Stein v. U.S. Dep't of Educ.

Decision Date31 March 2020
Docket Number18-CV-5684 (DLI) (LB)
Citation450 F.Supp.3d 273
Parties Shmuel STEIN, Plaintiff, v. UNITED STATES DEPARTMENT OF EDUCATION, Defendant.
CourtU.S. District Court — Eastern District of New York

Dov Michael Mittelman, Stein Saks, PLLC, Hackensack, NJ, for Plaintiff.

Sean P. Greene, United States Attorney's Office, EDNY, Brooklyn, NY, for Defendant.

MEMORANDUM & ORDER

DORA L. IRIZARRY, United States District Judge

Plaintiff Shmuel Stein ("Stein" or "Plaintiff") alleges violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. ("FCRA"). See generally , Am. Compl., Dkt. Entry No. 13. The only claims remaining in this action are those against the United States Department of Education ("DOE" or "Defendant"). Previously, the parties stipulated to, and the Court subsequently ordered, the dismissal of the claims against Trans Union, LLC ("Trans Union") and Great Lakes Educational Loan Services, Inc. ("Great Lakes"). See , Dkt. Entry Nos. 32, 52, respectively. The Court also adopted the magistrate judge's sua sponte and unopposed Report & and Recommendation recommending dismissal of the claims against Chase Bank USA, N.A. See , Dkt. Entry No. 50.

DOE now moves for dismissal under Federal Rule of Civil Procedure 12(b)(1), arguing that Congress has not waived the government's sovereign immunity under the FCRA, and, thus, this Court lacks subject matter jurisdiction to hear this action. Def.'s Mot. to Dismiss, Dkt. Entry No. 53; See also , Def.'s Mem. of L. in Supp., Dkt. Entry No. 54; Def.'s Reply Mem., Dkt. Entry No. 56. Plaintiff opposes, arguing the FCRA's text includes a waiver of sovereign immunity, thus granting this Court subject matter jurisdiction. Pl.'s Mem. ofext includes a waiver of sovereign immunity, thu L. in Opp., Dkt. Entry No. 55. For the reasons set forth below, the motion is granted and this action is dismissed.

BACKGROUND1

Stein is the borrower of certain "U.S. Department of Education Loans[,] some of which are serviced by Great Lakes and his Chase Bank account." Am. Compl. ¶ 13. He alleges that Trans Union "prepared and issued credit reports ... that included inaccurate information" relating to the loans, such as incorrect account balances for multiple loans, incorrect late payment notations, and misstatements of the balances owed. Id. ¶¶ 13-16. Plaintiff further alleges DOE "furnished" at least some of the inaccurate information to Trans Union, which "published" it. Id. ¶¶ 14-15.

Plaintiff alleges that, on or around April 23, 2018, he notified Trans Union that he was disputing the accuracy of the reported information. Id. ¶ 18. He further alleges that Trans Union notified DOE of this dispute, but DOE "failed to conduct a reasonable investigation and continued to report false and inaccurate adverse information" on Plaintiff's consumer report, including the misstated balances and late payment notations. Id. ¶¶ 19-21. Plaintiff also alleges that DOE received a "dispute letter" from him but failed to mark the accounts as disputed. Id. ¶ 22. Stein contends that DOE continues to report the inaccurate and materially misleading credit data, which harms his credit worthiness and credit score. Id. ¶¶ 27-29.

LEGAL STANDARD
I. Subject Matter Jurisdiction

"A plaintiff must prove the existence of subject matter jurisdiction by a preponderance of the evidence." Moser v. Pollin , 294 F.3d 335, 339 (2d Cir. 2002) (citing Makarova v. United States , 201 F.3d 110, 113 (2d Cir. 2000) ). "A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova , 201 F.3d at 113 (2d Cir. 2000). When a court lacks subject matter jurisdiction, dismissal is mandatory. Fed. R. Civ. P. 12(h)(3) ; Arbaugh v. Y & H Corp. , 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006) ("[W]hen a federal court concludes that it lacks subject-matter jurisdiction, the court must dismiss the complaint in its entirety.").

II. Sovereign Immunity

It is axiomatic "that federal courts are courts of limited jurisdiction and lack the power to disregard such limits as have been imposed by the Constitution or Congress." Durant, Nichols Houston, Hodgson & Cortese-Costa P.C. v. Dupont , 565 F.3d 56, 62 (2d Cir. 2009) (quotation marks and citation omitted). One such limit is that "[t]he United States, as sovereign, is immune from suit unless it waives immunity and consents to be sued." Cooke v. United States , 918 F.3d 77, 81 (2d Cir. 2019). Therefore, federal courts lack subject matter jurisdiction over suits brought against the United States unless there exists a specific, express waiver of the government's sovereign immunity. See , Lehman v. Nakshian , 453 U.S. 156, 160, 101 S.Ct. 2698, 69 L.Ed.2d 548 (1981) (finding that the United States is immune from suit except as it consents to be sued); FDIC v. Meyer , 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994) ("Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit.").

