BANKRUPTCY BULLETIN
Contributing Author:
Stanley Chow
University of Minnesota Law School
Juris Doctor Candidate, 2025
Judicial Extern to U.S. Bankruptcy Judge Kesha Tanabe
In Department of Agriculture Rural Development Rural Housing Service v. Kirtz, 144 S. Ct. 457 (2024), the Justices unanimously rejected the government’s claim to sovereign immunity under the Fair Credit Reporting Act (the “FCRA”). In the underlying case, the plaintiff sued a federal agency, seeking monetary damages for its failure to correct inaccurate information on a consumer credit report. The plaintiff sought relief under the FCRA pursuant to 11 U.S.C. §§ 1681n and 1681o. These statutory provisions authorize suit against “any person” who willfully or negligently fails to comply with any requirements of the FCRA. Under the FCRA, the definition of a “person” expressly includes “any . . . government or governmental subdivision or agency, or other entity” upon which a consumer has relied to its detriment. 15 U.S.C § 1681a. The plaintiff argued the express language of the definition confirmed the federal agency could be liable under the FCRA. In response, the government contended the definition was not sufficient to constitute a waiver of its sovereign immunity.
As a general principle, the United States is immune from suits seeking money damages, unless Congress explicitly makes a “clear statement” to waive this protection in one of two ways. Congress can waive the federal government’s immunity from suit if “a statute says in so many words that it is stripping immunity from a sovereign entity.” Financial Oversight and Management Bd. for P. R. v. Centro De Periodismo Investigativo, Inc., 598 U. S. 339, 347 (2023). Alternatively, Congress can waive immunity if “a statute creates a cause of action” and explicitly “authorizes suit against a government on that claim.” Id. at 347. In Kirtz, the Court found the second type of waiver exists with respect to the FCRA.
Bankruptcy practitioners will recall the Court made a similar ruling in Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, in which it rejected a claim of tribal sovereign immunity under the Bankruptcy Code. 599 U.S. 382 (2023). It may be worth noting, however, the Kirtz court hinted that had a State, as opposed to a federal agency, asserted sovereign immunity under the FCRA, the case might have yielded a different result. Practitioners should watch for additional litigation to clarify the scope of the Kirtz decision.
To read the Court’s opinion, click here.
Editors-in-Chief:
C.J. Harayda, Stinson LLP
David M. Tanabe, Winthrop & Weinstine, P.A.