Caroline Herron v. Fannie Mae

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 12, 2017 Decided June 27, 2017

No. 16-5070

CAROLINE HERRON,

APPELLANT

v.

FANNIE MAE, ET AL.,

APPELLEES

Consolidated with 16-5091

Appeals from the United States District Court

for the District of Columbia

(No. 1:10-cv-00943)

Lynne Bernabei argued the cause for appellant. With her

on the briefs was Alan R. Kabat.

Michael A.F. Johnson argued the cause for appellee

Federal Housing Finance Agency. With him on the brief were

Howard N. Cayne and Dirk Phillips.

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Ira T. Kasdan argued the cause for appellees The Federal

National Mortgage Association, et al. With him on the briefs

were Bezalel A. Stern and Elizabeth C. Johnson. Damien G.

Stewart entered an appearance.

Before: BROWN and KAVANAUGH, Circuit Judges, and

SENTELLE, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

SENTELLE.

SENTELLE, Senior Circuit Judge: Caroline Herron worked

as an at-will contractor for the Federal National Mortgage

Association, commonly known as Fannie Mae, on mortgage

modification programs created by the Department of the

Treasury (“Treasury”) in response to the financial crisis in

2007 and 2008. According to Herron, Fannie Mae blocked her

attempt to become an embedded contractor at Treasury and

then terminated her contract work with Fannie Mae in

retaliation for her purported disclosures of gross waste and

mismanagement by Fannie Mae in administering the programs.

Herron sued Fannie Mae and three Fannie Mae officers,

asserting claims under District of Columbia law and, in the

alternative, under Bivens. The district court dismissed the

Bivens claim in a published opinion, holding that Fannie Mae

is not a government actor, and, in a subsequent unpublished

opinion, granted summary judgment against Herron on her

remaining claims. For the reasons stated below, we affirm.

I.

Because of the numerous acronyms and terms of art

employed in this opinion, we provide a brief glossary.

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EESA Emergency Economic Stabilization Act of 2008

FAA Financial Agency Agreement

Fannie Mae Federal National Mortgage Association

Freddie Mac Federal Home Loan Mortgage Corporation

FHFA Federal Housing Finance Agency

HAMP Home Affordable Modification Program

HERA Housing and Economic Recovery Act of 2008

MHAP Making Home Affordable Program

II.

Because the district court’s opinions offer a detailed

description, see Herron v. Fannie Mae, No. 1:10-cv-943, 2016

WL 1177918, at *1–12 (D.D.C. Mar. 8, 2016) (“Summary

Judgment Opinion”); Herron v. Fannie Mae, 857 F. Supp. 2d

87, 88–91 (D.D.C. 2012) (“Bivens Opinion”), we provide only

a brief summary of the facts and allegations in this case.

A.

Although it originated as a government-owned entity,

Fannie Mae became a privately owned, government-sponsored

corporation in 1968. Perry Capital LLC v. Mnuchin, 848 F.3d

1072, 1080 (D.C. Cir. 2017). Fannie Mae and its brother

corporation, the Federal Home Loan Mortgage Corporation,

also known as Freddie Mac, “buy residential mortgages from

banks, repackage them for sale as mortgage-backed securities,

and guarantee these securities by promising to make investors

whole if borrowers default.” Judicial Watch, Inc. v. Fed.

Housing Fin. Agency, 646 F.3d 924, 925 (D.C. Cir. 2011).

Fannie Mae and Freddie Mac play a central role in the national

mortgage market by providing lenders with capital to make

more loans. Perry Capital, 848 F.3d at 1080; Judicial Watch,

646 F.3d at 926.

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During the 2000s, Fannie Mae and Freddie Mac “bought

risky mortgages and got caught up in the housing bubble.”

DeKalb Cty. v. Fed. Housing Fin. Agency, 741 F.3d 795, 798

(7th Cir. 2013). The decline in housing prices in the mid-2000s

“substantially eroded the value of Fannie [Mae]- and Freddie

[Mac]-held mortgages.” Judicial Watch, 646 F.3d at 926. The

ensuing financial crisis in 2007 and 2008 pushed both firms “to

the brink of collapse.” Perry Capital, 848 F.3d at 1079. To

prevent these government-sponsored enterprises from

defaulting, Congress enacted the Housing and Economic

Recovery Act of 2008 (“HERA”), Pub. L. No. 110-289, 122

Stat. 2654. Perry Capital, 848 F.3d at 1079, 1080–81.

HERA established the Intervenor Federal Housing

Finance Agency (“FHFA”), an independent federal agency

charged with supervising and regulating Fannie Mae. See 12

U.S.C. § 4511; Perry Capital, 848 F.3d at 1080–81. Among

other things, HERA authorized the FHFA to place Fannie Mae

into conservatorship. See 12 U.S.C. § 4617(a). It exercised

that authority on September 6, 2008. In conjunction with the

appointment of the FHFA as conservator, Treasury committed

to provide funding to Fannie Mae to keep it from defaulting.

