On February 7, 2018, the U.S. District Court for the Eastern District of Michigan denied a motion by the U.S. Department of Agriculture (“USDA”) to dismiss a lawsuit filed against the USDA seeking money damages for alleged violations of the Fair Credit Reporting Act (“FCRA”). In moving to dismiss, the USDA argued that the FCRA claim was barred by federal sovereign immunity. However, the court rejected that argument, holding that the U.S. Government had waived its sovereign immunity from actions seeking monetary relief for FCRA violations. As a result, the court held, it had subject matter jurisdiction over the FCRA claim. See Jones v. United States Dep’t of Agric., No. 17-11530, 2018 U.S. Dist. LEXIS 19886 (E.D. Mich. Feb. 7, 2018).

The case concerned the USDA’s reports that a consumer had an outstanding medical insurance balance and was 120 days late in making several medical insurance payments. The consumer disputed these reports as false and requested that the three major credit reporting agencies (“CRAs”) reinvestigate and correct the information. The CRAs then sought verification from the USDA that its reports were accurate. The USDA responded by verifying that a significant portion of the information was accurate. The consumer alleged that, by doing so, the USDA had failed to reinvestigate and correct the reports, in violation of section 1681s-2(b) of FCRA. Moreover, the consumer claimed that such failure was willful or negligent and therefore entitled her to money damages under the statute, which provides that any “person” who willfully or negligently fails to comply with its provisions is liable for damages. See 15. U.S.C. §§ 1681n(a) and 1681o(a).

The USDA moved to dismiss the lawsuit for lack of subject matter jurisdiction. Specifically, the USDA claimed that FCRA does not expressly and unequivocally waive sovereign immunity for cases brought against a U.S. Government entity, and that because waiver cannot be implied (see U.S. v. Nordic Vill. Inc., 503 U.S. 30, 34, 112 S. Ct. 1011, 117 L. Ed. 2d 181 (1992)), the court was precluded from exercising subject matter jurisdiction over the consumer’s claims.

In a separate case, the Seventh Circuit previously had held that FCRA unequivocally waives sovereign immunity for U.S. Government entities. See Bormes v. United States, 759 F.3d 793 (7th Cir. 2014). In Bormes, an individual sued the U.S. Government for damages under FCRA for allegedly including improper information in an email receipt it sent him for a payment he made via pay.gov. The issue facing the court was whether FCRA’s definition of “person” (set forth in section 1681a(b) as including, inter alia, “any. . . government or governmental subdivision or agency”) should be literally applied to section 1681n because Congress had amended that provision in 1996 to hold not just CRAs or users of information – but any “person”­ – liable for damages for willful noncompliance with the statute. The U.S. Government contended that because the legislative history concerning Congress’s amendment of section 1681n was silent as to how it may concern section 1681a(b), the court should not construe the amendment as waiving the sovereign immunity of U.S. Government entities from remedies under FCRA. The Seventh Circuit disagreed, holding that FCRA waived sovereign immunity for damages against U.S. Government entities:

The argument that a silent legislative history prevents giving the enacted text its natural meaning has been made before—and it has not fared well. Why should Congress have to reenact §1681a(b), or repeat it in the committee reports, every time it amends some other portion of the statute? Section 1681a(b) does what it has done since 1970, no matter what happens to other sections, and what §1681a(b) does is waive sovereign immunity for all requirements and remedies that another section authorizes against any “person.”

Bormes, 759 F.3d at 795-96.

The USDA urged the district court not to follow Bormes. The USDA argued that the court should follow certain district court precedents holding that FCRA does not waive sovereign immunity. Such district court precedents point out that FCRA does not specifically authorize damages claims “against the United States.” The Jones court rejected the USDA’s position for two primary reasons. First, it observed that a district court within the Sixth Circuit already had adopted the Seventh Circuit’s reasoning in Bormes in holding that the 1996 FCRA amendment unequivocally waived sovereign immunity. See Jones, 2018 U.S. Dist. LEXIS 19886, at *7 (citing Mooneyham v. Equifax Information Services, LLC, 99 F. Supp. 3d 720 (W.D. Ky. 2015)). The Jones court noted that the Mooneyham court also held that FCRA “expressly creates a private right of action against a furnisher [including “any person”] who fails to satisfy . . . duties identified in §1681s-2(b).” Id.

Second, while acknowledging that finding waiver could subject the U.S. Government to punitive damages, or federal employees to criminal penalties, the district court held that “Congress is free [] to authorize both punitive awards and criminal penalties against the United States and its entities,” and that such considerations do not change section 1681a(b)’s express waiver language. See Jones, 2018 U.S. Dist. LEXIS 19886, at *8-9. For these reasons, the Jones court found that the U.S. Government had waived its sovereign immunity from damages for FCRA violations. The court therefore denied the USDA’s motion to dismiss the consumer’s FCRA lawsuit.