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?
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. However, despite these account closures, both AES and USDA reported Kirtz’s payment status as 120 days overdue on his Trans Union credit report, which damaged Kirtz’s credit score and impeded his ability to take out any other loans. Id. at 2. Kirtz filed a complaint with TransUnion which reported the mistake to the USDA and AES and asked them to investigate and correct Kirtz’s credit. Id. However, no investigation or remedial measures occurred, and the mistake was never corrected. Id.
On October 20, 2020, Kirtz brought an action against TransUnion, the USDA, and AES in the United States District Court for the Eastern District of Pennsylvania. Kirtz v. Trans Union, LLC at 2. Section 1681a(b) of the Fair Credit Reporting Act (“FCRA”) defines the term “person” as “any individual […] government, governmental subdivision or agency, or other entity.” 15 U.S.C. § 1681a(b). Kirtz claimed that, under of all three are “people'' that have willfully and negligently violated the FCRA by failing to investigate and correct the errors in his records. Id. at 4. Trans Union and AES both responded to the suit, but the USDA filed a motion to dismiss, citing sovereign immunity. Id. at 2. Sections 1681n and 1681o of the FCRA define civil liability for “any person” who willfully and negligently fail to comply with the FCRA. Although the District Court conceded that the phrase “any person” in §§ 1681n and 1681o created a cause of action, it concluded that this language is too ambiguous as to whether the statute meant to waive sovereign immunity. Id. at 4, 6-7. The District Court adhered to the Fourth and Ninth Circuits’ precedent of strict statutory interpretation and held that §§ 1681n and 1681o did not waive sovereign immunity because the text of the statute did not do so unambiguously. Id. at 11. The District Court granted the USDA’s motion, and Kirtz’s suit against the USDA was dismissed accordingly. Id.
Kirtz appealed to the United States Court of Appeals for the Third Circuit, claiming that the District Court erred in finding that the term “any person” did not waive the USDA’s sovereign immunity. See Kirtz v. Trans Union, LLC et al. at 2. The Third Circuit reversed and remanded the case back to the District Court, stating that the plain text of the statute sufficiently waives sovereign immunity because reading the government into the definition of “any person” accords with the definition in § 1681a(b) and Congress’s intent for the statute and because the USDA is one of the nation's largest creditors. Id. at 11–12.
Accordingly, on March 3, 2023, the USDA petitioned the Supreme Court of the United States to hear this case, and the Supreme Court granted certiorari on June 20, 2023. Department of Agriculture Rural Development Rural Housing Service v. Kirtz.
The USDA argues that the language in §§ 1681n and 1681o of the FCRA is ambiguous and therefore, neither section—expressed and implied waive sovereign immunity. Brief for the Petitioner at 12. First, the USDA contends that the language in §§ 1681n and 1681o is incompatible with an express waiver of sovereign immunity because it does not specifically name government agencies and expressly waive their immunity. Id. at 14–15. The USDA asserts that §§ 1681n and 1681o merely create a cause of action. Id. at 12. Further, the USDA cites a precedent stating that the issue of whether a plaintiff has a cause of action and whether that cause of action waives sovereign immunity are two distinct issues and that the presence of the former does not automatically assume the latter. Id. at 13–14. Rather, the USDA asserts that any waiver must be so clearly stated that the court can be sure that Congress considered the consequences of holding the federal government potentially liable for damages. Id. at 15. Second, the USDA contends that an implied waiver should not be read into the statute here because implied waivers have only been found to be applicable so far in cases where a cause of action would be entirely obsolete without the waiver. Id. at 19. The USDA argues that FCRA suits are unlike these precedents because lenders are not composed exclusively of government entities and the cause of action would still exist even without the waiver of sovereign immunity. Id. at 21.
Kirtz asserts that the language in the FCRA clearly and unambiguously waives sovereign immunity. Brief for Kirtz at 13. First, Kirtz notes that there are no “magic-words” that Congress must include when waiving sovereign immunity. Id. Instead, Kirtz claims that it is sufficient for the text to define who it wishes to impose liability upon. Id. at 14. Kirtz maintains that since § 1681a(b) definition includes the expansive word, “any”, the definition includes government entities. Id. However, even if the language itself was ambiguous, Kirtz contends that reading the government into the definition of “any person” is necessary to maintain consistency throughout the statute. Id. at 16. Kirtz notes that when the FCRA prohibits “persons” from discriminating based on the consumer information they receive, the FCRA expressly states that this principle does not apply to government agencies investigating national security issues. Id. Kirtz therefore posits that, if the definition of “person” did not consistently include government entities, there would be no reason for Congress to create an exception whenever it sought to exempt government entities from certain regulations. Id.
