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    Carvelli v OCWEN Financial Who Regulates Whom? Who's Regulating the BANKS & SERVICER'S? FORECLOSURE COMPLAINTS UP STATES THE CFPB Verified listing

    • Date
      April 21, 2017
    • City/County
      West Palm Beach
    • Type of Case
      Cause: 15:0077 Securities Fraud Nature of Suit: 850 Securities/Commodities
    • Case Details
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    Title

    Carvelli v OCWEN Financial Who Regulates Whom? Who's Regulating the BANKS & SERVICER'S? FORECLOSURE COMPLAINTS UP STATES THE CFPB

    Case Number

    9:17-cv-80500

    State or Country
    Florida
    Judges

    Assigned To: Judge Robin Lee Rosenberg

    Referred To: Judge Dave Lee Brannon

    Defendant

    Ocwen Financial Corporation
    Ronald M. Faris
    Michael R. Bourque Jr.

    Plaintiff Attorney

    Ryan Huseman
    REPRESENTED BY

    Leo Wassner Desmond
    (772) 231-9600
    Fax: (772) 231-0300
    Leo Wassner Desmond
    5070 N. Highway A1A
    Suite D
    Vero Beach, FL 32963
    ATTORNEY TO BE NOTICED
    LEAD ATTORNEY

    Karen A. Carvelli
    REPRESENTED BY

    J. Alexander Hood , II
    (212) 661-1100
    Fax: (212) 661-8665
    Pomerantz, LLP
    600 Third Ave.
    Floor 20
    New York, NY 10016

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    PRO HAC VICE

    Jayne Arnold Goldstein
    (954) 903-3170
    Fax: (866) 300-7367
    Shepherd Finkelman Miller & Shah
    1625 N. Commerce Parkway
    Suite 320
    Ft.Lauderdale, FL 33326

    ATTORNEY TO BE NOTICED

    Patrick V. Dahlstrom
    (312) 377-1181
    Fax: (312) 377-1184
    Pomerantz LLP
    10 South LaSalle
    Suite 3505
    Chicago, IL 60603
    ATTORNEY TO BE NOTICED
    LEAD ATTORNEY
    PRO HAC VICE

    University of Puerto Rico Retirement System
    REPRESENTED BY

    Atara Hirsch
    (212) 279-5050
    Abraham Fruchter & Twersky LLP
    One Penn Plaza
    Suite 2805
    New York, NY 10119

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    PRO HAC VICE

    Ian D. Berg
    (858) 764-2580
    Abraham Fruchter and Twersky LLP
    11622 El Camino Real
    Suite 100
    San Diego, CA 92130

    ATTORNEY TO BE NOTICED

    PRO HAC VICE

    Jake Nachmani
    (212) 279-5050
    Abraham Fruchter & Twersky LLP
    One Penn Plaza
    Suite 2805
    New York, NY 10119

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    PRO HAC VICE

    Julie Prag Vianale
    (561) 392-4750
    Fax: (561) 961-5191
    Vianale & Vianale
    5550 Glades Road
    Suite 500
    Boca Raton, FL 33431

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    Lawrence D. Levit
    (212) 279-5050
    Abraham Fruchter & Twersky LLP
    One Penn Plaza
    Suite 2805
    New York, NY 10119

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    PRO HAC VICE

    Matthew E. Guarnero
    (212) 279-5050
    Abraham Fruchter & Twersky LLP
    One Penn Plaza
    Suite 2805
    New York, NY 10119

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    PRO HAC VICE

    Mitchell M. Z. Twersky
    (212) 279-5050
    Abraham Fruchter & Twersky LLP
    One Penn Plaza
    Suite 2805
    New York, NY 10119
    ATTORNEY TO BE NOTICED
    LEAD ATTORNEY
    PRO HAC VICE

    Social Networks
    • Other
    Document Links 1 (Scribd et. al)

    https://www.courtlistener.com/recap/gov.uscourts.flsd.505134.1.0.pdf

    Document Link 2

    https://www.courtlistener.com/docket/5543878/carvelli-v-ocwen-financial-corporation/

