112514 Defendants Reply in Support of Its Motion to Staypdf

8/10/2019 112514 Defendants Reply in Support of Its Motion to Staypdf

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No. 13-465C

(Judge Sweeney)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

FAIRHOLME FUNDS, INC., et al.,

Plaintiffs,

v.

THE UNITED STATES,

Defendant.

DEFENDANT'S REPLY IN SUPPORT OF ITS MOTION TO STAY

PROCEEDINGS PENDING APPEAL OF THE DISTRICT COURTSSEPTEMBER 30, 2014 DECISION INPERRY CAPITAL, LLC v. LEW ET AL.

______________________________________________________________________________

OF COUNSEL:

PETER A. BIEGERAssistant General Counsel

KATHERINE M. BRANDESAttorney Advisor

Department of Treasury

1500 Pennsylvania Avenue, N.W.Washington, D.C. 20220

November 25, 2014

JOYCE R. BRANDA

Acting Assistant Attorney General

ROBERT E. KIRSCHMAN, JR.

Director

KENNETH M. DINTZER

Acting Deputy Director

FRANKLIN E. WHITE, JR.Assistant Director

ELIZABETH M. HOSFORDGREGG M. SCHWIND

Senior Trial Counsel

Commercial Litigation BranchCivil Division

U.S. Department of Justice

P.O. Box 480Ben Franklin StationWashington, DC 20044

Telephone: (202) 616-0385

Facsimile: (202) [email protected]

Attorneys for Defendant

Case 1:13-cv-00465-MMS Document 110 Filed 11/25/14 Page 1 of 39


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TABLE OF CONTENTS

PAGE(S)

INTRODUCTION ...........................................................................................................................1

ARGUMENT ..................................................................................................................................4

I. The Court Should Reject Fairholmes Arguments And Stay Proceedings

In This Case Pending The D.C. Circuits Resolution Of The Pending Appeals .....3

A. Fairholme Urges The Court To Apply The Wrong Standard Of

Review To Our Motion To Stay ..................................................................4

B. Fairholme Erroneously Assumes That The Court Must First

Determine Whether The Perry CapitalDecision Has Preclusive

Effect Before It Can Stay The Case .............................................................5

C. Fairholmes Premature Arguments Against The Application Of

Issue Preclusion Are Not Well Taken ..........................................................6

D. The Potential Persuasive Effect Of The District Courts Ruling

On The Merits Of The Takings Claim Raised In The D.D.C. ActionsProvides A Strong Basis For A Stay Of This Action.................................12

II. The Balance Of Interests Weighs In Favor Of A Stay Of Proceedings .................13

A. A Stay Will Serve Judicial Economy Because Discovery Is Far

From Complete In This Case .....................................................................14

B. A Stay Of Proceedings Will Not Unfairly Prejudice Fairholme................16

III. In The Alternative, The Court Should Enter A Temporary Stay PendingA Decision On The Preclusive Effect Of The District Courts Decision ..............18

CONCLUSION ..............................................................................................................................19

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TABLE OF AUTHORITIES

CASES

PAGE(S)

Abbott Laboratories v. Gardner,

387 U.S. 136 (1967) .......................................................................................................... 10

Abraxis Bioscience, Inc. v. Navinta, LLC,

625 F.3d 1359 (Fed. Cir. 2010)........................................................................................... 8

Bayou Des Familles Dev. Corp. v. United States,

130 F.3d 1034 (Fed. Cir. 1997)......................................................................................... 10

Beard v. United States,

101 Fed. Cl. 100 (2011) .............................................................................................. 15, 18

Berman v. Dept of the Interior,447 F. Appx 186 (Fed. Cir. 2011) .................................................................................... 6

Brighton Vill. Assocs. v. United States,52 F.3d 1056 (Fed. Cir. 1995)............................................................................................. 5

Cal. Hous. Sec., Inc. v. United States,959 F.2d 955 (Fed. Cir. 1992)........................................................................................... 13

Cherokee Nation of Oklahoma v. United States,

124 F.3d 1413 (Fed. Cir. 1997).................................................................................. passim

Comair Rotron, Inc. v. Nippon Densan Corp.,

49 F.3d 1535 (Fed. Cir. 1995)........................................................................................... 11

Golden Pac. Bancorp v. United States,

15 F.3d 1066 (Fed. Cir. 1994)........................................................................................... 13

In re Ho Keung Tse,

552 F. App'x 979 (Fed. Cir. 2014) .................................................................................... 15

In re Prof'l Air Traffic Controllers Org.,

699 F.2d 539 (D.C. Cir. 1983) ............................................................................................ 6

In re Sacramento Mun. Utility Dist.,

395 F. App'x 684 (Fed. Cir. 2010) ...................................................................................... 5

Innovative Therapies , Inc. v. Kinetic Concepts, Inc.,

599 F.3d 1377 (Fed. Cir. 2010)........................................................................................... 8

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Landis v. North. Am. Co.,

299 U.S. 248 (1936) ............................................................................................................ 4

Maritrans Inc. v. United States,

342 F.3d 1344 (Fed. Cir. 2003)......................................................................................... 10

Masco Corp. v. United States,

303 F.3d 1316 (Fed. Cir. 2002)......................................................................................... 12

Pa. R.R. Co. v. United States,

363 U.S. 202 (1960) ............................................................................................................ 5

Perry Capital LLC v. Lew,

--- F. Supp. 3d ----, 2014 WL 4829559 (D.D.C. Sept. 30, 2014) .............................. passim

Rogers v. Desiderio,58 F.3d 299 (7th Cir. 1995) ............................................................................................ 6, 9

Shell Petroleum, Inc. v. United States,319 F.3d 1334 (Fed. Cir. 2003)........................................................................................... 7

Smith v. United States,2013 WL 5315694 (Fed. Cl. Sept. 20, 2013) ..................................................................... 5

Taylor v. Sturgell,553 U.S. 880 (2008) ............................................................................................................ 9

Underwood Livestock Inc. v. United States,417 F. App'x 934 (Fed. Cir. 2011), aff'd79 Fed. Cl. 486 (2007) ....................................... 9

United States v. Tohono O'Odham Nation,

131 S. Ct. 1723 (2011) ........................................................................................................ 5

Versata Software, Inc. v. Callidus Software, Inc.,

No. 2014-1468, 2014 WL 6480522 (Fed. Cir. Nov. 20, 2014) ....................................... 16

MISCELLANEOUS

Restatement (Second) of Judgments [16] cmt. b ......................................................................... 6

Restatement (Second) of Judgments, 27, cmt. i, Illustration ................................................... . 12

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FAIRHOLME FUNDS, INC., et al., ))

Plaintiffs, )) No. 13-465Cv. ) (Judge Sweeney)

)THE UNITED STATES, )

)Defendant. )

DEFENDANTS REPLY IN SUPPORT OF ITS MOTION TO STAY

PROCEEDINGS PENDING APPEALS OF THE DISTRICT COURTS

SEPTEMBER 30, 2014 DECISION INPERRY CAPITAL, LLC V. LEW ET AL.

INTRODUCTION

In framing its response, Fairholme reminds the Court that, at the start of the litigation, we

requested a stay in this case pending the resolution of parallel actions in district court brought by,

among others, Fairholme, Perry Capital, and other large hedge funds.1 Fairholme fails to

acknowledge, however, that it opposed our motion to stay on the basis that the motion was

premature and, in Fairholmes words, could be revisited once the proceedings in both courts

had taken better shape. SeePls. Resp. to Defs Motion to Stay at 10-11, ECF No. 10. That

time has now come. The parallel district court actions have not merely taken shape, but have

been decided and dismissed in a full opinion on the merits, and are now pending appeal before

the United States Court of Appeals for the District of Columbia Circuit. Perry Capital LLC v.

Lew, --- F. Supp. 3d ----, 2014 WL 4829559 (D.D.C. Sept. 30, 2014), consolidatedappeals

docketed, No. 14-5243 (D.C. Cir. Oct. 8, 2014) (the D.D.C. Actions).