The USDA argues that the meaning of “person” does not consistently adhere to the § 1681a(b) definition throughout the FCRA because the meanings of defined terms can vary depending on their surrounding context. Brief for the USDA at 28. Accordingly, the USDA insists that the Court should interpret “person” in its natural sense unless Congress specifically references government entities in the sentence. Id. at 28-29. The USDA asserts that “person” should be interpreted in its natural sense because, prior to the statute’s 1996 amendment, Congress used “person” in its natural sense when authorizing causes of action and imposed criminal liability only onto human people who mismanaged consumer credit information. Id. at 30. Accordingly, the USDA argues that reading the § 1681a(b) definition into §§ 1681n and 1681o is inconsistent with the historical development of the statute. Id. at 31–32. Further, the USDA cites the decision in Seminole Tribe of Florida v. Florida, which prohibited Congress from waiving state sovereign immunity, claiming that it would be implausible for Congress to try to circumvent the decision and impose liability on the government. Id. at 34. The USDA asserts that it is far more likely that Congress meant to impose liability only onto human people and non-governmental organizations. Id.
Kirtz counters that the word “person” should adhere to the § 1681a(b) definition and its interpretation should not be context-dependent because courts must interpret terms in accordance with the statute’s express definitions. Brief for Kirtz at 19-20. Kirtz asserts that Congress intended for the statute to protect consumers from inaccurate reports made by all credit agencies, including government agencies. Id. at 16. Kirtz insists that the § 1681a(b) definition must also attach to government entities and waive sovereign immunity for Congress’s intent to be carried out properly. Id. Moreover, Kirtz notes that Congress makes it clear in other statutes when it uses the term “person” but intends to exclude government entities from liability. Id. at 17. Kirtz argues that the fact that Congress did not do so here indicates that it intended to waive sovereign immunity. Id. at 18–19. Kirtz discusses the FCRA’s two sister statutes—the Equal Credit Opportunity Act (“ECOA”) and Truth in Lending Act (“TILA”) that, like the FCRA, regulate consumer credit—and asserts that, because the Department of Justice recognized that the use of “any person” in those statutes waives sovereign immunity, it must also recognize that “any person” in the FCRA does the same. Id. at 18. Additionally, Kirtz challenges the USDA’s reading of Seminole Tribe and claims that waiving state sovereign immunity is not comparable to waiving sovereign immunity for government creditors because Congress must enact completely different procedures in carrying out each waiver. Id. at 28. Accordingly, Congress would not be circumventing the Court’s previous decision by allowing suits against government entities under the FCRA. Id. at 29.
REDUNDANCY IN THE LAW
The USDA argues that allowing §§ 1681n and 1681o to waive sovereign immunity would create inconsistencies with the Privacy Act of 1974 by rendering the Privacy Act’s remedial structure useless. Brief for the USDA at 35–36. Specifically, the USDA states that, like the FCRA, the Privacy Act mandates that government agencies maintain consumer information and investigate any known inaccuracies in consumer records. Id. at 36. Additionally, the USDA notes that the Privacy Act offers injunctive relief and only awards compensatory damages if “actual damages” resulted from the failure to correct the record. Id. at 37. The USDA argues that it is implausible that Congress intended §§ 1681n and 1681o to waive sovereign immunity and impose monetary damages because doing so would circumvent the limited remedial scheme provided by the Privacy Act and vastly expand the government’s liability. Id. at 37-38.
