Fair Credit Reporting Act
Kirtz v. USDA
Date: Feb. 8, 2024
Issue: Whether the federal government, acting as a lender, may be sued for supplying false information under the Fair Credit Reporting Act (FCRA).
Case Summary: In a unanimous decision written by Justice Neil Gorsuch, the U.S. Supreme Court ruled a governmental agency is not immune from suit for violating the FCRA.
Reginald Kirtz secured a loan from the Rural Housing Service, a division of the U.S. Department of Agriculture (USDA). The service issues loans to promote the development of safe and affordable housing in rural communities. Kirtz repaid his loan in full by 2018. Despite this, the USDA repeatedly told TransUnion that his account was past due. The misrepresentations damaged Kirtz’s credit score and threatened his ability to secure future loans at affordable rates.
Kirtz sued USDA alleging it violated the FCRA by failing to investigate his records. According to Kirtz, the USDA took no steps to correct its mistake—either willfully or negligently. The USDA moved to dismiss. The agency did not dispute whether allegations like Kirtz’s state a viable claim for relief. Instead, the USDA pointed to the U.S. Supreme Court’s precedents holding that “as sovereign, the federal government enjoys immunity from suits for money damages unless Congress waives that immunity.” The USDA emphasized nothing in the FCRA purports to render the federal government amenable to suit. The district court agreed and ruled for USDA. The Third Circuit reversed on appeal, concluding the FCRA sections 1681n and 1681o authorize suits for damages against “any person” who violates the FCRA, and section 1681 expressly defines “any person” to include “any government agency.” The Third Circuit’s decision highlighted a circuit split: the Third and Seventh Circuits have allowed FCRA litigation against the federal government, while the Fourth and Ninth Circuits have granted the federal government immunity. The USDA petitioned the U.S. Supreme Court to review.
The Supreme Court affirmed the Third Circuit. The Court acknowledged the United States is generally immune from suits seeking money damages unless Congress chooses to waive that immunity. To determine whether Congress chose to do so under the FCRA, the Court applies a “clear statement” rule. The “clear statement” rule permits a lawsuit when the language if the statute is “unmistakably clear” in allowing it. The Court declared the FCRA’s express authorization of suit against a governmental agency reveals congressional intent to waive immunity. In reaching its decision, the Court rejected the argument that sovereign immunity could be waived only by a separate provision directly addressing the issue. It also rejected the government’s argument that the statute’s inclusive definition of “person” could not be applied to the provisions at issue.
Bottom Line: The Court’s decision waives federal agencies’ immunity from lawsuits. The ruling could trigger further litigation against government lenders and ensure that agencies follow proper procedures to report debt correctly.
Documents: Opinion
