Washington Federal v. United States, No. 20-2190 (Fed. Cir. Feb. 22, 2022)

Case: 20-2190 Document: 49 Page: 1 Filed: 02/22/2022
United States Court of Appeals

for the Federal Circuit
______________________
WASHINGTON FEDERAL, MICHAEL MCCREDY

BAKER, CITY OF AUSTIN POLICE RETIREMENT
SYSTEM, ON BEHALF OF THEMSELVES AND ALL
OTHERS SIMILARLY SITUATED,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant-Appellee
______________________
2020-2190
______________________
Appeal from the United States Court of Federal Claims

in No. 1:13-cv-00385-MMS, Senior Judge Margaret M.
Sweeney.
______________________
Decided: February 22, 2022

______________________
KEVIN GREEN, Hagens Berman Sobol Shapiro LLP, San

Diego, CA, argued for plaintiffs-appellants. Also repre-
sented by STEVE BERMAN, Seattle, WA; ROBERT M.
ROSEMAN, Spector Roseman & Kodroff, P.C., Philadelphia,
PA.
MARK B. STERN, Civil Division, Appellate Staff, United

States Department of Justice, Washington, DC, argued for
defendant-appellee. Also represented by BRIAN M.
2 WASHINGTON FEDERAL v. US
BOYNTON, KYLE T. EDWARDS, GERARD SINZDAK, ABBY

CHRISTINE.
______________________
Before LOURIE, PROST, and O’MALLEY, Circuit Judges.

O’MALLEY, Circuit Judge.
This is a companion to appeals in eight other matters:
Fairholme Funds, Inc. v. United States, Nos. 20-1912,
-1914, Owl Creek Asia I, L.P. v. United States, No. 20-1934,
Mason Capital L.P. v. United States, No. 20-1936,
Akanthos Opportunity Fund, L.P. v. United States,
No. 20-1938, Appaloosa Investment Ltd. Partnership I v.
United States, No. 20-1954, CSS, LLC v. United States,
No. 20-1955, Arrowood Indemnity Co. v. United States,
No. 20-2020, and Cacciapalle v. United States,
No. 20-2037. 1 In those cases (collectively, the Fairholme
appeals), certain shareholders of the Federal National
Mortgage Association and the Federal Home Loan Mort-
gage Corporation (collectively, the Enterprises or Compa-
nies) challenged actions taken by the Federal Housing
Finance Agency (FHFA) after it placed the Enterprises un-
der conservatorship. Those shareholders alleged that a
“net worth sweep” under an amendment to the FHFA’s pre-
ferred stock purchase agreements (PSPAs) with the De-
partment of Treasury (Treasury) constituted, inter alia, a
1 Some of the appellants in those other matters chose

to consolidate their cases for briefing purposes, but the ac-
tual appeals were never consolidated. We granted the mo-
tions of other appellants to consolidate the appeals in Owl
Creek, No. 20-1934, Mason Capital, No. 20-1936, Akanthos,
No. 20-1938, Appaloosa, No. 20-1954, and CSS,
No. 20-1955. We resolved all those matters in our decision
in Fairholme Funds, Inc. v. United States,
Nos. 20-1912, -1914, -1934, -1936, -1938, -1954, -1955,
-2020, -2037 (Fed. Cir. Feb. 22, 2022).
WASHINGTON FEDERAL v. US 3
direct taking or illegal exaction of their share value. We

affirmed decisions of the United States Court of Federal
Claims (Claims Court) dismissing those claims for lack of
standing. 2 Fairholme Funds, Inc. v. United States,
Nos. 20-1912, -1914, -1934, -1936, -1938, -1954, -1955,
-2020, -2037, slip op. at 7 (Fed. Cir. Feb. 22, 2022).
Here, Washington Federal, Michael McCredy Baker,
and the City of Austin Police Retirement System (collec-
tively, the Washington Federal Plaintiffs) also alleged di-
rect takings and illegal exaction claims. We separated this
appeal from the Fairholme appeals because the claims here
primarily were predicated on the imposition of the conser-
vatorships over the Enterprises, rather than on actions the
FHFA later took in its capacity as conservator. Specifi-
cally, the Washington Federal Plaintiffs alleged that the
FHFA lacked the statutory authority to impose the conser-
vatorships. 3 The Washington Federal Plaintiffs now ap-
peal the Claims Court’s final judgment dismissing their
claims for lack of standing. Wash. Fed. v. United States,
149 Fed. Cl. 281 (2020). We affirm.
I. BACKGROUND
We presume familiarity with the background set forth
in our Fairholme Funds decision and recite only those facts
necessary to address the issues raised in this appeal.
Congress created the Enterprises to, inter alia, provide
liquidity to the mortgage market. See Collins v. Yellen,
2 One shareholder, Andrew T. Barrett, asserted de-

rivative claims on behalf of the Enterprises in the Fair-
holme appeals. Our resolution of those claims is not
relevant to the issues in this appeal.
3 As discussed below, the Washington Federal Plain-
tiffs also originally cited the net worth sweep as a factual
predicate for their claims but have since withdrawn that
assertion.
141 S. Ct. 1761, 1770–71 (2021); 12 U.S.C. § 1716(4). The