1 On November 25, 2015, the Court granted a Motion for Leave to File Amicus BriefRegarding Defendants Motion to Stay filed by plaintiffs inRafter v. United States, No. 14-740C. Order, ECF No. 108. Due to the timing of theRafteramicus brief and the fact that thebrief presents a number of issues distinct from those in Fairholmes response, we intend to seekan enlargement of time to respond to theRafteramicus brief in a separate filing.



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We demonstrated in our moving brief that a stay of proceedings pending the outcome of

the Perry Capital appeals is warranted, and is the course preferred by the Federal Circuit,

because the Court will be guided by the D.C. Circuits resolution of issues common to both

cases. In response, Fairholme does not and cannot dispute that that there is significant overlap

between this case and the district court cases, or that the district court has decided issues raised in

both cases. Eleven of 12 plaintiffs in this action are also plaintiffs in the D.D.C. Actions, and

every one of these plaintiffs, including Fairholme, has challenged the August 2012 execution of

the Third Amendment to the Senior Preferred Stock Purchase Agreements (PSPAs).

Instead of addressing this core reason for a stay (and Federal Circuit precedent on stays in

similar circumstances), Fairholme attempts to distract the Court with several inaccurate or

irrelevant arguments. First, Fairholme contends that we seek an indefinite stay, and that, as a

result, our burden should be higher. But the stay we seek is not indefinite. Rather, we seek a

stay only until the D.C. Circuit decides the Perry Capitalappeals. Second, Fairholme suggests

that a stay is not warranted unless the Court finds that the Perry Capitaldecision has preclusive

effect on Fairholmes complaint in this Court. Our position is that Fairholmes complaint is

precluded, but it is not necessary for this Court to adjudicate that question in this motion. Rather,

the only question before this Court is whether it is more efficient to follow the course preferred

by the Federal Circuit in these circumstances and stay the case so that this Courts decision can

be informed by the D.C. Circuits resolution of the common issues. Finally, Fairholmes attempt

to argue that it will be prejudiced by a stay is particularly unpersuasive in light of the limited

duration of the stay we have requested, the fact that Fairholme chose to file in multiple fora, and

that Fairholmes litigation team will be representing Fairholme in its appeal to the D.C. Circuit.

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Although it is not necessary for the Court to reach the application of issue preclusion to

resolve this motion, it bears noting that Fairholmes arguments as to why there is no issue

preclusion lack merit. Fairholmes main argument is that one of the 12 plaintiffs in this case,

Continental Western Insurance Company, is not a plaintiff in the D.D.C. Actions. This fact, of

course, does not apply to the other eleven plaintiffs, who are plaintiffs in this case. And while

not a false statement, it is not relevant for preclusion purposes. Continental Western is a wholly

owned operating unit of Berkley Insurance Company, a plaintiff in both the D.D.C. Actions

and this case. Moreover, Continental Westerns shares were actually owned by Plaintiff Berkley

Insurance Company on the date that suit was filed in this Court. Continental Western held not a

single share on that critical date, and the only shares it now owns were acquired from Berkley the

day after this suit was filed. That share transfer allowed plaintiff Berkley, through Continental

Western, to engage in blatant forum shopping by filing a case materially identical to the D.D.C.

Actions in Iowa, where a motion to dismiss based on preclusion, as well as other grounds, is

already pending. Given these facts, Fairholme cannot credibly dispute that the resolution of the

D.D.C. Actions will have exactly the same legal effect on Continental Western that it will have

on plaintiffs Fairholme and Berkley.

Consistent with Federal Circuit precedent that Fairholme has ignored, the prudent

course is for this Court to stay proceedings so that the Court may be guided by the D.C. Circuits

resolution of the issues that are common to all three parallel, overlapping cases. In the

alternative, the Court should stay the case to permit full briefing on the Perry Capitaldecisions

immediate preclusive effect.

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ARGUMENT

I. The Court Should Reject Fairholmes Arguments And Stay Proceedings In This

Case Pending The D.C. Circuits Resolution Of The Pending Appeals

A. Fairholme Urges The Court To Apply The Wrong Standard Of Review ToOur Motion To Stay

As an initial matter, Fairholme urges the Court to apply the wrong standard of review to

our motion. Pls. Resp. at 4-5.2 The Supreme Court has held that a court may not grant a stay

of indefiniteduration in the absence of a pressing need. Landis v. N. Am. Co., 299 U.S. 248,

255 (1936) (emphasis added). The stay we seek, however, is limited in duration. We have asked

the Court to stay proceedings in this case only until the D.C. Circuit decides the Perry Capital

appeals. Briefing of the appeals is anticipated to be completed early next year, and a decision

could be issued by the end of next summer.

Thus, the stay sought here has nothing in common with the indefinite stay sought in

Cherokee Nation v. United States, 124 F.3d 1413, 1416 (Fed. Cir. 1997). The stay requested in

that case was deemed indefinite because the Government sought to stay the action pending the

resolution of as-yet unfiledstate court quiet title actions that the Government was expected to

initiate. Id. at 1415-16. In other words, the Cherokee Nation had absolutely no control over the

duration of the stay, and the Government was in a position to render the stay indefinite merely by

failing to file the state court quiet title actions. Id. at 1418. As the Federal Circuit noted, the

stay. . . [had] the cruel effect of placing the Tribes at the mercy of the party against whom they

seek redress. Id. Here, in contrast, Fairholme and the other district court plaintiffs have already

appealed the Perry Capital decision, so the appeals are certain, and plaintiffs have some control

2 Plaintiffs Sealed Response In Opposition To Defendants Motion To Stay AllProceedings (ECF No. 106) will be referred to as Pls. Resp. Defendants Motion to StayProceedings Pending Appeal of the District Courts September 30, 2014 Decision in PerryCapital LLC v. Lew et al. (ECF No. 103)will be referred to as Defs Mot.

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over the appeals in that they can seek to avoid undue delay. SeeIn re Sacramento Mun. Util.

Dist., 395 F. Appx 684, 687-88 (Fed. Cir. 2010) (stay is not indefinite in duration if the party

opposing the stay may litigate and resolve its second claim in an efficient and expeditious

manner and avoid delays to the extent possible). Thus, because the duration of the stay we seek

is notindefinite in the sense that the term was used in Cherokee Nation, Fairholme errs in

urging the Court to apply a pressing need standard. See Smith v. United States, No. 13-161C,

2013 WL 5315694, at *1 (Fed. Cl. Sept. 20, 2013) (quoting Cherokee Nation, 124 F.3d at 1416)

(accepting the Governments position that only in the case of a stay of indefinite duration must

the court identify a pressing need for the stay).

Not only does the Court enjoy considerable discretion in determining whether to grant a

stay in this situation, but, as we demonstrated in our moving brief, it is common practice to

stay suits filed in this Court while companion district court actions proceed. See United States v.

Tohono OOdham Nation, 131 S. Ct. 1723, 1739-40 (2011) (Ginsburg, J., dissenting);Pa. R.R.

Co. v. United States, 363 U.S. 202, 206 (1960);Brighton Vill. Assocs. v. United States, 52 F.3d

1056, 1060 (Fed. Cir. 1995); Defs Mot. at 12.

B. Fairholme Erroneously Assumes That The Court Must First Determine

Whether ThePerry CapitalDecision Has Preclusive Effect Before It Can Stay

The Case

Fairholme unconvincingly argues that a stay is not warranted because PerryCapitalhas

no preclusive effect on its takings complaint. Fairholmes approach misses the point because the

Courts final determination regarding the preclusive effect of the PerryCapital decision is not a

prerequisite to the Courtsgrant of a stay. In our moving brief, we demonstrated that a stay is

warranted here because, as the Federal Circuit has recognized, it is well-advised for a court

that is asked to accord a judgment preclusive effect . . . to stay its own proceedings to await the

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ultimate disposition of the [trial court] judgment on appeal. Berman v. Dept of the Interior,

447 F. Appx 186, 195 (Fed. Cir. 2011) (quotingIn re Profl Air Traffic Controllers Org., 699

F.2d 539, 544 n.18 (D.C. Cir. 1983) (citing Restatement (Second) of Judgments [16] cmt. b);

Rogers v. Desiderio, 58 F.3d 299, 302 (7th Cir. 1995) (a stay rather than immediate decision is

the prudent course in case presenting possible preclusion issue).

