Case Digest in Department of Agriculture Rural Development Housing Service v. Kirtz

Consumers can sue lenders who willfully or negligently supply false information about them to entities that generate credit reports.

FACTS OF THE CASE:

Respondent Reginald Kirtz secured a loan from Rural Housing Service, a United States Department of Agriculture division. Respondent sued the agency for money damages under the FCRA.

Kirtz alleged that the USDA falsely told TransUnion that his account was past due, thus damaging his credit score and prejudicing his ability to secure future loans. The USDA moved to dismiss, invoking sovereign immunity.

ISSUE OF THE CASE:

Whether Respondent Kirtz may sue the federal government under Fair Credit Reporting Act

RULING OF THE CASE:

The Court held that a consumer may sue a federal agency for defying the FCRA’s terms.

The Supreme Court has found a precise waiver of sovereign immunity “in only two situations.” “The first is when a statute says . . . 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 authorized explicitly by Congress.

Applying these principles leads to the conclusion that the FCRA waives sovereign immunity in cases like this one. The FCRA’s requirements apply to persons that falsely furnish information to consumer reporting agencies. Any person who willfully or negligently fails to comply with the statute’s directive can be sued.

IMPACT TO THE LEGAL SYSTEM:

The ruling establishes that consumers have the right to sue federal agencies for damages under the Fair Credit Reporting Act (FCRA) if the agency willfully or negligently provides false information to credit reporting agencies. This expands consumer protection and empowers individuals to hold government entities accountable for their actions.

It also holds that although sovereign immunity typically shields the government from lawsuits, sovereign immunity can be waived under certain circumstances.