Stellick v. Premiere Credit of North America, LLC et al
ORDER - Defendant U.S. Department of Education's motion to dismiss 42 is GRANTED. Plaintiff James Stellick's second amended complaint 30 is DISMISSED WITHOUT PREJUDICE for lack of jurisdiction. LET JUDGMENT BE ENTERED ACCORDINGLY. (Written Opinion). Signed by Judge Patrick J. Schiltz on 02/25/13. (bjs)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Case No. 11-CV-0730 (PJS/JJG)
U.S. DEPARTMENT OF EDUCATION
d/b/a National Student Loan Data System,
Thomas J. Lyons, Jr., CONSUMER JUSTICE CENTER, P.A., for plaintiff.
Erika R. Mozangue, UNITED STATES ATTORNEY’S OFFICE, for defendant.
Plaintiff James Stellick borrowed about $2,850 in the mid-1970s to pay for college. He
never repaid those student loans. In December 2009, Stellick applied for financial aid at
Minnesota State College Southeast Technical School; his application was denied by the school.
Stellick again applied for financial aid in 2010, this time at Jones International University; again,
his application was denied by the school. In both instances, the reason given by the school for
denying Stellick’s financial-aid application was that information provided by the National
Student Loan Data System (“NSLDS”) indicated that Stellick still owed money on his old student
loans. Stellick alleges that the information given to the schools by the NSLDS was false, because
his student-loan obligations were discharged in 1989 via bankruptcy, and therefore he is no
longer obligated to repay his loans.
The NSLDS is operated by the U.S. Department of Education (“DOE”). Stellick filed
this lawsuit against the DOE. He contends that the DOE, through the NSLDS, operates as a
“consumer reporting agency” for purposes of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C.
§ 1681 et seq. Stellick further alleges that the DOE is violating the FCRA by disseminating false
information about his student-loan history. The DOE moves to dismiss the claims against it,
arguing that sovereign immunity deprives the Court of subject-matter jurisdiction over those
claims.1 The Court agrees with the DOE.
I. THE FCRA
Enacted in 1970, the FCRA seeks to ensure the “[a]ccuracy and fairness of credit
reporting.” 15 U.S.C. § 1681(a). Toward that end, the FCRA requires that “[e]very consumer
reporting agency shall maintain reasonable procedures designed to avoid” inaccurate and
prohibited disclosures. 15 U.S.C. § 1681e(a). “Consumer reporting agency” is defined, in part,
as “any person which . . . regularly engages . . . in the practice of assembling or evaluating
consumer credit information . . . .” 15 U.S.C. § 1681a(f). “Person” is defined by the FCRA as
“any individual, partnership, corporation, trust, estate, cooperative, association, government or
governmental subdivision or agency, or other entity.” 15 U.S.C. § 1681a(b) (emphasis added).
Accordingly, if a governmental entity regularly engages in the practice of assembling or
evaluating consumer-credit information, then it is a consumer-reporting agency for purposes of
the FCRA — and therefore, like all consumer-reporting agencies, it must maintain reasonable
procedures to avoid inaccurate and prohibited disclosures.
The FCRA provides remedies for violations of its substantive provisions. Any “person”
who negligently fails to comply with the FCRA with respect to any consumer can be held liable
Although the DOE moves to dismiss Stellick’s claims pursuant to Fed. R.
Civ. P. 12(b)(6), it argues in its brief that the Court lacks subject-matter jurisdiction. ECF
No. 44. The Court will therefore construe the DOE’s motion as having been filed pursuant to
Fed. R. Civ. P. 12(b)(1).
to that consumer for actual damages, costs, and attorney’s fees. 15 U.S.C. § 1681o. Any
“person” who willfully fails to comply with the FCRA with respect to any consumer can be held
liable to that consumer for actual damages, statutory damages of up to $1,000, punitive damages,
costs, and attorney’s fees. 15 U.S.C. § 1681n. As explained above, “person” is defined by the
FCRA to include governmental entities. Stellick argues that the FCRA therefore authorizes
consumers to sue governmental entities for money damages when those entities fail to comply
with the substantive requirements of the FCRA.
