The Supreme Court last week unanimously ruled that the federal government is not immune from lawsuits accusing it of violating the Fair Credit Reporting Act when it incorrectly furnishes information to the credit reporting agencies. The Court held there is no sovereign immunity when it comes to the FCRA’s private right of action.
The Background: An individual sued the Department of Agriculture’s Rural Development Rural Housing Service for reporting that the individual was more than 120 days late on a student loan. The individual claimed that nothing else was owed on the loan and disputed the account. The individual filed suit, and a District Court judge dismissed the case after the government argued that there was nothing explicitly in the FCRA that said that Congress intended to waive the federal government’s immunity from lawsuits.
- The individual appealed and the Court of Appeals for the Third Circuit reversed the ruling, teeing up the Supreme Court to hear arguments and take the case.
The Ruling: There is nothing in the FCRA that indicates the government is entitled to sovereign immunity, the Supreme Court ruled. In fact, there are sections of the FCRA that defines a person to include any government agency.
- Written by Justice Gorsuch, the unanimous opinion notes that the federal government is among the largest issuers of credit information to the credit reporting agencies.
- “… we think the Third Circuit reached the right decision in this case: The FCRA effects a clear waiver of sovereign immunity,” Justice Gorsuch wrote. “Through this series of statutory directions … Congress has explicitly permitted consumer claims for damages against the government. Dismissing suits like Mr. Kirtz’s would effectively ‘negat[e]’ suits Congress has clearly authorized.”