Justices Agree to Hear Government Appeal in Credit Report Dispute

WASHINGTON — The Supreme Court on Tuesday agreed to determine whether Congress waived the United States’ sovereign immunity when it comes to errors related to credit reports in a case involving a Pennsylvania man and the U.S. Department of Agriculture.

The case, which will be heard by the court next term, is an appeal of a 3rd U.S. Circuit Court of Appeals ruling in which the court held the legal doctrine of sovereign immunity does not shield the U.S. government from liability in lawsuits concerning credit reporting inaccuracies. 

The underlying lawsuit dates back to 2020, when Reginald Kirtz sued two public lenders, including a USDA agency called the Rural Housing Service that furnishes loans to help lower-income Americans get housing in rural parts of the country.

In his lawsuit, Kirtz claimed his loans had been completely repaid, but that the USDA reported his account was 120 days past due, damaging his credit score. He also maintains that despite several attempts to have the inaccurate statement corrected, the USDA failed to take any action.

The Biden administration responded by saying Kirtz’s suit should be dismissed under sovereign immunity, which generally shields the U.S. government from liability except in instances in which it has been waived by law. 

A federal judge dismissed the case in 2021, ruling that the Fair Credit Reporting Act “does not contain such an unambiguous waiver of sovereign immunity.” 

But the 3rd Circuit disagreed, prompting the administration’s appeal to the Supreme Court.

In a filing in the Supreme Court earlier this year, U.S. Solicitor General Elizabeth Prelogar said the 3rd Circuit ruling conflicted with the decisions by two other courts of appeals, a conflict only the justices could resolve.

The USDA meanwhile said in a court filing of its own that allowing the 3rd Circuit’s interpretation of the law to stand would expose the federal government to “substantial liability” over its credit reporting practices.

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