See Perry Capital, 848 F.3d at 1079, 1082.

B.

The financial crisis also spurred Congress to enact the

Emergency Economic Stabilization Act of 2008 (“EESA”),

Pub. L. No. 110-343, 122 Stat. 3765. The EESA provides the

Secretary of the Treasury with the “authority and facilities . . .

to restore liquidity and stability to the financial system of the

United States,” 12 U.S.C. § 5201(1), and directs the Secretary

to act in a manner that, among other things, “preserves

homeownership,” id. § 5201(2)(B). To that end, the EESA

authorized the Secretary to “implement a plan that seeks to

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maximize assistance for homeowners” and to encourage loan

servicers to minimize foreclosures. Id. § 5219(a)(1). Pursuant

to this authority, the Secretary established the Home

Affordable Modification Program (“HAMP”), which is

designed to prevent foreclosures by encouraging loan servicers

to modify mortgage terms for eligible homeowners.

A brief summary of HAMP is necessary to understand the

factual allegations underlying this case. See generally Wigod

v. Wells Fargo Bank, N.A., 673 F.3d 547, 556–57 (7th Cir.

2012) (providing a detailed explanation of HAMP). HAMP—

the largest mortgage modification program within Treasury’s

broader Making Home Affordable Program (“MHAP”)—

provides struggling homeowners with an opportunity to modify

the terms of their mortgages, and can include changes such as

reduced interest rates and term extensions. A HAMP

modification consists of two steps. First, a servicer offers an

eligible homeowner a “trial modification,” which allows the

homeowner to make modified mortgage payments for a

specified term to determine whether those payments are

sustainable. Then, if the homeowner successfully completes

the trial modification, the servicer can convert the homeowner

to a permanent mortgage modification. To encourage

participation, Treasury offered financial incentives to servicers

who agreed to these modifications, and, prior to June 1, 2010,

Treasury permitted servicers to approve homeowners for trial

modifications without written verification of income, meaning

that servicers placed eligible homeowners in “stated” or

“verbal” trial modifications, rather than compelling “verified”

trial modifications.

On February 18, 2009, Treasury and Fannie Mae entered

into a Financial Agency Agreement (“FAA”), under which

Fannie Mae was to administer MHAP as a fiduciary to

Treasury. See 12 U.S.C. § 5211(c)(3) (authorizing Treasury to

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designate certain institutions as “financial agents of the Federal

Government”). Fannie Mae was eligible to receive incentive

payments from Treasury based on a number of metrics set forth

in the FAA, including the number of modifications. And, at

least in fiscal year 2009, Fannie Mae used the number of

modifications, regardless of whether they converted to

permanent modifications, as a metric in determining executive

bonuses.

C.

In June 2009, after the FHFA placed Fannie Mae into

conservatorship, ICon Professional Services (“ICon”), a

third-party contracting company, hired Herron to provide

consulting services to Fannie Mae on MHAP and, more

specifically, HAMP. Appellees Eric Schuppenhauer, a senior

vice president at Fannie Mae, and Alanna Brown, Fannie

Mae’s Director of Government Programs and New Initiatives,

were her direct supervisors. In addition to working with Fannie

Mae officials and servicers, Herron worked directly with

Treasury managers overseeing Fannie Mae’s administration of

MHAP.

Almost immediately after she began work at Fannie Mae,

Herron raised a number of criticisms about Fannie Mae’s

administration of HAMP. Summary Judgment Opinion, 2016

WL 1177918, at *3. Herron does not press her argument

concerning the excessive burdens Fannie Mae allegedly

imposed on servicers on appeal. See id. at *3, *23–25. And

she forfeited her argument concerning the extension of the

HAMP enrollment deadline, see id. at *4–7, *28–30, by failing

to adequately raise it in her opening brief. See City of

Waukesha v. EPA, 320 F.3d 228, 250 n.22 (D.C. Cir. 2003).

Therefore, the only criticism relevant to this appeal concerns

the problems associated with the use of stated trial

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modifications, including the low rate of conversion to

permanent modifications. See Summary Judgment Opinion,

2016 WL 1177918, at *3–4, *25–27.

The record establishes that the problems with stated trial

modifications were highly debated and controversial topics at

both Fannie Mae and Treasury. See id. at *25–27. Herron

contends, however, that she was the only one who disclosed the

extent of the problems. According to Herron, Fannie Mae

pushed stated trial modifications, not to assist homeowners, but

to obtain incentive payments from Treasury and justify higher

executive bonuses. Herron alleges that Fannie Mae knew that

many homeowners enrolled in trial modifications would never

be eligible to convert to permanent modifications, and

therefore Fannie Mae wasted public funds and mismanaged

HAMP by pushing these modifications.