    Date
    April 21, 2017
    Type of Case
    Cause: 15:0077 Securities Fraud Nature of Suit: 850 Securities/Commodities
    The Court the Case was filed in

    USDC of the Southern District of Florida

    County/City:
    West Palm Beach
    Plaintiff

    Karen A. Carvelli
    University of Puerto Rico Retirement System
    Ryan Huseman

    Defendant Attorney

    Ryan Huseman
    REPRESENTED BY

    Leo Wassner Desmond
    (772) 231-9600
    Fax: (772) 231-0300
    Leo Wassner Desmond
    5070 N. Highway A1A
    Suite D
    Vero Beach, FL 32963
    ATTORNEY TO BE NOTICED
    LEAD ATTORNEY

    Ocwen Financial Corporation
    REPRESENTED BY

    Jason M. Moff
    (212) 715-9913
    Kramer Levin Naftalis and Frankel LLP
    1177 Ave. of the Americas
    New York, NY 10036

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    PRO HAC VICE

    Jeffrey Allan Hirsch
    (954) 765-0500
    Greenberg Traurig
    401 E. Las Olas Blvd.
    Suite 2000
    Fort Lauderdale, FL 33301

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    John P. Coffey
    (212) 715-9456
    Kramer Levin Naftalis and Frankel LLP
    1177 Ave. of the Americas
    New York, NY 10036

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    PRO HAC VICE

    Jonathan M. Wagner
    (212) 715-9393
    Kramer Levin Naftalis and Frankel LLP
    1177 Ave. of the Americas
    New York, NY 10036
    ATTORNEY TO BE NOTICED
    LEAD ATTORNEY
    PRO HAC VICE

    Ronald M. Faris
    REPRESENTED BY

    Jason M. Moff
    (212) 715-9913
    Kramer Levin Naftalis and Frankel LLP
    1177 Ave. of the Americas
    New York, NY 10036

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    PRO HAC VICE

    Jeffrey Allan Hirsch
    (954) 765-0500
    Greenberg Traurig
    401 E. Las Olas Blvd.
    Suite 2000
    Fort Lauderdale, FL 33301

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    John P. Coffey
    (212) 715-9456
    Kramer Levin Naftalis and Frankel LLP
    1177 Ave. of the Americas
    New York, NY 10036

    ATTORNEY TO BE NOTICED

    LEAD ATTORNEY

    PRO HAC VICE

    Jonathan M. Wagner
    (212) 715-9393
    Kramer Levin Naftalis and Frankel LLP
    1177 Ave. of the Americas
    New York, NY 10036
    ATTORNEY TO BE NOTICED
    LEAD ATTORNEY
    PRO HAC VICE

    Comments

    Class Action Complaint

    Plaintiff Karen A. Carvelli (“Plaintiff”), individually and on behalf of all other persons
    similarly situated, by her undersigned attorneys, for her complaint against Defendants, alleges the
    following based upon personal knowledge as to herself and her own acts, and information and
    belief as to all other matters, based upon, inter alia, the investigation conducted by and through
    her attorneys, which included, among other things, a review of the Defendants’ public documents,
    conference calls and announcements made by Defendants, United States Securities and Exchange
    Commission (“SEC”) filings, wire and press releases published by and regarding Ocwen Financial
    Corporation (“Ocwen” or the “Company”), analysts’ reports and advisories about the Company,
    and information readily obtainable on the Internet. Plaintiff believes that substantial evidentiary
    support will exist for the allegations set forth herein after a reasonable opportunity for discovery.

