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Complex Civil Litigation

Freddie & Fannie Shareholder Litigation Update - Podcast

Litigation Practice Group Podcast
Jason A. Levine, John Carney March 02, 2017

During the 2008 financial crisis, Congress provided Fannie Mae and Freddie Mac with billions of dollars in emergency funds to keep them afloat, supplemented by the investments of private investors who bet that these entities would return to profitability. In 2012, just as Fannie and Freddie were indeed becoming profitable again, the Government instituted a "net worth sweep" that required them to remit to the government nearly all of their profits every quarter. Fannie and Freddie have paid the government over $246 billion so far. In the process, the stock was rendered virtually worthless. Investors filed myriad lawsuits as the net worth sweep came into effect. After four years of litigation and an initial dismissal by the district court, the D.C. Circuit has now largely affirmed but also sent key contract-based claims for monetary relief back to the district court for further review. This Teleforum discusses this historic litigation, its implications for the housing market and the proper role of the Government, and the investors' prospects for success on their claims.

Featuring:

  • John Carney, Editor, Breitbart News
  • Jason A. Levine, Litigation Partner, Vinson & Elkins LLP 

State Farm Fire and Casualty Co. v. U.S. ex rel. Rigsby - Post-Decision SCOTUScast

SCOTUScast 2-9-17 featuring Lawrence Ebner
Lawrence S. Ebner February 09, 2017

On December 6, 2016, the Supreme Court decided State Farm Fire and Casualty Co. v. U.S. ex rel. Rigsby. State Farm Fire and Casualty Co. (State Farm) administered separate wind and flood damage policies in the Gulf Coast area at the time of Hurricane Katrina. In general, State Farm was responsible for paying wind damage from its own assets, while federal funds would pay for flood damage. The Rigsby sisters were State Farm claims adjusters who allegedly discovered in the aftermath of Hurricane Katrina that, with respect to properties covered under both wind and flood policies, State Farm was unlawfully classifying wind damage as flood damage in order to offload the cost of payment onto the federal government. Rigsby sued on behalf of the United States under the provisions of the federal False Claims Act (FCA), and continued to litigate the case after the United States declined to intervene. The district court focused discovery and trial on a single bellwether claim, and the jury found an FCA violation and awarded damages.  

Both sides appealed, with the Rigsbys (classified under the FCA as “relators”) seeking additional discovery to uncover and pursue other similar FCA violations by State Farm--and State Farm arguing, among other things, that the case should be dismissed because the Rigsbys’ counsel had violated the FCA’s seal requirement, by disclosing the existence of the FCA lawsuit to various news outlets. The U.S. Court of Appeals for the Fifth Circuit acknowledged the seal violation but concluded (as the district court had)--after applying a multi-factor test--that the breach did not warrant dismissal here.

The question before the Supreme Court was what standard governs the decision whether to dismiss a relator's claim for violation of the False Claims Act's seal requirement, an issue on which the federal circuit courts of appeals have split three ways.

By a vote of 8-0, the Supreme Court affirmed the judgment of the Fifth Circuit. In an opinion by Justice Kennedy, the Court unanimously held that a seal violation does not mandate dismissal of a relator's complaint under the False Claims Act and that whether to dismiss is a matter left to the discretion of the district court. In this case, the Supreme Court added, the district court did not abuse its discretion in declining to dismiss the relator’s complaint.

To discuss the case, we have Lawrence Ebner, who is the Founder of Capital Appellate Advocacy.

State Farm Fire and Casualty Co. v. U.S. ex rel. Rigsby - Post-Argument SCOTUScast

SCOTUScast 11-8-16 featuring Cory Andrews
Cory L. Andrews November 08, 2016

On November 1, 2016, the Supreme Court heard oral argument in State Farm Fire and Casualty Co. v. U.S. ex rel. Rigsby. State Farm Fire and Casualty Co. (State Farm) administered separate wind and flood damage policies in the Gulf Coast area at the time of Hurricane Katrina. In general, State Farm was responsible for paying wind damage from its own assets, while federal funds would pay for flood damage. The Rigsby sisters were State Farm claims adjusters who allegedly discovered in the aftermath of Hurricane Katrina that, with respect to properties covered under both wind and flood policies, State Farm was unlawfully classifying wind damage as flood damage in order to offload the cost of payment onto the federal government. Rigsby sued on behalf of the United States under the provisions of the federal False Claims Act (FCA), and continued to litigate the case after the United States declined to intervene. The district court focused discovery and trial on a single bellwether claim, and the jury found an FCA violation and awarded damages.  

Both sides appealed, with the Rigsbys (classified under the FCA as “relators”) seeking additional discovery to uncover and pursue other similar FCA violations by State Farm--and State Farm arguing, among other things, that the case should be dismissed because the Rigsbys’ counsel had violated the FCA’s seal requirement, by disclosing the existence of the FCA lawsuit to various news outlets. The U.S. Court of Appeals for the Fifth Circuit acknowledged the seal violation but concluded after applying a multi-factor test that the breach did not warrant dismissal here.

The question now before the Supreme Court is what standard governs the decision whether to dismiss a relator's claim for violation of the False Claims Act's seal requirement, an issue on which the federal circuit courts of appeals have split three ways.

To discuss the case, we have Cory Andrews, who is senior litigation counsel at the Washington Legal Foundation.

Trial by Formula & Class Action Lawsuits

Short video featuring Anastasia Boden discussing Tyson Foods, Inc. v. Bouaphakeo
Anastasia Boden November 09, 2015

Attorney Anastasia Boden of the Pacific Legal Foundation previews the upcoming Supreme Court case Tyson Foods, Inc. v. Bouaphakeo. In the case, workers sued Tyson Food for not paying them for time spent taking on and off their work equipment.  Since no time records for such activity were kept, the lower court allowed damages to be determined based on an average time for class members and then applied it to the entire remaining class.  Ms. Boden explains the concept of “Trial by Formula” and its implications in this case. The Pacific Legal Foundation filed an amicus brief  co-authored by Ms. Boden in support of the petitioner Tyson Foods.

Gelboim v. Bank of America Corporation - Post-Decision SCOTUScast

SCOTUScast 1-29-15 featuring Erik Zimmerman
Erik Zimmerman January 29, 2015

On January 21, 2015, the Supreme Court decided Gelboim v. Bank of America Corporation. This case concerns whether and in what circumstances the dismissal of all claims in one civil action that had been consolidated with other cases for pre-trial purposes, in a Multi-District Litigation proceeding, is final and immediately appealable? 

In an opinion by Justice Ginsburg, the Court held unanimously that a lower court order dismissing petitioners' case in its entirety removed petitioners from the consolidated multidistrict litigation proceeding, thereby triggering their statutory right to appeal. The judgment of the Second Circuit was reversed and the case remanded. 

To discuss the case, we have Erik Zimmerman, who is an Olin-Searle-Smith Fellow and Constitutional Law Center Fellow at Stanford Law School.