Around the same time that she voiced these concerns,

Herron began planning a move to Treasury. See id. at *7–11.

On December 15, 2009, she proposed that she be hired by

Fannie Mae as a dedicated “on site” or “embedded” contractor

at Treasury. Fannie Mae officials, including Schuppenhauer,

initially supported the idea but soon began expressing

concerns. See id. at *7–8. More specifically, Schuppenhauer

and Appellee Nancy Jardini, Fannie Mae’s acting Chief

Compliance Officer, raised potential conflicts of interest and

ethics issues relating to the move. Id. at *8–9. The parties

dispute the facts regarding these issues—Herron argues that

Fannie Mae created “a spurious conflict of interest issue” to

block her move, while Fannie Mae asserts that the move would

create serious conflicts of interest that needed to be addressed.

It appears undisputed, however, that Fannie Mae ultimately

decided not to go through with the move. Schuppenhauer also

admitted that Herron’s criticisms of Fannie Mae’s

administration of HAMP may have affected his views. On

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January 13, 2010, Herron told Schuppenhauer she was “ready

to escalate” the question of her move to Fannie Mae’s

Executive Vice President Terry Edwards and Chief Executive

Officer Mike Williams. After Schuppenhauer discussed the

issue with Williams and Edwards, he terminated Herron’s

contract work with Fannie Mae on January 15.

After her HAMP work was terminated, Herron pursued

other business opportunities in the industry. Two Fannie Mae

managers, Rich McGhee and Patricia Fulcher, discussed the

possibility of Herron working on non-HAMP projects, but one

of Fannie Mae’s compliance attorneys told McGhee and

Fulcher to stop recruiting Herron. See id. at *11. Herron also

discussed potential employment opportunities with Timothy

Rood, the president of the Collingwood Group, a financial

services consulting group. After speaking with his contacts at

Fannie Mae, however, Rood informed Herron that she

appeared to be “radioactive” and he did not think she would be

an asset to the company.

On June 8, 2010, Herron sued Fannie Mae,

Schuppenhauer, Brown, and Jardini, alleging that they blocked

her move to Treasury and terminated her contract work in

retaliation for her disclosures of Fannie Mae’s “gross waste of

public funds” and “gross mismanagement” in administering

HAMP. Operating under the presumption that Fannie Mae is a

private entity, Herron asserted claims under District of

Columbia law for wrongful termination in violation of public

policy, civil conspiracy, and tortious interference with

prospective contractual relations. Alternatively, if Fannie Mae

is a government actor, Herron alleged a Bivens claim for

retaliation in response to the exercise of her First Amendment

rights. See generally Bivens v. Six Unknown Named Agents of

Fed. Bureau of Narcotics, 403 U.S. 388 (1971).

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D.

Fannie Mae and the individual defendants first moved to

dismiss Herron’s alternative Bivens claim, asserting that Fannie

Mae is a private entity and thus not subject to a Bivens action.

The FHFA, in its capacity as conservator, intervened and

moved to dismiss on the same ground. On April 30, 2012, the

district court granted the motion. Bivens Opinion, 857 F. Supp.

2d at 88. Applying the framework set forth in Lebron v.

National Railroad Passenger Corp., 513 U.S. 374 (1995), the

court concluded that Fannie Mae is “a private entity and the

appointment of [the] FHFA as conservator . . . did not

transform Fannie Mae into a public agency,” because the

conservatorship “did not establish permanent government

authority to control Fannie Mae.” See Bivens Opinion, 857 F.

Supp. 2d at 88, 95–96.

After the parties engaged in extensive discovery, Fannie

Mae and the individual defendants moved for summary

judgment on Herron’s remaining wrongful termination,

tortious interference, and conspiracy claims. On March 8,

2016, the district court granted the motion. Summary Judgment

Opinion, 2016 WL 1177918, at *1. The court recognized that

Herron’s status as an at-will contractor posed a fundamental

problem for her tortious interference claim, see id. at *13–15,

and her wrongful termination claim, see id. at *16. First, the

court held that Herron’s tortious interference claim failed as a

matter of law because she had not identified a “commercially

reasonable business expectancy” on which to base the claim.

See id. at *12–16. Second, the court held that the EESA

provided a sufficient “mandate of public policy” to support

Herron’s wrongful termination in violation of public policy

claim. See id. at *16, *19–20. It nevertheless entered summary

judgment against her on that claim after concluding that “there

is not a close fit between [her] criticism of the use of stated

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trials and her claimed public policy of disclosing Fannie Mae’s

gross mismanagement or waste of funds.” See id. at *20–23,

*25–27. Finally, the court explained that without “a cognizable

underlying tort,” Herron’s conspiracy claim also failed. See id.

at *30.

