Thompson v. United States Department of Education

Background

Kenneth D. Thompson sued the United States Department of Education in New York state court. He alleged breach of contract, negligent infliction of emotional distress, intentional infliction of emotional distress, negligence, and fraud.

The complaint alleged that, in 1998, a student loan was taken out in the name of “Kenneth L. Thompson.” The borrower’s middle initial, date of birth, and Social Security number differed from Thompson’s, although they shared a first and last name. Thompson disputed the debt from about 2000 to 2006. In 2006, the Department of Education associated Thompson’s Social Security number with the debt. A collection agent later offset a federal tax refund, and the agent paid Thompson $4,566 under a 2009 settlement agreement.

In 2019, after Thompson began receiving Social Security benefits, the Social Security Administration notified him that a debt allegedly owed to the Department of Education had been referred to the Treasury Department. The notice stated that up to 15 percent of his Social Security benefits could be withheld. The Department of Education later told Thompson that the offset was an error and that steps had been taken to refund him. The government also explained that two Social Security numbers, including Thompson’s, had been associated with the debt’s case number.

The Department of Education removed the case to federal court and moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which concerns subject-matter jurisdiction, and Rule 12(b)(6), which concerns whether a complaint states a legally sufficient claim. The court notified Thompson that he could amend his complaint, but he chose to rely on the original complaint.

Jurisdiction and sovereign immunity

The court considered the Rule 12(b)(1) argument first because a lack of subject-matter jurisdiction would make the other defenses unnecessary. The court rejected Thompson’s argument that the Department of Education had waived its jurisdictional defense by removing the case from state court. It explained that removal does not waive Rule 12 defenses and that objections to subject-matter jurisdiction may be raised at any time.

The court stated that the United States and its agencies generally cannot be sued without the government’s consent. A plaintiff must identify an unequivocal statutory waiver of sovereign immunity before a suit against the federal government or one of its agencies may proceed. The court concluded that Thompson had not identified any such waiver in his complaint or opposition papers.

The court also considered possible statutory bases for the claims. It stated that the Court of Federal Claims generally has exclusive jurisdiction over contract claims against the United States when more than $10,000 is at issue, and that Thompson had identified no statute independently waiving immunity. As to the tort and fraud claims, the court explained that the Federal Tort Claims Act requires a claimant first to present the claim to the appropriate federal agency and receive a final denial. The complaint did not allege that Thompson had filed an administrative claim. The court also stated that the Higher Education Act’s partial waiver of immunity requires exhaustion of administrative remedies, which Thompson had not shown.

Disposition

The court held that Thompson’s failure to identify a waiver of sovereign immunity was fatal to all claims and that the court lacked subject-matter jurisdiction over the action. The court concluded that amendment would be futile because Thompson had declined the opportunity to amend and had not requested further leave to amend.

Judge Alison J. Nathan granted the Department of Education’s motion to dismiss. The court dismissed all claims with prejudice, instructed the clerk to enter judgment, and closed the case. The opinion’s ruling was based on the lack of subject-matter jurisdiction and did not decide whether Thompson’s underlying contract, tort, or fraud allegations were legally valid.