The DOE acknowledges that agencies of the federal government must comply with the
substantive requirements of the FCRA. The DOE denies, however, that federal agencies can be
held liable for damages if those agencies violate the FCRA. Instead, the DOE argues that
sovereign immunity insulates federal agencies (such as itself) from suits for damages brought
under the FCRA.
II. SOVEREIGN IMMUNITY
“Sovereign immunity shields the United States from suit absent a consent to be sued that
is ‘unequivocally expressed.’” United States v. Bormes, 133 S. Ct. 12, 16 (2012) (quoting United
States v. Nordic Village, Inc., 503 U.S. 30, 33 (1992)). “[T]he Government’s consent to be sued
must be construed strictly in favor of the sovereign . . . .” Nordic Village, 503 U.S. at 34
(internal quotations omitted).
Stellick contends that the FCRA contains within its definition of “person” an unequivocal
waiver of sovereign immunity. As explained above, the FCRA defines “person” as including any
“government or governmental subdivision or agency . . . .” 15 U.S.C. § 1681a(b). Congress was
thus crystal clear that a federal agency is a “person” for purposes of the FCRA. Moreover,
Congress was also crystal clear in providing that a consumer may sue “any person” who violates
the FCRA. 15 U.S.C. § 1681n; 15 U.S.C. § 1681o (emphasis added). Thus, says Stellick,
Congress unequivocally consented to consumers suing federal agencies such as the DOE for
violations of the FCRA.
In support of his argument, Stellick compares the FCRA to two closely related statutes —
the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., and the Equal Credit Opportunity
Act (“ECOA”), 15 U.S.C. § 1691 et seq. TILA was passed by Congress in 1968 and constitutes
subchapter I of the Consumer Credit Protection Act (“CCPA”), Pub. L. No. 90-321, 82 Stat. 146
(1968); the FCRA was passed in 1970 and constitutes subchapter III of the CCPA. Like the
FCRA, TILA defines “person” as including governmental entities. See 15 U.S.C. § 1602
(defining “person” as “a natural person or an organization,” and “organization” as including
“government or governmental subdivision[s] or agenc[ies]”). And like the FCRA, persons who
violate TILA are liable for damages. See 15 U.S.C. § 1640(a) (holding “any creditor who fails to
comply” liable, with creditors defined within § 1602(g) as persons). Unlike the FCRA, however,
TILA explicitly states that “[n]o civil or criminal penalty provided under this subchapter for any
violation thereof may be imposed upon the United States or any department or agency
thereof . . . .” 15 U.S.C. § 1612(b).
Stellick argues that this provision of TILA is strong evidence that Congress intended to
waive sovereign immunity under the FCRA. He reasons as follows: TILA and the FCRA were
enacted only two years apart. Each statute is a subchapter of the CCPA. Each statute defines
“person” to include governmental entities, and each statute authorizes a party injured by a
“person’s” violation of the statute to recover damages from that “person.” In all material
respects, then, TILA and the FCRA are identical — with one critical exception: Congress
included within TILA (but not within the FCRA) a provision that explicitly preserved sovereign
immunity. Congress would not have included such a provision in TILA unless it believed that,
without the provision, TILA would be construed to waive sovereign immunity. The FCRA is
essentially TILA without the explicit statement — and thus, following Congress’s logic, the
FCRA waives sovereign immunity.
Stellick makes a similar argument with respect to the ECOA. The ECOA was enacted by
Congress in 1974 — four years after the FCRA, and six years after TILA — and constitutes
subchapter IV of the CCPA. Once again, like the FCRA and TILA, the ECOA defines “person”
to include “government or governmental subdivision[s] or agenc[ies],” 15 U.S.C. § 1691a(f), and
authorizes a party who is injured by a “person’s” violation of the statute to recover damages from
that “person,” see 15 U.S.C. § 1691e(a) (holding “[a]ny creditor who fails to comply” liable, with
creditors defined within § 1691a(e) as persons). But like the FCRA, and unlike TILA, the ECOA
does not include a provision explicitly preserving sovereign immunity.