Enterprises do so by purchasing mortgages, pooling them
into mortgage-backed securities, and selling them to inves-
tors. Collins, 141 S. Ct. at 1771. As a result, the Enter-
prises relieve mortgage lenders of the risk of default and
free up their capital to make additional loans. Id.
The Enterprises operate under congressional charters
as for-profit corporations owned by private shareholders.
Id. at 1770–71. They have long benefited from a perception
that the federal government would honor their obligations
should they experience financial difficulties. Perry Cap.
LLC v. Lew (“Perry I”), 70 F. Supp. 3d 208, 215 (D.D.C.
2014); Dep’t of Treasury & Dep’t of Hous. & Urb. Dev., Re-
forming America’s Housing Finance Market: A Report to
Congress 8 (2011) (“Treasury & HUD Report”) (“[The En-
terprises] benefited from . . . a widely perceived govern-
ment guarantee—the commonly held assumption that
large losses would be backstopped by the taxpayer.”). This
perception and other government benefits allowed the En-
terprises to purchase mortgages and mortgage-backed se-
curities at cheaper rates than would otherwise prevail in
the private market. See Perry I, 70 F. Supp. 3d at 215;
Treasury & HUD Report at 8; J.A. 94 (¶ 15).
When the housing bubble burst in 2008, the Enter-
prises experienced significant losses and found themselves
owning an “immense inventory of defaulted and overvalued
subprime mortgages.” DeKalb Cnty. v. Fed. Hous. Fin.
Agency, 741 F.3d 795, 798 (7th Cir. 2013); see Collins,
141 S. Ct. at 1771. Though the Enterprises remained sol-
vent, many feared the Enterprises would eventually de-
fault and “throw the housing market into a tailspin.”
Collins, 141 S. Ct. at 1771.
To address that concern, Congress enacted the Housing
and Economic Recovery Act of 2008 (HERA) giving the
FHFA discretion to appoint itself as conservator or receiver
over the Enterprises. 12 U.S.C. § 4617. HERA constrained
the FHFA’s discretion by providing twelve grounds on

which the agency may appoint itself as conservator or re-
ceiver. Id. § 4617(a)(2)–(3). These grounds include the con-
sent of the Enterprises, by resolution of their boards of
directors or their shareholders or members. Id.
§ 4617(a)(3)(I).
HERA provides for limited judicial review of the
FHFA’s decision to appoint itself as conservator or receiver
over the Enterprises:
If the Agency is appointed conservator or receiver
under this section, the [Enterprise] may, within
30 days of such appointment, bring an action in the
United States district court for the judicial district
in which the home office of such [Enterprise] is lo-
cated, or in the United States District Court for the
District of Columbia, for an order requiring the
Agency to remove itself as conservator or receiver.
Id. § 4617(a)(5)(A). The court in which the action is
brought “shall, upon the merits, dismiss such action or di-
rect the Agency to remove itself as such conservator or re-
ceiver.” Id. § 4617(a)(5)(B).
On September 6, 2008, the FHFA’s Director placed the
Enterprises under conservatorship with the consent of the
Enterprises’ boards of directors. See J.A. 90 (¶ 7). There-
after, the Director negotiated PSPAs with Treasury. See
J.A. 112–13 (¶ 68). In August 2012, the FHFA and Treas-
ury amended the PSPAs to require the Enterprises to pay
Treasury quarterly dividend payments equal to their entire
net worth minus a small capital reserve amount, i.e., the
“net worth sweep.” See J.A. 116 (¶ 76); J.A. 162 (¶ 204).
In June 2013, the Washington Federal Plaintiffs filed
a class action against the government before the Claims
Court. They later amended their complaint so that it con-
tained only one count: a Fifth Amendment takings claim
and/or an illegal exaction claim. 4 The operative complaint

broadly alleges that, in imposing the conservatorships over
the Enterprises, the government “destroyed the rights and
value of the property interests tied to the common and pre-
ferred stock of the Companies” held by the Washington
Federal Plaintiffs. J.A. 166 (¶ 218).
The complaint centers around the Washington Federal
Plaintiffs’ allegation that the government “improperly im-
pos[ed] the . . . conservatorships over the Companies under
false pretenses with no valid statutory basis.” J.A. 166–67
(¶ 222(b)). According to the Washington Federal Plaintiffs,
the FHFA obtained the consent of the Enterprises’ boards
of directors through “misrepresentation and duress,” as
well as by immunizing the directors from liability for con-
senting to a conservatorship. J.A. 121–22 (¶¶ 87, 89) (cit-
ing 12 U.S.C. § 4617(a)(6)). The complaint asserts that, as
a result of the FHFA’s unlawful appointment as conserva-
tor, the FHFA “terminated all shareholder meetings and
all shareholder voting rights,” ordered the Enterprises “to
cease paying dividends on their preferred and common
stock,” and ordered the Enterprises “to delist their common
and preferred shares from the New York Stock Exchange.”
E.g., J.A. 161–62 (¶¶ 202–03). The Washington Federal
Plaintiffs also alleged that the net worth sweep constituted
a taking or illegal exaction. J.A. 153 (¶ 185). After the Su-
preme Court confirmed in Collins that the FHFA had
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 “in-
volves 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).
statutory authority to enter into the amendment to the

