It was a helluva week for the Federal Home Loan Mortgage Corporation, its former executives, and their defense lawyers at Bingham McCutchen; Latham & Watkins; and Sidley Austin. Freddie Mac won dismissal of a securities class action; scored a triple win in patent infringement litigation; and two former Freddie senior executives escaped a renewed bid for class certification in another investor suit. On top of the litigation wins, the inspector general for Fannie Mae and Freddie Mac’s conservator issued a report finding that Freddie didn’t trap homeowners into high interest loans to boost its own investment returns.
Freddie caught its first break on Monday, when U.S. District Judge John Keenan in Manhattan knocked out a putative securities fraud class action brought by a group of former executives by a group of pension funds. Handing a win to a Bingham team led by partner Jordan Hershman, Keenan dismissed the second amended complaint with prejudice in a 34-page opinion. The plaintiffs had claimed that Freddie and a group of its former executives materially misrepresented the organization’s exposure to risky subprime mortgages, the sufficiency of its capital, and the accuracy of its financial reporting after Freddie disclosed a $2 billion loss in late 2007. But Keenan wasn’t having it.
“It defies logic to conclude that executives who are seeking to perpetrate fraudulent information upon the market would make such fulsome disclosures,” the judge wrote. As Alison Frankel at Reuters pointed out Thursday, Keenan’s ruling could further bolster the arguments Freddie and its former executives are making in a parallel case brought by the Securities and Exchange Commission. Robbins Geller Rudman & Dowd is lead counsel for the plaintiffs.
The good news continued for Freddie on Tuesday with a decision by U.S. District Judge Richard Leon in Washington, D.C., who dismissed three-year-old patent infringement claims by Graff/Ross Holdings related to Freddie’s electronic fixed-income bond auctions. In a 14-page opinion, Leon agreed with a magistrate judge that Graff/Ross’s IP is invalid because it’s based on unpatentable subject matter. On Wednesday Leon ruled for Freddie once again in two related cases, finding that all 614 (!) claims that Graff/Ross had asserted in two follow-on patents were invalid.
We asked Latham & Watkins partner Matthew Moore, who handled the infringement case for Freddie, whether Wednesday’s decision set some sort of record for invaliding a staggering number of patent claims in one fell swoop. “This seems to be several levels of magnitude beyond what I’ve ever seen before,” Moore said. Graff/Ross is represented in all three cases by counsel from Fulbright & Jaworski.
Finally, in a decision dated on Tuesday but filed on Wednesday, U.S. District Judge Miriam Goldman Cedarbaum in Manhattan denied a motion to certify a class in an investor suit brought by Cotchett, Pitre & McCarthy against former Freddie CEO Richard Syron and CFO Anthony Piszel. The judge had previously denied a motion for reconsideration of class cert in May 2012, and the U.S. Court of Appeals for the Second Circuit denied a petition for interlocutory appeal later that month. “This proposed new class definition is not an adequate basis for reopening a question that has been exhaustively litigated,” Cedarbaum wrote in her latest decision. Former Freddie CEO Syron is represented by a Sidley Austin team including Thomas Green and Steven Bierman; former CFO Piszel has Murphy & McGonigle.
This article originally appeared in The AmLaw Litigation Daily.