    NATURE OF THE ACTION
    1. This is a federal securities class action on behalf of a class consisting of all persons
    other than defendants who purchased or otherwise acquired Ocwen securities between May 11,
    2015 and April 19, 2017, both dates inclusive (the “Class Period”), seeking to recover damages
    caused by defendants’ violations of the federal securities laws and to pursue remedies under
    Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule
    10b-5 promulgated thereunder, against the Company and certain of its top officials.
    2. Ocwen Financial Corporation is diversified financial services holding company.
    The Company's primary businesses are the acquisition, servicing, and resolution of sub-performing
    and nonperforming residential and commercial mortgage loans, as well as the related development
    of loan servicing technology and business-to business e-commerce solutions for the mortgage and
    real estate industries.
    3. Founded in 1988, the Company is headquartered in West Palm Beach, Florida.
    Ocwen’s stock trades on the New York Stock Exchange (“NYSE”) under the ticker symbol
    “OCN.”
    4. Throughout the Class Period, Defendants made materially false and misleading
    statements regarding the Company’s business, operational and compliance policies. Specifically,
    Defendants made false and/or misleading statements and/or failed to disclose that: (i) Ocwen
    engaged in significant and systemic misconduct at nearly every stage of the mortgage servicing
    process; (ii) the foregoing conduct, when it became known would subject the Company to
    heightened regulatory scrutiny and potential criminal sanctions; (iii) as a result of the foregoing,
    Ocwen’s public statements were materially false and misleading at all relevant times.
    5. On April 20, 2017, the U.S. Consumer Financial Protection Bureau (“CFPB”)
    issued a press release entitled “Consumer Financial Protection Bureau sues Ocwen for failing borrowers throughout mortgage servicing process,” reporting that the Company had generated
    errors in borrowers’ accounts, failed to credit payments, illegally foreclosed on homeowners, and
    charged borrowers for add-on products without their consent. The press release, in part:
    WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB)
    today sued one of the country’s largest nonbank mortgage loan servicers, Ocwen
    Financial Corporation, and its subsidiaries for failing borrowers at every stage of
    the mortgage servicing process. The Bureau alleges that Ocwen’s years of
    widespread errors, shortcuts, and runarounds cost some borrowers money and
    others their homes. Ocwen allegedly botched basic functions like sending
    accurate monthly statements, properly crediting payments, and handling taxes
    and insurance. Allegedly, Ocwen also illegally foreclosed on struggling
    borrowers, ignored customer complaints, and sold off the servicing rights to loans
    without fully disclosing the mistakes it made in borrowers’ records. The Florida
    Attorney General took a similar action against Ocwen today in a separate lawsuit.
    Many state financial regulators are also independently issuing cease-and-desist and
    license revocation orders against Ocwen for escrow management and licensing
    issues today.
    “Ocwen has repeatedly made mistakes and taken shortcuts at every stage of the
    mortgage servicing process, costing some consumers money and others their
    homes,” said CFPB Director Richard Cordray. “Borrowers have no say over who
    services their mortgage, so the Bureau will remain vigilant to ensure they get fair
    treatment.”
    Ocwen, headquartered in West Palm Beach, Fla., is one of the nation’s largest
    nonbank mortgage servicers. As of Dec. 31, 2016, Ocwen serviced almost 1.4
    million loans with an aggregate unpaid principal balance of $209 billion. It services
    loans for borrowers in all 50 states and the District of Columbia. A mortgage
    servicer collects payments from the mortgage borrower and forwards those
    payments to the owner of the loan. It handles customer service, collections, loan
    modifications, and foreclosures. Ocwen specializes in servicing subprime or
    delinquent loans.
    The CFPB uncovered substantial evidence that Ocwen has engaged in significant
    and systemic misconduct at nearly every stage of the mortgage servicing process.
    The CFPB is charged with enforcing the Dodd-Frank Wall Street Reform and
    Consumer Protection Act, which protects consumers from unfair, deceptive, or
    abusive acts or practices, and other federal consumer financial laws. In addition,
    the Bureau adopted common-sense rules for the mortgage servicing market that
    first took effect in January 2014. The CFPB’s mortgage servicing rules require that
    servicers promptly credit payments and correct errors on request. The rules also
    include strong protections for struggling homeowners, including those facing
    foreclosure. In its lawsuit, the CFPB alleges that Ocwen:

