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Inside Privacy Updates on Developments in Global Privacy & Data Security from Covington & Burling LLP

Government May be Immune to Suits Alleging Violations of FACTA

Posted in Financial Privacy, Litigation, Technology Transactions, United States

The U.S. Supreme Court ruled on Tuesday that the federal government does not always lose its sovereign immunity to damages lawsuits claiming that an agency violated the Fair and Accurate Credit Transactions Act (“FACTA”) by printing the expiration date of a credit card on a receipt issued to a consumer. In a unanimous decision, authored by Justice Antonin Scalia, the Court rejected a November 2010 ruling by the Federal Circuit that the Little Tucker Act authorized the government to be sued for money damages under the Fair Credit Reporting Act (“FCRA”), which FACTA amended.  

James Bormes, a Chicago lawyer, paid a $350 court filing fee through the federal government’s pay.gov system with his American Express card. He was sent an electronic receipt for the transaction, which contained his credit card’s expiration date. Bormes alleged that this violated FACTA’s prohibition on printing expiration dates on credit card receipts issued at the point of sale.  He sued the government, seeking class-action status on behalf of thousands of people issued receipts that displayed card expiration dates or more than the last five digits of credit and debit card numbers (which FACTA also prohibits).

The district court initially dismissed the suit, finding that the FCRA does not contain an explicit waiver of the government’s sovereign immunity and could, therefore, not allow for the plaintiff’s damages claims. Bormes appealed to the Federal Circuit, which has exclusive jurisdiction for appeals in which a lower court’s jurisdiction was based partly on the Little Tucker Act. The government moved to transfer the suit to the Seventh Circuit, arguing that the Act’s jurisdictional provision did not apply. The Federal Circuit denied the motion and vacated the lower court’s ruling. The federal government then took the sovereign immunity issue to the Supreme Court.

As a general matter, the government’s immunity will not be displaced by the Little Tucker Act’s waiver if Congress has provided a separate statutory remedy that includes money damages. Because the FCRA provides its own remedial scheme for plaintiffs, the Court ruled that the Little Tucker Act does not apply to Brome’s claim. Plaintiffs cannot “mix and match FCRA’s provisions with the Little Tucker Act’s immunity waiver to create an action against the United States,” the Court stated.

“Where, as in FCRA, a statute contains its own self-executing remedial scheme, [courts] look only to that statute to determine whether Congress intended to subject the United States to damages liability.” The Court ruled that the federal government, therefore, does not necessarily give up its sovereign immunity in FCRA cases. It refrained, however, from deciding whether the FCRA, on its own, waives that immunity. Transferring the case for remand the Court reserved that question for the Seventh Circuit to consider.

Looking ahead, even if the Seventh Circuit concludes that the FCRA does, in fact, waive the government’s immunity, it will be an uphill battle for Bormes. In 2010, the Seventh Circuit, in Shlahtichman v. 1-800 Contacts, Inc., 615 F.3d 794 (7th Cir. 2010), ruled that the FACTA does not apply to electronic displays or e-mail confirmations of online transactions.