Herron appealed, challenging the district court’s order

granting the motion to dismiss her Bivens claim and its order

granting the motion for summary judgment against her on the

common law claims. She also appeals two orders denying

discovery. Herron’s additional argument regarding unsealing

the summary judgment briefing does not warrant separate

discussion in this opinion.

Fannie Mae and the individual defendants cross-appealed,

arguing that the district court’s grant of summary judgment

could be affirmed on the alternative ground that the EESA did

not set forth a sufficient public policy on which to base a

wrongful termination claim.

We have jurisdiction pursuant to 28 U.S.C. § 1291.

III.

We review de novo the district court’s dismissal of

Herron’s alternative Bivens claim. Emory v. United Air Lines,

Inc., 720 F.3d 915, 921 (D.C. Cir. 2013).

Herron alleges that, if Fannie Mae is a government actor,

Fannie Mae and the individual defendants, acting as officers of

the United States government, all are liable for retaliating

against her for the exercise of her First Amendment rights.

Because Herron’s Bivens claim is based on her contention that

Fannie Mae “is not a private entity but Government itself,” we

need not “traverse th[e] difficult terrain” of the state action

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doctrine. Lebron, 513 U.S. at 378; see also Sprauve v. W.

Indian Co., 799 F.3d 226, 229–30 (3d Cir. 2015); Hack v.

President & Fellows of Yale Coll., 237 F.3d 81, 83 (2d Cir.

2000), abrogated on other grounds by Swierkiewicz v. Sorema

N.A., 534 U.S. 506 (2002). Instead, we apply the framework

the Supreme Court established in Lebron for determining

whether a “Government-created and -controlled corporation[]”

is a government actor for constitutional purposes. 513 U.S. at

397.

In Lebron, the Court considered whether the National

Railroad Passenger Corporation, commonly known as Amtrak,

was part of the government for First Amendment purposes. See

id. at 376, 394. Considering the “public and judicial

understanding of the nature of Government-created

and -controlled corporations over the years,” see id. at 394–97,

the Court noted that arrangements providing for temporary

government control over a government-created corporation do

not make that corporation a government actor, see id. at 398–

99. The Court then concluded that a corporation is “part of the

Government” for constitutional purposes when: “[(1)] the

Government creates [the] corporation by special law, [(2)] for

the furtherance of governmental objectives, and [(3)] retains

for itself permanent authority to appoint a majority of the

directors of that corporation . . . .” Id. at 400. Applying these

criteria, the Court held that Amtrak was a government actor

because “it is established and organized under federal law for

the very purpose of pursuing federal governmental objectives,

under the direction and control of federal governmental

appointees.” See id. at 397–98. As our sister circuits

recognize, Lebron sets forth a three-part standard to determine

whether a government-created corporation is part of the

government for constitutional purposes. See, e.g., Hack, 237

F.3d at 83–84.

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This case satisfies the first two Lebron criteria. Congress

created Fannie Mae to accomplish a number of governmental

objectives for the national housing market. See 12 U.S.C.

§§ 1716, 1716b, 4501; Perry Capital, 848 F.3d at 1080.

Although Congress converted Fannie Mae to a private

corporation in 1968, “its charter, and therefore its function . . .,

were unchanged.” DeKalb Cty., 741 F.3d at 797. Neither

Fannie Mae nor the FHFA challenge that Congress’s creation

of Fannie Mae furthered “governmental objectives.” See Am.

Bankers Mortg. Corp. v. Fed. Home Loan Mortg. Corp., 75

F.3d 1401, 1406–07 (9th Cir. 1996) (holding that Freddie Mac

satisfied the first two Lebron criteria). The real dispute in this

case centers on the final Lebron criterion: permanent

government control.

Herron urges that permanent government control is not

required under the Lebron framework. But “[w]e think Lebron

means what it says.” Hack, 237 F.3d at 84. To find that a

government-created corporation is a government actor for

constitutional purposes, Lebron clearly requires permanent

government control. See 513 U.S. at 398–99. Otherwise put,

permanency is “a necessary condition precedent” to consider a

government-created corporation part of the government.

Sprauve, 799 F.3d at 233 n.8 (citations omitted). We do not

read Department of Transportation v. Association of American

Railroads, 135 S. Ct. 1225 (2015), as dispensing with the

permanency requirement. Consistent with Lebron, the Court

in Association of American Railroads concluded that “the

practical reality of federal control and supervision,” not a

statutory disclaimer, controls when determining an entity’s

status. See id. at 1231–33; see also Lebron, 513 U.S. at 392–

93, 399. Because the government’s permanent control over

Amtrak was already established in Lebron, the Court had no

occasion to revisit that question in Association of American

Railroads. Moreover, we generally presume that the Court

13

does not overturn or limit its prior holdings through silence or

implication. See, e.g., Shalala v. Ill. Council on Long Term

Care, Inc., 529 U.S. 1, 18 (2000); Rodriguez de Quijas v.