A waiver of sovereign immunity "must be unequivocally expressed in the statutory text." Cooke , 918 F.3d at 81 (quotation marks and citation omitted). This is to ensure "that Congress has specifically considered" and "intentionally legislated on the matter" of sovereign immunity, rather than "legislat[ing] on a sensitive topic inadvertently or without due deliberation." Sossamon v. Texas , 563 U.S. 277, 290-91, 131 S.Ct. 1651, 179 L.Ed.2d 700 (2011) (quotation marks omitted). Implied waivers are not permitted. Lane v. Pena , 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996).

The Supreme Court frequently has held that waivers of sovereign immunity are "to be strictly construed, in terms of [their] scope, in favor of the sovereign." Dep't of the Army v. Blue Fox, Inc. , 525 U.S. 255, 261, 119 S.Ct. 687, 142 L.Ed.2d 718 (1999). Moreover, any ambiguity within a waiver must be construed in favor of immunity. FAA v. Cooper , 566 U.S. 284, 290, 132 S.Ct. 1441, 182 L.Ed.2d 497 (2012). "Ambiguity exists if there is a plausible interpretation of the statute that would not authorize [the relief sought]." Id.

DISCUSSION

Congress enacted the FCRA in 1970 to protect consumer privacy, prevent consumer harm arising from flaws in the credit reporting system, and promote efficiency in the nation's banking and consumer credit systems. See , Safeco Ins. Co. of Am. v. Burr , 551 U.S. 47, 52, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007). As amended in 1996, the FCRA provides a cause of action against any "person" who willfully or negligently fails to comply with the statute. See , 15 U.S.C. § 1681n (setting forth damages for willful noncompliance); § 1681o (providing damages for negligent noncompliance). The statute defines a "person" as "any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity." Id. at § 1681a(b). The FCRA imposes civil and criminal liability for violations, including fines or imprisonment, or both. Id. at § 1681q. In addition, the 1996 amendments authorized the Federal Trade Commission ("FTC") to seek civil penalties for violations of the statute, and gave enforcement authority to state governments to seek damages from "person[s]" in certain circumstances. Id. at § 1681s.

As a federal agency, DOE enjoys immunity from the present lawsuit, unless Stein can show that the FCRA contains a clear and unambiguous waiver of the government's sovereign immunity. Stein contends that the statute's text contains such a waiver because the statute provides for a cause of action against any "person," the definition of which includes any "government or governmental subdivision." Pl.'s Mem. of L. in Opp. at 3-4. Defendant counters that the inclusion of the words "government or governmental subdivision" in the definition of "person" is not sufficiently clear and unequivocal to constitute a waiver of sovereign immunity, and, therefore, this Court does not have subject matter jurisdiction over this case. Def.'s Mem. of L. in Supp. at 6-10.

The Second Circuit has not ruled on the issue of whether the FCRA contains a waiver of sovereign immunity. However, two of the three circuits that have considered this issue have concluded that the FCRA does not contain such a waiver. See , Robinson v. U.S. Dep't of Educ. , 917 F.3d 799 (4th Cir. 2019) (holding that FCRA did not unambiguously and unequivocally waive DOE's sovereign immunity); Daniel v. Nat'l Park Serv. , 891 F.3d 762 (9th Cir. 2018) (finding FCRA did not clearly waive sovereign immunity from suit); But see , Bormes v. United States , 759 F.3d 793 (7th Cir. 2014) (concluding FCRA waived government's sovereign immunity as to civil damages).

An examination of FCRA's text supports a finding that it does not contain a waiver of sovereign immunity. "Statutory construction is a holistic endeavor." Koons Buick Pontiac GMC, Inc. v. Nigh , 543 U.S. 50, 60, 125 S.Ct. 460, 160 L.Ed.2d 389 (2004) (quotation marks and citation omitted). Thus, the Court must examine the "FCRA as a whole – including the different contexts in which ‘person’ is used[.]" Daniel , 891 F.3d at 769. There is a "longstanding interpretive presumption that ‘person’ does not include the sovereign." Vt. Agency of Nat. Res. v. U.S. ex rel. Stevens , 529 U.S. 765, 780, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). "As we have often noted, in common usage, the term ‘person’ does not include the sovereign, and statutes employing the word are ordinarily construed to exclude it." Int'l Primate Prot. League v. Adm'rs of Tulane Educ. Fund , 500 U.S. 72, 82-83, 111 S.Ct. 1700, 114 L.Ed.2d 134 (1991) (quotation marks, citation, and brackets omitted).

Moreover, "statutes waiving sovereign immunity are normally quite clear." Robinson , 917 F.3d at 803. Generally, when Congress intends to include a waiver of sovereign immunity in a statute, Congress includes the words "United States" in the waiver. See, e.g. , Little...

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