In Moore v. U.S. Department of Agriculture, 55 F.3d 991 (5th Cir. 1995), the Fifth Circuit
found that Congress waived sovereign immunity as to claims brought pursuant to the ECOA.
Moore, 55 F.3d at 994. According to Moore, Congress understood that the definition of “person”
in TILA potentially exposed governmental entities to liability, and therefore included the
provision expressly preserving sovereign immunity. Only six years later, Congress again
exposed governmental entities to liability through its definition of “person” — this time in the
ECOA — but failed to include such a provision. Moore found in this difference an unequivocal
expression by Congress of its intention to waive sovereign immunity under the ECOA. Stellick
asks this Court to extend Moore’s reasoning to the FCRA.
There is some force to Moore’s reasoning and Stellick’s argument. But the Court
nevertheless finds that the FCRA does not waive the sovereign immunity of the DOE for a
number of reasons:
First, the Supreme Court has said repeatedly that consent to be sued must be
“unequivocally expressed.” Bormes, 133 S. Ct. at 16 (internal quotations omitted). A waiver of
sovereign immunity cannot be implied. See United States v. King, 395 U.S. 1, 4 (1969). In
implying that Congress meant to waive sovereign immunity under the ECOA because of
differences between TILA and the ECOA, Moore appears to have done exactly what the Supreme
Court said should not be done. This Court is reluctant to go down the same path with respect to
Second, at the time that the FCRA was enacted in 1970, its remedial provisions applied
not to “person[s],” but to consumer-reporting agencies. See Pub. L. No. 104-208, § 2412(a), 110
Stat. 3009, 3446 (1996). (The remedial provisions of the FCRA were not broadened to apply to
all “persons” until 1996.) As far as the Court is aware, no agency of the federal government was
acting as a consumer-reporting agency in 1970,2 and thus no federal agency could have been held
liable under the FCRA at the time that the FCRA was enacted. It is understandable, then, why
Congress did not think to include within the FCRA a provision explicitly preserving sovereign
The NSLDS was established in 1986, and did not take on its current role until 1989,
nearly two decades after the FCRA was passed. See Pub. L. No. 99-498, § 407(a), 100
Stat. 1268, 1486 (1986); Pub. L. No. 101-239, § 2008, 103 Stat. 2106, 2121 (1989).
immunity; if Congress even thought about the question, it likely concluded that such a provision
Third, it is doubtful that Congress believed that it was establishing a consumer-reporting
agency when it created the NSLDS in 1986. The statutes governing the NSLDS seem to envision
that the agency would work with consumer-reporting agencies, not become a consumer-reporting
agency. See 20 U.S.C. § 1080a. It seems entirely possible — perhaps even likely — that it
simply never occurred to Congress that the NSLDS could be held liable under the FCRA.
Fourth, the FCRA permits courts to impose punitive damages on persons who willfully
violate the FCRA. See 15 U.S.C. § 1681n(a)(2). But Congress only infrequently authorizes the
recovery of punitive damages against the United States; indeed, Congress often preserves
sovereign immunity as to punitive damages even when it broadly and explicitly waives sovereign
immunity as to actual damages. For example, the Federal Tort Claims Act, 28 U.S.C. § 2674,
generally waives the sovereign immunity of the United States as to tort claims, but states that the
United States “shall not be liable . . . for punitive damages.” Likewise, the ECOA explicitly
states that governmental entities cannot be held liable for punitive damages. 15 U.S.C.
§ 1691e(b). It is conceivable that Congress intended to expose the United States to punitive
damages under § 1681n,3 but it appears more likely, given the legislative history described above,
One section of the FCRA does, in fact, expose the federal government to punitive
damages for particular types of violations of the FCRA. See 15 U.S.C. § 1681u(i) (“Any agency
or department of the United States . . . is liable [under this section] . . . if the violation is found to
have been willful or intentional, [for] such punitive damages as a court may allow . . . .”). But if,
as Stellick argues, Congress waived sovereign immunity as to all violations of the FCRA, then
§ 1681u would be unnecessary.
that Congress failed to realize that the FCRA could be read to expose the NSLDS to punitivedamages claims under § 1681n.
