Decision Alert: Supreme Court Unanimously Paves the Way for FCRA Suits Against Federal Agencies

On February 8, 2024, the Court unanimously held that a consumer may sue a federal agency under 15 U.S.C. §§ 1681n and 1681o for defying the terms of the Fair Credit Reporting Act (FCRA) in Department of Agriculture v. Kirtz. The opinion, authored by Justice Gorsuch, reasoned that the FCRA waived the federal government’s sovereign immunity.

As summarized more fully in Dykema’s December 2023 edition, the dispute arose when Reginald Kirtz sued a private credit reporting company, a private loan servicer, and the USDA, alleging violations of the FCRA. Claiming that the violations were negligent and willful, Kirtz sought actual, statutory, and punitive damages, as well as attorney’s fees. The USDA moved to dismiss the claims on the ground that it did not fit into the Act’s definition of “person” because in the 1996 amendment to the FCRA, the remedial provisions amended to include “person(s)” do not “unequivocally and unambiguously” waive the sovereign immunity of the United States to impose monetary liability. The Third Circuit concluded that the United States is subject to liability, reasoning that the FCRA’s express definition of a “person” explicitly applies for purposes of the subchapter it is in, necessarily including the enforcement or remedial provisions.

The Supreme Court focused on the definition of “person” as it appears in the FCRA and whether the general definition of “person” that implicitly waives sovereign immunity applies to those enforcement or remedial provisions. The Court affirmed the Third Circuit ruling and emphasized the FCRA’s unequivocal waiver of sovereign immunity. Justice Gorsuch noted that while initially focused on consumer reporting agencies and individuals requesting credit information, the FCRA’s definition of “person” broadly includes partnerships, government entities, corporations, cooperatives, and associations. Justice Gorsuch explained that the federal government, one of the largest furnishers of credit information, is a “person” because of the 1996 amendment to the FCRA which included credit information providers in that definition.

The Court also noted that dismissing suits like Kirtz would effectively “negate suits Congress has clearly authorized.” The government argued that for a cause of action directly against the government, sovereign immunity may be waived only by an express statutory waiver. The Court rejected that argument, citing Financial Oversight and Management Bd. for P.R. v. Centro De Periodismo Investigativo, Inc., 598 U.S. 339 (2023), which held that a cause of action authorizing suit against the government may waive sovereign immunity even without a separate waiver provision.

For more information, please contact Chantel Febus, James Azadian, Cory Webster, Christopher Sakauye, McKenna Crisp, Monika Harris, or Puja Valera.