Kelly v. United States: Federal Circuit Oral Argument Recording Now Available (Case 24-2042)

The recording of yesterday's oral argument in Kelly v. United States (Case No. 24-2042) before the U.S. Court of Appeals for the Federal Circuit is now available — at no charge.

Listen to the full oral argument here (MP3)

The panel: Judge Timothy B. Dyk, Judge Jimmie V. Reyna, and Judge Richard G. Taranto — three of the Federal Circuit's most experienced jurists.

Why This Matters

This case is part of the sprawling litigation over what happened to Fannie Mae and Freddie Mac shareholders after the 2012 Net Worth Sweep — the Third Amendment to the Senior Preferred Stock Purchase Agreements that converted a fixed 10% dividend into a full sweep of both companies' entire net worth to the U.S. Treasury every quarter.

The numbers are staggering:

$191 billion — the total capital injected by Treasury into the GSEs during the financial crisis
$301 billion — the total swept back to Treasury before the sweep ended in 2019
$110 billion — the difference. That's not a bailout repayment. That's a profit extraction.

Shareholders have argued, across multiple courts and multiple theories, that this constituted an unconstitutional taking of their property without just compensation — a violation of the Fifth Amendment. The Court of Federal Claims has jurisdiction under the Tucker Act over these monetary claims against the United States, and the Federal Circuit hears the appeals.

The Broader Litigation Landscape

Kelly v. United States is one of several shareholder cases working their way through the Federal Circuit:

Fairholme Funds, Inc. v. United States (20-1912, 20-1914) — The Federal Circuit issued a split decision in February 2022, affirming in part and reversing in part, allowing certain direct shareholder claims to proceed.
The $612 million jury verdict — In a related case at the Court of Federal Claims, shareholders were awarded $612.4 million after a rare jury trial, finding that the government's actions damaged shareholder value.
Case 24-1167 — Another Federal Circuit opinion issued August 2025 addressed derivative claims by shareholders seeking to recover billions on behalf of the companies.

The legal battlefield spans the Court of Federal Claims, the Federal Circuit, multiple district courts, and the Supreme Court (which addressed FHFA's authority in Collins v. Yellen in 2021).

What to Listen For

When you listen to the oral argument, pay attention to:

Jurisdictional questions — Does the Court of Federal Claims have Tucker Act jurisdiction over the specific claims raised in Kelly? The government has repeatedly tried to shut the door on shareholder claims by arguing jurisdictional barriers.
The takings theory — Did the Net Worth Sweep constitute a taking of shareholders' property interests? The Fifth Amendment says the government cannot take private property for public use without just compensation. Shareholders argue their dividend rights and equity value were confiscated.
The illegal exaction theory — Was the Net Worth Sweep authorized by statute, or did it exceed the government's authority? If it exceeded statutory authority, any money taken was an illegal exaction that must be returned.
The Judges' questions — Judge Dyk is known for sharp, probing questions. Judge Taranto brings deep analytical rigor. Judge Reyna rounds out a panel that has seen these GSE issues before. Their questions during oral argument often signal how they're leaning.

The Big Picture

Seventeen years after the conservatorship began in September 2008, the fight over what happened to Fannie Mae and Freddie Mac shareholders is still being litigated. The government took control of two companies that back roughly $7 trillion in American mortgages, injected $191 billion in taxpayer money during a crisis, and then — once the companies returned to profitability — swept every dollar of profit for seven straight years.

Whether that was prudent conservatorship or an unconstitutional taking is the question that will not die. Kelly v. United States is the latest chapter.

Listen to the full oral argument (MP3)

Full Transcript of the Oral Argument

The following transcript has been generated from the court's audio recording. Speaker identifications are based on context; minor transcription artifacts may exist. The argument lasted approximately 22 minutes.

Plaintiffs' Opening Argument

THE COURT: The first is number 24-2042, Kelly versus the United States. Mr. Lubet.