PSPAs effectuating the net worth sweep, 141 S. Ct. at 1777,
the Washington Federal Plaintiffs abandoned that aspect
of their claims. 5 Appellants’ Suppl. Resp. Br. on Collins at
1.
The government moved to dismiss the claims in every
case before the Claims Court in a single, omnibus motion.
Wash. Fed., 149 Fed. Cl. at 289. The Claims Court ulti-
mately granted the government’s motion, dismissing the
Washington Federal Plaintiffs’ operative complaint for lack
of standing. Id. at 297.
Two of the Claims Court’s holdings are relevant to this
appeal. First, the court rejected the government’s argu-
ment that, because HERA’s 30-day limitations period bars
the Washington Federal Plaintiffs’ claims, the court lacks
subject matter jurisdiction over the case. Id. at 291–92.
The court explained that the applicable statute of limita-
tions is not HERA’s 30-day period under 12 U.S.C.
§ 4617(a)(5), but the general 6-year period under 28 U.S.C.
§ 2501 for claims over which the Claims Court has jurisdic-
tion. Id. Because the Washington Federal Plaintiffs filed
suit within six years of the imposition of conservatorships
over the Enterprises, the Claims Court found their claims
timely. Id. at 292.
Second, the Claims Court held that the Washington
Federal Plaintiffs lacked standing to litigate their direct
takings and illegal exaction claims because the claims are
5 In their opening brief on appeal, the Washington

Federal Plaintiffs also asked, in the alternative, that we
remand this matter to the Claims Court so that they might
amend their claims to assert the claims derivatively on be-
half of the Enterprises. Appellants’ Opening Br. 41–46.
They have since withdrawn that request as well. Appel-
lants’ Suppl. Resp. Br. on Collins at 1.
substantively derivative. See id. at 296. The court found

that the Washington Federal Plaintiffs’ claims and the di-
rect takings and illegal exaction claims in Fairholme Funds
are “virtually indistinguishable for standing purposes.” Id.
at 293. While the Washington Federal Plaintiffs placed
greater emphasis on the imposition of the conserva-
torships, the Claims Court explained that the claims here
similarly rest on the expropriation of the Washington Fed-
eral Plaintiffs’ economic interests and property rights as
shareholders. Id. According to the court, the Washington
Federal Plaintiffs’ claims are indistinguishable from an
overpayment claim: “The FHFA, through the imposition of
the conservatorships and subsequent manipulations of the
Enterprises, gutted [the Enterprises] and left nothing for
the shareholders.” Id. at 295; see also id. at 294 (referring
to the standing analysis in Fairholme Funds, Inc. v. United
States, 147 Fed. Cl. 1, 45–47 (2019)). The court noted that
the Washington Federal Plaintiffs’ claims are premised on
allegations that the conservatorships harmed the Enter-
prises themselves, and only thereby caused indirect harm
to the shareholders. See id. at 295. The Claims Court
therefore dismissed the Washington Federal Plaintiffs’
claims for lack of standing.
The Washington Federal Plaintiffs timely appealed to
this court. We have jurisdiction under 28 U.S.C.
§ 1295(a)(3).
II. DISCUSSION
We review a dismissal for lack of standing de novo. See
Rack Room Shoes v. United States, 718 F.3d 1370, 1374
(Fed. Cir. 2013).
On appeal, the Washington Federal Plaintiffs argue
that they have standing to assert their direct takings and
illegal exaction claims arising out of the FHFA’s actions to
coerce the Enterprises into consenting to conservatorships.
In response, the government maintains that § 4617(a)(5)
bars the Washington Federal Plaintiffs’ challenge to the
FHFA’s appointment as conservator over the Enterprises.

Because it is a jurisdictional challenge, we address the gov-
ernment’s threshold argument before turning to the sub-
stance of the Washington Federal Plaintiffs’ appeal.
A. The Claims Court’s jurisdiction
The government argues that the Claims Court should
have dismissed the Washington Federal Plaintiffs’ claims
as untimely and filed in the wrong court. Specifically, the
government asserts that 12 U.S.C. § 4617(a)(5)—which
permits the Enterprises (“the regulated entity”) to chal-
lenge the FHFA’s appointment as conservator in a district
court action within 30 days of the appointment—is the ex-
clusive means of challenging the FHFA’s appointment. Ac-
cording to the government, the Washington Federal
Plaintiffs’ suit is “incontrovertibly a challenge to the ap-
pointment of the conservator.” Appellee’s Resp. Br. 20.
While the Washington Federal Plaintiffs agree that
§ 4617(a)(5) provides the exclusive means for challenging
the FHFA’s appointment as conservator, they distinguish
between such challenges and their claims “seek[ing] mone-
tary relief for past harm directly resulting from the imposi-
tion of the conservatorships.” Appellants’ Reply Br. 20.
Although, as we discuss below, § 4617(a)(5) prohibits
the Washington Federal Plaintiffs from pursuing their
claims, the application of that provision here is a mer-
its-based bar, not one that implicates the Claims Court’s
jurisdiction over the Washington Federal Plaintiffs’ claims.
The Tucker Act provides the Claims Court with subject
matter jurisdiction over “any claim against the United
States founded . . . upon the Constitution,” including the
Washington Federal Plaintiffs’ takings and illegal exaction
claims. See 28 U.S.C. § 1491. The statute of limitations to
bring such claims is six years after a claim first accrues.
Id. § 2501 (“Every claim of which the United States Court
of Federal Claims has jurisdiction shall be barred unless
the petition thereon is filed within six years after such
claim first accrues.”). Here, the Washington Federal Plain-

