USDA Rural Development Rural Housing Service v. Kirtz
Our court system was designed to help individuals, businesses, and governments resolve their disputes. Part of access to justice means being able to use the courts to sue those who wrong you. This case is about whether a consumer can sue the federal government when it violates the Fair Credit Reporting Act (FCRA). The federal government issues many kinds of loans to individuals and businesses. And, like any private lender, the federal government might make a mistake and report inaccurate information about a loan in a way that unfairly lowers the borrower’s credit score. That’s what happened to Reginald Kirtz.
In this case, Mr. Kirtz alleges that he had a loan account with the United States Department of Agriculture Rural Development Rural Housing Service (USDA), which issues loans to develop affordable housing in rural communities. Unfortunately, Mr. Kirtz learned that his credit report contained inaccurate information that his USDA account was past due, even though he had paid it in full. This hurt his credit score, so he tried to fix it. But, according to Mr. Kirtz, the USDA failed to fix or even investigate the errors. He was forced to file a federal lawsuit alleging that the USDA had violated the FCRA.
The district court dismissed the lawsuit on the grounds that USDA may not be sued for violating FCRA because the FCRA does not waive the federal government’s sovereign immunity. Sovereign immunity is the legal doctrine under which a government is generally protected (immune) from lawsuits for money damages. The case was appealed in the Third Circuit, which ruled in favor of Mr. Kirtz. The USDA asked the U.S. Supreme Court to hear the case, which it agreed to do.
In October 2023, our Access to Justice team worked with our close allies at the National Consumer Law Center, the Center for Consumer Law and Economic Justice at UC Berkeley, and the Jerome N. Frank Legal Services Organization to submit an amicus brief to the U.S. Supreme Court supporting Mr. Kirtz. On February 8, 2024, the Supreme Court issued a unanimous opinion ruling in Mr. Kirtz’s favor, holding that consumers may sue federal agencies for violating the FCRA. We were thrilled to see that the Court’s opinion, authored by Justice Gorsuch, touched on several key points we made in our brief.
Our brief drills down on the wide-ranging use of credit reports to make clear that consumer credit information is the lifeblood of the economy. As we wrote, “Credit reports and scores can determine everything from where a person lives to where she works to whether her small business survives.” These stakes clearly resonated for the Court too, as it started its opinion similarly: “A credit report can determine everything from whether a person can secure a credit card, purchase a home, win a new job, or start a small business.”
We also note the central role that the federal government plays in the distribution and use of this vital information. When the government appropriately uses and accurately reports consumer credit information, it promotes access to credit and other opportunities. For example, farmers and veterans rely on government programs when they can’t access private lenders. But when the federal government provides inaccurate information to consumer reporting agencies, those same individuals suffer. Think of a veteran who receives a home loan from the VA. If the VA erroneously reports information about that loan that makes the veteran look like a riskier borrower than they are, they might have to accept a higher interest rate on a credit card, or even lose their security clearance. The veteran suffers, and the economy suffers.
Our amicus brief also underscores that the express purpose of FCRA—to protect the national economy and the financial health of all Americans—can be served only if the Act applies to both private market participants and the federal government. Justice Gorsuch’s opinion acknowledged this as well, noting that it is consistent with the goals of the FCRA to allow suits against federal agencies, given that they are among the largest furnishers of credit information in the country, and the purpose of the Act is to ensure fair and accurate credit reporting.
The Supreme Court’s holding is an important victory for consumers everywhere who seek to hold the government accountable when it mishandles their sensitive credit information.