MR. LUBET (Counsel for Plaintiffs): Good morning, Your Honor. We have sort of three distinct issues on this appeal. One is a statute of limitations, another is the merits of the taking claim, and the third is the implied contract claim that we made in the district court.

So I'll address my time on those three issues as much as I can, but the statute of limitations issue is also going to be argued in the case that follows us, and we have much of the same arguments in the briefs.

And that argument is that the Bright case issued by this court in 2010 is the law — still is the law. And it has not been implicitly overturned by the CalPERS case, the securities case the Supreme Court decided in 2017.

The Bright case clearly was on all fours with what we have here. It was on all fours with —

JUDGE TARANTO: Can I just be clear? I think I remember from your brief that you have an argument about why CalPERS really didn't implicitly overrule Bright — and a fairly extended argument. But I don't think you made any kind of argument that said, as a technical — and I don't need to diminish it by that word — matter, it was reasonable to rely on Bright until we declare that Bright was implicitly overruled. I don't think you made an argument along those lines.

MR. LUBET: I've granted there are some difficulties, but I just want to give you our reliance —

JUDGE TARANTO: The reliance argument you mean? That we made here? Not quite. So we have not yet said that Bright is no longer good law in light of CalPERS.

MR. LUBET: That's right.

JUDGE TARANTO: I don't think you've made an argument that says the simple fact that we have not yet said that should mean that Bright should govern this case.

MR. LUBET: Well, I think if we did not say that explicitly, we certainly intended that by saying that CalPERS cobbled together with these other cases does not —

JUDGE DYK: And in the Court's interest, Judge Taranto's question — I think he's asking you whether this panel is bound by Bright until the en banc Court overrules that based on the Supreme Court authority, or whether we directly have an obligation to consider what the Supreme Court did in CalPERS.

MR. LUBET: Well, I think that you do have an obligation to consider it, obviously. But I think it is still the law of this Court, and I do not think anything in CalPERS changes that with regard to this Court. I think that I really do believe that if Bright is going to be overruled, this Court has to do it, because implication in a new envelope is not going to bring us in.

JUDGE TARANTO: But we have cases, I think, that say that, for example, a panel decision which ordinarily would bind a later panel doesn't bind the later panel if it's really quite clear that the Supreme Court, in the meantime, has made a pronouncement that is inconsistent with the earlier.

MR. LUBET: No, I think that's — I agree with that, Your Honor. I think that's true. But our position is that the Supreme Court did not take a position that's inconsistent with Bright. Bright was an extremely well-reasoned decision that was on all fours. It covered the Tucker Act, class actions, the John R. Sand case, it covered equitable versus other semantics of what is a class action tolling with transaction and administrative — it dealt with all that, and said very specifically, the last sentence in Bright says, you have tolling in a class action under the Tucker Act for a taking claim.

JUDGE DYK: Yes, but it says that that's based on the fact that it's statutory tolling rather than equitable tolling.

MR. LUBET: It does, Your Honor, and I don't think that CalPERS eliminated that.

JUDGE DYK: That issue, I think you've got to grapple with that with this Court. If you're going to adopt that, I think in the CalPERS case, it was a statute of repose, and in the end, it was a five-four decision highly criticized by the dissent because of that issue, but clearly under that standard, it rested on statute of repose, which is not what we have here.

MR. LUBET: It's not a statute of repose, and all the courts have agreed with that, and that's why Sand is distinguishable. I think the Bright Court had the absolute right answer, and considered all the things including the reasons why Congress set up class actions in the first place for the efficiency of the court system.

JUDGE TARANTO: What — why is 2501 not a statute of repose?

MR. LUBET: Because it doesn't have the characteristics of a statute of repose. There's nothing in that statute that says, "this is the end, this is it." Statutes of repose normally say, as soon as you discover that, that period of time — that's it. This is a statute of limitations. When the events occurred, you have the statute of limitations for that period of time.

