Tag: USDA

Third Circuit Finds Government Can Be Held Liable for Violations of the FCRA October 3, 2022 The U.S. Court of Appeals for the Third Circuit has recently vacated the dismissal of a lawsuit. The court found that the federal government lacks sovereign immunity and can be held liable for violations of the FCRA’s reporting requirements. The plaintiff brought this case against the Department of Agriculture (USDA) and a servicer of student loan debts. The issue is due to the defendants allegedly continuing to report two loans as past due despite both being closed and holding a $0 balance. The plaintiff filed a dispute regarding the information with a consumer reporting agency (CRA) and contacted the USDA and the student loan servicer; however, neither of these parties investigated or corrected the information. In response, the plaintiff filed a lawsuit against the CRA, USDA, and the servicer. The plaintiff alleges violations of Sections 1681n and 1681o of the FCRA regarding civil liability for willful and negligent noncompliance, respectively. The USDA moved for dismissal, claiming that the court lacked jurisdiction over the subject matter due to the federal government’s sovereign immunity. The district court granted the motion, finding that the government’s sovereign immunity protected it from responsibility for damages under the FCRA. This decision is in line with prior decisions by the Fourth and Ninth Circuits. However, the plaintiff appealed this decision. In response, the Third Circuit vacated the decision, finding that the federal government and its divisions, subdivisions, and agencies may be held responsible for damages under the FCRA. Under the principle of sovereign immunity, the Third Circuit noted that the federal government has broad immunity from civil suits except where a Congressional statute explicitly waives its immunity. Examining the FCRA’s language, the Third Circuit noted that the FCRA imposes substantive requirements on both CRAs and “persons” who use information in credit reports. Under the original text, the FCRA defines a person as “any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.” In a 1996 amendment, Congress imposed additional requirements for “persons” that furnish information to CRAs. The furnishers must investigate upon receiving notice of disputed information from a CRA and report the results to all relevant CRAs. The FCRA authorizes consumers to bring civil actions against any furnisher who fails to meet these obligations. Examining the plain statutory text, the Third Circuit noted that courts could discern Congress’ explicit statutory intent to waive sovereign immunity. The court noted that where Congress wanted to narrow the definition of “person,” it did so, such as where the FCRA explicitly excludes the federal government from the requirements about adverse employment-related decisions based upon consumer reports. As a result, the court found the federal government’s sovereign immunity had been explicitly waived and vacated the district court’s decision. Stay updated on all the new rules of compliance with Pre-employ’s free news resources on FCRA, EEOC, and more. Contact a Sales Rep today for more information. Source

Tag: USDA

Third Circuit Finds Government Can Be Held Liable for Violations of the FCRA

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