Bell v. North Dakota University System

Background

Norman Bell sued the North Dakota University System (NDUS) under the Fair Credit Reporting Act, a federal law regulating the accuracy and handling of consumer credit information. Bell alleged that he paid his NDUS student loan in full by August 2021, but that inaccurate information later appeared on his credit reports stating that the account remained delinquent and had an approximately $8,329 past-due balance.

Bell alleged that he disputed the information with Equifax and TransUnion and requested information about how its accuracy had been determined. According to the complaint, the credit reporting agencies forwarded the dispute to NDUS, but neither NDUS nor the agencies conducted reasonable investigations or removed the allegedly false information. Bell sought costs, fees, statutory damages, and punitive damages. He voluntarily dismissed Equifax and TransUnion from the lawsuit before the court ruled on NDUS’s motion.

NDUS’s sovereign-immunity argument

NDUS moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(1), which permits dismissal when the federal court lacks jurisdiction. NDUS argued that the Eleventh Amendment’s sovereign immunity barred Bell’s federal claims.

The court explained that sovereign immunity generally protects states and certain state-related entities from lawsuits in federal court, including federal-law claims. A state may waive that protection, but the waiver must be clear and unequivocal. NDUS had the burden of showing that it was entitled to sovereign immunity.

Bell argued that NDUS could pay a judgment from non-state sources. He pointed to an NDUS press release stating that approximately 26% of the system’s operating budget came from North Dakota’s general fund, while the remainder came from tuition, auxiliary revenues, grants, and other revenue. Bell also noted that courts may consider additional factors when deciding whether a university shares the state’s immunity, but he did not base an argument on those factors.

Court’s analysis

The court relied on decisions from the Eighth Circuit, the District of North Dakota, and the North Dakota Supreme Court holding that North Dakota’s universities are arms of the state and entitled to sovereign immunity. It also considered North Dakota’s constitutional and statutory structure.

The North Dakota University System is controlled by the state board of higher education. The governor appoints the board members with the Senate’s consent, board members are paid with state funds, and the board reports to the legislative assembly. The state also maintains special revenue funds for each institution. Those funds include tuition and other money, but they must be used under the state constitution and are subject to legislative appropriations.

The court concluded that North Dakota’s universities are under the state’s control. It rejected Bell’s argument about non-state funding as speculative. Restricted grants, donations, and bequests could be used only for their intended purposes, while other revenue was deposited into special revenue funds subject to the stated restrictions. The court therefore found that a judgment against NDUS would come from the state treasury or other state funds, rather than non-state funds under NDUS’s discretionary control.

The court also found that North Dakota had not consented to suit in federal court. It further stated that Bell had not argued that Congress validly removed the state’s immunity for these Fair Credit Reporting Act claims. The court therefore found that NDUS had met its burden to establish sovereign immunity.

Ruling and disposition

The court granted NDUS’s motion to dismiss on sovereign-immunity grounds. Because the court lacked jurisdiction, it did not address the parties’ arguments about dismissal under Rule 12(b)(6), which concerns whether a complaint adequately states a claim. The written order states: “Defendant’s Motion to Dismiss (Doc. 9) is GRANTED.” The court also ordered that judgment be entered accordingly.