The U.S. Court of Appeals for the District of Columbia Circuit is quite the place to be these days, especially if you have issues with how the federal government functions.

Fresh off handing down a significant ruling in the battle over the constitutionality of the Consumer Financial Protection Bureau, the D.C. Court of Appeals just dealt a sizable body blow to the investors who claimed that the government’s decision to sweep all the profits from Fannie Mae and Freddie Mac into the government’s coffers was not only unnecessary, but illegal as well.

In a 2-1 ruling, the D.C. Court of Appeals ruled that Fannie and Freddie shareholders, including the hedge funds that bet on Fannie and Freddie being released from conservatorship, cannot not pursue many of their claims against the government.

But all is not lost for the Fannie and Freddie investors, as the court ruled that some claims are to be remanded back down to lower courts for future rulings.

The issue at hand is the so-called “Third Amendment sweep,” in which the federal government modified its conservatorship agreement with Fannie and Freddie to direct all profits from the government-sponsored enterprises to the Department of the Treasury.

The government claimed at the time that the previous version of the conservatorship agreement, which required Fannie and Freddie to send a quarterly dividend to the Treasury, only led to the GSEs needing to draw funds simply to send them right back to the government.

So, the government enacted the “Third Amendment sweep,” which results in Fannie and Freddie sending their profits to the Treasury. For example, Fannie will soon send $5.5 billion to the Treasury, while Freddie will send $4.5 billion, based on each of the GSEs financial performance in 2016.

After the government approved the “Third Amendment sweep” in 2012, a series of Fannie and Freddie shareholders sued the government. But they weren’t the only ones to sue.

Several hedge funds, including Perry Capital, sued as well, claiming the government was illegally seizing profits from Fannie and Freddie and destroying shareholder holdings at the same time.

Perry Capital’s suit is the subject of D.C. Court of Appeals’ ruling, which denied much of the Perry Capital’s claims, but the decision is not a total loss for the investors.

The entire decision is 103 pages, but here’s the important piece:

A number of Fannie Mae and Freddie Mac stockholders filed suit alleging that FHFA’s and Treasury’s alteration of the dividend formula through the Third Amendment exceeded their statutory authority under the Recovery Act, and constituted arbitrary and capricious agency action in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). They also claimed that FHFA, Treasury, and the Companies committed various common-law torts and breaches of contract by restructuring the dividend formula.

We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f). We also reject most of the stockholders’ common-law claims. Insofar as we have subject matter jurisdiction over the stockholders’ common-law claims against Treasury, and Congress has waived the agency’s immunity from suit, those claims, too, are barred by the Recovery Act’s limitation on judicial review. Id. As for the claims against FHFA and the Companies, some are barred because FHFA succeeded to all rights, powers, and privileges of the stockholders under the Recovery Act, id. § 4617(b)(2)(A); others fail to state a claim upon which relief can be granted. The remaining claims, which are contract-based claims regarding liquidation preferences and dividend rights, are remanded to the district court for further proceedings.

While the ruling, from Circuit Judge Patricia Millett and Senior Circuit Judge Douglas Ginsburg, is a setback for the investors, some of their claims can move forward.

As the opinion notes, the suit’s contract-based claims regarding liquidation preferences and dividend rights are sent back down to district court.

Again from the ruling:

We affirm the judgment of the district court that the institutional plaintiffs’ claims against the FHFA and Treasury alleging arbitrary and capricious conduct and conduct in excess of their statutory authority are barred by 12 U.S.C. § 4617(f). We affirm the district court’s dismissal of their common-law claims because they were not properly appealed. With respect to the class plaintiffs’ claims, we affirm the judgment of the district court on all claims except for the claims alleging breach of contract and breach of the implied covenant of good faith and fair dealing regarding liquidation preferences and the claim for breach of the implied covenant with respect to dividend rights, which claims we remand for further proceedings consistent with this opinion.

But the ruling wasn’t unanimous.

Circuit Judge Janice Rogers Brown dissented, arguing that the government stepped well outside its bounds when authorizing the sweep.

From Justice Brown’s dissent:

Regardless of whether Congress had many options or very few, it chose a well understood and clearly-defined statutory framework—one that drew upon the common law to clearly delineate the outer boundaries of the Agency’s conservator or, alternatively, receiver powers. FHFA pole vaulted over those boundaries, disregarding the plain text of its authorizing statute and engaging in ultra vires conduct. Even now, FHFA continues to insist its authority is entirely without limit and argues for a complete ouster of federal courts’ power to grant injunctive relief to redress any action it takes while purporting to serve in the conservator role. See FHFA Br. 21. While I agree with much of the Court’s reasoning, I cannot conclude the anti-injunction provision protects FHFA’s actions here or, more generally, endorses FHFA’s stunningly broad view of its own power. Plaintiffs— not all innocent and ill-informed investors, to be sure—are betting the rule of law will prevail. In this country, everyone is entitled to win that bet. Therefore, I respectfully dissent from the portion of the Court’s opinion rejecting the Institutional and Class Plaintiffs’ claims as barred by the antiinjunction provision and all resulting legal conclusions.

When assessing responsibility for the mortgage mess there is, as economist Tom Sowell notes, plenty of blame to be shared. Who was at fault? “The borrowers? The lenders? The government? The financial markets? The answer is yes. All were responsible and many were irresponsible.” THOMAS SOWELL, THE HOUSING BOOM AND BUST 28 (2009). But that does not mean more irresponsibility is the solution. Conservation is not a synonym for nationalization. Confiscation may be. But HERA did not authorize either, and FHFA may not do covertly what Congress did not authorize explicitly. What might serve in a banana republic will not do in a constitutional one.

FHFA, like the FDIC before it, was given broad powers to enable it to respond in a perilous time in U.S. financial history. But with great power comes great responsibility. Here, those responsibilities and the authority FHFA received to address them were well-defined, and yet FHFA disregarded them. In so doing, FHFA abandoned the protection of the anti-injunction provision, and it should be required to defend against the Institutional and Class Plaintiffs’ claims.

Commenting on the ruling, Tim Pagliara, the founder of Investors Unite, said that the group of GSE investors is pleased that some parts of the suit will be allowed to move forward, but holds out hope that the Trump administration will address GSE reform.

“We are pleased that the D.C. Circuit acknowledged that shareholders have direct contract rights which must be respected and we look forward to a resolution of those rights,” Pagliara said in a statement.

“We respectfully disagree with the opinion that FHFA has the power to do whatever it wants with Fannie Mae and Freddie Mac,” Pagliara added. “Neither HERA, nor any other statute gives it such power. Meanwhile, the net worth sweep continues to place the U.S. taxpayer at risk by depriving these companies of adequate capital. We hope that the Trump Administration will put an end to this wrong by ending the sweep now and restoring the rights of shareholders.”

To read the court’s opinion in full, click here.