Fifth, the FCRA imposes criminal liability on “[a]ny person who knowingly and willfully
obtains information on a consumer from a consumer reporting agency under false pretenses . . . .”
15 U.S.C. § 1681q. Just as it is unlikely that Congress intended to waive sovereign immunity as
to punitive damages throughout the FCRA, it is unlikelier still that Congress intended to expose
governmental entities to criminal penalties. Yet the section of the FCRA that imposes criminal
liability uses the same “any person” formulation found in the sections that impose civil liability.
Sixth, the United States government is one of the world’s largest creditors. The
consequences of holding that the federal government can be held liable for any violation of the
FCRA would be immense. In such circumstances, it is particularly important to insist that
Congress waive sovereign immunity expressly and clearly.
Finally, it appears that all of the other courts that have explicitly addressed the question
of whether the FCRA includes a waiver of sovereign immunity — with only one exception4 —
have concluded that it does not. See Taylor v. United States, No. CV-09-2393-PHX-DGC, 2011
WL 1843286, at *5 (D. Ariz. May 16, 2011); Gillert v. U.S. Dep’t of Educ., Civ. No. 08-6080,
See Talley v. U.S. Dep’t of Agric., No. 07 C 0705, 2007 WL 2028537 (N.D. Ill. July 12,
2007). Talley has experienced a convoluted afterlife. On appeal, a panel of the Seventh Circuit
avoided the question of whether the FCRA waived sovereign immunity, instead finding that the
Little Tucker Act, 28 U.S.C. § 1346(a)(2), supplied the necessary waiver of sovereign immunity
for the plaintiff to sue the government for violations of the FCRA. See 595 F.3d 754, 757-760
(7th Cir. 2010). An equally divided en banc Seventh Circuit vacated the opinion of the panel and
affirmed the judgment of the district court. See No. 09-2123, 2010 WL 5887796, at *1 (7th Cir.
Oct. 1, 2010). The Supreme Court has since rejected the argument that the Little Tucker Act can
supply the waiver of sovereign immunity necessary to recover against the government under the
FCRA. See United States v. Bormes, 133 S. Ct. 12 (2012).
2010 WL 3582945, at *3-4 (W.D. Ark. Sept. 7, 2010); Bormes v. United States, 638
F. Supp. 2d 958, 961-62 (N.D. Ill. 2009), vacated on other grounds by 626 F.3d 574 (Fed. Cir.
2010), vacated sub nom. United States v. Bormes, 133 S. Ct. 12 (2012); Ralph v. U.S. Air Force
MGIB, Civil Action No. 06-CV-02211-ZLW-KLM, 2007 WL 3232593, at *2-3 (D. Colo.
Oct. 31, 2007); Kenney v. Barnhart, No. SACV 05-426-MAN, 2006 WL 2092607, at *9
(C.D. Cal. July 26, 2006). Stellick cites a handful of cases in which courts have addressed the
merits of an FCRA claim against a federal agency, see ECF No. 51 at 11 n.7, but there is no
evidence that the United States raised a sovereign-immunity defense in any of those cases, nor is
there any evidence that it occurred to any of those courts to inquire into their own jurisdiction.
See, e.g., Banks v. United States, Civil Action No. 05-6853, 2007 WL 1030326, at *5 (E.D. La.
Mar. 28, 2007).
For these reasons, the Court concludes that nothing in the FCRA waives the sovereign
immunity of the DOE. “Sovereign immunity is jurisdictional in nature.” Preferred Risk Mut.
Ins. Co. v. United States, 86 F.3d 789, 793 (8th Cir. 1996) (citing FDIC v. Meyer, 510 U.S. 471
(1994)). Therefore, Stellick’s claims against the DOE must be dismissed for want of jurisdiction.
Based on the foregoing, and on all of the records, files, and proceedings herein, IT IS
HEREBY ORDERED THAT:
Defendant U.S. Department of Education’s motion to dismiss [ECF No. 42] is
Plaintiff James Stellick’s second amended complaint [ECF No. 30] is
DISMISSED WITHOUT PREJUDICE for lack of jurisdiction.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: February 25, 2013
s/Patrick J. Schiltz
Patrick J. Schiltz
United States District Judge
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