    Serviced loans using error-riddled information: Ocwen uses a
    proprietary system called REALServicing to process and apply borrower
    payments, communicate payment information to borrowers, and maintain
    loan balance information. Ocwen allegedly loaded inaccurate and
    incomplete information into its REALServicing system. And even when
    data was accurate, REALServicing generated errors because of system
    failures and deficient programming. To manage this risk, Ocwen tried
    manual workarounds, but they often failed to correct inaccuracies and
    produced still more errors. Ocwen then used this faulty information to
    service borrowers’ loans. In 2014, Ocwen’s head of servicing described
    its system as “ridiculous” and a “train wreck.”
     Illegally foreclosed on homeowners: Ocwen has long touted its ability to
    service and modify loans for troubled borrowers. But allegedly, Ocwen has
    failed to deliver required foreclosure protections. As a result, the Bureau
    alleges that Ocwen has wrongfully initiated foreclosure proceedings on at
    least 1,000 people, and has wrongfully held foreclosure sales. Among
    other illegal practices, Ocwen has initiated the foreclosure process before
    completing a review of borrowers’ loss mitigation applications. In other
    instances, Ocwen has asked borrowers to submit additional information
    within 30 days, but foreclosed on the borrowers before the deadline. Ocwen
    has also foreclosed on borrowers who were fulfilling their obligations under
    a loss mitigation agreement.
     Failed to credit borrowers’ payments: Ocwen has allegedly failed to
    appropriately credit payments made by numerous borrowers. Ocwen has
    also failed to send borrowers accurate periodic statements detailing the
    amount due, how payments were applied, total payments received, and
    other information. Ocwen has also failed to correct billing and payment
    errors.
     Botched escrow accounts: Ocwen manages escrow accounts for over 75
    percent of the loans it services. Ocwen has allegedly botched basic tasks in
    managing these borrower accounts. Because of system breakdowns and an
    over-reliance on manually entering information, Ocwen has allegedly failed
    to conduct escrow analyses and sent some borrowers’ escrow statements
    late or not at all. Ocwen also allegedly failed to properly account for and
    apply payments by borrowers to address escrow shortages, such as changes
    in the account when property taxes go up. One result of this failure has been
    that some borrowers have paid inaccurate amounts.
     Mishandled hazard insurance: If a servicer administers an escrow
    account for a borrower, a servicer must make timely insurance and/or tax
    payments on behalf of the borrower. Ocwen, however, has allegedly failed
    to make timely insurance payments to pay for borrowers’ home insurance
    premiums. Ocwen’s failures led to the lapse of homeowners’ insurance coverage for more than 10,000 borrowers. Some borrowers were pushed
    into force-placed insurance.

