Case #14-5243 Document #1568874 Filed: 08/20/2015 Page 16 of 16
CERTIFICATE OF SERVICE
I hereby certify that on August 20, 2015, I electronically filed the foregoing response with the Clerk of the Court by using the appellate CM/ECF system. Service will be accomplished by the appellate CM/ECF system.
s/ Gerard Sinzdak
GERARD SINZDAK
Here's another one just now in the appeals case
08/20/2015 Open Document RESPONSE IN OPPOSITION FILED [1568874] by TREA in 14-5254 to motion for judicial notice [1565601-2] [Service Date: 08/20/2015 by CM/ECF NDA] Pages: 16-20. [14-5254, 14-5243, 14-5260, 14-5262] (Sinzdak, Gerard)
It seems like it's moving pretty fast now with the latest developments in all the courts. I keep going back to Ackman's latest comment of clarifying that he is confident, rather than just hopeful.
YW, Paula! !De Nada!
Dear Shareholder,
Fairholme’s effort to cast light on the government’s unlawful actions in imposing the 2012 “Net Worth Sweep” is accelerating.
In the “Public Redacted Motion for Judicial Notice and Supplementation of the Record” (and two accompanying Appendices, Volume 1 and Volume 2) released yesterday, Fairholme informed the United States Court of Appeals for the District of Columbia Circuit that newly discovered evidence reveals the Defendants have (i) “improperly concealed” documents and (ii) submitted materials to the district court that were “incomplete, misleading, and in important respects, outright false.”
Highlights from Fairholme’s Motion include:
“…this Court should hold that the Net Worth Sweep is facially inconsistent with FHFA’s and Treasury’s statutory authorities and order entry of judgment for Plaintiffs as a matter of law. But, even if that were not so, the district court’s decision must be reversed. As the materials attached to this motion demonstrate, the administrative record submitted by Treasury and the ‘Document Compilation’ and declaration submitted by FHFA in lieu of an administrative record are incomplete, misleading, and, in important respects, outright false . . . the Court must at a minimum remand for further proceedings that account for this newly discovered evidence.” (Pages 1-2)
“…the Court should assure that this case is not decided on the basis of a false factual premise and take judicial notice of the existence of the materials in question.” (Page 4)
“Materials that have come to light in the [Court of Federal Claims] since the district court dismissed the complaint on jurisdictional grounds reveal that the Defendants’ jurisdictional arguments are premised on a mischaracterization of the relevant facts.” (Page 6)
“It is now apparent that those materials, which form the heart of Treasury’s administrative record and FHFA’s document compilation, are in certain respects highly misleading and in others outright false.” (Page 7)
“In light of Ms. McFarland’s testimony, Mr. Ugoletti’s sworn statement that neither agency envisioned recognition of the deferred tax assets is not credible.” (Page 9)
“Those projections, included in a presentation dated June 12, 2012, say that they were based in part on “Grant Thornton analyses” that Treasury omitted from its administrative record . . . And by the time of the Net Worth Sweep, those stale financial projections had proven to be woefully unreliable.” (Page 12)
“The Court should take judicial notice of the fact that these materials exist and that Treasury’s administrative record and FHFA’s document compilation do not accurately represent the true record before the agencies when the Net Worth Sweep was announced.” (Page 14)
“The Court should take judicial notice of the existence of documents demonstrating [REDACTED] which Defendants improperly concealed by submitting manifestly incomplete and misleading materials in the district court.” (Pages 16-17)
“Documents produced in discovery also confirm that the central defense of the Net Worth Sweep—a purported concern that the Companies’ cash dividend payments would exhaust the government funding commitment—was based on a false premise.” (Page 17)
“As the foregoing discussion of the materials attached to this motion demonstrates, Treasury’s administrative record and FHFA’s document compilation and declaration were misleading and, in certain important respects, false, and they obscured the true rationale for the Net Worth Sweep and what the Defendants considered and understood when they imposed it. It is difficult to imagine materials that go more directly [to] the heart of the matter in dispute in this case, and ‘it would be inconsistent with this court’s own equitable obligations . . . to pretend that [the materials] do not exist.’” (Page 19)
We are pleased to share these documents and encourage you to review the facts.
Sincerely,
Investor Relations
Fairholme Funds, Inc.
4400 Biscayne Blvd.
9th Floor
smart!!
Appeals case
08/19/2015 Open Document PUBLIC (REDACTED) MOTION filed [1568780] by Acadia Insurance Company, Admiral Indemnity Company, Admiral Insurance Company, Berkley Insurance Company, Berkley Regional Insurance Company, Carolina Casualty Insurance Company, Fairholme Fund, Fairholme Funds, Inc, Midwest Employers Casualty Insurance Company, Nautilus Insurance Company and Preferred Employers Insurance Company for judicial notice. (Response to Motion served by mail due on 09/03/2015), to supplement record (Response to Motion served by mail due on 09/03/2015) [Service Date: 08/19/2015 by CM/ECF NDA] Pages: 21-30. [14-5254] (Cooper, Charles)
Good info, thanks so much, H!
08/18/2015 230 NOTICE, filed by BRYNDON FISHER, BRUCE REID, ERICK SHIPMON re 217 Protective Order Corrected Notice Re: Dkt. No. 229 (Attachments: # 1 Exhibit A - Declaration of Francis Der)(Schubert, Robert) (Entered: 08/18/2015)
You don't know much about the product, do you softcare?
next up, the judge :)