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Why the US is Losing to Fairholme

Treasury and FHFA have gotten knocked around in court vs Fairholme. To date they have yet to win a decision from the judge and based on the back and forth with the Judge last week,  that record is not likely to be broken when she rules on discovery.

So, the question one must ask then is why? Put aside your biases on the merits of either side’s arguments for a minute and look at the two opposing lawyers, Charles Cooper and Stuart Delery.

One only need read the following two briefs to understand what is going on here:

Delery Proposal

Cooper Proposal

Cooper has been 2 or 3 steps ahead of the US on every issue since the beginning and was again here.  There is no way his brief was researched and filed in the time between last week hearing and when this was filed. No, Cooper anticipated the ruling and had this waiting. After a few tweaks for specificity based on what Judge Sweeney called for, bam, filed.  The US simply reiterated a previous filing with their request.

Now, it very well could be that the ease at which plaintiffs are running circles around the gov’t here is a simple one, the gov’t finds itself in a seemingly indefensible legal position. For proof of this you need not read the thousands of pages of courts docs like I have, just read the following paragraph from last week (also detailed  here):

THE COURT: And so far, I haven’t gotten — I haven’t received a good answer from the Government. Counsel is very able. But counsel has expressed concern of what could happen if certain documents are released, which I do not want to see happen, but counsel didn’t answer to my satisfaction the discrepancy between sort of using the deliberative process as sword and shield. On one hand, FHFA is a government entity, you know, for purposes of booting the Plaintiffs out of court and not part of the Government, but for purposes of forwarding discovery, all of a sudden deliberative process is appropriate because they are part of the Government. So, it’s a schizophrenic approach and I’m just waiting to hear a reasonable explanation.

This has been a recurring theme in this case.  The gov’t claims on the one hand “plaintiffs cannot sue us because we are not the gov’t” and then on the other claims “we do not have to turn over certain papers to you in discovery because we are the gov’t”.  This is but a taste of what has been happening to date.   Time after time Cooper has caught the gov’t different sides of the same arguments when conditions change.  This has been noted by the Judge also. The first “wave” of discovery ought to start soon and it is simply going to be a Treasure trove for plaintiffs.

For those wondering, the gov’t did not give Sweeney and answer to her query.




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