Supreme Court Rules Federal Agencies Can Be Sued Under Fair Credit Reporting Act

In Department of Agriculture Rural Development Rural Housing Service v. Kirtz, 601 U.S. ____ (2024), the U.S. Supreme Court held that a consumer may sue a federal agency under 15 U.S.C. §§ 1681n and 1681o for failing to comply with the terms of the Fair Credit Reporting Act (FCRA).

Facts of the Case

The Fair Credit Reporting Act of 1970, as amended by the Consumer Credit Reporting Reform Act of 1996, allows consumers to sue lenders who willfully or negligently supply false information about them to entities that generate credit reports.

Respondent Reginald Kirtz secured a loan from a division of the United States Department of Agriculture and later sued the agency for money damages under the FCRA. Kirtz alleged that the USDA falsely told TransUnion, a credit reporting agency, that his account was past due, which damaged his credit score and his ability to secure loans at affordable rates.

The USDA invoked sovereign immunity and sought to dismiss the suit. While the District Court sided with the USDA, the Third Circuit Court of Appeals reversed. It held that the USDA could be sued because 15 U. S. C. §§1681n and 1681oauthorize suits for damages against “any person” who violates the FCRA, and §1681a expressly defines “person” to include “any” government agency.

Supreme Court’s Decision

The Supreme Court unanimously affirmed. “[W]e think the Third Circuit reached the right decision in this case: The FCRA effects a clear waiver of sovereign immunity,” Justice Neil Gorsuch wrote on behalf of the Court.

The Supreme Court relied on the “clear statement” rule in reaching its decision. Given that the United States, as a sovereign, is generally immune from suits seeking money damages unless Congress chooses to waive that immunity, the Court’s “clear statement” rule allows a suit against the government only when “the language of the statute” is “unmistakably clear” in allowing it.

As Justice Gorsuch explained, the Court has found a clear waiver of sovereign immunity in just two situations. The first is when a statute expressly states that it is stripping immunity from a sovereign entity. The second is when a statute creates a cause of action and explicitly authorizes suit against a government on that claim. Statutes in the second category may not directly address sovereign immunity, but dismissing a claim against the government would negate a claim specifically authorized by Congress.

Applying these principles, the Supreme Court concluded that federal agencies are not immune to suit under the FCRA. According to the Court, the FCRA’s requirements apply to “person[s]” who, “like the federal government here, furnish information to consumer reporting agencies.” It further found that Sections 1681n and 1681o create a cause of action for money damages to consumers injured by “[a]ny person” who willfully or negligently fails to comply with the statute’s directive, noting that Section 1681a provides a definition of “person” that includes “any . . . government . . . agency,” §1681a(b), and that applies to the entire Act.

In further support of its decision, the Court cited additional provisions of the FCRA that point to the same conclusion. As Justice Gorsuch explained, Section 1681a(y) excludes from the definition of “consumer report” certain communications that “are not provided to any person except . . . any Federal or State officer, agency, or department, or any officer, agency, or department of a unit of general local government.” Similarly, Section 1681b requires a “person” who intends to take an “adverse [employment] action” based on a consumer credit report to provide the affected individual with a copy of the report unless “an agency or department of the United States Government” seeks to use the report as part of a national security investigation. “Both provisions thus exempt government agencies from the Act’s otherwise-broad definition of ‘person’ for particular reasons in particular contexts,” he emphasized.