CONSUMER PROTECTION

Department of Agriculture Rural Development Rural Housing Service v. Kirtz

Issues

Do the Fair Credit Reporting Act provisions 15 U.S.C. §§ 1681n and 1681o waive sovereign immunity and allow for suits against the United States government for claims brought under the act?

Court below

United States Court of Appeals for the Third Circuit

This case asks the Court to determine whether the Fair Credit Reporting Act (FCRA) waives the United States’ sovereign immunity to suits brought against it under the statute. The Department of Agriculture Rural Development Rural Housing Service (USDA) argues that the FCRA contains no waiver of sovereign immunity because the statute neither explicitly waives sovereign immunity nor creates a cause of action that expressly authorizes suits against the government. The USDA further contends that Congress’s intentions are unclear because the FCRA does not clearly state whether the definition of “person” includes the federal government within §§ 1681n and 1681o. Respondent Reginald Kirtz counters that the FCRA unambiguously creates a cause of action authorizing suits against federal agencies under §§ 1681n and 1681o because the FCRA’s definition of “person” in § 1681a(b), which includes government agencies, applies to §§ 1681n and 1681o. This case touches on important questions regarding what constitutes a waiver of sovereign immunity and whether courts may interpret congressional intent when making such a determination.

Questions as Framed for the Court by the Parties

Whether the civil-liability provisions of the Fair Credit Reporting Act, 15 U.S.C. 1681 et seq. unequivocally and unambiguously waive the sovereign immunity of the United States.

Reginald Kirtz took out loans from the United States Department of Agriculture Rural Development Rural Housing Service (“USDA”) and the Pennsylvania Higher Education Assistance Agency (“AES”). Kirtz v. Trans Union, LLC at 1. Kirtz closed his AES account with a balance of zero on or about June 7, 2016, and closed his USDA account with a balance of zero on or about June 7, 2018, both of which were reflected in his Trans Union credit report. Id. at 1–2.

Additional Resources

Congress, Suits Against the United States and Sovereign Immunity.
Federal Trade Commission, 40 Years of Experience with the Fair Credit Reporting Act (2011).
Gregory C. Sisk, A Primer on the Doctrine of Federal Sovereign Immunity, Oklahoma Law Review (2005).
Kimberly Strawbridge Robinson, Supreme Court to Decide if US Can Be Sued as Creditor, Bloomberg Law (June 20, 2023).

Submit for publication

Read more about Department of Agriculture Rural Development Rural Housing Service v. Kirtz

Dodd-Frank: Title X - Bureau of Consumer Financial Protection

Introduction

Title X of the Dodd-Frank Act (aka: Consumer Financial Protection Act of 2010), created the Consumer Financial Protection Bureau (CFPB or Bureau) as an independent agency within the Board of Governors of the Federal Reserve System (Federal Reserve). The CFPB regulates the offer

wex

ACADEMIC TOPICS

law and economics

COMMERCE

commercial activities

commercial transactions

money and financial problems

Read more about Dodd-Frank: Title X - Bureau of Consumer Financial Protection

Watters v. Wachovia Bank

Issues

1. Are State-chartered subsidiaries of national banks exempt from State regulation because of their relationship with a national bank?

2. Does equating a State-chartered subsidiary of a national bank to a national bank constitute conversion of a State corporation into a Federal corporation in violation of the Tenth Amendment?

Court below

United States Court of Appeals for the Sixth Circuit

Michigan has attempted to regulate State-charted nonbank subsidiaries of national banks. National banks are governed by the National Bank Act and the Office of the Comptroller of the Currency (OCC). Through §484(a) of the National Bank Act, national banks are not subject to State regulation. Through 12 C.F.R. 7.4006, the OCC expanded the reach of §484 to cover subsidiaries of national banks as well. Wachovia Mortgage, a State-chartered nonbank subsidiary of Wachovia Bank, a national bank, operates in Michigan. Michigan seeks to exercise regulatory power over the entity. Both courts below held that the OCC’s expansion of §484 was valid and that Michigan could not exercise regulatory power over the subsidiary, Wachovia Mortgage. The decision of the Supreme Court in this case will affect the balance of power between State and Federal regulatory and consumer protection measures.

Questions as Framed for the Court by the Parties

1. 12 U.S.C. § 484(a) of the National Bank Act limits visitorial powers over "national banks" except as authorized by federal law. National banks are defined and created under the National Bank Act. State-chartered nonbank operating subsidiaries of national banks are created under State corporate law. The Comptroller of the Currency, by Rule 12 CFR 7.4006, made 12 USC § 484(a) equally applicable to State-chartered nonbank "operating subsidiaries" of national banks. Is the interpretation of the Comptroller of the Currency that 12 CFR 7.4006 preempts Michigan's laws regulating mortgage lending as applied to State chartered nonbank operating subsidiaries, entitled to judicial deference under Chevron USA, Inc v. Natural Resources Defense Council, 467 US 837 (1984)?

2. A national bank has been declared to be a national corporation in Guthrie v Harkness, 199 US 148, 159 (1905). 12 CFR 7.4006 treats a State-chartered nonbank operating subsidiary of a national bank as equivalent to a national bank and, thus, as a national corporation. The Tenth Amendment to the United States Constitution is violated to the extent a statute permits the conversion of State corporations into federal ones in contravention of the laws of the place of their creation. Hopkins v Federal Savings & Loan Ass'n v Cleary, 296 US 315, 335 (1935). Does 12 CFR 7.4006, by equating a State-chartered nonbank operating subsidiary with a national bank for purposes of federal preemption of State regulation, violate the Tenth Amendment to the United States Constitution?

Wachovia Bank is a national bank chartered under the National Bank Act, 12 U.S.C. § 21. Wachovia Mortgage is a "State-chartered nonbank, operating subsidiary of Wachovia Bank." Watters v. Wachovia, 431 F.3d 556, 558 (6th. Cir. 2005); Brief for the Petitioner at 7.