tiffs timely filed their claims in June 2013, within six years
of the FHFA’s appointment as conservator in September
2008.
We also disagree with the government’s characteriza-
tion of the Washington Federal Plaintiffs’ claims as no
more than a challenge to the FHFA’s appointment as con-
servator. While there is no dispute that the claims allege
that the FHFA improperly coerced the Enterprises’ boards
of directors to consent to the conservatorships, the Wash-
ington Federal Plaintiffs also claim that, by those unlawful
actions, the government took or illegally exacted their
property interests as shareholders of the Enterprises with-
out just compensation. See, e.g., J.A. 116–18 (¶¶ 77–81);
J.A. 153–63 (¶¶ 185–208); J.A. 165–68 (¶¶ 217–25). We
therefore reject the government’s argument that we should
dismiss the Washington Federal Plaintiffs’ claims on juris-
dictional grounds.
B. The Washington Federal Plaintiffs’ illegal exaction
claim
Although the 30-day limitations period in § 4617(a)(5)
does not deprive the Claims Court of jurisdiction over the
Washington Federal Plaintiffs’ claims, we affirm the
Claims Court’s dismissal of their illegal exaction claim on
the alternative ground that the Washington Federal Plain-
tiffs fail to state a claim upon which relief may be granted. 6
Our case law makes clear that the Washington Federal
Plaintiffs may not challenge the propriety of the FHFA’s
6 While the Claims Court predicated its dismissal of

the Washington Federal Plaintiffs’ illegal exaction claim on
standing grounds, we may affirm the Claims Court’s dis-
missal on any grounds supported by the record. See Wyan-
dot Nation of Kan. v. United States, 858 F.3d 1392, 1397
(Fed. Cir. 2017).
appointment as conservator through an illegal exaction

claim in the Claims Court. See Rith Energy, Inc. v. United
States, 247 F.3d 1355, 1366 (Fed. Cir. 2001). Instead, the
Washington Federal Plaintiffs must litigate their claims on
the assumption that the FHFA’s appointment as conserva-
tor was lawful. See id. Therefore, the Washington Federal
Plaintiffs’ illegal exaction claim, which requires showing
that the FHFA’s imposition of the conservatorships was
unlawful, is not plausible.
We have explained that an uncompensated taking and
an unlawful agency action constitute separate wrongs that
give rise to separate causes of action. See id. at 1365 (quot-
ing Del-Rio Drilling Programs, Inc. v. United States,
146 F.3d 1358, 1364 (Fed. Cir. 1998)). Where Congress
mandates the review process for an allegedly unlawful
agency action, 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. See id.
at 1366. In other words, the plaintiff may not claim that it
is entitled to prevail because the agency acted in violation
of statute or regulation. See id. Rather, where Congress
mandates the review process for the allegedly unlawful
agency action, a plaintiff must litigate on the assumption
that the agency action is authorized and lawful, i.e., that
the government took its property regardless of whether the
agency acted consistently with its statutory and regulatory
mandate. See id. at 1365–66. That means that an illegal
exaction claim predicated on the alleged unlawfulness of
the agency action is not plausible as a matter of law.
In Rith Energy, the Department of Interior denied Rith
Energy a permit to resume mining coal in a certain area
pursuant to the Surface Mining Control and Reclamation
Act of 1977 (SMCRA). See id. at 1358–60. Congress as-
signed the question of whether the agency violated SMCRA
in denying the permit to an administrative process within
the agency, subject to judicial review in a district court. See
id. at 1365; see also 30 U.S.C. §§ 1264, 1276. 7 Rith Energy

engaged in that process, lost its administrative appeal, and
voluntarily dismissed its district court action seeking re-
view of the administrative ruling. Rith Energy, 247 F.3d
at 1360. Rith Energy then filed a takings claim in the
Claims Court, asserting that the government took its prop-
erty by preventing it from mining. See id. at 1361. We held
that, “having forgone its challenge to [the agency’s] admin-
istrative actions, Rith is not free to renew its challenge to
those actions under the cover of a takings claim in the
Court of Federal Claims.” Id. at 1366. Importantly, we
concluded that, while Rith Energy could not argue that the
permit denial was unlawful under SMCRA, it could assert
that the permit denial constituted a taking on the assump-
tion that the administrative action was both authorized
and lawful. See id. at 1365–66.
Here, there is no dispute that Congress provided the
exclusive means to challenge the grounds of the FHFA’s
appointment as conservator in 12 U.S.C. § 4617(a)(5): the
Enterprises may challenge the FHFA’s appointment in dis-
trict court within 30 days of the appointment. The Enter-
prises did not bring such a challenge, nor did their
shareholders bring a derivative challenge on their behalf.
Accordingly, “having forgone [their] challenge” to the
7 Section 1264 of Title 30 specifies that a permit ap-

plicant, or any person whose interests may be adversely af-
fected by the agency’s final decision, “may request a
hearing on the reasons for the final determination,” after
which the agency must issue a written decision granting or
denying the permit and stating its reasons. 30 U.S.C.
§ 1264(c). The statutory provision further provides a right
to appeal the agency’s decision in accordance with
30 U.S.C. § 1276, which specifies the venue, timing, appli-
cable standards, and procedures of the district court’s re-
view. See id. §§ 1264(f), 1276.
FHFA’s decision to appoint itself as conservator over the

