Case 1:04-cv-01639-RJL Document 780 Filed 09/14/09 Page 1 of 6

UNITED STATES DISTRICT COURT DISTRICT OF COLUMBIA

In re Federal National Mortgage Association Securities, Derivative, and ERISA Litigation

MDL No. 1688

In re Fannie Mae Securities Litigation

Consolidated Civil Action No. 1:04-cv-01639 (RJL)

INDIVIDUAL DEFENDANTS OPPOSITION TO FHFAS MOTION TO QUASH THE DEPOSITION SUBPOENA OF AUGUST 20, 2009, AND FOR A PROTECTIVE ORDER OFHEOs motion to quash is yet another motion to reconsider the same arguments the agency has made, and this Court has rejected, for more than three years. Neither the governing law nor the critical facts has changed since the Court rejected these arguments, and OFHEOs motion should be denied.1 Remarkably, OFHEO argues that the deposition of one additional OFHEO employee would constitute an undue burden. This familiar argument merits little response. In July 2007, during the oral argument related to OFHEOs last motion to quash deposition subpoenas, counsel for Mr. Howard noted that the Individual Defendants might need the depositions of up to 15 OFHEO witnesses. See Hrg Tr. 80:16-81:14 (July 19, 2007); see also Non-Party OFHEOs Motion to Quash Raines and Howards Subpoenas, or For a Protective Order or, Alternatively, to Stay Compliance With Those Subpoenas (June 4, 2007) (Dkt. No. 421). Nevertheless, the Individual Defendants have requested only 9 depositions of OFHEO personnel, but have consistently reserved their rights to seek additional depositions, where appropriate.2

This Court (and the D.C. Circuit Court of Appeals) has already considered and resolved OFHEOs arguments about undue burden. See, e.g., Non-Party OFHEOs Motion to Quash Raines and Howards Subpoenas, or For a Protective Order or, Alternatively, to Stay Compliance With Those Subpoenas (June 4, 2007) (Dkt. No. 421); Minute Order Denying OFHEOs Motion (Dkt. No. 421) (Oct. 31, 2007). The Individual Defendants hereby incorporate their arguments, made over several years, to OFHEOs complaints, and we will not rehash those arguments here. OFHEOs reliance on a purported agreement to limit the number of depositions is without basis. The referenced agreement was conditioned upon OFHEO upon working with the Individual Defendants and the Court to expedite the discovery process. As the Court is well aware, OFHEO elected not to provide

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The Individual Defendants seek the deposition testimony of Ms. Corinne Russell, an employee in OFHEOs Office of External Relations. OFHEO complains that the Individual Defendants could have subpoenaed Ms. Russell at an earlier date and that the exhaustive deposition of Ms. Russells direct superior, Mr. Peter Brereton, is entirely duplicative of Ms. Russells anticipated testimony. See Mem. at 2-3, 6-8 (Aug. 31, 2009) (Dkt. No. 773). OFHEOs arguments are utterly without merit. The Individual Defendants elected to depose Mr. Brereton in anticipation that they would not need to depose Ms. Russell. Both Mr. Brereton and Ms. Russell were authors or recipients of correspondence that establishes OFHEOs continued efforts to leak confidential information to harm Fannie Maes stock price and force the enterprise to submit to [OFHEOs] will, see, e.g., U.S. Dept of Housing and Urban Development, Office of Inspector General, Report of Investigation (Case Number SID-04-0034-I) at 11 (Oct. 5, 2004). Accordingly, the Individual Defendants chose to depose the Associate Director of the Office of External Relations, as opposed to his subordinate. As OFHEO is aware, however, during Mr. Breretons one-day deposition, he claimed more than 200 times that he could not recall or remember key events or policies.3 Only after Mr. Brereton claimed that he could not recall critical policies in the office he directs along with events related to OFHEOs efforts to leak confidential information did the Individual Defendants serve a deposition subpoena on Ms. Russell. In light of Mr. Breretons purported lack of recollection, Ms. Russells testimony will be neither cumulative nor duplicative. The Lead Plaintiffs joinder motion is consistent with their ongoing cooperation with OFHEO and longstanding efforts to obstruct the Individual Defendants discovery, but it raises no new arguments. Unfortunately, the Lead Plaintiffs have merely used the opportunity to draw a false analogy
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the requested information, to misrepresent its compliance with subpoenas and Court orders, and then to appeal this Courts finding of contempt, which delayed OFHEO discovery for one full year.
3

Mr. Breretons deposition was scheduled for two days, but it was completed after one day full of Mr. Breretons purported inability to recall any of the critical events or policies in the office he leads. Although Lead Plaintiffs continue to claim that all OFHEO discovery is irrelevant, they served a subpoena on OFHEO before any other party; they sought the opportunity to review more than 200,000 documents produced by OFHEO in connection with this Courts contempt and exempt orders; and they have reserved between 30 minutes to 2 hours for the depositions of each OFHEO deponent.