Fairholmes lengthy and tortured endeavor to persuade the Court that it is not collaterally

estopped by any of the Perry Capitalholdings serves only to illuminate the complexity of that

issue and the need to await appellate review of Perry Capital. Moreover, as demonstrated

below, Fairholmes eagerness to force the issue before we have even filed a preclusion motion is

undermined by the weakness of its arguments and serves only to reinforce our showing that a

stay is the only prudent course of action at this juncture.

C. Fairholmes Premature Arguments Against The Application of Issue

Preclusion Are Not Well Taken

As established above, the Court need not decide that issue preclusion applies before

properly staying the case pending the D.C. Circuits resolution of the appeals. The serious

preclusion issues in this case stem from plaintiffs litigation strategy, and should be resolved by

the Court only following full briefing. It is worth noting, however, that many of Fairholmes

arguments against the proposed stay all of which relate to details of the preclusion doctrine,

and not the basic point that the cases are overlapping and parallel are based on facts presented

without context and on fundamental misapplications of the law.

A party seeking to invoke issue preclusion based on the doctrine of collateral estoppel

must satisfy four elements: (1) the issue sought to be precluded must be the same as the issue

involved in the prior action (identity of issues); (2) the issue sought to be precluded must have

been actually litigated in the prior action; (3) the determination in the prior action must have

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been essential to the decision; and (4) the party defending against issue preclusion had a full and

fair opportunity to litigate the issue in the previous action (identity of parties). Shell Petroleum,

Inc. v. United States, 319 F.3d 1334, 1338 (Fed. Cir. 2003).

As an initial matter, Fairholme does not deny that there is identity of parties with respect

to 11 of the 12 plaintiffs named in its complaint in this Court because these plaintiffs were also

parties to the D.D.C. Actions. Pls. Resp. at 2. Instead, in an attempt to demonstrate that the

Perry Capitaldecision has no preclusive effect here, Fairholme dwells upon the fact that one

plaintiff in this Court, Continental Western Insurance Company (Continental Western), is not a

plaintiff in the D.D.C. Actions. Id. Fairholme suggests that, even if the Perry Capital decision

is preclusive with respect to 11 of 12 plaintiffs, the Court should allow the continuation of

expensive, labor-intensive discovery and, ultimately, decide the case in a manner that may

conflict with the district courts decision, simply because one of the parties Continental

Western is not a party in the D.D.C. Actions. Such an approach defies both logic and long-

accepted concepts of judicial economy and uniformity.

Moreover, Fairholme, in its effort to demonstrate that a stay will somehow prejudice

Continental Westerns rights as a plaintiff in this action, fails to mention that Continental

Western did not even own shares in the Federal National Mortgage Association (Fannie Mae)

and the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Enterprises)

when the company filed its complaint in this Court. Continental Western is a wholly-owned

operating unit of plaintiff Berkley Insurance Company. SeeEx. A, attached hereto; Compl.

18. Continental Western purchased its shares of the Enterprises stock from its corporate parent,

Berkley Insurance Company, on July 10, 2013, the day afterContinental Western and the other

11 plaintiffs filed their complaint in this Court. SeeBerkley Plaintiffs Answer to Defendants

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First Interrogatory at 6 (attached as Ex. B). Thus, although we have not yet moved to dismiss

Continental Western from the case on this basis, as we plan, it is likely that the company lacked

standing to sue when the complaint was filed. A court may exercise jurisdiction only if a

plaintiff has standing to sue on the date it files suit. Innovative Therapies, Inc. v. Kinetic

Concepts, Inc., 599 F.3d 1377, 1383 (Fed. Cir. 2010) (affirming dismissal of complaint when

plaintiff had no standing at time suit was filed even though events occurring after filing and

before dismissal would have established standing);Abraxis Bioscience, Inc. v. Navinta, LLC, 625

F.3d 1359, 1364 (Fed. Cir. 2010) (vacating denial of motion to dismiss in patent infringement

action when plaintiff filed suit eight months before it received assignment of the relevant

patents). Thus, Fairholmes reliance upon Continental Westerns presence in this action does not

weigh in favor of denial of our motion to stay.

Further, Continental Westerns absence from the D.D.C. Actions is ultimately irrelevant

to our motion to stay because, as Fairholme acknowledges, Continental Western filed a

complaint similar to the D.D.C. Fairholmecomplaint in the District Court for the Southern

District of Iowa. Pls. Resp. at 2. A motion to dismiss the Iowa case on the ground it is

precluded by the D.D.C. judgment is pending.3 Thus, contrary to plaintiffs contention,

Continental Western ispursuing the same claims as those in the D.D.C. Actions.

The pendency of Continental Westerns complaint in Iowa is a strong sign that plaintiffs

are engaging in a plan of forum shopping. Continental Western purchased its shares in the

Enterprises from Berkley on the same day that the Fairholme and Berkley plaintiffs filed their

complaint in the D.C. district court. In essence, the Berkley plaintiffs, through their ownership

of Continental Western, positioned themselves to bring identical claims in the Iowa and D.C.

3Motions to dismiss the Iowa complaint also have been filed on various jurisdictionalgrounds. Oral Argument on the motions is scheduled for December 16, 2014.

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district courts, and were unsuccessful in the D.C. court. This is a quintessential situation that

imposes needless costs on ones adversary, on the judicial system, and on other litigants, who

must endure a longer queue. Rogers, 58 F.3d at 300 ([t]o discourage the tactic, judges award

plaintiffs not the better outcome, but the first outcome). Fairholmes litigation strategy of

filing substantially similar claims in three different courts presents a classic case of the type of

forum shopping that merits a stay. SeeRogers, 58 F.3d at 301 (Plaintiffs themselves, by

choosing to file two suits, supplied strong reason for a stay.). Simply put, Fairholmes

complaint in this court suggests much more than a mere whiff of tactical maneuvering, see

Pls. Resp. at 7 (citing Taylor v. Sturgell, 553 U.S. 880, 906 (2008)), strongly militating in favor

of a stay.

Moreover, regardless of whether Continental Westerns Iowa complaint is technically

precluded by the Perry Capitaldecision, our grounds for a stay with respect to the other

plaintiffs in this Court apply equally, as an equitable matter, to Continental Western. See

Underwood Livestock Inc. v. United States, 417 F. Appx 934, 938 (Fed. Cir. 2011), affg79

Fed. Cl. 486 (2007) (a non-party can be estopped from relitigating an issue when the issue was

previously decided against its owner and predecessor-in-interest).

Fairholme also argues that the issues actually litigated in the D.D.C. Actions are not

identical to issues raised in our motion to dismiss. Pls. Resp. at 7-10. As we explained in our

moving brief, Judge Lamberth based his decision on several legal defenses each independently

dispositive that we raised in our motion to dismiss in this case. The district court held that

Fairholmes and other plaintiffs claims based upon the alleged loss of a liquidation preference

are not ripe because Fannie Mae and Freddie Mac are not in liquidation. Perry Capital, 2014

WL 4829559 at *15-17. Further, the district court held that plaintiffs failed to state a claim for

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loss of a liquidation preference or future dividends because the Enterprises have not been

liquidated and plaintiffs have no right to dividends. Id.at *17-19 & n.24. Fairholmes complaint

in this Court alleges the very same loss of liquidation preference and dividends, and we have

raised the same defenses regarding ripeness.

Fairholme does not dispute that ripeness is an issue in both the district court and this

Court. Pls. Resp. at 8-9. Fairholme contends, however, that the ripeness analysis applied to a

breach of contract claim is not identical to the ripeness analysis applied to a takings claim. Pls.

