The Shareholders sued FHFA, its Director, Treasury, and its Secretary (the Agencies). They assert four causes of action, three statutory and one constitutional:•
In Count I, they allege the Administrative Procedure Act (APA), 5 U.S.C. § 706(2)(C), (D), affords relief because FHFA exceeded its statutory conservator authority under 12 U.S.C. § 4617(b)(2)(D). •
In Count II, they allege the APA, 5 U.S.C. § 706(2)(C), (D), affords relief because Treasury exceeded its securities-purchase authority under 12 U.S.C. §§ 1455(l), 1719(g). Specifically, they allege that Treasury purchased securities after the sunset period, failed to make the required “[e]mergency determination[s],”and disregarded statutory “[c]onsiderations.”•
In Count III, they allege the APA, 5 U.S.C. § 706(2)(A), affords relief because Treasury’s adoption of the net worth sweep was arbitrary and capricious.•
In Count IV, they allege FHFA violates Article II, §§ 1 and 3 of the Constitution because, among other things, it is headed by a single Director removable only for cause.
Count I, to the extent it has merit, is a direct claim. The Shareholders suffered injury in fact—they were excluded from the GSEs’ profits. And they are within the zone of interests HERA protects. Count I alleges that FHFAviolated 12 U.S.C. § 4617(b)(2)(D)—the grant of conservator powers. TheShareholders’ economic value is “arguably within the zone of interests” for this provision.103 It is axiomatic that shareholders are the residual claimants of a firm’s value.104 They are among the first beneficiaries of the “sound and solvent condition” that a conservator is empowered to pursue.105 And they ordinarily have a claim on the “assets and property” that a conservator is empowered to “preserve and conserve.”106 For example, in James Madison, the D.C. Circuit
held a bank shareholder could challenge the FDIC’s appointment as the bank’s receiver under FIRREA.107Plus, HERA elsewhere states that the succession provision does not extinguish the Shareholders’ right to pursue their claims in receivership.108This matters because Count I essentially alleges that an improper conservatorship preempted rights that could have been redeemed in receivership.109 Because the Shareholders are within the zone of interests protected by HERA’s enumeration of conservator powers, they have a direct claim.And the prudential shareholder-standing rule does not change this analysis. The rule is “a strand of the standing doctrine that prohibits litigants from suing to enforce the rights of third parties.”110 But for APA claims, “Congress itself has pared back traditional prudential limitations.”111 The APA does not abolish the shareholder-standing doctrine. But it limits it in some cases. James Madison is one example, because the court held it had jurisdiction to review the shareholder’s APA action against appointment of a receiver.112The Supreme Court decisions City of Miami and Lexmark also support this point: For very broad statutory rights like the APA, an injury in fact and
inclusion in the zone of interests can add up to a right of action, even if prudential standing limits would have blocked it.113 That is the case here.In so holding, we do not say that there is no direct–derivative distinction for APA claims. Nor is it true that any shareholder may obtain review of agency action affecting his holdings. In Thompson v. North American Stainless, LP, the Supreme Court rejected the “absurd” proposition that shareholders could sue under Title VII employment protections.114 Shareholders are not within Title VII’s zone of interests because “the purpose of Title VII is to protect employees from their employers’ unlawful actions.”115 But a corporate reorganization statute is a different animal. Shareholders may be within itszone of interests, and here they are.116Counts II and III, however, are not within the asserted statutes’ zone of interests. In Count II the Shareholders allege that Treasury violated 12 U.S.C. §§ 1455(l), 1719(g), which granted it authority to purchase securities in the GSEs. They say the net worth sweep effectively purchased securities after these provisions’ 2009 sunset and otherwise exceeded the purchase authority.117 In Count III they allege that Treasury acted arbitrarily and capriciously under those same sections because it never made the requisite “[e]mergency determination.”118Congress granted this purchase authority to protect markets, consumers, and taxpayers, not GSE stakeholders. The emergency determination asks whether a purchase will stabilize markets, prevent disruptions in mortgage finance, and protect taxpayers.119 And the statutes’ mandatory “[c]onsiderations” are likewise public-oriented: Treasury must consider the GSEs’ condition, and any transaction’s structure, “[t]o protect the taxpayers.”120 So we agree with the district court, though for a different reason, that Counts II and III must be dismissed.
AI
