Last Thursday, in a unanimous slip opinion, the US Supreme Court delivered a landmark decision: establishing that the federal government can indeed be liable under the Fair Credit Reporting Act (FCRA). This ruling argues that the FCRA waives sovereign immunity, meaning the federal government can be held responsible for inaccuracies in credit score reporting.
Justice Neil Gorsuch led the authorship of the court’s decision. He stipulated that the FCRA permits consumers to bring charges against creditors who willfully or negligently provide false information to an entity issuing credit reports. This definition of liability under the FCRA includes those who negligently cause damage to credit, and its definition of “person” extends to, among others, individuals, partnerships, and government, or governmental subdivisions or agencies. In Gorsuch’s view, this portion of the FCRA “unequivocally waives sovereign immunity” for the federal government, making it possible to be held accountable under this law.
A variety of public interest groups played a significant role in this decision, buttressing the argument eventually accepted by the court. They asserted that the federal government shares a crucial role in the distribution and use of credit-related data, and the FCRA could only garner its intended impact if it were applied to all furnishers, federal agencies inclusive.
The genesis for this case was Reginald Kirtz’s charges against the US Department of Agriculture (USDA) for alleged infringements of the FCRA. According to Kirtz, the USDA inappropriately marked a loan as being “overdue”, subsequently impairing his credit score. Despite Kirtz’s and his credit reporting agency, Trans Union’s, efforts to correct this, the USDA did not attempt to rectify or investigate the contentious information.
The USDA initially attempted to dismiss the suit, claiming the FCRA does not clearly waive sovereign immunity. Initially, the US District Court for the Eastern District of Pennsylvania agreed with the USDA, but this ruling was overturned on appeal by the Third Circuit. The USDA then appealed to the Supreme Court, resulting in this recent ruling.
In essence, the doctrine of sovereign immunity generally shields the federal government from legal actions by individual citizens. Traditionally, this immunity could only be waived by a legislative act permitting such lawsuits. Now this recent Supreme Court ruling adds another dimension by interpreting the FCRA as such a waiver.
You can read the full story here.