Enterprises, the Washington Federal Plaintiffs “[are] not
free to renew [their] challenge to those actions under the
cover of a takings claim in the” Claims Court. See id. at
1366. Instead, the Washington Federal Plaintiffs must lit-
igate their claims “on the assumption that the administra-
tive action was both authorized and lawful.” See id.
Because the Washington Federal Plaintiffs’ illegal exaction
claim requires showing that the FHFA’s appointment as
conservator over the Enterprises was unlawful under
HERA, we affirm the Claims Court’s dismissal of their ille-
gal exaction claim on alternative grounds of failure to state
a claim.
The Washington Federal Plaintiffs argue that there is
no basis for the government’s “ambitious reading” that
“any dispute as to the legality of the appointment must be
resolved immediately in the district court.” Appellants’ Re-
ply Br. 21 (quoting Appellee’s Resp. Br. 21). And, they
make much of the fact that the mechanism for challenge in
§ 4617(a)(5) only authorizes the Enterprises to challenge
the conservatorship. Id. at 19–20. As noted, Rith Energy
forecloses the Washington Federal Plaintiffs’ argument.
Where Congress specifies the means of challenging an
agency action, like the FHFA’s decision to appoint itself
conservator over the Enterprises, a plaintiff may not chal-
lenge the lawfulness of the agency action under the cover
of a takings (or illegal exaction) claim in the Claims Court.
See Rith Energy, 247 F.3d at 1365–66. While it is true that
§ 4617(a)(5) refers to “the regulated entit[ies]” (i.e., the En-
terprises), an action challenging the conservatorship could
have been asserted derivatively by the shareholders on be-
half of the Enterprises, but was not.
The Washington Federal Plaintiffs also argue that in-
terpreting § 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 unlaw-
fulness of an agency action where Congress provided an al-
ternate exclusive means to challenge that action. As the
government points out, moreover, a Due Process challenge
to HERA and the implications of its statutory structure,
even if such a challenge could be brought, may not be
brought in the Claims Court. See Appellee’s Resp. Br. 38;
see also In re United States, 463 F.3d 1328, 1335 n.5
(Fed. Cir. 2006) (“[B]ecause the Due Process Clause is not
money-mandating, it may not provide the basis for juris-
diction under the Tucker Act.”).
C. The Washington Federal Plaintiffs’ takings claim
1. Failure to allege a cognizable takings claim
We similarly affirm the Claims Court’s dismissal of the
Washington Federal Plaintiffs’ takings claim on the alter-
native ground that the Washington Federal Plaintiffs fail
to state a claim upon which relief may be granted. 8
The Washington Federal Plaintiffs’ takings claim rests
on the premise that the appointment of the FHFA as con-
servator was unlawful. See J.A. 166–67 (¶ 222) (“[A]s a re-
sult of the Government’s legally unsubstantiated
imposition of the conservatorships, the Government de-
stroyed the value of the stock held by Plaintiffs . . . and vi-
olated the fundamental principles of the . . . Takings
Clause[ ] of the United States Constitution.” (emphasis
added)); see also J.A. 95 (¶ 16); J.A. 117–36 (¶¶ 78,
82–143); J.A. 153–54 (¶¶ 185–86); J.A. 157–59
8 The Claims Court predicated its dismissal of the

Washington Federal Plaintiffs’ takings claim on standing
grounds, but we may affirm the Claims Court’s dismissal
on any grounds supported by the record. See Wyandot,
858 F.3d at 1397.
(¶¶ 194–96). Indeed, the Washington Federal Plaintiffs’

complaint makes clear that the harms they allegedly suf-
fered—i.e., the property interests taken by the govern-
ment—flowed directly from the unlawful appointment of
the FHFA as conservator. See also Appellants’ Opening Br.
3–4 (“The Washington Federal Plaintiffs aver, in great de-
tail, a coerced nationalization of the Companies starting in
2008 that supplanted the Companies’ shareholders [and]
eliminated their ownership rights . . . , without just com-
pensation . . . .”); Appellants’ Reply Br. 1 (“The forced im-
position of the 2008 conservatorships over two companies
that were not insolvent, and did not need a bailout, is at
the core of this action . . . .”); id. at 4 (asserting the forced
conservatorships and coerced consent are “key factual un-
derpinnings” of the Washington Federal Plaintiffs’ claims);
cf. id. at 20 (characterizing claims as seeking relief for “past
harm directly resulting from the imposition of the conser-
vatorships”); Oral Arg. at 2:31–3:33, https://oralargu-
ments.cafc.uscourts.gov/default.aspx?fl=
20-2190_08042021.mp3 (explaining that the alleged harm
to the rights to vote, receive dividends, and transfer stock
“occurred as a result of the conservatorships”).
That takings claim is not plausible under Rith Energy.
As noted, where Congress mandates the review process for
an allegedly unlawful agency action, a plaintiff may not as-
sert a takings claim in the Claims Court claiming entitle-
ment to prevail because the agency acted in violation of a
statute or regulation. See Rith Energy, 247 F.3d at 1366.
This is because a plaintiff does not have the right to litigate
the issue of whether an agency’s action is unlawful under
the guise of a takings claim, rather than through the con-
gressionally mandated review process. See id. Because, as
pled, the Washington Federal Plaintiffs’ takings claim at-
tempts to litigate the propriety of the FHFA’s appointment
as conservator and to circumvent the exclusive review pro-
cess under 12 U.S.C. § 4617(a)(5), we affirm the Claims
Court’s dismissal of the claim.
As in Rith Energy, moreover, the “consequence of as-

