Fannie/Freddie Consolidated Class Action

The Berkley Plaintiffs Just Filed Their Reply Brief. Here's Why It Matters.

On February 20, 2026, the Berkley Plaintiffs filed their reply brief in Berkley v. FHFA (Case #25-5113) before the DC Circuit Court of Appeals. This is not a routine filing. This brief lays out the argument for why the current $850 million+ judgment is the floor — not the ceiling — and why the case should be remanded for reliance damages that could reach into the billions.

25-5113-2160327 — Download

If you own shares in Fannie Mae or Freddie Mac, this is one of the most important legal documents you should understand.

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Case Timeline: From the Net Worth Sweep to the DC Circuit

• August 2012 — FHFA, acting as conservator, agrees to the "Net Worth Sweep" with the U.S. Treasury. The Third Amendment to the Preferred Stock Purchase Agreements replaces the fixed 10% dividend with a quarterly sweep of 100% of all current and future net worth of Fannie Mae and Freddie Mac. Private shareholders are effectively wiped out on paper.
• August 2023 — A federal jury in Washington, DC delivers a landmark verdict: FHFA "arbitrarily and unreasonably violated the contractual rights of private shareholders." The jury awards $612.4 million in damages.
• March 20, 2024 — Final judgment is entered at $812,050,000, including prejudgment interest.
• March 14, 2025 — Judge Lamberth upholds the verdict, ruling the jury had "ample evidence" to support its findings. The government's post-trial motions are denied.
• 2025-2026 — The case moves to the DC Circuit Court of Appeals. With continuing accrued interest, the reserved judgment now stands at approximately $850 million+.
• February 20, 2026 — The Berkley Plaintiffs file their reply brief, arguing for remand and reliance damages.

Every step of the way, the judgment has grown. And the reply brief argues it should grow substantially more.

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The Reliance Damages Argument: Why the Potential Recovery Is in the Billions

This is the critical issue on appeal, and it requires understanding the distinction between two types of damages.

What the jury proved: The jury found that FHFA violated shareholders' contractual rights. It awarded approximately $0.60 per share in damages based on what was proven at trial. That is the $612.4 million verdict — later increased to $812 million with prejudgment interest, and now over $850 million with continuing accrued interest.

What the jury could not fully quantify: Plaintiffs demonstrated harm but could not fully demonstrate the total amount of harm they suffered. In other words, the trial established that the government broke its contractual obligations to shareholders. The only limitation was in calculating the full extent of the damage.

What reliance damages would mean: The Berkley Plaintiffs are now arguing that the case should be remanded for an assessment of reliance damages. Here is the distinction:

• Expectation damages measure what shareholders expected to gain from the contract being performed. This is essentially what the jury awarded — the difference between what shareholders got and what they expected to get, to the extent it could be proven.
• Reliance damages measure what shareholders lost by relying on the contract in the first place. This is based on the original contract terms — what shareholders invested and committed based on the contractual framework that FHFA then violated.

Reliance damages are the appropriate remedy when a plaintiff has proven breach and harm but the full expectation damages are difficult to calculate with precision. And in this case, reliance damages could be orders of magnitude larger than the current judgment — potentially billions of dollars.

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What the Numbers Mean: A Judgment That Keeps Growing

Follow the trajectory:

• $612.4 million — Original jury award (August 2023)
• $812,050,000 — Final judgment with prejudgment interest (March 2024)
• $850 million+ — Current reserved judgment with continuing accrued interest
• Potentially billions — If the DC Circuit remands for reliance damages

The government has been fighting this case at every stage, and at every stage the number has gone up. The Berkley Plaintiffs' reply brief is the next step in that trajectory — an argument that the proven breach entitles shareholders to a fundamentally larger measure of recovery.

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Why This Matters: The Government Violated Shareholder Rights. The Only Question Is How Much They Pay.

Step back and consider what has already been established as fact in this case:

1. A federal jury found that FHFA violated shareholder contractual rights. This is not an allegation. It is a verdict.
2. A federal judge upheld that verdict, ruling the jury had "ample evidence." This is not a close call in the court's view.
3. The government owes shareholders at least $850 million+ and counting. This is a reserved judgment that accrues interest daily.

The legal question is no longer whether FHFA violated shareholder rights. That question has been answered — by a jury, upheld by a judge. The question now before the DC Circuit is how to properly measure the damages from that violation.

If the DC Circuit affirms the current judgment, shareholders collect $850 million+. If the court remands for reliance damages, the potential recovery dwarfs that figure. Either way, the shareholders have won on the merits. The appeal is about how big that win ultimately becomes.

This case also establishes a powerful legal precedent: the government, acting through FHFA as conservator, cannot arbitrarily strip private shareholders of their contractual rights without consequence. That principle matters far beyond the dollar amounts — it matters for the rule of law and for every investor who relies on contractual protections.

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The Bottom Line

The Berkley Plaintiffs' reply brief is another step in a case that has consistently moved in one direction: toward the shareholders. A jury found the government liable. A judge upheld it. The judgment has grown from $612 million to over $850 million. And now the plaintiffs are arguing for a measure of damages that could push the recovery into the billions.

The shareholders are winning. The only question is by how much.