Resp. at 8-9. Fairholme is wrong. In takings cases that do not involve an alleged taking of real

property, the Federal Circuit applies the same Article III case or controversy ripeness standard

that is applied to non-takings cases. See, e.g.,Maritrans Inc. v. United States, 342 F.3d 1344,

1359-61 (Fed. Cir. 2003) (reversing lower courts holding that certain claims were not ripe

following two-part test for ripeness articulated inAbbott Laboratories v. Gardner, 387 U.S. 136

(1967)). Further, even if there were some special body of ripeness law applicable to all takings

claims, plaintiffs would not be excused from meeting a threshold showing of Article III ripeness

before addressing any takings-specific issues. See, e.g.,Bayou Des Familles Dev. Corp. v.

United States, 130 F.3d 1034, 1037 (Fed. Cir. 1997) (In the federal courts, a dispute must have

reached the point at which it can be said that the constitutional requirement of a case or

controversy has been met.). This is particularly true when the takings claim is based on an

asserted taking of contract rights that form the basis for the contract claim in the other action.

Indeed, in concluding that the takings claims raised in the D.D.C. Actions are unripe, the district

court relied upon the very same Article III case or controversy analysis that it applied in

examining the ripeness of the breach of contract claims. Perry Capital, 2014 WL 4829559 at

*24.

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Fairholme also admits that its complaint in this Court alleges a loss of dividend rights,

and that the district court held that it failed to state a claim with respect to such alleged losses.

Pls. Resp. at 9. Nonetheless, Fairholme contends that the ruling is not preclusive because it

alleges that the Net Worth sweep effected a taking of their stock in toto, transferring to Treasury

. . . allof their rights as shareholders. Id. That contention is plainly at odds with Fairholmes

complaint, in which Fairholme (1) affirmatively alleges a loss of contract-based dividend (and

liquidation preference) rights in its shares of the Enterprises, Compl. 76-80, and (2) expressly

acknowledges that it retains its shares and the right to freely trade the shares. Compl. 4

([P]ublic trading in Fannies and Freddies stock was permitted to, and did, continue.); id. at

43 (same).4 Therefore, Fairholme has not alleged and there cannot possibly be an in toto

taking. The district court has already held that Fairholme does not possess the contractual

dividend right that it alleges was taken and that claims based upon a contractual right to a

liquidation preference are unripe. Perry Capital, 2014 WL 4829559 at *17-19. Consequently,

the Perry Capitaldecision disposes of Fairholmes takings claim in this Court.

Finally, Fairholme contends that the district courts ripeness holding is not essential for

purposes of issue preclusion because the court also held, in the alternative, that its claims are

barred because they are derivative. Pls. Resp. at 10-11 (citing Comair Rotron, Inc. v. Nippon

Densan Corp., 49 F.3d 1535, 1538 (Fed. Cir. 1995). This contention is meritless. The ripeness

holding is not any less essential by virtue of the district courts observation that even if the

4 In fact, as we have previously pointed out, the Fairholme plaintiffs have continued tobuy and sell shares in the Enterprises during this litigation. SeeU.S. Reply in Support of Mot.for Prot. Order, June 17, 2014, ECF No. 60 at 9 n.4. For example, between September 30 andOctober 23, 2013, the Fairholme plaintiffs acquired almost 40 million shares of common stock inthe Enterprises for about $1.50 per share. On March 11, 2014, after the stock price had risendramatically, plaintiffs sold over 12 million of these shares for just over $4.00 per share, earningover $30 million. Id.

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plaintiffs could claim damages as a result of a prospective contractual breach, such claims

would be barred under HERA as derivative. Perry Capital, 2014 WL 4829559 at *16 n.39.

Regardless, Fairholme has overstated Federal Circuit practice on this issue. The Federal Circuit

recognizes that, if an appellate court upholds one of two alternative bases for a ruling, that

alternative has preclusive effect. Masco Corp. v. United States, 303 F.3d 1316, 1329 (Fed. Cir.

2002).5

Thus, Fairholme is incorrect. Even assuming that the district courts ripeness and

derivative claims are alternatives, a stay is warranted until the D.C. Circuit addresses the issues.

D. The Potential Persuasive Effect Of The District Courts Ruling On TheMerits Of The Takings Claim Raised In The D.D.C. Actions Provides A

Strong Basis For A Stay Of This Action

Finally, Fairholme does not seriously dispute that the district courts ruling on the merits

of the takings claim advanced in the D.D.C. Actions may be viewed as persuasive authority in

this Court. Pls. Resp. at 11-12. Fairholme instead argues that the persuasive nature of the

ruling does not establish the pressing need required for an indefinite stay. Id. As

demonstrated above, however, the pressing need standard does not apply because the stay will

only last until disposition of the Perry Capitalappeals. Fairholmes position undermines the

interest of judicial economy and should be rejected.

Ultimately, Fairholme cannot escape the reality that another Federal judge considered the

same takings claim that it brought in this Court and held, as a matter of law, that the shareholders

failed to state a compensable claim. Perry Capital, 2014 WL 4829559 at *20-24. In reaching

5Indeed, the district courts ruling on the derivative nature of Fairholmes claims wouldalso have preclusive effect here. The Restatement (Second) of Judgments, section 27,acknowledges that alternative holdings may have preclusive effect if both lead to the same result in this case, dismissal for failure to state a claim. SeeRestatement (Second) of Judgments, 27, cmt. i, Illustration 16.

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this holding, the court applied Federal Circuit precedent that is binding on this Court. Id. at *21-

23 (citing Golden Pac. Bancorp v. United States, 15 F.3d 1066 (Fed. Cir. 1994); Cal. Hous. Sec.,

Inc. v. United States, 959 F.2d 955 (Fed. Cir. 1992)). Further, Fairholme cannot dismiss the

persuasive value of the district courts reasoning on the merits of the takings claim simply

because the court identified a curable jurisdictional defect in the takings complaint. Id. at *20.

Because the district courts reasoning on the merits of the takings claim may be viewed as

persuasive authority in this Court, a stay pending appeal of the decision is warranted.

II. The Balance Of Interests Weighs In Favor Of A Stay Of Proceedings

Fairholme contends that the balance of interests favors allowing the current time-

consuming, costly discovery to continue pending the outcome of the Perry Capital appeals in the

D.C. Circuit. Pls. Resp. at 12-20. According to Fairholme, this is true because (1) discovery is

almost complete and (2) Fairholme may suffer additional costs if discovery resumes after the

stay.

Before addressing Fairholmes arguments, we note that Fairholme does not dispute an

important factor supporting a stay. We demonstrated in our moving brief the waste of judicial

time and resources inherent in duplicative litigation involving overlapping claims and issues.

Defs Mot. at 11-12. Here, Fairholme made the strategic decision to file parallel actions in

multiple Federal courts alleging identical facts and challenging the same action by FHFA and

Treasury. Thus, Fairholme chose to risk the possibility that a decision on the merits in one court

would likely have preclusive effect in other cases in which Fairholme and its subsidiaries were

plaintiffs. Fairholme may contest the preclusive effect of Judge Lamberths decision, but what

Fairholme cannot dispute is that both cases present identical allegations of Government

malfeasance and identical allegations of harm to Fannie Mae and Freddie Mac shareholders.

13



18/39

Perhaps realizing that its predicament is of its own making, Fairholme avoids the issue of

judicial efficiency in its response entirely. As we established in our prior brief, this factor

weighs in favor of staying proceedings pending the outcome of the appeals that will decide

issues that are undeniably intertwined with those in this case. Defs Mot. at 11-13.

A. A Stay Will Serve Judicial Economy Because Discovery Is Far From

Complete In This Case

Fairholme first claims that the burden on the parties and Court of continuing discovery is

minimal because discovery is largely complete. Pls. Resp. at 13. This is untrue. As we stated

in our moving brief, document discovery is underway, plaintiffs have yet to begin depositions,

and the Court can expect significant motions practice. Although Fairholme on one hand attempts

to minimize the discovery that remains, it later provides the Court a sample of the complex

discovery disputes and contested motions practice that loom on the horizon.