suming the lawfulness of [the government’s] actions . . . is
to limit the issue before us” to whether imposing re-
strictions on the Enterprises’ right to issue dividends, or-
dering them to delist their common and preferred shares
from the New York Stock Exchange, and terminating cer-
tain rights previously attendant to share ownership consti-
tute a taking. See id. And that inquiry requires us to
determine whether, upon lawful imposition of the conser-
vatorships, the shareholders retained any invest-
ment-backed expectation that the value of their shares
would not be diluted and the rights otherwise attendant to
share ownership would not be temporarily suspended. Cf.
id. Collins makes clear that they did not.
As the Collins court explained, the FHFA’s authority
under HERA is both unusual and extremely broad; the
FHFA as conservator “may” act in the interests of the En-
terprises but is not required to do so. 12 U.S.C.
§ 4617(b)(2)(J); Collins, 141 S. Ct. at 1776; see also Fair-
holme Funds, slip op. at 46; Perry Cap. LLC v. Mnuchin
(“Perry II”), 864 F.3d 591, 607–08 (D.C. Cir. 2017). Under
HERA, the FHFA may act in ways that are not in the best
interests of either the Enterprises or the shareholders, and,
instead, are beneficial to the FHFA and the public it serves.
Collins, 141 S. Ct. at 1776; Fairholme Funds, slip op. at 46;
Perry II, 864 F.3d at 608 (noting that, unlike the Financial
Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA), which permits the FDIC to take into ac-
count the interests of depositors, HERA does not require
the FHFA to consider the interests of the shareholders).
Where shareholders hold shares in such highly regu-
lated entities—entities that the government has the au-
thority to place into conservatorship—where the
conservator’s powers are extremely broad, and where the
entities were lawfully placed into such a conservatorship,
shareholders lack a cognizable property interest in the con-
text of a takings claim. Golden Pac. Bancorp v. United
States, 15 F.3d 1066, 1073–75 (Fed. Cir. 1994) (holding that

Golden Pacific lacked a historically rooted expectation of
compensation necessary to establish a Fifth Amendment
taking because it chose to invest in a highly regulated en-
tity); cf. Fairholme Funds, slip op. at 45–47 & n.14. 9 For
this reason as well, we find that the Washington Federal
Plaintiffs cannot assert a cognizable takings claim regard-
ing actions taken in connection with the imposition of the
conservatorships in 2008.
2. Lack of standing to assert a direct takings claim
As an independent ground, we affirm the Claims
Court’s dismissal of the Washington Federal Plaintiffs’ tak-
ings claim for lack of standing. The Washington Federal
Plaintiffs lack standing to assert their substantively deriv-
ative claims as direct claims. The doctrine of standing asks
whether a litigant is entitled to have a federal court resolve
its grievance. Kowalski v. Tesmer, 543 U.S. 125, 128
(2004). A litigant generally must assert its own legal rights
and interests; it cannot rest its claim to relief on the legal
rights or interests of third parties. See id. at 129 (quoting
Warth v. Seldin, 422 U.S. 490, 498 (1975)).
Related to this prudential limitation on third-party
standing, 10 shareholders generally may not initiate an
9 The highly regulated nature of the Enterprises al-

ways limited the investment-backed expectations of their
shareholders. To the extent there existed any expectations
at all, the shareholders lacked them after the passage of
HERA and certainly after the FHFA imposed the conser-
vatorships. Cf. Fairholme Funds, slip op. at 45–47 & n.14.
10 In Lexmark International, Inc. v. Static Control
Components, Inc., 572 U.S. 118 (2014), the Supreme Court
held that the label of prudential standing was inappropri-
ate for the requirement that a plaintiff’s interests fall
within the zone of interests protected by the law invoked.
action to enforce the rights of a corporation but may do so

if the corporation’s management refuses to pursue the
same action for reasons other than good-faith business
judgment. Franchise Tax Bd. v. Alcan Aluminium Ltd.,
493 U.S. 331, 336 (1990). Such an action by shareholders
must be a derivative action because the corporation has the
direct interest in the cause of action. Starr Int’l Co. v.
United States, 856 F.3d 953, 966 (Fed. Cir. 2017). Only
shareholders with a direct, personal interest in a cause of
action may bring a direct shareholder action. Id. (quoting
Franchise Tax Bd., 493 U.S. at 336). Shareholders whose
injuries are derivative of their ownership interests in a cor-
poration may not bring a direct shareholder action to re-
dress their injuries. Id. (quoting Franchise Tax Bd.,
493 U.S. at 336).
While federal law governs the standing inquiry, there
is a presumption that state law should be incorporated into
federal common law unless doing so would frustrate spe-
cific objectives of federal programs. Starr, 856 F.3d at 966
(quoting Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 98
(1991)). Consistent with federal law, Delaware courts con-
sider two questions when determining whether a share-
holder’s claim is derivative or direct. Id.; Tooley v.
Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031, 1035
(Del. 2004) (en banc). First, who suffered the alleged harm,
the corporation or the suing stockholder individually?
Tooley, 845 A.2d at 1035. Second, who would receive the
benefit of the recovery or other remedy? Id. A
See id. at 127 & n.3, 129. The Court did not, however, ex-
tend its holding to the prudential principle of third-party
standing. See id. at 127 n.3 (“This case does not present
any issue of third-party standing, and consideration of that
doctrine’s proper place in the standing firmament can
await another day.”); Starr Int’l Co. v. United States,
856 F.3d 953, 965 n.18 (Fed. Cir. 2017).
stockholder’s claimed direct injury must be independent of