Shearson/Am. Express, Inc., 490 U.S. 477, 484 (1989).

Accordingly, the Lebron framework requires permanency.

See, e.g., Meridian Invs., Inc. v. Fed. Home Loan Mortg. Corp.,

855 F.3d 573, 578–79 (4th Cir. 2017) (applying permanency

requirement after Association of American Railroads).

We therefore turn to the question of whether the federal

government exercises permanent control over Fannie Mae.

Fannie Mae’s organic statute, see 12 U.S.C. §§ 1716b, 1718(a),

1723(b), does not place it “under the direction and control of

federal governmental appointees,” cf. Lebron, 513 U.S. at 385–

86, 397–98. Herron, therefore, does not dispute that Fannie

Mae was a private entity before the conservatorship. See, e.g.,

Northrip v. Fed. Nat’l Mortg. Ass’n, 527 F.2d 23, 30–32 (6th

Cir. 1975); see also Am. Bankers, 75 F.3d at 1407–09 (applying

the Lebron framework and concluding that pre-conservatorship

Freddie Mac was not a government actor because the

government did not “control the operation of Freddie Mac

through its appointees” (quoting Lebron, 513 U.S. at 399)

(alterations omitted)). Rather, she argues that the FHFA’s

conservatorship converted Fannie Mae into a government actor

because it gave the government de facto permanent control

over Fannie Mae. As noted, HERA authorized the FHFA “to

undertake extraordinary economic measures” with regard to

Fannie Mae, including placing it into conservatorship. Perry

Capital, 848 F.3d 1080–81. Herron asserts that the

conservatorship transformed Fannie Mae into a government

actor because the federal government now exercises “pervasive

and far-reaching” control over Fannie Mae, including the

authority to determine its future. This is not the first time a

plaintiff has advanced this argument, see, e.g., Rubin v. Fannie

Mae, 587 F. App’x 273, 275 (6th Cir. 2014); Wright v. Fed.

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Nat’l Mortg. Ass’n, No. 1:13-cv-4294, 2014 WL 12042555, at

*2–3 (N.D. Ga. Sept. 22, 2014), and it is not without some

appeal. Nevertheless, Herron’s argument misses the mark

because the conservatorship does not amount to permanent

government control.

The FHFA became conservator “for the purpose of

reorganizing, rehabilitating, or winding up the affairs” of

Fannie Mae. 12 U.S.C. § 4617(a)(2). Although there is no

specific termination date, the purpose of the conservatorship is

to restore Fannie Mae to a stable condition. See, e.g., id.

§ 4617(b)(2)(D) (giving the FHFA authority as conservator to

take actions “necessary to put [Fannie Mae] in a sound and

solvent condition” and “appropriate to carry on [its] business

. . . and preserve and conserve [its] assets and property”). “This

is an inherently temporary purpose.” Rubin, 587 F. App’x at

275. While the conservatorship authorized the government to

exercise substantial control over Fannie Mae, “that control is

temporary, ‘as a private corporation whose stock comes into

federal ownership might be.’” See Meridian Invs., 855 F.3d at

579 (quoting Lebron, 513 U.S. at 398). Thus, the government’s

indefinite but temporary control does not transform Fannie

Mae into a government actor. See Lebron, 513 U.S. at 399

(citing Reg’l Rail Reorganization Act Cases, 419 U.S. 102, 152

(1974)).

Further, as conservator, the FHFA succeeded to “all rights,

titles, powers, and privileges” of Fannie Mae. 12 U.S.C.

§ 4617(b)(2)(A)(i). This language evinces Congress’s

intention to have the FHFA step into Fannie Mae’s private

shoes. Perry Capital, 848 F.3d at 1103 & n.22. When it

stepped into these shoes, the FHFA “shed[] its government

character and . . . [became] a private party.” See Meridian

Invs., 855 F.3d at 579. But while the FHFA’s status changed,

the status of Fannie Mae, as the “shoes” into which the FHFA

15

stepped, did not. See United States ex rel. Adams v. Aurora

Loan Servs., Inc., 813 F.3d 1259, 1261 (9th Cir. 2016)

(explaining that the FHFA as conservator stepped into Fannie

Mae’s shoes, and “not the other way around”).

In conclusion, the conservatorship over Fannie Mae did

not create the type of permanent government control that is

required under Lebron, and we therefore affirm the district

court’s dismissal of Herron’s Bivens claim.