I think this leads us into the biggest problem that this Court has to face, and that's this. It's a case of fundamental fairness. If you look at this, and this is different from what we have in Blue Cross Blue Shield — the operative facts here were 2008, statute of limitations 2014. Bright comes out in 2010. Bright is good law, the law of the land, '10, '11, '12, '13, '14. When I have to advise my client, what do you do? Do you file a protective action, or do you just rely on the fact that Bright has said that you're part of the class?

JUDGE TARANTO: Yes, kind of. Okay. I don't remember your brief making this point, though it is one that popped into my mind as I was reading, which is: unlike the other case, by the time CalPERS came around, your six years were up.

MR. LUBET: Yeah, by the time CalPERS — it's seven, and it really didn't pop up until 2024.

JUDGE TARANTO: Well, let's just assume 2017. Okay. But I don't remember you making an argument to that effect.

MR. LUBET: We did make the reliance —

JUDGE TARANTO: Yes, reliance originally, but not that. It mattered that the — I'm now just by assumption in this question — the overruling of Bright occurred after your six years had run.

MR. LUBET: Well, which is not true in the next case. No, the overruling of Bright was done in 2024, in our case, by a Court of Federal Claims judge. That's the first time that Bright was overruled that we can find anywhere. As a matter of fact, in 2022, we have a case — the Abridgewright case, I think it was — where the Court of Claims applied Bright. Five years after CalPERS.

I think our reliance issue is that, even if you feel you have no authority under 2501 that you can toll the statute, if you've relied on some judicial decision that gave you a window of opportunity —

JUDGE DYK: But you're out of — we didn't have any opportunity. No, no, no, but there's no cases that say reliance can toll the statute under 2501, right?

MR. LUBET: Well, I don't think we're talking about that. What we're talking about is that this court, which has sole responsibility for appeals over this issue, the Tucker Act, made it very clear under Bright that there was a tolling of the statute. And it made it in 2010 during the period of time when we had to make that decision on what do we do. A company had lost all of its assets. How do you go forward and bring a case — a protective case — thinking that sometime in the future, some case would change that?

We don't think it did. We do not think that CalPERS changed it. We think that Bright is still the right law. And we think, remember too, that the government appealed Bright on the very issues we're talking about here, to the Supreme Court, and cert was denied. That's important in this case because of the series of cases the Supreme Court had looked at. They denied cert in Bright. And so now we have the law. This is it.

JUDGE REYNA: So your argument is the CalPERS decision did not abrogate Bright?

MR. LUBET: Yes, Your Honor.

JUDGE REYNA: Because it involved a statute of repose?

MR. LUBET: Yes, Your Honor. I think when you read the CalPERS decision, Justice Kennedy was talking about the difference between a normal statute of limitations and where Congress has specifically — in the legislative history and everything — said that this is a statute of repose. And in the securities case, we have to have a finality. And it was only a three-year statute of limitations, but in the course of a legislatively created claim, like the Securities Act, it can disrupt the market. So we're going to have an end. And that's what he talked about. He didn't talk about a statute of limitations like we have in the Tucker Act, which is quite different. And I think that that's something the Supreme Court eventually will have to address, but I don't think CalPERS did it. And even the Court of Claims judge said, "I'm doing it by implication." It's got to be expressed.

JUDGE TARANTO: This is a question on, I guess, a slightly different topic. On the assumption that American Pipe is still available, don't most, if not all, of your claims fail under American Pipe anyway? I know that the Claims Court was going to say so. Like your contract claim — there were no contract claims in Washington Federal, right?

MR. LUBET: There were no contract claims.

JUDGE TARANTO: And American Pipe, and whatever the later case was, said it really has to be the same claim. So the contract claims might be unavailable regardless, even if American Pipe may relate to some arguments on that. That might be true, as well, about one or two of your taking claims — for example, if you say your Tier 1 capital taking claim is really quite different from the claim that was litigated in Washington Federal, it would maybe follow that your Tier 1 capital claim was not present in Washington Federal, in which case American Pipe wouldn't apply to that either. What do you think would survive here for you if American Pipe were still available?

