We gotta be honest here: when the substantive portion of an opinion (even an opinion about takings and exactions) begins with, "Congress created the Enterprises to, inter alia, provide liquidity to the mortgage market..." our eyes kind of glaze over. It's going to be one of those opinions.
But we soldiered on, and slogged through the Federal Circuit's opinion in Washington Federal v. United States, No. 20-2190 (Feb. 22, 2022). The case is about the 2008 federal takeover of Freddie Mac and Fannie Mae. We won't go into the details, but the basic allegations in the complaint are that the fed takeover of the entities was an exaction, and a taking.
The Federal Circuit affirmed the Court of Federal Claims' dismissal, although for other reasons. The CFC thought the plaintiffs missed the 30-day statute of repose applicable to challenging the appointment of a conservator. The Federal Circuit disagreed, concluding that the six-year statute generally applicable to takings claims governed. But it affirmed the dismissal for failure to state a claim.
'Exactions" and "takings" are "separate wrongs." An exaction claim challenges the constitutional legitimacy of the government action. Whereas in takings, the property owner seeks compensation for an otherwise legitimate government action. Check out footnote 4:
The Claims Court treated the count as two legal claims that the Washington Federal Plaintiffs pled in the alternative, and we do as well. See Wash. Fed., 149 Fed. Cl. at 288–89. In contrast to a takings claim, which involves lawful government action, an illegal exaction claim “involves money that was ‘improperly paid, exacted, or taken from the claimant in contravention of the Constitution, a statute, or a regulation.’” Norman v. United States, 429 F.3d 1081, 1095 (Fed. Cir. 2005).
Slip op. at 6 n.4.
That's all well and good, the Federal Circuit concluded, but where Congress has established a separate review process to challenge agency action as unlawful, "a plaintiff may not separately litigate the issue of whether the agency acted in violation of statute or regulation in a takings (or illegal exaction) action." Slip op. at 11. That limitation rendered the plaintiffs' exaction claim here "not plausible as a matter of law." Id.
The court did not view this as a question of a statute of limitations or repose, but that goes to the nature of exaction and takings claims:
The Washington Federal Plaintiffs also argue that interpreting § 4617(a)(5) to bar direct claims by shareholders seeking monetary relief for Fifth Amendment violations would raise serious due process concerns. We disagree. As noted, the statute of limitations in § 4617(a)(5) does not time-bar Fifth Amendment takings claims before the Claims Court. A litigant simply cannot assert a plausible takings or illegal exaction claim predicated on the unlawfulness of an agency action where Congress provided an alternate exclusive means to challenge that action.
Slip op. at 13-14.
The plaintiffs' straight-up takings claim didn't fare any better. The complaint objected to the feds' unlawful appointment of itself as conservator. And we know that in order to get to "takings" relief, the plaintiff can't be complaining about unlawful action (at least in the Federal Circuit). See slip op. at 15 ("a plaintiff may not assert a takings claim in the Claims Court claiming entitled to prevail because the agency acted in violation of a statute or regulation").
The Federal Circuit also concluded that the plaintiffs in this case lacked standing because as shareholders, they were asserting the rights of the entities, not their own. See slip op. at 17-19.
Washington Federal v. United States, No. 20-2190 (Fed. Cir. Feb. 22, 2022)
