Supreme Court slaps down Fannie Mae’s federal jurisdiction bid

by Anna Sobrevinas23 Jan 2017
The U.S. Supreme Court unanimously decided last week that Fannie Mae’s charterdoesn’t allow it to take any suit filed against it to federal court, according to Courthouse News Service.

After being rechartered to private ownership in 1954, Fannie Mae has been able to “to sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, state or federal,” according to a clause in its charter. The GSE has taken that to mean that it could choose to take any lawsuit it was involved with to federal, rather than state, court.

However, the Supreme Court decided that the clause should not be interpreted as granting “federal courts subject-matter jurisdiction over all cases involving Fannie Mae.”

Justice Sonia Sotomayor said the clause should rather be read as permitting “suit in any state or federal court already endowed with subject-matter jurisdiction over the suit.”

“The doors to federal court remain open to Fannie Mae through diversity and federal-question jurisdiction,” Sotomayor wrote. “Fannie Mae provides no reason to think that in other cases, involving only state-law claims, access to the federal courts gives Freddie Mac an unintended competitive advantage over Fannie Mae that Congress would have wanted to avoid. Indeed, the usual assumption is that state courts are up to the task of adjudicating their own laws.”

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