IV.

Herron asserts the following claims under District of

Columbia law against Fannie Mae in its capacity as a private

entity: (1) wrongful termination in violation of public policy;

(2) tortious interference with prospective contractual relations;

and (3) civil conspiracy. We review de novo the district court’s

grant of summary judgment against Herron, Robinson v.

Pezzat, 818 F.3d 1, 7 (D.C. Cir. 2016), and for the reasons

stated below, we affirm.

A.

The district court concluded that the EESA provided a

sufficient public policy to support Herron’s wrongful

termination in violation of public policy claim, but it granted

summary judgment against her because she failed to satisfy the

“close fit” analysis. See Summary Judgment Opinion, 2016

WL 1177918, at *16, *19–23, *25–27. We affirm the district

court’s ultimate determination on the alternative ground that no

public policy exception exists under the EESA.

The District of Columbia has long recognized that an

at-will employee may be discharged “at any time and for any

reason, or for no reason at all.” Liberatore v. Melville Corp.,

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168 F.3d 1326, 1329 (D.C. Cir. 1999) (quoting Adams v.

George W. Cochran & Co., 597 A.2d 28, 30 (D.C. 1991)). But

the District of Columbia Court of Appeals has recognized a

“very narrow” public policy exception to the at-will

employment doctrine. Id. (quoting Adams, 597 A.2d at 34).

Although the exception initially applied only to cases in which

an employee was discharged for refusal to violate the law,

courts may recognize additional public policy exceptions on a

case-by-case basis. See Fingerhut v. Children’s Nat’l Med.

Ctr., 738 A.2d 799, 803–04 (D.C. 1999).

An exception warrants recognition if it is “firmly anchored

either in the Constitution or in a statute or regulation which

clearly reflects the particular ‘public policy’ being relied upon”

and there is “a close fit between the policy thus declared and

the conduct at issue in the allegedly wrongful termination.”

Carl v. Children’s Hosp., 702 A.2d 159, 162, 164 (D.C. 1997)

(Terry, J., concurring); 1 see also Liberatore, 168 F.3d at 1331;

Fingerhut, 738 A.2d at 803 n.7. “By tying new causes of action

to statutory and constitutional provisions,” courts are prevented

from “defining nebulous concepts of public policy” and

creating exceptions based on conduct that “simply tends to be

injurious to the public or against the public good.” Rosella v.

Long Rap, Inc., 121 A.3d 775, 778 (D.C. 2015) (citations and

internal quotation marks omitted). Without this statutory

anchor, the at-will doctrine would be reduced to “a virtual

nullity.” Carl, 702 A.2d at 163 (Terry, J., concurring).

Herron seeks to have this Court create a public policy

exception to the at-will doctrine based on the EESA. That

statute, Herron argues, reflects specific public policy interests

1

Judge Terry’s concurrence in Carl “constitutes the effective

holding of the en banc court.” Rosella v. Long Rap, Inc., 121 A.3d

775, 778 n.3 (D.C. 2015); see also Liberatore, 168 F.3d at 1331.

17

in preventing foreclosures and protecting taxpayers’ interests,

which are directly relevant to Herron’s purported disclosures

of Fannie Mae’s maladministration of MHAP. The district

court agreed, holding that Herron’s “claimed public policy of

disclosing or protecting against the gross mismanagement and

the gross waste of public funds is ‘clearly reflected’ and ‘firmly

anchored’” in the EESA. Summary Judgment Opinion, 2016

WL 1177918, at *19–20. In this, the district court erred.

“[A]ny judicially recognized public policy exception to the

at-will doctrine” must be “‘carefully tethered’ to rights

officially recognized in statutes or regulations . . . .” Carl, 702

A.2d at 164 (Terry, J., concurring). For this reason, one

“common denominator” can be found in all of the cases

applying the public policy exception: “the existence of specific

laws or regulations that clearly reflect a policy prohibiting the

activity about which the employee complained . . . .” Leyden

v. Am. Accreditation Healthcare Comm’n, 83 F. Supp. 3d 241,

249 (D.D.C. 2015) (collecting cases); see also Freas v. Archer

Servs., Inc., 716 A.2d 998, 999–1003 (D.C. 1998) (noting that

plaintiff alleged facts demonstrating that he was discharged “in

violation of a mandate explicitly set forth in [D.C.] law”). That

common denominator is missing in this case.

The EESA provisions the district court relied upon simply

identify the general purpose of the statute and the goals the

Secretary must consider in exercising his statutory authority.