    Bungled borrowers’ private mortgage insurance: Ocwen allegedly
    failed to cancel borrowers’ private mortgage insurance, or PMI, in a timely
    way, causing consumers to overpay. Generally, borrowers must purchase
    PMI when they obtain a mortgage with a down payment of less than 20
    percent, or when they refinance their mortgage with less than 20 percent
    equity in their property. Servicers must end a borrower’s requirement to pay
    PMI when the principal balance of the mortgage reaches 78 percent of the
    property’s original value. Since 2014, Ocwen has failed to end borrowers’
    PMI on time after learning information in its REALServicing system was
    unreliable or missing altogether. Ocwen ultimately overcharged borrowers
    about $1.2 million for PMI premiums, and refunded this money only after
    the fact.
     Deceptively signed up and charged borrowers for add-on products:
    When servicing borrowers’ mortgage loans, Ocwen allegedly enrolled some
    consumers in add-on products through deceptive solicitations and without
    their consent. Ocwen then billed and collected payments from these
    consumers.
     Failed to assist heirs seeking foreclosure alternatives: Ocwen allegedly
    mishandled accounts for successors-in-interest, or heirs, to a deceased
    borrower. These consumers included widows, children, and other relatives.
    As a result, Ocwen failed to properly recognize individuals as heirs, and
    thereby denied assistance to help avoid foreclosure. In some instances,
    Ocwen foreclosed on individuals who may have been eligible to save these
    homes through a loan modification or other loss mitigation option.
     Failed to adequately investigate and respond to borrower complaints:
    If an error is made in the servicing of a mortgage loan, a servicer must
    generally either correct the error identified by the borrower, called a notice
    of error, or investigate the alleged error. Since 2014, Ocwen has allegedly
    routinely failed to properly acknowledge and investigate complaints, or
    make necessary corrections. Ocwen changed its policy in April 2015 to
    address the difficulty its call center had in recognizing and escalating
    complaints, but these changes fell short. Under its new policy, borrowers
    still have to complain at least five times in nine days before Ocwen
    automatically escalates their complaint to be resolved. Since April 2015,
    Ocwen has received more than 580,000 notices of error and complaints
    from more than 300,000 different borrowers.
     Failed to provide complete and accurate loan information to new
    servicers: Ocwen has allegedly failed to include complete and accurate
    borrower information when it sold its rights to service thousands of loans to
    new mortgage servicers. This has hampered the new servicers’ efforts to
    comply with laws and investor guidelines.
    The Bureau also alleges that Ocwen has failed to remediate borrowers for the
    harm it has caused, including the problems it has created for struggling
    borrowers who were in default on their loans or who had filed for bankruptcy.
    For these groups of borrowers, Ocwen’s servicing errors have been particularly
    costly.
    (Emphasis added.)
    6. On that same day, it was further reported that the North Carolina Office of the
    Commissioner of Banks and state regulators from more than twenty states issued a cease-anddesist order (the “Order”) to Ocwen’s subsidiaries as a result of the Company’s mishandling of
    consumer escrow accounts and a deficient financial condition. The Order “specifically prohibits
    the acquisition of new mortgage servicing rights and the origination of mortgage loans by Ocwen
    Loan Servicing (NMLS number 1852), a subsidiary of Ocwen, until the company is able to prove
    it can appropriately manage its consumer mortgage escrow accounts.”
    7. On this news, Ocwen’s share price fell $2.91, or 53.89%, to close at $2.49 on April
    20, 2017.
    8. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline
    in the market value of the Company’s securities, Plaintiff and other Class members have suffered
    significant losses and damages.