any alleged injury to the corporation. Id. at 1039. The Del-
aware Supreme Court recently confirmed, moreover, that
a suing shareholder’s claims must be completely independ-
ent from the harm to the corporation before they may be
asserted directly. Brookfield Asset Mgmt., Inc. v. Rosson,
261 A.3d 1251, 1267, 1272–73 (Del. 2021) (en banc) (over-
ruling the dual nature doctrine espoused in Gentile v. Ros-
sette, 906 A.2d 91 (Del. 2006), and confirming that, even
when shareholders assert harm to rights attendant to
share ownership, those claims must be asserted deriva-
tively if the shareholders’ harm is not independent of harm
to the corporation).
Here, the Washington Federal Plaintiffs’ takings claim
is derivative in nature because the Washington Federal
Plaintiffs’ alleged injuries are not independent of alleged
harms to the Enterprises. Instead, as noted, the Washing-
ton Federal Plaintiffs pled that the harms to their share-
holder rights flowed from the injury to the Enterprises by
the unlawful appointment of the FHFA as conservator.
See, e.g., J.A. 166–67 (¶ 222) (“[A]s a result of the Govern-
ment’s legally unsubstantiated imposition of the conserva-
torships, the Government destroyed the value of the stock
held by Plaintiffs . . . .”); J.A. 153 (¶ 185) (alleging that “im-
posing the conservatorships upon the Companies, under
false pretenses and without a statutory basis, causing the
value of the Companies’ shares to plummet, and destroying
all shareholder rights and property interests” constituted
a taking); J.A. 117 (¶ 78); J.A. 95 (¶ 16). Because the
Washington Federal Plaintiffs’ alleged injuries, as pled, de-
pend on an alleged injury to the Enterprises, the Washing-
ton Federal Plaintiffs lack standing to assert their
substantively derivative claim as a direct takings claim.
We are unpersuaded by the Washington Federal Plain-
tiffs’ arguments in favor of standing. First, the Washing-
ton Federal Plaintiffs contend that the extreme
circumstances warranting a derivative action are not
present here. They suggest that a derivative suit requires

“the misfeasance and malfeasance of ‘faithless directors
and managers.’” Appellants’ Opening Br. 31 (quoting Ka-
men, 500 U.S. at 95). The Washington Federal Plaintiffs
argue that, though they believe the government committed
malfeasance, they have no reason to believe the directors
and managers of the Enterprises did so. Id. at 31–32. This
argument is a red herring. The Washington Federal Plain-
tiffs lack standing to assert their direct takings claim be-
cause their alleged harms depend on alleged injuries to the
Enterprises. Under federal law, the Washington Federal
Plaintiffs may not rest their claim to relief on the legal
rights or interests of third parties, i.e., the Enterprises. See
Kowalski, 543 U.S. at 129. The defect with the Washington
Federal Plaintiffs’ direct takings claim is distinct from the
additional showing that must be made before a derivative
claim on behalf of the Enterprises can be asserted: that the
managements of the Enterprises refused to pursue an ac-
tion enforcing the Enterprises’ rights for reasons other
than good-faith business judgment. See Kamen, 500 U.S.
at 95–96; Franchise Tax Bd., 493 U.S. at 336.
Second, the Washington Federal Plaintiffs disagree
that their alleged harms are dependent on harm to the En-
terprises. The Washington Federal Plaintiffs hypothesize
that the Enterprises could have thrived under conserva-
torship without their shareholders receiving any benefit
and, thus, assert that the Enterprises were not themselves
actually harmed by the conservatorship decision. The
Washington Federal Plaintiffs also analogize their takings
claim to the direct breach-of-contract claims in Perry II,
864 F.3d 591.
The Washington Federal Plaintiffs’ hypothetical is at
odds with every other argument and allegation they have
made in this case. As outlined above, supra, at 14–15, the
Washington Federal Plaintiffs tie all of their alleged harms
to an action they assert was illegally imposed upon and
caused great damage to the Enterprises. For the same
reasons, Perry II is inapposite. There, a class of sharehold-

ers of the Enterprises asserted that, in adopting the net
worth sweep, the FHFA and the Enterprises breached the
terms of the shareholders’ stock certificates. Perry II, 864
F.3d at 603. The D.C. Circuit held that these con-
tract-based claims “are obviously direct.” Id. at 628. The
court explained that the plaintiffs asserted breaches of con-
tractual duties owed to them by the Enterprises by virtue
of their stock certificates. Id. In stark contrast to the
claims in Perry II, which were based on a contract to which
the shareholders were a party, the Washington Federal
Plaintiffs’ takings claim attempts to enforce the legal
rights and interests of the Enterprises. As we explained in
Fairholme Funds, “[t]he fact that shareholders possess a
property interest in their shares of the Enterprises does not
answer the question of whether they are asserting direct or
indirect harm to that property right.” Fairholme Funds,
slip op. at 23. The D.C. Circuit’s holding in Perry II does
not mandate that the Washington Federal Plaintiffs’ claim
is similarly direct. 11
Third, the Washington Federal Plaintiffs argue that
dismissing their claim for lack of standing is an unconsti-
tutional denial of a forum for redress and a clear violation
of due process. As noted above, however, whether enforc-
ing HERA as written and interpreted by the Supreme
11 The Washington Federal Plaintiffs also analogize