Under the Courts most recent order, discovery is to conclude on March 27, 2015. Order,

ECF No. 92, Sept. 8, 2015. To be sure, the Government has completed a significant portion of

its document review and has made a number of document productions. We continue to comply

with the Courts order and we expect to produce a large number of additional documents, along

with a number of additional privilege logs identifying privileged documents.

Based upon representations of Fairholmes counsel, it is a certainty that Fairholme will

vigorously challenge our privilege designations and our confidentiality designations. We further

expect that Fairholme will notice depositions of many current and former employees of Treasury

and FHFA, as well as current and former employees of Fannie Mae, Freddie Mac, and other third

parties. A number of these persons will be high-ranking current and former Government

officials. Fairholme may also seek broad depositions under RCFC 30(b)(6). Fairholme does not

14



19/39

deny any of this, instead responding only that it has not yet decided who it will depose. Pls.

Resp. at 18.

Fairholme acknowledges that the Government has the right to resist deposition requests

to the extent they are inconsistent with the Court rules and the Courts orders permitting limited

discovery. This concession, however, only highlights that discovery in this case is certain to

engender further significant, time-consuming motions practice.6

B. A Stay Of Proceedings Will Not Unfairly Prejudice Fairholme

Fairholme next contends that a limited stay of proceedings pending the resolution of the

appeals in the D.C. Circuit will prejudice Fairholme by causing alleged inefficiencies and

additional litigation expense. Pls. Resp. at 15. Fairholmes complaints of prejudice are

overblown.

Fairholme asserts that, if a stay is granted, members of its litigation team may depart the

firm or, assuming they remain, may need to refamiliarize themselves with the facts and issues

of the case. Id. These concerns are illegitimate on their face. Neither this Court nor the

Government is responsible for the decisions of Fairholme counsel to depart their firm.

6In a footnote, Fairholme citesBeard v. United States, 101 Fed. Cl. 100, 104 (2011) toassert that the costs of engaging in discovery cannot constitute irreparable injury. Pls. Resp. at13 n.2. Beardis inapposite there, the Government sought a stay pending its own interlocutoryappeal. The four factor analysis for such a stay does not apply in this context. One of those fourfactors in the analysis applicable inBeardis irreparable injury to the applicant for a stay; here,the Government need not demonstrate irreparable injury for the Court to order a stay. Further, inBeard, 101 Fed. Cl. at 104, the court found that [d]iscovery will be necessary in all events. In

this case, discovery efforts would be in vain if Fairholmes case is dismissed on preclusiongrounds. In any event, various courts have weighed the expense of discovery in examiningwhether to exercise their discretionary power to stay proceedings. See,e.g.,In re Ho Keung Tse,552 F. App'x 979, 981 (Fed. Cir. 2014)(non-precedential) (it was plausible for the district courtto conclude that continuing the stay would reduce the potential risk for unnecessary costs andinefficiencies during discovery.).

15



20/39

Moreover, it is not credible to suggest that any significant re-education of counsel will be

necessitated by a stay of the anticipated duration we seek. The Court can be confident that, if for

no other reason, Fairholme counsels participation in the D.C. Circuit appeals of the Perry

Capital decision and the Continental Westerncase in Iowa will allow these attorneys to maintain

their familiarity with this case. To the extent that Cooper & Kirk attorneys are reviewing

documents, these are ostensibly the same attorneys involved in litigating the appeals.

The Court should also consider that, although Fairholme refers to a team of persons

assembled for this case, only two persons (an attorney in Georgia and a local accountant) have

been granted access to protected materials under the Courts protective order. SeeNotices, Aug.

6, 2014, ECF Nos. 79, 80. Simply put, the stay we seek will not have any adverse effect on the

Fairholme team of attorneys and accountant.

Fairholme next asserts that a stay may cause prejudice because witnesses memories fade

with the passage of time. Pls. Resp. at 17-18. We agree that this is a concern in situations

(unlike here) where the proposed stay is anticipated to delay the case for a very long period of

time. However, Fairholmes non-specific concerns are insufficient to establish prejudice. See

Versata Software, Inc. v. Callidus Software, Inc., No. 2014-1468, 2014 WL 6480522 at *7 n.6

(Fed. Cir. Nov. 20, 2014) (noting that generic concerns of fading memories and stale evidence

are, without more, insufficient to establish undue prejudice from a stay of proceedings). The

Court should consider that the stay we seek is limited in duration, the events Fairholme

challenges in its complaint occurred relatively recently, in August 2012, and much of the factual

inquiry is likely to rely on documentary materials rather than witness memories. Fairholmes

citation (once again) to Cherokee Nationis of no help. Pls. Resp. at 18 (citing Cherokee Nation,

124 F.3d at 1418). The truly indefinite stay in Cherokee Nationhad already lasted three years

16



21/39

and there was no end in sight. 124 F.3d at 1415-16, 1418. Here, in contrast, the Perry Capital

appeals have been filed and are awaiting a briefing schedule in the D.C. Circuit. Given the

limited duration of the stay we request and the recency of the Third Amendment, Fairholmes

concerns have little weight.

Fairholmes attempt to articulate some form of prejudice ultimately leads it in a

remarkable direction. Fairholme claims that a stay of discovery would be prejudicial because

there are gaps in document discovery that, according to Fairholme, remain to be filled. Pls.

Resp. at 15-17. Fairholme then describes, in nearly two pages of single-spaced text, documents

that it claims would assist its case on the merits. Id.at 16-17.

7

Missing from Fairholmes argument is a coherent connection between the yet-to-be-

produced documents and any prejudice caused by a stay. Even assuming Fairholme is correct

that the Government has not produced certain documents, the Government would still be

required to produce the documents at the resumption of discovery following the stay because the

stay will not alter the discovery obligations. Therefore, Fairholmes wish list of documents

even assuming they exist does not give rise to any prejudice from a stay.

III. In the Alternative, The Court Should Enter A Temporary Stay Pending A Decision

On The Preclusive Effect Of The District Courts Decision

Fairholme only briefly addresses our alternative request that the Court temporarily stay

proceedings to permit briefing and a decision on the preclusive effect of Judge Lamberths

opinion. Pls. Resp. at 20. In suggesting that the Court deny the request, however, Fairholme

seeks to apply a standard more stringent than that dictated by the law. Fairholme asserts, based

7We note the obvious tension in Fairholmes position that discovery is largely completeand that there are large gaps in discovery. In any event, Fairholme provides the Court anindication of the discovery disputes to come should our request for a stay be denied.

17



22/39

on its cursory arguments against preclusion elsewhere in its response, that the Governments

motion is unlikely to succeed. Id. It appears Fairholme is again referencing the standard for

examining a stay pending interlocutory appeal of a trial court order, which lists first among four

factors whether the stay applicant has made a strong showing that [it] is likely to succeed on the

merits. Beard, 101 Fed. Cl. at 102 (citations omitted). No such standard is mandated when a

court contemplates a temporary stay of certain litigation activities (e.g., onerous discovery) to

allow the parties to brief a potentially dispositive issue such as issue preclusion or dismissal, that

normally would be considered prior to anydiscovery. Instead, [w]hen and how to stay

proceedings is within the sound discretion of the trial court. Cherokee Nation, 124 F.3d at

1416.

Fairholmes arguments regarding the likelihood of preclusion, however, do serve to

illustrate the need for, at a minimum, a stay pending full briefing and resolution of any preclusive

effect of the district court decision. Full briefing is required to permit the Court to resolve the

complex questions of issue preclusion in the concurrent, multi-party, multi-jurisdictional

litigation resulting from plaintiffs litigation strategy. The perfunctory treatment given to

preclusion issues in these filings, which are focused solely on the need for a stay, are insufficient

to present to the Court the full depth and breadth of the law in this area. Moreover, Fairholmes

concern about the length of any stay is even further allayed in the context of a temporary stay,

allowing the Court to give the potentially case-dispositive issues of preclusion measured

consideration. Therefore, if the Court decides not to stay proceedings until the D.C. Circuit

issues an opinion on Judge Lamberths decision, the Court should stay proceedings in this case at

least temporarily to permit full briefing and disposition of the preclusive effect of Judge

Lamberths decision and other purely legal issues raised by that decision.