See 12 U.S.C. §§ 5201, 5213. Sections 5201 and 5213 neither

“set out a standard of conduct” for Fannie Mae nor “embody a

specific public policy prohibiting [an employer] from engaging

in the conduct [the employee] alleges.” Leyden, 83 F. Supp. 3d

at 249. These sections do not offer the sort of “declaration of

policy . . . needed to support a public policy exception to the

at-will doctrine,” Carl, 702 A.2d at 165 n.9 (Terry, J.,

concurring), and courts are prohibited from creating new

18

exceptions by “broaden[ing] the policies expressed” in a statute

or “fill[ing] a perceived gap in the statute,” id. at 162–63

(Terry, J., concurring) (citation, internal quotation marks, and

alteration omitted). Relying on these provisions to create a new

public policy exception would contravene the District of

Columbia Court of Appeals’ admonition against finding

generalized exceptions. See Rosella, 121 A.3d at 778. The

district court therefore erred in concluding that Herron had

identified a clear source of public policy upon which to base an

exception to the at-will doctrine.

But, because we reject Herron’s request to recognize an

exception that is not clearly reflected or firmly anchored in a

statute or regulation, we affirm the district court’s granting of

summary judgment against Herron on her wrongful

termination claim.

B.

To support her tortious interference with prospective

contractual relations claim, Herron relies on three

expectancies: (1) working as a Fannie Mae contractor

embedded at Treasury; (2) working as a Fannie Mae contractor

on non-HAMP projects; and (3) working for the Collingwood

Group. Under District of Columbia law, a tortious interference

with prospective contractual relations claim requires a valid

business expectancy, the defendant’s knowledge of the

expectancy, intentional interference causing a termination of

the expectancy, and damages. See Banneker Ventures, LLC v.

Graham, 798 F.3d 1119, 1134 (D.C. Cir. 2015); Browning v.

Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002); Havilah Real

Prop. Servs., LLC v. VLK, LLC, 108 A.3d 334, 345–46 (D.C.

2015). This theory of tortious interference protects “business

expectancies, not grounded on present contractual relationships

but which are commercially reasonable to anticipate, . . . from

19

unjustified interference.” Carr v. Brown, 395 A.2d 79, 84

(D.C. 1978). Because Herron has not identified a valid

business expectancy, her claim fails.

Herron cannot maintain a claim for tortious interference

based on either of her expectancies of working as an at-will

Fannie Mae contractor. The District of Columbia Court of

Appeals has been reluctant to recognize a claim for tortious

interference with prospective contractual relations based on a

prospective at-will relationship. See, e.g., McManus v. MCI

Commc’ns Corp., 748 A.2d 949, 957–58 (D.C. 2000). In an

attempt to overcome the at-will hurdle, Herron alleges that she

had a reasonable expectation of continuing employment

because Fannie Mae “routinely and automatically renewed”

contracts such as hers. Even assuming these contracts were

routinely renewed, that fact is insufficient to rebut the at-will

presumption. See id. at 957 (holding that at-will employee

could not base her tortious interference claim on “a long-term

employment relationship and an expectancy of continuing

employment relations with [the defendant]”); Bible Way

Church of Our Lord Jesus Christ of the Apostolic Faith of

Washington, D.C. v. Beards, 680 A.2d 419, 433 (D.C. 1996)

(concluding that plaintiffs failed to state a tortious interference

claim based on an allegation of “a tacit agreement” of

continued employment); see also Summary Judgment Opinion,

2016 WL 1177918, at *14 (rejecting Herron’s argument that

she was not an at-will contractor).

Herron’s claim fails for “an additional simple reason.”

Summary Judgment Opinion, 2016 WL 1177918, at *14. In

this case, Herron argues that Fannie Mae interfered with her

prospective contractual relations with Fannie Mae. But, just as

an employer cannot interfere with its own contract, Fannie Mae

cannot interfere with its own business relationships. See Little

v. Dist. of Columbia Water & Sewer Auth., 91 A.3d 1020, 1030

20

n.12 (D.C. 2014); Paul v. Howard Univ., 754 A.2d 297, 309–

10 (D.C. 2000); McManus, 748 A.2d at 957–58; see also

Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1255

(D.C. Cir. 2005) (noting that “the duty not to interfere with the

plaintiff’s economic relationship with a third party” underlies

tortious interference claims); Dow Chem. Corp. v. Weevil-Cide

Co., 897 F.2d 481, 488–89 (10th Cir. 1990) (explaining that,

for purposes of a tortious interference with prospective

contractual relations claim, “one cannot ‘interfere’ with its own

affairs”).

We also conclude that Herron’s proffered expectancy

outside of Fannie Mae is too remote to support a tortious

interference claim. The prospect of obtaining employment is a

recognized expectancy protected from interference. Carr, 395

A.2d at 84. But any expectancy “‘must be commercially

reasonable to anticipate’ before its loss may be actionable.”