MR. LUBET: I think the full taking claim survives. Because under the Washington Federal case, the putative class — remember, class action was never determined — the putative class included everyone who had stock in the GSEs. Everyone. Clearly the banks had stock in the GSEs.

JUDGE TARANTO: But the Washington Federal case only dealt with that property taken. They didn't get to the point of what was the result of that. For any plaintiff, not just our plaintiffs.

MR. LUBET: So in the event the case had gone on and there was a class certification, the class would have been defined. We may have been a subclass because we had greater property loss than some others. But in class actions, you can have some class members have greater property loss than others. It's not a different theory — it's a taking by the government for a public purpose without just compensation.

JUDGE TARANTO: But those disparate losses have to be based on the same theory, the same underlying theory, correct?

MR. LUBET: Yes, Your Honor, and they are the same theory. The theory is that the government nationalized the GSEs. What happens as a result of that nationalization is the taking. For people who only had stock, it was the value of their stock, which Washington Federal said. For our banks, it was — not because of the — the arrangements the government had with the regulators, they encouraged these banks to invest the same as bonds and stocks with government backing in their Tier 1 capital. When this happened with nationalization, there was an additional taking. And that taking was all of the assets of these banks.

JUDGE TARANTO: After you made the investment, the transition into the enterprises, you left that money parked there for several months?

MR. LUBET: No, Your Honor, what happened was the government was looking for ways to finance the GSEs. Tier 1 capital is limited to U.S. bonds at the time. U.S. bonds and cash only, because those are backed by the federal government. And so, solvency of a bank could only be that. The U.S. government would not allow anything else. They came to the banks and said, look, we're going to make an exception. We want you to invest in these GSEs. We want you to put your cash into these GSEs and in return, we will treat it the same as bonds and cash. That was the deal, and all the incentives that went with that.

And so, if you look at this from that perspective, it was the government and the banks together that made this deal. And in making that deal — look, good example: if the government just devalued U.S. savings bonds and said they weren't going to honor them, we wouldn't have this appeal. That would be a taking. Absolutely. That would be an absolute taking. There's no difference.

THE COURT: You're into your rebuttal time. Do you want to save it?

MR. LUBET: Yes, sir.

THE COURT: I'll give you a few minutes.

Government's Argument

THE COURT: Mr. Jerome.

MR. JEROME (Counsel for the United States): Good morning, Your Honors. And may it please the Court, Simon Jerome, for the federal government.

American Pipe tolling does not apply to Section 2501. That conclusion follows from three principles expressed in the Supreme Court's case law.

The first is that jurisdictional statutes of limitations are not subject to equitable tolling. We see that principle in the Wong case. We see it in Brockamp. We see it in numerous Supreme Court cases and decisions of this Court.

Secondly, Section 2501 is a jurisdictional statute of limitation. We have that from the John R. Sand case from the Supreme Court.

And finally, American Pipe tolling is equitable in nature. The Supreme Court explained that.

JUDGE DYK: Is it your view that Sand is dispositive in this case?

MR. JEROME: Partially dispositive, Your Honor. I think Sand, certainly, the holding that Section 2501 is a jurisdictional statute of limitation is an important part of the logic. But similarly, you need the logic that American Pipe tolling is equitable in nature. We acknowledge that this Court reached a contrary conclusion in its Bright case in 2010, but CalPERS from the Supreme Court, which is an intervening decision, unambiguously abrogated that logic.

And to get to the procedural question that Judge Taranto asked my colleague earlier, it's, I think, indisputable under this Court's case law — we cite the Troy case at page 23 of our brief — that so long as the intervening decision of the Supreme Court undermines the logic of the case, a panel of this Court can depart from it. That is what we have here.

I understood my friend to attempt to distinguish CalPERS on the basis that it involved a statute of repose. With respect, that distinction is meaningless in this case. This Court, indeed, in its Hall case, which we cite, has analogized jurisdictional statutes of limitation to statutes of repose. There's no question that we're not arguing Section 2501 is a statute of repose, but it is a jurisdictional statute of limitation. And that has consequences.