18



23/39

CONCLUSION

For these reasons, and for the reasons stated in our moving brief, the Court should stay all

proceedings in this case pending disposition of the appeals from the district courts decision.

Should the Court conclude that a stay of proceedings pending a final decision by the D.C. Circuit

is not warranted at this time, the Court should stay discovery pending full briefing and

disposition on the issue of whether Fairholmes complaint in this Court is now precluded.

Respectfully submitted,

JOYCE R. BRANDAActing Assistant Attorney General

s/ Robert E. Kirschman, Jr.ROBERT E. KIRSCHMAN, Jr.Director

OF COUNSEL:s/ Kenneth M. Dintzer

PETER A. BIEGER KENNETH M. DINTZERAssistant General Counsel Acting Deputy Director

FRANKLIN E. WHITE, JR.Assistant Director

KATHERINE M. BRANDESAttorney Advisor ELIZABETH M. HOSFORDDepartment of the Treasury GREGG M. SCHWIND1500 Pennsylvania Avenue, N.W. Senior Trial CounselWashington, D.C. 20220 Commercial Litigation Branch

Civil DivisionDepartment of JusticeP.O. Box 480Ben Franklin StationWashington, D.C. 20044(202) 616-0385(202) 307-0972 [email protected]

November 25, 2014 Attorneys for Defendant

19



24/39

EXHIBIT A



25/39

(/)

Our 52 operating units are positioned throughout the U.S. and strategically around the globe, which

allows us to develop the particular skills and expertise necessary to each market. Every W. R. Berkley

company has the ability to react as quickly and effectively as a small business, while offering the superior

stability, resources and financial strength of the W. R. Berkley Insurance Group.

Operating Units

Insurance Domestic

Acadia Insurance

Admiral Insurance

American Mining Insurance

Berkley Accident and Health

Berkley Asset Protection

Berkley Aviation

Berkley Custom Insurance

Berkley Design Professional

Berkley FinSecure

Berkley Life Sciences

Berkley Medical Excess

Berkley Mid-Atlantic Group

Page 1 of 3Operating Units W. R. Berkley Corporation

11/25/2014http://wrberkley.com/our-business/operating-units.aspx



26/39

Berkley Net Underwriters

Berkley North Pacific

Berkley Offshore Underwriting Managers

Berkley Oil & Gas

Berkley Professional Liability

Berkley Program Specialists

Berkley Public Entity

Berkley Regional Specialty

Berkley Risk Administrators

Berkley Select

Berkley Specialty Underwriting Managers

Berkley Southeast

Berkley Surety

Berkley Technology Underwriters

Carolina Casualty Insurance

Clermont Specialty Managers

Continental Western Group

Gemini Transportation

Key Risk Insurance

Midwest Employers Casualty





27/39

Monitor Liability Managers

Nautilus Insurance Group

Preferred Employers Insurance

Riverport Insurance Services

Union Standard

Vela Insurance Services

Verus Underwriting Managers





28/39

Our Mission

We set high standards for serving our customers and it shows.

Over 93% of our customers rate Continential Western Group

(CWG) as Superior for how timely their claim was handled and

95% of our customers who have had a claim would

recommend us to other businesses for their insurance needs.

As one of only 26 property-casualty insurers that have

maintained an A.M. Best Financial Strength Rating of A+

(Superior) or higher for at least 75 years, we consistently meet

the highest nancial standards in our industry.

Company Description

Continental Western Group offers a broad array of commercial

products that meet the needs of businesses operating in both

the small towns and major metropolitan areas across the

Midwest. We have been a trusted par tner since 1886.

We offer insurance solutions for all types and sizes ofbusinesses such as retail, light manufacturing, schools,

telecommunications, implement dealers, ne dining,

construction, wholesale distribution and many more.

In addition to our standard portfolio, CWG offers specialized

underwriting solutions for diversied agriculture, volunteer re

departments, telecommunications, collector vehicles,

transportation, public entities and water districts.

The Continental Western Group companies are rated A+

(Superior) by A. M. Best.

CONTINENTALWESTERNGROUP

Continental Western Group is a regional property & casualty insurance

company providing underwriting and risk management services to

large, midsize and small businesses throughout the Midwest. Our local

knowledge, expertise and strong partnerships with our independent agents

provide tailored insurance solutions for our valued customers.

2013 At A Glance

How Continental Western Group is

Different

LOCAL PRESENCE & EXPERTISE CWG believes that

specialized knowledge about customers, territories and

products only becomes a competitive advantage when this

knowledge is applied as close to the customer as possible.

This gives us a true understanding of the businesses we

insure and the communities in which we serve.

For more than 125 years weve continued our tradition of

being close to our customers with regional ofces in IA, MN,

NE, CO, and OH. In addition to our local ofces, we employ

many sales, loss control, claims and agribusiness eld staff

throughout our territory who live and operate in the same

communities as our agents and our customers.

We take pride in our people and their expertise in

underwriting, claims and loss control.

OUR VALUED BUSINESS PARTNERSWe distribute our

commercial products exclusively through a network of

independent agencies throughout the Midwest. Our strong

local presence allows us to be exible and responsive to the

needs of our agents and their customers.

BERKLEY SOLUTIONSOne of the unique advantages we

have as a member company of W. R. Berkley Corporation is

the ability to access other W. R. Berkley member companies

to collaborate on specialized Berkley solutions for our agents

and their customers. These partnerships allow us to

customize coverage to provide complete solutions within W.

R. Berkley Corporation.

BERKLEY AGRIBUSINESS RISK SPECIALISTSBerkley

Agribusiness Risk Specialists, offers insurance for larger

commercial risks across the United States for businesses

involved in the supply, storage, handling, shipping,

processing and distribution of commodities related to the

agriculture and food industries.

States served by Continental Western Group



29/39

Michael G. Connor, CPCU

President

Ann M. Collins, CPA

Vice President

Chief Financial Ofcer

Thomas E. Nelson, CPCU

Vice President Claims

Douglas R. Pearson, CPCU

Vice President

Chief Underwriting Ofcer

Meyer T. Lehman, FCAS

Vice President

Chief Actuarial Ofcer

John F. Thelen

Vice President

General Counsel & Secretary

Barbara J. Updike

Assistant Vice President

Human Resources

C. Jeffrey West

Vice President

Information Services

Michael G. Connor, President

Michael G. Connor joined W. R. Berkley Corporation in 2012 as President of Continental Western Group.

He has over 25 years of experience in the property casualty insurance industry, having held senior

executive positions with several national companies.

For more information, please contact us at any of the ofce locations below.

Home Ofce

11201 Douglas Avenue

Des Moines, IA 50322

(515) 473-3480

Ami T. Hokomoto, CPCU

Vice President Sales,

Marketing and Distribution

Great Rivers Region

11201 Douglas Avenue


(515) 473-3022

William J. Besonen, CPCU

Regional Vice President

Territory: Iowa, Missouri

Great Mountain Region

2000 S. Colorado Blvd

Annex Building

Suite 410

Denver, CO 80222

(303) 357-2630

Maureen E. Herzog

Assistant Vice President

Territory: Colorado, Wyoming

Great Lakes Region

4449 Easton Way

Columbus, OH 43219

(614) 800-4952

David J. Hosler, CPCU


Territory: Illinois, Indiana,

Michigan

Great North Region

10 Roundwind Road

Luverne, MN 56156

(507) 449-6701

Ordean H. Voight, CPCU


Territory: Minnesota, North

Dakota, South Dakota,

Wisconsin

Great Plains Region

3641 Village Drive

Lincoln, NE 68516

(402) 421-4395

Amy M. Argo, CPCU


Territory: Kansas, Nebraska

Berkley Agribusiness Risk

Specialists

11201 Douglas Ave.


(515) 473-3115

Terry L. Shaw, CPCU

Vice President

Territory: National

Contact Information

Copyright 2014 W. R. Berkley Corporation. All Rights Reserved.

www.cwgins.com | www.berkleyag.com | www.berkleyclassics.com | www.repak.com

Follow us: twitter.com/CWGinswww.facebook.com/CWGins

OFFICERS

About W. R. Berkley Corporation

W. R. Berkley Corporation, founded in 1967, is one of the nations premier commercial lines property casualty insurance

providers. Each of the operating units in the Berkley group participates in a niche market requiring specialized knowledge about

a territory or product. Our competitive advantage lies in our long-term strategy of decentralized operations, allowing each of our

units to identify and respond quickly and effectively to changing market conditions and local customer needs. This decentralized

structure provides nancial accountability and incentives to local management and enables us to attract and retain the highest

caliber professionals. We have the expertise and resources to utilize our strengths in the present environment, and the exibility

to anticipate, innovate and respond to whatever opportunities and challenges the future may hold.