this case to A & D Auto Sales, Inc. v. United States,
748 F.3d 1142 (Fed. Cir. 2014), because both cases contain
allegations of government coercion. A & D Auto Sales is
procedurally distinct. There, we considered whether the
plaintiffs had stated a plausible takings claim under Rule
12(b)(6) of the Rules of the Court of Federal Claims. Our
holding there has no relevance to whether the Washington
Federal Plaintiffs have standing to assert their direct tak-
ings claim here.
Court, this court, and the D.C. Circuit deprives the Wash-
ington Federal Plaintiffs of due process is not a question
before us and not a question over which the Claims Court
could assert jurisdiction. See supra, at 13–14.
Fourth, the Washington Federal Plaintiffs argue that
the Claims Court incorrectly assumed that, if a share-
holder claim is derivative, the claim cannot also be direct.
They reason that the same set of facts can give rise to both
direct and derivative claims and can be asserted either di-
rectly or derivatively under Delaware law, citing to the
dual nature doctrine found in Gentile and its progeny. But,
as noted above, Gentile has been overruled. See supra, at
19. Even where two types of harm are alleged, when the
alleged harm to the corporation and alleged harm to the
shareholder are not independent, the claim is only substan-
tively derivative in nature. See Brookfield, 261 A.3d at
1262–63 (overturning Gentile and distinguishing between
direct and derivative claims).
Finally, the Washington Federal Plaintiffs argue that
Collins supports holding that they have standing to assert
a direct takings claim. We disagree. As we explained in
Fairholme Funds, the shareholders in Collins alleged that
HERA’s statutory restriction on the President’s power to
remove the FHFA’s Director constituted a separa-
tion-of-powers (i.e., Appointments Clause) violation. Fair-
holme Funds, slip op. at 25 (citing Collins, 141 S. Ct. at
1778). In concluding that the threshold Article III standing
requirements were satisfied in Collins, the Supreme Court
explained that the unique claims at issue there did not de-
rive from the plaintiffs’ status as shareholders. See Col-
lins, 141 S. Ct. at 1781. Instead, the separation-of-powers
claim asserted a right “shared by everyone in the country.”
Id. By contrast, like the claims in Fairholme Funds, the
Washington Federal Plaintiffs’ claims implicate areas of
corporate law that require them to go beyond Article III’s
minimum standing requirements and establish the right to
assert claims on behalf of a third party. Fairholme Funds,
slip op. at 25. Only shareholders with a direct, personal

interest in a cause of action may bring a direct shareholder
action. Franchise Tax Bd., 493 U.S. at 336. And, as the
Delaware Supreme Court has made clear, whenever the
shareholders’ alleged harm is not independent of harm to
the corporation, shareholders must assert their claim de-
rivatively. See Brookfield, 261 A.3d at 1272. Collins did
not change those legal principles. See Fairholme Funds,
slip op. at 25.
III. CONCLUSION
For the reasons discussed above, we affirm the Claims
Court’s decision dismissing the Washington Federal Plain-
tiffs’ takings and illegal exaction claims.
AFFIRMED

Washington Federal v. United States, No. 20-2190 (Fed. Cir. Feb. 22, 2022)

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Washington Federal v. United States, No. 20-2190 (Fed. Cir. Feb. 22, 2022)

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Case: 20-2190 Document: 49 Page: 1 Filed: 02/22/2022

United States Court of Appeals

WASHINGTON FEDERAL, MICHAEL MCCREDY

Appeal from the United States Court of Federal Claims

Decided: February 22, 2022

KEVIN GREEN, Hagens Berman Sobol Shapiro LLP, San

MARK B. STERN, Civil Division, Appellate Staff, United

BOYNTON, KYLE T. EDWARDS, GERARD SINZDAK, ABBY

Before LOURIE, PROST, and O’MALLEY, Circuit Judges.

1 Some of the appellants in those other matters chose

direct taking or illegal exaction of their share value. We

2 One shareholder, Andrew T. Barrett, asserted de-

141 S. Ct. 1761, 1770–71 (2021); 12 U.S.C. § 1716(4). The

the FHFA’s discretion by providing twelve grounds on

and/or an illegal exaction claim. 4 The operative complaint

4 The Claims Court treated the count as two legal

statutory authority to enter into the amendment to the

5 In their opening brief on appeal, the Washington

substantively derivative. See id. at 296. The court found

FHFA’s appointment as conservator over the Enterprises.

claim first accrues.”). Here, the Washington Federal Plain-

6 While the Claims Court predicated its dismissal of

appointment as conservator through an illegal exaction

id. at 1365; see also 30 U.S.C. §§ 1264, 1276. 7 Rith Energy

7 Section 1264 of Title 30 specifies that a permit ap-

FHFA’s decision to appoint itself as conservator over the

time-bar Fifth Amendment takings claims before the

8 The Claims Court predicated its dismissal of the

(¶¶ 194–96). Indeed, the Washington Federal Plaintiffs’

As in Rith Energy, moreover, the “consequence of as-

States, 15 F.3d 1066, 1073–75 (Fed. Cir. 1994) (holding that

9 The highly regulated nature of the Enterprises al-

action to enforce the rights of a corporation but may do so

stockholder’s claimed direct injury must be independent of

present here. They suggest that a derivative suit requires

reasons, Perry II is inapposite. There, a class of sharehold-

11 The Washington Federal Plaintiffs also analogize

slip op. at 25. Only shareholders with a direct, personal

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