Posted on December 28, 2016
Howard Cayne at Arnold & Porter, representing FHFA, delivered a letter to the D.C. Circuit yesterday, and a copy of that letter is attached to this e-mail message. Mr. Cayne advises the D.C. Circuit about a recent development in one of the cases cited by the Class Plaintiffs on page 6 of their Reply Brief (Doc. 1602880). The Class Plaintiffs told the D.C. Circuit in March 2016 that “[t]here is not a single Delaware case holding that shareholder claims based entirely on the breach of shareholder contracts are somehow derivative claims owned by the company, and any such conclusion defies common sense.” In partial support of that statement, the Class Plaintiffs shared that the Delaware Chancery Court recognized in In re El Paso that “breach of a certificate of designation ‘gives the investor a claim for breach of contract that the investor can assert directly.'” Mr. Cayne says the Delaware Supreme Court’s review of El Paso undermines that statement. The Class Plaintiffs are likely to respond shortly that that’s not exactly what Chief Justice Strine said in his concurring opinion in El Paso.