30/39

EXHIBIT B



31/39


FAIRHOLME FUNDS, Inc.,

et al.

Plaintiffs,

V

THE UNITED STA TES,

Defendant.

)

No. 13-465C

(Judge Sweeney)

BERKLEY PLAINTIFFS ANSWER TO DEFENDANT S FIRST INTERROGATORY

Interrogatory No.

1:

Identify all shares of stock in the Enterprises owned

y

plaintiffs at

any time. For each share identified, describe in detail the following information:

The parties to the transaction in which the share was acquired;

A description of the share including the type or class of share;

The date of acquisition;

The terms

of

the acquisition including the purchase price; and

All post-acquisition transactions related to the share.

Response:

Berkley Insurance Co., Acadia Insurance Co., Admiral Indemnity Co., Admiral Insurance

Co., Berkley Regional Insurance Co., Carolina Casualty Insurance Co., Continental Western

Insurance Co., Midwest Employers Casualty Insurance Co., Nautilus Insurance Co., and

Preferred Employers Insurance Co ( Berkley Plaintiffs ) reassert their objections ofApril 21,

2014, and the response to this interrogatory is not a waiver

of

those objections. Except

as

indicated below, the Berkley Plaintiffs purchased their shares through various brokers and do not

know the identities

of

the counter-parties from whom they acquired their shares. Additionally,

because the transactions listed below were conducted through various brokers, the Berkley



32/39

2

Plaintiffs could not identify an address or location for the listed transactions. The Berkley

Plaintiffs have provided only the information that could be obtained through a reasonable

investigation. Thus, they have not included the identity and actions of every person involved in the

listed transactions.

Acadia Insurance Co. Freddie Series S (fmccs)

Trade Date Activity Quantity Price

8/22/2007 Purchase 25,000.00 50.13

9/7/2007 Purchase 25,000.00 50.45

11/14/2008 Sale (25,000.00) 1.15

11/14/2008 Sale (25,000.00) 1.15

Admiral Insurance Co. Freddie Series S (fmccs)


10/2/2006 Purchase 50,000.00 51.65

1/10/2007 Purchase 25,000.00 52.10

5/21/2007 Purchase 40,000.00 52.75

8/22/2007 Purchase 40,000.00 50.13

11/14/2008 Sale (50,000.00) 1.15

11/14/2008 Sale (25,000.00) 1.15

11/14/2008 Sale (40,000.00) 1.15

11/14/2008 Sale (40,000.00) 1.15

12/22/2009 Purchase 225,000.00 1.20

5/31/2011 Sale (94,500.00) 5.12

6/2/2011 Sale (130,500.00) 5.00

Admiral Insurance Co. Fannie Series O (fnmfn)


1/11/2005 Purchase 30,000.00 56.13

1/12/2005 Purchase 10,000.00 56.13

1/14/2005 Purchase 30,000.00 56.65

1/20/2005 Purchase 130,000.00 56.75

1/20/2005 Purchase 50,000.00 56.70

1/25/2005 Purchase 50,000.00 56.65

10/16/2006 Purchase 25,000.00 54.00

9/25/2007 Sale (10,000.00) 52.65

9/25/2007 Sale (10,000.00) 52.65

9/25/2007 Sale (20,000.00) 52.65

9/25/2007 Sale (30,000.00) 52.65

9/25/2007 Sale (30,000.00) 52.65



33/39

10/3/2008

Purchase

50,000.00

3.40

12/30/2008

Purchase

20,000.00 0.80

1212212 9

Sale

25,000.00)

1.20

1212212 9 Sale

20,000.00)

1.20

12/22/2009

Sale

50,000.00)

1.20

1212212 9 Sale 130,000.00) 1.20

5/26/2011

Sale

50,000.00)

4.75

5/26/2011 Sale

20,000.00) 4.75

Admiral Indemnity Co. -- Freddie Series S fmc

cs)

Trade Date

Activity

Quantity

Price

7/30/2007 Purchase

25,000.00

50.60

8/22/2007 Purchase

20,000.00

50.55

11114/2008

Sale

25,000.00)

1.15

11/14/2008

Sale

20,000.00)

1.15

B kl Ir ey nsurance

c

0

dd S . S

f

s)

e Ie nes

mcc

Trade Date

Activity

Quantity Price

711212 6 Purchase

100,000.00

50.00

111 12 7

Purchase

50,000.00

52.10

7/30/2007 Purchase

100,000.00 50.60

8/1/2007

Purchase

79,500.00

50.60

91712 7 Purchase

25,000.00 50.30

11/14/2008 Sale

100,000.00)

1.15

11/14/2008

Sale

50,000.00)

1.15

11/14/2008 Sale 100,000.00) 1.15

11114/2008

Sale

79,500.00) 1.15

11/14/2008

Sale

25,000.00)

1.15

1212212 9

Purchase

450,000.00

1.20

6/2/2011 Sale

119,500.00)

5.00

1/1/2013

Purchase

1

100,000.00

1.20

11112 13 Purchase

2

155,000.00

1.20

11112 13

Purchase

3

170,000.00

1.20

711 12 13

Sale

4

1,000.00) 8.34

1

These shares were acquired from Plaintiff Berkley Regional Insurance Co., which

s

owned by the W.R.

Berkley Corporation.

2

These shares were acquired from Plaintiff Carolina Casualty Insurance Co., which s owned by the W.R.


3

These shares were acquired from Plainti ff Nautilus Insurance Co., which is owned by the W.R. Berkley

Corporation.

These shares were sold to Plaintiff Continental Western Insurance Co., which is owned by the W.R.


3



34/39

B kl Ir ey nsurance

c

o

F

S . f fn

nme

nes

nm

Trade Date Activitv

Quantity Price

1111/2005 Purchase

30,000.00

56.13

1/11/2005 Purchase

50,000.00 56.13

1114/2005 Purchase 30,000.00 56.65

1/20/2005

Purchase

50,000.00 56.70

1/20/2005 Purchase

140,000.00

56.70

1/25/2005 Purchase

50,000.00

56.65

6/28/2006

Purchase

50,000.00 54.00

10116/2006 Purchase

50,000.00

54.00

10/28/2008 Purchase

125,000.00

2.95

11/14/2008

Purchase

600,000.00 2.15

12/22/2008 Purchase

750,000.00

0.85

12/30/2008 Purchase

40,000.00 0.80

12/22/2009 Sale 30,000.00) 1.20

12/22/2009 Sale

50,000.00) 1.20

12/22/2009 Sale

30,000.00)

1.20

12/22/2009 Sale

50,000.00) 1.20

12/22/2009 Sale

140,000.00) 1.20

12/22/2009 Sale

50,000.00) 1.20

12/22/2009 Sale

50,000.00) 1.20

12/22/2009

Sale

50,000.00)

1.20

5/23/2013 Sale

1,500.00)

8.45

5/24/2013 Sale

123,500.00)

10.20

5/24/2013 Sale 76,500.00) 10.20

5/28/2013 Sale

100,000.00) 11.62

61412 13 Sale

100,000.00) 11.20

711 12 13

Sale

5

1,000.00) 8.48

10/22/2013 Purchase

25,000.00 10.25

1 12312 13 Purchase

13,500.00 10.65

10/24/2013 Purchase

500,000.00 11.98

11/5/2013 Purchase

1,000.00 12.92

11/7/2013 Purchase

100,000.00

14.95

111/2013 Purchase

6

1,043,000 1.54

111/2013

Purchase

7

125,538 1.85

2/21/2014 Purchase

255,000.00 18.00

These shares were sold to Plaintiff Continental Western Insurance Co.