Banneker Ventures, 798 F.3d at 1134 (quoting Browning, 292

F.3d at 242). As the District of Columbia Court of Appeals has

recognized, some expectancies are “simply too remote” to

support a tortious interference claim. Carr, 395 A.2d at 84.

Herron argues that she “pursued a position” at the Collingwood

Group by discussing potential opportunities with the

company’s president. To have an actionable claim, however,

she must show “a probability of future contractual or economic

relationship and not a mere possibility.” Havilah Real Prop.

Servs., 108 A.3d at 351 (citation omitted); cf. Banneker

Ventures, 798 F.3d at 1134–35 (holding that the plaintiff had

demonstrated “far more than a ‘hope’” of a future relationship).

There is nothing in the record—such as a “prospective final

agreement,” see Banneker Ventures, 798 F.3d at 1135—to

support an inference that it was commercially reasonable for

Herron to anticipate employment with the Collingwood Group.

Herron’s claim that she pursued a position, standing alone, falls

21

short of establishing a valid business expectancy. Cf.

Browning, 292 F.3d at 242–43.

Because Herron failed to demonstrate a genuine issue of

material fact as to any valid business expectancy, we affirm the

district court’s grant of summary judgment.

C.

Herron alleged in her complaint that Fannie Mae and the

individual defendants conspired to wrongfully terminate her

contract work. Citing Myers v. Alutiiq International Solutions,

LLC, 811 F. Supp. 2d 261 (D.D.C. 2011), she argues on appeal

that, instead of pursuing a conspiracy claim, she can proceed

directly against the individual defendants on her wrongful

termination claim. See id. at 268–70 (holding that D.C. case

law suggests that a plaintiff may be able assert claims for

wrongful termination against individual employees). It

appears, therefore, that Herron has dropped her civil conspiracy

claim. In any event, since Herron has failed to establish a

cognizable underlying tort, her conspiracy claim fails. See

Browning, 292 F.3d at 245. We therefore affirm the district

court’s grant of summary judgment.

V.

Herron also challenges two discovery rulings, which we

review only for abuse of discretion. Jankovic v. Int’l Crisis

Grp., 822 F.3d 576, 584 (D.C. Cir. 2016); Brune v. IRS, 861

F.2d 1284, 1288 (D.C. Cir. 1988).

A.

Herron asserts that the district court abused its discretion

by denying discovery into the government’s control of Fannie

22

Mae before dismissing her Bivens claim. A Rule 12(b)(6)

motion to dismiss tests the legal sufficiency of a plaintiff’s

complaint; it does not require a court to “assess the truth of

what is asserted or determine whether a plaintiff has any

evidence to back up what is in the complaint.” Browning, 292

F.3d at 242 (citations, internal quotation marks, and alteration

omitted). For this reason, Herron was not entitled to discovery

before the court ruled on the motion to dismiss. See, e.g.,

Mujica v. AirScan Inc., 771 F.3d 580, 593 & n.7 (9th Cir.

2014); Kolley v. Adult Protective Servs., 725 F.3d 581, 587 (6th

Cir. 2013). In addition, for purposes of the motion to dismiss,

the district court assumed that the federal government would

not allow Fannie Mae to emerge from the conservatorship as a

private entity, which is precisely the information Herron sought

in discovery. Because Herron failed to state a Bivens claim

against Fannie Mae, the district court did not abuse its

discretion by denying her discovery into Fannie Mae’s status

as “a Lebron state actor.” See Hack, 237 F.3d at 84–85.

B.

Herron also argues that she was entitled to discovery into

the facts underlying a report that details the results of an

investigation into Herron’s allegations undertaken by Fannie

Mae. See Summary Judgment Opinion, 2016 WL 1177918, at

*7 n.8 (discussing the report). During a telephone conference

in or around April 2011, the district court denied Herron’s

discovery request but did not memorialize its order. We are

constrained in our review because Herron failed to follow the

proper procedure to allow this Court to adequately consider the

district court’s discovery ruling. When a district court makes a

ruling off the record, Rule 10(c) of the Federal Rules of

Appellate Procedure provides an appellant with a mechanism

to reconstruct the record and bring that ruling before an

appellate court. See FED. R. APP. P. 10(c). Herron, as the

23

appellant, bore the burden of invoking and complying with

Rule 10(c) to properly challenge the district court’s ruling

denying discovery into the report. Because the district court’s

ruling was not memorialized and Herron failed to comply with

the procedure set forth in Rule 10(c), “meaningful appellate

review is virtually impossible.” Badami v. Flood, 214 F.3d

994, 999 (8th Cir. 2000). Under these circumstances, “we have

no option but to defer to the district court’s ruling . . . .”

SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1517 (10th Cir.

1990).

***

For the reasons stated above, the district court’s orders are

affirmed.

So ordered.