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between (i) the fact discovery the Individual Defendants seek from OFHEO and (ii) the expert opinions the Lead Plaintiffs seek from the SEC and its former Chief Accountant, Donald Nicolaisen. See Lead Plaintiffs Joinder in FHFAs Motion at 1-3 (Sept. 2, 2009) (Dkt. No. 776); see also Memorandum in Support of Lead Plaintiffs Motion to Compel Testimony from Donald Nicolaisen, or Alternatively, to Quash Any Future Deposition Discovery of OFHEO By Defendants (Aug. 27, 2009) (Dkt. No. 772-2). Our respective discovery efforts cannot be compared. First, the Individual Defendants have sought fact discovery from OFHEO, which issued two special examination reports that Lead Plaintiffs have incorporated by reference into the Second Amended Consolidated Class Action Complaint, see, e.g., Second Amended Complaint 20(f), 38-47, 113, 167, 174. 200, 325, 345, 358-59, 370, 407(c) (incorporating the 2004 OFHEO Report of Findings to Date); id. 86-91, 136, 315, 332, 346, 352, 371, 373, 418, 436 (incorporating the 2006 OFHEO Report of the Special Examination of Fannie Mae), and which form the basis for and heart of the Lead Plaintiffs lawsuit. As the Individual Defendants have notedand discovery from OFHEO has helped to confirm OFHEOs reports were politically motivated efforts and directed, in part, to harm Fannie Maes stock price and compel the company to submit to OFHEOs will. It is this reality, perhaps, that animates the Lead Plaintiffs support of OFHEO to object to one additional deposition. Second, a substantial portion of the OFHEO testimony pertains to OFHEOs communications to Fannie Mae management, in real time, in which OFHEO reviewed and approved Fannie Maes accounting policies and practices. As this Court has repeatedly found, this testimony is relevant fact evidence pertaining to, inter alia, the Individual Defendants state of mindi.e., what they knew and what they were told about the policies and practices as to which the Lead Plaintiffs must establish scienter. This contrasts sharply with the SEC testimony the Lead Plaintiffs seek to elicit and introduce, which amounts to no more than after-the-fact expert opinions in the guise of fact discovery. Notwithstanding the Lead Plaintiffs assertions, Mr. Raines has not argued that all discovery from any regulator is inadmissible as opinion evidence by a regulator. Lead Plaintiffs Joinder in FHFAs Motion at 4. Mr. Raines argues that if the Lead Plaintiffs use the SEC or Mr. Nicolaisen as experts, then

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they must meet all of the requirements of the Federal Rules of Civil Procedure, the Federal Rules of Evidence, and this Courts rules. See, e.g., Memorandum in Support of Franklin D. Rainess Motion to Compel 30(b)(6) Testimony from the Securities and Exchange Commission at 1-7 (Aug. 4, 2009) (Dkt. No. 766-2); Letter from Richard M. Humes, Associate General Counsel, Securities and Exchange Commission, to Melanie S. Corwin at 3-4 (Aug. 14, 2009) (Dkt. No. 769-6) (Exhibit D to Opposition of Securities and Exchange Commission to Defendant Raines Motion to Compel Rule 30(b)(6) Deposition (Aug. 17, 2009) (Dkt. No. 769)); KPMG LLPs Response in Opposition to Lead Plaintiffs Motion to Compel Testimony from Donald Nicolaisen Or, Alternatively, To Quash Any Future Deposition Discovery of OFHEO by Defendants at 4-5 (Sept. 9. 2009) (Dkt. No. 779). The Lead Plaintiffs strained attempt to justify their solicitation of expert opinion testimony from the SEC is unpersuasive and should not be countenanced. * * * * *

The Individual Defendants anticipate that the deposition of Ms. Russell will last no more than one day, and, as noted in correspondence to counsel for OFHEO, we remain willing to negotiate a mutually convenient date for that deposition. OFHEOs claim that this one-day deposition will constitute an undue burden on the agency is an old argument that has been rejected by this Court and is incredible on its face. In addition, the testimony of Mr. Breretonin which he claimed not to recall or remember more than 200 timesonly confirms that Ms. Russells testimony will not be cumulative or duplicative. The Individual Defendants respectfully request that the Court deny OFHEOs motion.

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Dated: September 14, 2009

Respectfully submitted,

/s/ Alex G. Romain Kevin M. Downey (D.C. Bar No. 438547) Alex G. Romain (D.C. Bar No. 468508) Eun Young Choi (D.C. Bar No. 987677) Antony K. Haynes (admitted pro hac vice) WILLIAMS & CONNOLLY LLP 725 Twelfth Street, N.W. Washington, DC 20005 (202) 434-5164 (telephone) (202) 434-5029 (facsimile) Counsel for Defendant Franklin D. Raines /s/ Eric R. Delinsky Steven M. Salky (D.C. Bar No. 360175) Eric R. Delinsky (D.C. Bar No. 460958) Miles Clark (D.C. Bar No. 489388) ZUCKERMAN SPAEDER LLP 1800 M Street, NW, Suite 1000 Washington, DC 20036 (202) 778-1800 (telephone) (202) 822-8106 (facsimile) Counsel for Defendant J. Timothy Howard /s/ Christopher F. Regan David S. Krakoff (D.C. Bar No. 229641) Christopher F. Regan (D.C. Bar No. 433972) Adam Miller (D.C. Bar No. 496339) MAYER BROWN LLP 1909 K Street, NW Washington, DC 20006 (202) 263-3000 (telephone) (202) 263-3300 (facsimile) Counsel for Defendant Leanne G. Spencer

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CERTIFICATE OF SERVICE I certify that on September 14, 2009, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to the counsel of record in this matter who are registered on CM/ECF.

/s/ Alex G. Romain Alex G. Romain

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