6

These shares were acquired from Plaintiff Berkley Regional Insurance Co.

7

These shares were acquired from Plaintiff Nautilus Insurance Co.

4



35/39

I 2/21/2014 Purchase 275,000.00 I 18.10 I

B

kl

R

r

ey

eg10na

I nsurance

c

o

F dd S

es

S (fmccs)

e

Ie

en

Trade

Date

Activity

Quantity

Price

7 12/2006 Purchase 50,000.00 50.00

3/27/2007 Purchase 40,000.00 52.55

8/22/2007 Purchase 60,000.00 50.13

11/14/2008

Sale

(50,000.00)

1.15

11114/2008 Sale (40,000.00) 1.15

11/14/2008

Sale

(60,000.00)

1.15

12/22/2009 Purchase 100,000.00 1.20

111/2013 Sale

8

(100,000.00) 1.20

B

kl

R . II

r

ey

eg10na

nsurance

c

o

F S es 0 (fnmfn)

nme

en

Trade Date Activity

Quantity

Price

1111/2005 Purchase 20,000.00 56.13

1/14/2005 Purchase

20,000.00

56.65

1/20/2005 Purchase 60,000.00 56.70

112512 5 Purchase

30,000.00 56.65

10/16/2006 Purchase 25,000.00 54.00

5/2/2007 Purchase

45,000.00 53.60

9/25/2007

Sale (20,000.00)

(52.65)

9/25/2007 Sale

(20,000.00) (52.65)

9/25/2007

Sale (60,000.00)

(52.65)

10/2/2008

Purchase

200,000.00

3.30

11/14/2008 Purchase 600,000.00 2.15

12/4/2008 Purchase

233,000.00 1.10

12/30/2008 Purchase

10,000.00 0.80

12/22/2009 Sale

(30,000.00) 1.20

12/22/2009 Sale

(25,000.00) 1.20

12/22/2009 Sale (45,000.00) 1.20

1/1/2013 Sale

9

(1,043,000) 1.54

arolina asualty Insurance

Co. -

Freddie

Series S (fmccs)

Trade

Date

Activity

Quantity

Price

10/2/2006 Purchase 50,000.00 51.65

8/22/2007 Purchase

50,000.00 50.13

9/7/2007 Purchase

50,000.00

50.45

8

These shares were sold

to

Plaintiff Berkley Insurance Co., which is owned

by

the W.R. Berkley

Corporation.

9

These shares were sold to Plaintiff Berkley Insurance Co.



36/39

11114/2008

Sale 50,000.00)

1.15

11114/2008 Sale 50,000.00)

1.15

11/14/2008 Sale 50,000.00)

1.15

12/22/2009 Purchase 155,000.00

1.20

111/2013 Sale

1

155,000.00)

1.20

Carolina Casualty Insurance Co. - Fannie Series 0 fnmfn)

Trade Date Activity

Quantity Price

111112 5 Purchase 30,000.00 56.13

1/14/2005

Purchase 10,000.00 56.65

112512 5

Purchase 40,000.00 56.65

51212 7

Purchase 25,000.00

53.60

91712 7

Purchase 50,000.00 53.50

10/2/2008 Purchase 100,000.00

3.30

12/30/2008 Purchase

10,000.00

0.80

12/22/2009 Sale 30,000.00) 1.20

12/22/2009

Sale

10,000.00) 1.20

12/22/2009 Sale 40,000.00) 1.20

12/22/2009

Sale 25,000.00) 1.20

12/22/2009 Sale

50,000.00)

1.20

5/26/2011 Sale 100,000.00) 4.75

5/26/2011 Sale

10,000.00) 4.75

Continental Western Insurance Co. - Freddie Series S fmccs)

Trade Date

Activity Quantity Price

7/30/2007 Purchase 25,000.00 50.60

8/22/2007 Purchase

25,000.00 50.13

11/14/2008

Sale

25,000.00)

1.15

11/14/2008 Sale

25,000.00) 1.15

7 10/2013 Purchase

1,000.00 8.34

Continental Western Insurance Co. - Fannie Series 0 fnmfn)

Trade Date Activity

Quantity Price

7/10/2013 Purchase

12

1,000.00

8.48

Midwest

m

loyers Casual Co. - Freddie Series S fmccs)


1


These shares were acquired from Plaintiff Berkley Insurance Co.

12

These shares were acquired from Plaintiff Berkley Insurance Co.

6



37/39

7/30/2007

Purchase

25,000.00

50.60

11/14/2008

Sale

25,000.00)

1.15

Nautilus Insurance Co. - Freddie Series S fmccs)

Trade Date

Activity

Quantity Price

7/12/2006 Purchase 50,000.00 50.00

1/10/2007

Purchase

25,000.00 52.10

7/30/2007

Purchase 25,000.00

50.60

8/22/2007

Purchase 50,000.00

50.13

11/14/2008

Sale 50,000.00)

1.15

11114/2008

Sale 25,000.00)

1.15

11/14/2008

Sale 25,000.00)

1.15

11/14/2008

Sale 50,000.00)

1.15

1212212 9

Purchase 170,000.00 1.20

1/1/2013

Sale

3

170,000.00)

1.20

Nautilus Insurance Co. - Fannie Series 0 fnmfn)

Trade Date Activity Quantity

Price

111112 5

Purchase 30,000.00

56.13

111412 5

Purchase 10,000.00 56.65

112 12 5

Purchase 70,000.00

56.75

1/25/2005

Purchase 30,000.00 56.65

6/28/2006 Purchase 30,000.00 54.00

5/2/2007 Purchase 25,000.00 53.60

9/7/2007

Purchase 10,538.00 53.50

10/3/2008 Purchase 50,000.00 3.40

10/23/2008 Purchase 60,000.00

3.00

11/14/2008

Purchase

300,000.00

2.15

12/22/2009

Sale 30,000.00) 1.20

12/22/2009 Sale 10,000.00) 1.20

1212212 9

Sale 70,000.00) 1.20

1212212 9 Sale 30,000.00)

1.20

12/22/2009

Sale 30,000.00) 1.20

5/26/2011 Sale 25,000.00) 4.75

5/26/2011 Sale

10,538.00)

4.75

5/26/2011 Sale 50,000.00) 4.75

5/26/2011 Sale 60,000.00)

4.75

5/26/2011

Sale

174,462.00)

4.75

11112 13

Sale

4

125,538)

1.85

3

These shares were sold t Plaintiff Berkley Insurance Co.

4




38/39

Preferred

m

lo ers Insurance Co. - Freddie Series S fmccs)

Trade Date Quanti Price

91712 7 Purchase 25,000.00 50.45

1111412008 Sale 25,000.00) 1.15

Date:

May 7,

2 14

8

Respectfully submitted,

sl

Charles

J

Cooper

Charles

J

Cooper

Counsel ofRecordfor Plaintiffs

COOPER KIRK, PLLC

1523 New Hampshire Avenue, N.W.

Washington, D.C. 20036

202) 220-9600

202) 220-9601 fax)

[email protected]

f

Counsel

Vincent J

Colatriano

David H.

Thompson

Peter A. Patterson

COOPER KIRK, PLLC

1523 New

Hampshire

Avenue, N.W.

Washington, D.C.

2 36

202) 220-9600

202) 220-9601 fax)



39/39

VERIFIC TION

I state under penalty

of

perjury that the information contained in the foregoing response

has been collected and the response prepared with the advice and assistance of counsel and that

subject to any inadvertent or undiscovered errors and based on the records and information still

in existence and thus far discovered the response is true and correct to the best

of

my

knowledge recollections and

elief

based upon the information known or made available to me.

gene G Ballard

Senior Vice President - CFO

W.

R

Berkley Corporation

May 7 2014


Documents

112514 Defendants Reply in Support of Its Motion to Staypdf