I heard a lot in the conversation during my friend's presentation about fundamental fairness. I heard questions about reliance interests. Those are equitable considerations. And just to put a finer point on it — the key part, I think, of this Court's analysis in Bright was that it looked to the type of tolling, the source of the rule, and it said it was a statutory rule.

There can be no question after CalPERS about how we determine what is a statutory tolling rule and what is an equitable tolling rule. Justice Kennedy explained: you need to look to the text of the statute. If the tolling rule comes from the text of the statute, it's a statutory rule. In contrast, American Pipe tolling and this Court's — the Court of Federal Claims equivalent, Local Rule 23 — they rest on no textual indication that tolling is to be the rule. And so for those reasons, the Bright decision has been abrogated. CalPERS controls here, and all of the taking claims are untimely.

As Judge Taranto indicated — the premise of your question, Your Honor — was that the contract claims, there were no contract claims in Washington Federal, which is the asserted basis of the tolling in this case. And so all of the claims are untimely, whether because they're untolled or because they are not present in the action that my friend invokes to support tolling.

JUDGE TARANTO: Have you made the argument to us — not on the contract claims — but that any of the taking claims here were also missing from Washington Federal?

MR. JEROME: We have not, Your Honor, because we've accepted — I mean, I think, in her decision below, Judge Sweeney acknowledged that it's a very difficult line my friend has to walk. His claims have to be so close as to be tolled, but not so close as to be barred by binding precedent of this Court.

JUDGE TARANTO: You were happy to make that on the merits side.

MR. JEROME: We've accepted the framing. And to explain further, of course, I understand my friend to say that his clients' interests are different because they are downstream of the taking, but respectfully, you still have to — the relevant time of analysis is the imposition of the conservatorship. This Court unambiguously said the imposition of the conservatorships on the enterprises did not constitute a taking, and so any harm that flows from it —

JUDGE TARANTO: One other, I think, minor question. One thing happened on September 6, which is the conservatorships. The second thing happened on September 7, as I recall, which is the deal with Treasury to infuse money in exchange for super preferential stock. Does anybody make here a distinction between those two dates?

MR. JEROME: No, Your Honor. And Judge Sweeney, at least in the decision below, said the parties do not dispute for purposes of this motion — the accrual date, I believe, was September 6 — I can double check, but it was one of those dates in September. Those dates for purposes of the motion were undisputed.

JUDGE TARANTO: That was my understanding.

JUDGE DYK: If there are no further questions — you do say in your brief that Sand is directly on point here.

MR. JEROME: Yes, Your Honor.

JUDGE DYK: Do you concede that Sand has conflict, or at least tension, with other Supreme Court cases?

MR. JEROME: No, Your Honor. And in fact, the Supreme Court has reaffirmed Sand. In the Wong case in particular. I understand in the briefing, there's a lot about how this clear statement rule that the Supreme Court now imposes requires a different result. The Supreme Court acknowledged in Wong that its outcome — that the holding in Sand was a product of stare decisis. And so the Supreme Court is well aware that it has sort of charted a new path with respect to interpreting novel statutes. But it said, as a matter of stare decisis, we've interpreted this very old statute the same way a number of times, and we decline to depart from that. That holding is binding on this Court.

THE COURT: Thank you, Your Honor.

Plaintiffs' Rebuttal

MR. LUBET: I think in the two minutes — the government lawyer said that our claims are downstream. They're not downstream. I think that one of the problems we have with the opinion below, and we've briefed this, is that the court below did not follow the normal procedures that she had to undertake, and that is treating the complaint and the allegations as true and in the light most favorable to us. She didn't even address those. And if you look at paragraphs 142 through 152, you see directly what was claimed here.

This is not about the GSEs losing stock value. The entire arrangement here was one for this Tier 1 capital, which was something between the federal government and the banks. They asked the banks to put up their assets, in effect, to help the GSEs. And in part of that, they said, we will treat the GSE stock like bonds. And you know what bonds are — guaranteed by the federal government.

