U.S. District Court Judge Rosemary Collyer has denied Fannie Mae's second attempt to dismiss a wrongful termination suit brought against the mortgage giant by a purported whistleblower.
In the two-page order (PDF) issued yesterday afternoon, Collyer said that Fannie Mae had "confused" its legal arguments in its motion to dismiss as to whether the mortgage giant should be treated in this case as a federal agency or a private employer.
“In other litigation, the government appears to have argued that Fannie Mae is a federal actor; before this Court, Fannie Mae tries to distance itself from those arguments but neither agrees nor disagrees with it. This is what discovery will resolve,” Collyer wrote.
Collyer ordered that the first phase of discovery will be limited to determining whether Fannie Mae was a federal or non-federal actor when the alleged incidents took place.
Fannie Mae 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, in her complaint (PDF), claims that she found evidence 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.
The litigation took a turn for the unpleasant when attorneys on both sides began lobbing accusations of misconduct at one another. During a status conference on April 14, Collyer attempted to ease the tension, denying a motion for sanctions filed by Herron’s attorneys and urging both sides to come to her first if they were having problems.
Herron is being represented by attorneys from Washington’s Bernabei & Wachtel.
“We argued very strongly in other cases, the government and Fannie Mae had argued it was a state actor. I don’t know what Fannie will try to do this time around. The judge clearly recognized the inconsistency,” Bernabei attorney Alan Kabat said in a phone interview yesterday.
Fannie Mae has denied any wrongdoing. A Fannie Mae spokeswoman declined to comment this morning. Fannie Mae’s attorney, Ira Kasdan of Washington’s Kelley Drye & Warren did not immediately return a request for comment.
Collyer denied Fannie Mae’s first motion to dismiss in February. Fannie Mae renewed (PDF) its motion in March, asking Collyer to consider issues it believed were not addressed and also arguing that Herron had made arguments in briefs that proved her suit was more appropriate as a False Claims Act lawsuit.
Collyer disagreed, saying that regardless of how Herron may have phrased her briefs, her complaint – the document that governs a motion to dismiss decision, Collyer wrote – did not present her allegations as a False Claims Act lawsuit.
“The Court already denied a defense motion to dismiss because critical facts remain in dispute. That conclusion remains as accurate now as it was a few weeks ago, despite Defendants’ renewed motion to dismiss,” she wrote.
National Law Journal photo by Diego M. Radzinschi.
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