Supreme Court Rules Biden Administration Must Face False Debt Reporting Lawsuits

The Supreme Court has ruled against the Biden administration’s efforts to prevent consumer lawsuits against federal agencies.
Supreme Court Rules Biden Administration Must Face False Debt Reporting Lawsuits
The US Supreme Court in Washington, on Nov. 13, 2023. (Mandel Ngan/AFP via Getty Images)
Tom Ozimek

The U.S. Supreme Court on Feb. 8 rejected an attempt by the Biden administration to avoid a lawsuit stemming from false debt reporting, with the landmark ruling opening the door for consumers to sue federal agencies.

In a 9–0 decision on Feb. 8, the Supreme Court ruled that the federal government is not immune from lawsuits brought under the Fair Credit Reporting Act (FCRA), a law that lets consumers sue creditors for failing to fix false credit information that the consumer has requested be corrected.

The ruling stems from a lawsuit brought under the FCRA by Reginald Kirtz, a Pennsylvania man whose credit score was damaged when the Department of Agriculture’s (USDA’s) Rural Housing Service wrongly stated on his credit report that some of his loans were overdue.

The government claimed that it was immune from Mr. Kirtz’s lawsuit and moved to dismiss the case, with several rounds of adjudication in lower courts leading to a request for Supreme Court review.

The high court agreed in June 2023 to review an appeals court ruling that allowed Mr. Kirtz to sue the USDA for false debt reporting.

At issue in the case was whether Congress waived U.S. sovereign immunity from lawsuits when it modified consumer protection laws nearly 30 years ago.

The question that was presented before the high court was whether the civil-liability provisions of the FCRA “unequivocally and unambiguously waive the sovereign immunity of the United States.”

“We think the Third Circuit reached the right decision in this case: The FCRA effects a clear waiver of sovereign immunity,” Justice Neil Gorsuch, a Trump appointee, wrote in the Feb. 8 opinion.

Public Citizen Litigation Group attorney Nandan Joshi, who argued the case before the Supreme Court, praised the decision.

“Today’s decision confirms that federal agencies cannot escape accountability when they fail to comply with their responsibilities to consumers under the FCRA,” he said in a Feb. 8 statement.

“As the court explained, FCRA’s text means what it says: The FCRA allows consumers to sue any ‘person’ that violates the statute and defines ‘person’ to include any government agency.”

The USDA did not respond by press time to a request by The Epoch Times for comment on the ruling.


Congress amended the FCRA decades ago to impose new requirements on lenders.

The additions require that if a consumer challenges the accuracy of his or her credit reports, the “person” who carried out the report must look into the matter and, if appropriate, correct inaccurate information.

Mr. Kirtz accused the USDA of violating the FCRA when the agency reported his loans as delinquent even though he had paid them off.

After he sued the USDA in 2020, the agency moved to dismiss the case, arguing that the FCRA did not clearly indicate that Congress meant to waive the federal government’s immunity from lawsuits.

The district court sided with the USDA, but that decision was later reversed on appeal.

Mr. Kirtz’s team argued that the USDA incorrectly suggested that Congress must enact an explicit statutory waiver of sovereign immunity for a waiver to be effective.

In siding with Mr. Kirtz, the Third Circuit Court of Appeals pointed to the definition of “person” in the FCRA, which includes “any ‘government or governmental subdivision or agency.’”

The appeals court also said allowing lawsuits against federal agencies would be in line with Congress’s aim of ensuring “fair and accurate credit reporting” because the federal government is the largest employer and creditor in the United States.

The USDA disagreed and asked the Supreme Court to review the case.

In the Crosshairs of SCOTUS

The USDA argued that the Supreme Court should weigh in because if the appeals court’s ruling in favor of Mr. Kirtz is allowed to stand, it would allow the government to “routinely be threatened with substantial monetary liability for its everyday employment and lending activities.”

The agency argued in its petition that waivers of federal sovereign immunity must be “unequivocally and unambiguously expressed” but that the FCRA does not contain the kind of unambiguous and unequivocal waiver of sovereign immunity that is required by law.

The USDA stated that the question presented before the Supreme Court concerns a “matter of great importance” because even if the government were to prevail in lawsuits, “an ultimate victory on the merits would not vindicate the interests protected by sovereign immunity.”

Sovereign immunity, the USDA argued, is an immunity from lawsuits, not just being immune to liability.

“The foundational principle of sovereign immunity also is an important issue in its own right, irrespective of dollars and cents,” Solicitor General Elizabeth Prelogar wrote in the petition.

“Immunity from suit protects ’the nation from unanticipated intervention in the processes of government,'” Ms. Prelogar said.

She argued that Congress is the body charged by the U.S. Constitution with “striking the balance” between creating federal rights and duties and establishing private remedies to vindicate and enforce them.

“Judicial decisions allowing ‘private suits for money damages’ against the sovereign absent its consent would upset that balance and ’place unwarranted strain on the [government’s] ability to govern in accordance with the will of [its] citizens,'” Ms. Prelogar said, asking the Supreme Court to reverse the appeals court’s decision.

During oral arguments in November 2023, USDA attorneys faced pointed questions from Supreme Court justices.

Justice Clarence Thomas said that “the statute defines a person as [including] any government or governmental subdivision or agency,” which he said seemed to at least “suggest that it applies to the U.S. government.”

“Isn’t that sufficient to waive sovereign immunity?” he asked.

When attorneys representing the USDA suggested that the real question at hand was what the “logical implication” of the statute is, Justice Elena Kagan replied that the logic appears clear—namely that the government is liable to lawsuits.

“The necessary logical implication of what Congress has done is authorize a suit against ... persons, as defined in the definitions section,” she said.

“Then you go to the definitions section. Then you discover that what Congress has done is authorize a suit against natural persons, enterprises, and governments.”

Justice Gorsuch said during oral arguments that concern about sovereign immunity made little sense when it was “the sovereign itself speaking” about being liable.

In the Feb. 8 opinion, he reiterated this argument, pointing to a number of legal provisions that underpin the argument that the FCRA authorizes consumer lawsuits against federal agencies.

“Through this series of statutory directions, no less than those we encountered in Kimel, Congress has explicitly permitted consumer claims for damages against the government,” Justice Gorsuch wrote.

“Dismissing suits like Mr. Kirtz’s would effectively ‘[negate]’ suits Congress has clearly authorized.”