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From 2001 to 2003, he was Associate Counsel and then Senior Associate Counsel to President George W. Bush. From 2003 to 2006, he was Assistant to the President and Staff Secretary for President Bush. He was appointed a Judge of the United States Court of Appeals for the District of Columbia Circuit in 2006. President Donald J. Trump nominated him as an Associate Justice of the Supreme Court, and he took his seat on October 6, 2018. Amy Coney Barrett, Associate Justice Amy Coney Barrett, Associate Justice, was born in New Orleans, Louisiana, on January 28, 1972. She married Jesse M. Barrett in 1999, and they have seven children - Emma, Vivian, Tess, John Peter, Liam, Juliet, and Benjamin. She received a B.A. from Rhodes College in 1994 and a J.D. from Notre Dame Law School in 1997. She served as a law clerk for Judge Laurence H. Silberman of the U.S. Court of Appeals for the D.C. Circuit from 1997 to 1998, and for Justice Antonin Scalia of the Supreme Court of the United States during the 1998 Term. After two years in private law practice in Washington, D.C., she became a law professor, joining the faculty of Notre Dame Law School in 2002. She was appointed a Judge of the United States Court of Appeals for the Seventh Circuit in 2017. President Donald J. Trump nominated her as an Associate Justice of the Supreme Court, and she took her seat on October 27, 2020. Ketanji Brown Jackson, Associate Justice Ketanji Brown Jackson, Associate Justice, was born in Washington, D.C., on September 14, 1970. She married Patrick Jackson in 1996, and they have two daughters. She received an A.B., magna cum laude, from Harvard-Radcliffe College in 1992, and a J.D., cum laude, from Harvard Law School in 1996. She served as a law clerk for Judge Patti B. Saris of the U.S. District Court for the District of Massachusetts from 1996 to 1997, Judge Bruce M. Selya of the U.S. Court of Appeals for the First Circuit from 1997 to 1998, and Justice Stephen G. Breyer of the Supreme Court of the United States during the 1999 Term. After three years in private practice, she worked as an attorney at the U.S. Sentencing Commission from 2003 to 2005. From 2005 to 2007, she served as an assistant federal public defender in Washington, D.C., and from 2007 to 2010, she was in private practice. She served as a Vice Chair and Commissioner on the U.S. Sentencing Commission from 2010 to 2014. In 2012, President Barack Obama nominated her to the U.S. District Court for the District of Columbia, where she served from 2013 to 2021. She was appointed to the Defender Services Committee of the Judicial Conference of the United States in 2017, and the Supreme Court Fellows Commission in 2019. President Joseph R. Biden, Jr., appointed her to the United States Court of Appeals for the District of Columbia Circuit in 2021 and then nominated her as an Associate Justice of the Supreme Court in 2022. She took her seat on June 30, 2022. Anthony M. Kennedy, Associate Justice Anthony M. Kennedy (Retired), Associate Justice, was born in Sacramento, California, July 23, 1936. He married Mary Davis and has three children. He received his B.A. from Stanford University and the London School of Economics, and his LL.B. from Harvard Law School. He was in private practice in San Francisco, California from 1961–1963, as well as in Sacramento, California from 1963–1975. From 1965 to 1988, he was a Professor of Constitutional Law at the McGeorge School of Law, University of the Pacific. He has served in numerous positions during his career, including a member of the California Army National Guard in 1961, the board of the Federal Judicial Center from 1987–1988, and two committees of the Judicial Conference of the United States: the Advisory Panel on Financial Disclosure Reports and Judicial Activities, subsequently renamed the Advisory Committee on Codes of Conduct, from 1979–1987, and the Committee on Pacific Territories from 1979–1990, which he chaired from 1982–1990. He was appointed to the United States Court of Appeals for the Ninth Circuit in 1975. President Reagan nominated him as an Associate Justice of the Supreme Court, and he took his seat February 18, 1988. Justice Kennedy retired from the Supreme Court on July 31, 2018. David Hackett Souter, Associate Justice David H. Souter (Retired), Associate Justice, was born in Melrose, Massachusetts, September 17, 1939. He graduated from Harvard College, from which he received his A.B. After two years as a Rhodes Scholar at Magdalen College, Oxford, he received an A.B. in Jurisprudence from Oxford University and an M.A. in 1963. After receiving an LL.B. from Harvard Law School, he was an associate at Orr and Reno in Concord, New Hampshire from 1966 to 1968, when he became an Assistant Attorney General of New Hampshire. In 1971, he became Deputy Attorney General and in 1976, Attorney General of New Hampshire. In 1978, he was named an Associate Justice of the Superior Court of New Hampshire, and was appointed to the Supreme Court of New Hampshire as an Associate Justice in 1983. He became a Judge of the United States Court of Appeals for the First Circuit on May 25, 1990. President Bush nominated him as an Associate Justice of the Supreme Court, and he took his seat October 9, 1990. Justice Souter retired from the Supreme Court on June 29, 2009. Stephen G. Breyer, Associate Justice Stephen G. Breyer (Retired), Associate Justice, was born in San Francisco, California, August 15, 1938. He married Joanna Hare in 1967, and has three children - Chloe, Nell, and Michael. He received an A.B. from Stanford University, a B.A. from Magdalen College, Oxford, and an LL.B. from Harvard Law School. He served as a law clerk to Justice Arthur Goldberg of the Supreme Court of the United States during the 1964 Term, as a Special Assistant to the Assistant U.S. Attorney General for Antitrust, 1965–1967, as an Assistant Special Prosecutor of the Watergate Special Prosecution Force, 1973, as Special Counsel of the U.S. Senate Judiciary Committee, 1974–1975, and as Chief Counsel of the committee, 1979–1980. He was an Assistant Professor, Professor of Law, and Lecturer at Harvard Law School, 1967–1994, a Professor at the Harvard University Kennedy School of Government, 1977–1980, and a Visiting Professor at the College of Law, Sydney, Australia and at the University of Rome. From 1980–1990, he served as a Judge of the United States Court of Appeals for the First Circuit, and as its Chief Judge, 1990–1994. He also served as a member of the Judicial Conference of the United States, 1990–1994, and of the United States Sentencing Commission, 1985–1989. President Clinton nominated him as an Associate Justice of the Supreme Court, and he took his seat August 3, 1994. Justice Breyer retired from the Supreme Court on June 30, 2022
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