Berkley Class Action, Explained

The Berkley Insurance class action — formally consolidated as In re Fannie Mae/Freddie Mac Senior Preferred Stock Purchase Agreement Class Action Litigation, Nos. 13-cv-1053 and 13-cv-1149 (D.D.C.) — is the consolidated class-action lawsuit brought on behalf of Fannie Mae and Freddie Mac junior preferred and common shareholders against FHFA and the U.S. Treasury over the August 2012 Third Amendment / Net Worth Sweep. After Perry Capital v. Lew defeated APA claims at the D.C. Circuit in 2017, what survived were state-law breach-of-contract and implied-covenant claims that fed into the consolidated class action under Senior Judge Royce Lamberth in the U.S. District Court for the District of Columbia.

Berkley Insurance Company is one of the named class plaintiffs and ultimately took on a leading role in the consolidated litigation. The case has been referred to by Berkley's name in shareholder-investor circles for years, even though the formal caption is the consolidated class action. Hamish Hume of Boies Schiller represents the plaintiff class generally; Brian Barnes of Cooper & Kirk represents Berkley specifically on its cross-appeal seeking restitution and reliance damages distinct from the class's expectation-damages theory.

After more than a month of trial in late 2022 — the first time any Fanniegate case ever made it to a jury — the jury returned a verdict on August 14, 2023 finding that FHFA and Treasury had breached the implied covenant of good faith and fair dealing in the Senior Preferred Stock Purchase Agreement certificates of designation. Total damages: approximately $612.4 million across the three certificate classes. Importantly, the jury found there was no breach of the express contract terms — the win was on the implied covenant, which is the doctrine that says even if you technically followed the contract's letter, you can't deliberately frustrate the other party's reasonable expectations.

The D.C. Circuit Court of Appeals heard oral argument on FHFA's appeal of the August 2023 jury verdict. Panel: Judges Walker, Childs, and Senior Judge Douglas Ginsburg. Arguments split: 20 minutes for John Elwood representing FHFA, Fannie Mae, and Freddie Mac as appellants; arguments for Hamish Hume defending the class verdict; arguments for Brian Barnes pushing the Berkley cross-appeal on restitution and reliance damages. Glen's read on the bench from the recording: bullish-leaning. Walker did most of the heavy pressing; Childs focused on Perry II, damages measurement, and equitable relief under § 4617(f); Ginsburg leaned in on capital-markets analogies. The recording is publicly available from the D.C. Circuit.

The opinion is expected sometime between July 2026 and January 2027. D.C. Circuit opinion timelines on complex commercial cases typically run 4-9 months post-argument; this case is on the longer end of typical because of the volume of briefing, the jury-trial record, and the cross-appeal. The decision will affect whether the ~$612M verdict is affirmed, reversed, or remanded, and will likely set the framework for any conservatorship-exit settlement.

Three things. (1) Whether the implied-covenant verdict survives — FHFA argues that even if there was a breach, equitable relief is barred by 12 U.S.C. § 4617(f) and damages were improperly calculated. (2) Whether Berkley's cross-appeal on reliance and restitution damages opens a much larger damages framework on remand. (3) The political/policy precedent — affirmance establishes that breach-of-contract claims can yield real money against the federal government in this fact pattern, which dramatically strengthens shareholder leverage in any conservatorship-exit settlement negotiation.

Directly. The January 14, 2021 Treasury / FHFA Letter Agreement requires that 'all material litigation relating to the conservatorship is resolved or settled' before the conservatorship can end. The Berkley class action is by far the most material live litigation. Treasury and FHFA cannot complete an IPO under that framework without either (a) winning on appeal at the D.C. Circuit, (b) settling with the class, or (c) renegotiating the SPSPA to remove the litigation precondition. Trump's May 2025 'implicit GUARANTEES' commitment underwrites the IPO direction, but the Berkley appeal is the gating live legal question.

The April 21, 2026 oral argument recording is at media.cadc.uscourts.gov; Glen's recap of the argument with timestamped quotes is at /blog/fannie-freddie-dc-circuit-oral-argument-recap-april-21-2026. The April 14, 2026 Hume/Barnes letter to the D.C. Circuit Clerk that reshaped argument allocation is at /blog/fannie-freddie-oral-argument-hume-barnes-subject-matter. The full Fanniegate timeline is at /fanniegate/timeline. The shareholder-lawsuits survey contextualizing Berkley alongside Perry, Fairholme, Collins, Kelly, and Angel is at /fannie-freddie-shareholder-lawsuits.