Kirtz counters that allowing §§ 1681n and 1681o to waive sovereign immunity would not create inconsistencies in the law in light of the Privacy Act because the two acts are sufficiently different from each another. Brief for Kirtz at 31-32. Kirtz first asserts that the statutes do not overlap because the FCRA deals with issues regarding consumer credit while the Privacy Act focuses on citizens’ personal information. Id. at 32. Moreover, Kirtz maintains that the remedies offered by both statutes further establish that they address different purposes. Id. at 33-34. Specifically, Kirtz asserts that, unlike the Privacy Act which offers consumers the opportunity to request corrections in their records, the FCRA awards monetary damages when credit reporters fail to investigate and correct known inaccuracies. Id. However, Kirtz contends, even if there was a slight risk that upholding the FCRA would create redundancies in the law, the Court’s duty is nevertheless to uphold the legitimacy of both statutes unless the party claiming redundancy can prove that Congress intended for one statute to supersede the other. Id. at 32.
CONSUMER PROTECTION AND COMPENSATION
The USDA argues that permitting consumers to sue federal agencies under the FCRA would subject federal agencies to excessive damages for conduct punishable under the Privacy Act. Brief for the USDA at 37. The USDA observes that the Privacy Act grants injunctive relief for consumers only under limited circumstances and argues that the FCRA would allow consumers to circumvent Congress’s intended limitations while also punishing federal agencies with statutory and punitive damages for conduct Congress never thought to be sufficient to trigger such damages. Id. The USDA also stresses that the federal government is “one of the largest furnishers of credit information in the country.” Id. at 38. The USDA contends that interpreting the FCRA to contain a sovereign immunity waiver, and thus subjecting the federal government to harsh penalties, would negatively impact public finances. Id.
The National Consumer Law Center (“Center”), writing in support of Kirtz, counters that the FCRA protects consumers from conduct not covered by the Privacy Act. Brief of Amici Curiae National Consumer Law Center et al., in Support of Respondent at 22. The Center contends that the FCRA and the Privacy Act address different concerns, with the FCRA focusing on consumer information disputes between private citizens and consumer credit providers, and the Privacy Act focusing on records containing individual data kept by the government. Id. at 21. The Center contends that the difference between each act renders any overlap in punishable conduct inconsequential, and limiting consumers to relying solely on the Privacy Act would deprive them of remedies for inaccurate credit reports or unresolved credit disputes involving federal agencies. Id. at 22. The Center also observes that the federal government serves as the sole or primary provider of consumer credit information in markets that have no alternative lenders. Id. at 15. The Center argues that the lack of alternatives increases the impact of inaccurate reporting and justifies the harsher penalties against federal agencies under the FCRA to ensure that consumers are adequately protected. Id. at 18.
BALANCE OF POWER
The USDA asserts that legislative history may only be used to show that Congress did not seek to waive sovereign immunity and cannot be used to show that Congress had waived it. The USDA argues that the legislative history of the FRCA does not support applying the definition of “person” from § 1681a(b) to §§ 1681n and 1681o to waive sovereign immunity because 1996 amendment only substituted “credit reporting agency” with “person”, which did not authorize causes of action against federal agencies Brief for the USDA at 28. The USDA contends that allowing federal government to waive state sovereign immunity would allow Congress to “overstep” its authority. Id. at 33-34. The USDA claims that it would contradict the Court’s decision in Seminole Tribe of Florida v. Florida, which asserted that Congress lacks the authority to do so. Id. The USDA further contends that reading the “person” in §§ 1681n and 1681o to include federal agencies would create absurd results, such as permitting the Federal Trade Commission and state governments to bring suits against the federal government, or subjecting the federal government to criminal penalties, and would therefore create disruption in balance of powers. See Id. at 31.
The Constitutional Accountability Center, writing in support of Kirtz, counters that the Court in Employees of the Department of Public Health & Welfare v. Department of Public Health & Welfare asserted that legislative history cannot be used to find whether a waiver of sovereign immunity exists and that the Court should look only at the text of the statute. Brief of Amicus Curiae Constitutional Accountability Center, in Support of Respondent at 9-10. Furthermore, the Center contends that allowing the Court to consider legislative history to find that Congress has not waived immunity as the USDA suggests would take away Congress's control over the decision to waive sovereign immunity and allow the Court to undermine Congress's power. Id. at 10. The Center stresses that Congress acts deliberately and makes a considerable number of policy considerations before waiving sovereign immunity. Id. at 14. The Center finally argues that the Court should not be granted the power to reinterpret Congress’s intentions after legislation by allowing it to consider legislative history. Id.
- 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).