Attorneys in a wrongful termination suit filed against Fannie Mae have been locked in an escalating fight over allegations of misconduct, prompting U.S. District Court Judge Rosemary Collyer to step in today during a status conference and urge both sides "to sit down and take deep breaths."
Collyer also asked Fannie Mae's attorneys to revise a proposed protective order for discovery in the case, which centers on allegations that Fannie Mae improperly implementation of U.S. Department of Treasury mortgage foreclosure prevention programs. Collyer noted that in considering what documents and information should be kept confidential in discovery and trial, the court is not bound to honor confidentiality agreements Fannie Mae may have entered into with Treasury at the time.
The mortgage giant is being sued by Caroline Herron, a former Fannie Mae vice president who left the corporation in 2007 but came back as a consultant in 2009 to assist with the Treasury’s Homeownership Preservation Program. Herron, represented by Lynne Bernabei and Alan Kabat of Washington’s Bernabei & Wachtel, claims that she found evidence (PDF) Fannie Mae officials were focusing on maximizing incentive payments at the expense of taxpayer dollars and efficiency, and was fired in early 2010 after reporting her concerns to Fannie Mae and Treasury officials.
Fannie Mae denies any wrongdoing, accusing Herron of filing the lawsuit because she had wanted to pursue a job opportunity at Treasury and Fannie Mae wouldn’t help her resolve conflicts of interest that came up, given her role at the time at Fannie Mae. Fannie Mae, represented by Ira Kasdan, Joseph Wilson III and Brooke Fineberg of Washington’s Kelley Drye & Warren, filed a motion to dismiss (PDF).
Collyer initially denied Fannie Mae’s motion to dismiss, but also granted Fannie Mae’s request to pursue a renewed motion to dismiss on some of Herron’s claims, since Fannie Mae had argued that Collyer did not address the full scope of arguments included in their motion to dismiss.
When Fannie Mae filed its renewed motion to dismiss (PDF), it also argued for Collyer to reconsider her original denial of the motion to dismiss. Herron’s attorneys cried foul and filed a motion to strike the renewed motion to dismiss, accusing Fannie Mae’s attorneys of going beyond the scope of what Collyer had allowed them to do.
Herron’s attorneys also accused Fannie Mae of making misrepresentations to the court on certain facts and of withholding discovery, even though Collyer had said that discovery should move forward. Herron eventually asked the court to sanction defense counsel and award plaintiffs’ counsel attorneys’ fees for the work done on this part of the case.
In filings, Herron’s attorneys accused opposing counsel of “deliberately wasting judicial resources and driving up plaintiffs’ costs.” Fannie Mae’s attorneys called the request for sanctions “insulting.”
In court today, Collyer said she thought the situation had gotten out of hand. She first read from an order recently issued by federal judges in Kansas, in which they warned attorneys not to let disputes between their clients spiral into personal attacks between each other. In that case, an attorney for the defense had requested a continuance because his wife was about to give birth, and plaintiffs’ counsel had vigorously argued against it.
“You’re not being quite as impersonal and inhuman,” Collyer said in court today. However, she said, “this is getting off to a very bad start.”
Although she has yet to rule on Fannie Mae’s renewed motions for dismissal and Herron’s motion to strike, Collyer denied the request the sanctions.
On the question of a protective order for discovery, Collyer told Fannie Mae’s attorneys that they had crafted an order that was too broad in what it would keep confidential, but also that the version put forward by Herron’s attorneys failed to address the complexity of some of the information at issue. She asked both sides to take another stab at putting together an order.
Attorneys on both sides declined to comment on the case following the hearing.