And so what happened was, things changed. HERA passed afterwards. You've got to go back to the time this transaction was made to see what the real investment-backed expectations were. The expectations were that "we're going to give you this money for the GSEs, but you've got to protect us like you protect bonds." That's what was going on here.

And when the nationalization occurred — did the stock drop? Yes. But the direct result was that solvency went away because of that. This is as if the government refused to honor savings bonds. Could they do that? They could, but wouldn't that be a taking? Absolutely.

There was no difference here. But the importance here is that — and why this falls under the Washington Federal class — is because, yes, they were all shareholders, yes, they suffered the loss in value. But that doesn't mean that every class member suffers the same damages. In this case, there were more, in addition.

The Court held in Washington Federal that shareholders were entitled to the value of their stock. But that's just a part of it. I think we're out of time. Thank you.

THE COURT: Thank both counsel. The case is submitted.

Analysis: Key Observations from the Oral Argument

Having reviewed the full transcript, several critical themes and strategic dynamics emerge from this 22-minute argument.

1. The Central Battleground: Bright v. United States and Class Action Tolling

The dominant issue in this oral argument is whether the Federal Circuit's own 2010 decision in Bright v. United States — which held that American Pipe class action tolling applies to the Tucker Act's six-year statute of limitations (28 U.S.C. Section 2501) — remains good law after the Supreme Court's 2017 decision in California Public Employees' Retirement System v. ANZ Securities (CalPERS).

Why it matters: If Bright still controls, the Kelly plaintiffs' claims were timely because they were tolled by the earlier Washington Federal class action. If CalPERS implicitly abrogated Bright, the claims are time-barred — and the case is over before it reaches the merits.

2. Judge Taranto's Probing on the "Reliance" Argument

Judge Taranto pressed plaintiff's counsel on a subtle but potentially decisive point: even if CalPERS did implicitly overrule Bright, the Kelly plaintiffs relied on Bright as binding law during the entire period when their statute of limitations was running (2008-2014). Bright wasn't questioned until 2024 — a decade after the limitations window closed.

Judge Taranto appeared to be offering counsel an argument he hadn't fully made: that the timing of the implicit overruling matters. If Bright was good law when the limitations period expired, and plaintiffs reasonably relied on it, retroactive application of its abrogation could raise due process concerns.

Constructive observation: This is a line of argument the Kelly plaintiffs may wish to develop further in supplemental briefing if the Court permits — the intersection of reliance interests, retroactivity, and jurisdictional time bars is an area where the Supreme Court has not spoken clearly.

3. The Statute of Repose Distinction

Plaintiffs argue that CalPERS is distinguishable because it involved a statute of repose (the Securities Act's three-year bar), not a statute of limitations. Judge Dyk appeared sympathetic to this distinction, noting that CalPERS was a 5-4 decision that rested on the repose characterization.

The government countered by citing this Court's Hall case, which analogized jurisdictional statutes of limitations to statutes of repose — attempting to collapse the distinction.

Constructive observation: The statute of limitations vs. statute of repose distinction is legally significant. Statutes of repose create absolute cutoffs not subject to tolling of any kind, while statutes of limitations are procedural and have historically been subject to tolling. The Kelly plaintiffs' best argument is that Section 2501 has never been formally classified as a statute of repose by the Supreme Court, and CalPERS' reasoning was expressly tied to the repose characterization.

4. The Tier 1 Capital Theory — A Unique Taking Claim

Perhaps the most distinctive aspect of the Kelly case is the Tier 1 capital theory. Unlike typical GSE shareholder claims based on stock value destruction, the Kelly plaintiffs (community banks) argue that the government induced them to invest in GSE preferred stock by granting it Tier 1 capital status — treating it like U.S. Treasury bonds for bank solvency purposes. When the conservatorship wiped out that value, it wasn't just a stock loss — it was the destruction of regulatory capital that the government itself had told banks was safe.

Plaintiff's counsel drew a powerful analogy: "If the government just devalued U.S. savings bonds and said they weren't going to honor them, we wouldn't have this appeal. That would be a taking. Absolutely."

