In a wrongful termination lawsuit against Fannie Mae, U.S. District Judge Rosemary Collyer ruled (PDF) Monday that the mortgage giant should be considered a private company and not a government actor.
Caroline Herron, who had served as a Fannie Mae vice president until 2007 and then returned in 2009 as a consultant, sued Fannie Mae in U.S. District Court for the District of Columbia in 2010, claiming she was wrongfully fired for reporting concerns she had about how the company was carrying out U.S. Department of Treasury mortgage foreclosure prevention programs.
Collyer asked the parties in May to weigh in on whether she should consider Fannie Mae a private company or a federal actor, since Congress had placed Fannie Mae under the conservatorship of the Federal Housing Finance Agency in 2008. The viability of Herron's claims would depend on Fannie Mae's status, but Collyer said at the time that Fannie Mae had "confused" its legal arguments on the issue.
In the April 24 opinion, Collyer wrote that the appointment of FHFA as Fannie Mae’s conservator didn’t “transform Fannie Mae into a public agency.” Fannie Mae was chartered by the federal government, but historically has been treated as a private company, Collyer wrote. While there is no specific end date for FHFA’s conservatorship, Collyer wrote that because Congress didn’t give FHFA “permanent” authority over Fannie Mae, it couldn’t be considered a government actor.
Collyer dismissed one of Herron’s claims, which could only apply if Fannie Mae was a government actor. The claim, known as a Bivens claim, gives individuals the right to sue a federal actor over alleged violations of constitutional rights. In this case, Herron claimed Fannie Mae retaliated against her for exercising her First Amendment right to free speech.
The ruling means that Herron’s claims under D.C. law for wrongful termination, tortious interference and civil conspiracy still stand.
Herron worked at Fannie Mae from 2000 to 2007, and when she left she was a vice president. She was hired in 2009 to work as a consultant to Fannie Mae, but claimed that Fannie Mae fired her after she reported what she characterized as questionable practices in how Fannie Mae was managing mortgage foreclosure prevention programs.
Fannie Mae denied any wrongdoing and accused Herron of filing the lawsuit because Fannie Mae officials wouldn’t help her get a job at the Treasury Department.
Herron’s attorney, Lynne Bernabei of Washington’s Bernabei & Wachtel, could not immediately be reached for comment.
Fannie Mae’s lead counsel, Ira Kasden of Kelley Drye & Warren, and a Fannie Mae spokesman declined to comment. A lead attorney for FHFA, Arnold & Porter’s Michael Johnson, referred a request for comment to the agency. An agency spokeswoman declined to comment.