Owl Creek Asia I, L.P., et al. v. United States, et al.

Fannie Mae and Freddie Mac are “for-profit corporations owned by private shareholders” and “dominate the secondary mortgage market.” Collins v. Yellen, 141 S. Ct. 1761, 1770, 1785 (2021). In 2008, Congress passed a statute that led to the Federal Housing Finance Agency’s becoming the companies’ conservator and the U.S. Department of Treasury’s becoming a shareholder (sole holder of senior preferred, as well as warrants to purchase nearly 80% of common at a nominal price) and providing substantial investment. In 2012, private shares remained outstanding, carrying dividend rights and liquidation preferences. That year, Treasury and the FHFA decided that, henceforth, the companies each quarter “would transfer nearly all of [their] net worth” to Treasury. Id. at 1770. They continued as profitable going concerns with a government “backstop,” but this net-worth sweep “left nothing for their private shareholders.” Id. at 1777, 1779; see id. at 1774, 1778. In Collins, the Court held the private shareholders’ APA challenge barred by statute. With their rights in their shares wiped out, Petitioners sued for a taking. The Court of Federal Claims held that their claims for compensation for themselves were actually derivative, mere “overpayment” claims that belonged to the government-controlled companies. The Federal Circuit affirmed. The question presented is: If the United States causes a company to transfer to the United States for the public benefit private shareholders’ rights incident to their ownership of shares in the company, do the private shareholders have a direct, personal interest in a cause of action challenging that taking?