Constructive observation: This theory distinguishes Kelly from most other GSE shareholder cases and could survive even if the broader class action tolling argument fails. The government's response — that these claims are merely "downstream" of the conservatorship — doesn't adequately address the independent nature of the government's Tier 1 capital inducement.

5. Judge Taranto's American Pipe Scope Question

Judge Taranto raised an important secondary issue: even if American Pipe tolling survived CalPERS, do the Kelly plaintiffs' specific claims fall within its scope? American Pipe only tolls claims that were actually present in the original class action (Washington Federal). The contract claims clearly weren't. And the Tier 1 capital taking theory — if it's truly distinct from the stock-value taking — might not have been either.

This puts the Kelly plaintiffs in what Judge Sweeney called a "difficult line to walk" — their claims need to be similar enough to Washington Federal to qualify for tolling, but different enough to avoid being barred by the Federal Circuit's prior ruling that the conservatorship was not a taking.

6. The Government's Three-Step Syllogism

Government counsel presented a clean, structured argument:

Jurisdictional statutes of limitations are not subject to equitable tolling (Wong, Brockamp);
Section 2501 is a jurisdictional statute of limitation (John R. Sand);
American Pipe tolling is equitable in nature (CalPERS);
Therefore, American Pipe tolling does not apply to Section 2501.

This syllogism is logically tight. The Kelly plaintiffs' best response — which they delivered — is to challenge premise 3 by arguing that Bright correctly characterized American Pipe tolling as statutory rather than equitable, and that CalPERS did not disturb that characterization because it dealt with a fundamentally different type of time bar.

7. The Stare Decisis Dimension

When pressed on whether Sand conflicts with other Supreme Court precedent, government counsel invoked stare decisis — noting that the Supreme Court in Wong acknowledged Sand's holding was preserved on stare decisis grounds even as the Court charted a new interpretive path for novel statutes.

Constructive observation: This is a double-edged sword. If Sand's jurisdictional characterization of Section 2501 is maintained by stare decisis rather than by the merits of the interpretive question, it may eventually be vulnerable to reversal. But for now, it remains binding — and the Kelly plaintiffs must work within that framework.

8. Reading the Panel

Judge Taranto asked the most questions and appeared to be the swing vote. His questions to the plaintiffs about the reliance/timing argument suggest he sees potential merit in their position but wants a stronger doctrinal hook. His questions to the government about the scope of American Pipe suggest he's not simply ready to affirm.
Judge Dyk appeared more skeptical of the plaintiffs' position, pressing on the statute of repose distinction and the reliance argument's legal basis. However, his acknowledgment that CalPERS was a 5-4 decision suggests he recognizes the fragility of the government's position.
Judge Reyna asked fewer questions but confirmed the core framing of the CalPERS distinction.

Bottom Line

Kelly v. United States presents the Federal Circuit with a genuinely difficult question at the intersection of class action tolling, jurisdictional time bars, and the unique Tier 1 capital theory. The plaintiffs' strongest arguments are: (1) Bright was never overruled and remains binding circuit precedent; (2) CalPERS is distinguishable because it involved a statute of repose; and (3) the Tier 1 capital theory presents a taking claim that is legally distinct from and more compelling than generic shareholder stock-value claims.

The government's strongest arguments are: (1) CalPERS unambiguously characterized American Pipe tolling as equitable; (2) Sand makes Section 2501 jurisdictional and thus immune from equitable tolling; and (3) the conservatorship was already held not to be a taking, so downstream claims fail.

Watch for the opinion — it could have significant implications not only for the Kelly plaintiffs but for the broader GSE shareholder litigation and for the scope of class action tolling under the Tucker Act.

Listen to the full oral argument (MP3)

Oral argument recording credit: Peter A. Chapman. Posted by the U.S. Court of Appeals for the Federal Circuit.

For more on Fannie Mae, Freddie Mac, and the ongoing shareholder litigation, visit Fanniegate: The Definitive Guide or follow @DoNotLose on X.