Texas Court Rules in Favor of FCRA Sovereign Immunity

A Court in the Western District of Texas recently released an opinion regarding the interplay between the Fair Credit Reporting Act (“FCRA”) and sovereign immunity. Usually when Texans, or other Americans, dispute inaccurate information on their credit reports and the furnisher of that information “verifies” it and leaves it on there, the person has a claim under the FCRA. The problem in this case is when the furnisher of the inaccurate information in affiliated with the federal government. In that case, sovereign immunity could kick in which would prevent the consumer from suing the government or the government employee. As the Court writes in Thurston v. Equifax Info. Servs., No. SA-20-CV-00513-FB, (W.D. Tex. Nov. 2, 2020):

As a sovereign, the United States is immune from suit unless it expressly consents to be sued by an act of Congress. Meyer, 510 U.S. at 475. Absent a statutory waiver of immunity, the principle of sovereign immunity “shields the Federal Government and its agencies from suit.” Id. If the government has not waived its immunity, the court lacks subject matter jurisdiction over the governmental party, and the barred claims must be dismissed without prejudice under Rule 12(b)(1). Warnock v. Pecos County, Tex., 88 F.3d 341, 343 (5th Cir. 1996).

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Neither the Supreme Court nor the Fifth Circuit has addressed the question of whether the FCRA waived the United States’ sovereign immunity, and the Supreme Court recently declined to grant certiorari to resolve what has emerged as a “Circuit split” on the issue. See Robinson v. Dep’t of Educ., 140 S. Ct. 1440 (Apr. 20, 2020) (denying petition for review over dissent of Justices Thomas and Kavanaugh). 

The Court ultimately decided that the FCRA did not waive sovereign immunity:

The undersigned is also persuaded by the Daniel court’s examination of other sections of the FCRA that reference “person” and the “implausible results” created by substituting “the United States” for “person” in every provision throughout the Act. See 891 F.3d at 770. Doing so would not only subject the United States (not just its employees) to criminal penalties, such as incarceration, as well as punitive damages, but it would also authorize the Federal Trade Commission, the Consumer Financial Protection Bureau, and even state governments to initiate enforcement actions against the United States for violations of the FCRA. Id. (citing See 15 U.S.C. §§ 1681n, 1681q, 1681s(a)(2)(A), 1681s(c)(1)(B)).

It also should be noted that this particular order does not dismiss the credit reporting agencies from the case. The Plaintiff could still have viable claims against them.