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WBK Industry News - Litigation Developments

Supreme Court Rules That Debt Collector’s Authorized Use of the State Letterhead Does Not Violate the Fair Debt Collection Practices Act

In Sheriff v. Gillie, 194 L.Ed.2d 625 (U.S. 2016), the Supreme Court has ruled that a debt collector’s use of a State Attorney General’s letterhead, when the debt collector is acting under that Attorney General’s direction, does not violate the Fair Debt Collection Practices Act (FDCPA).

The FDCPA aims to eliminate “abusive debt collection practices.” 15 U.S.C. § 1692(a)-(e). The Act prohibits “any false, deceptive, or misleading representation … in connection with the collection of any debt,” 15 U.S.C. § 1692e, and specifically prohibits “falsely represent[ing]” that a communication is “authorized, issued, or approved” by a State. 15 U.S.C. § 1692e(9). In addition, the Act excludes from the definition of the term “debt collectors,” “any officer … of … any State to the extent that collecting … any debt is in the performance of his official duties.” 15 U.S.C. § 1692a(6)(C).

Plaintiff-debtors filed a putative class action in the U.S. District Court for the Southern District of Ohio, asserting that Defendant-debt collectors violated the FDCPA by sending debt collection notices on the Ohio Attorney General’s letterhead, rather than the letterhead of their private firms. Plaintiffs alleged that Defendants had employed deceptive and misleading means to attempt to collect consumer debts. However, under Ohio law, the Attorney General appoints private attorneys as independent contractors to act on the Attorney General’s behalf to collect overdue debts owed to state-owned agencies and instrumentalities. The Ohio Attorney General names them “special counsel” and requires them to use his letterhead.

The District Court granted summary judgment for the Defendants, holding that special counsel are “officers” of the State and, in any event, their use of the Attorney General’s letterhead is not false or misleading. But the Sixth Circuit vacated that judgment, concluding that special counsel, as independent contractors, are not entitled to the FDCPA’s state-officer exemption, and remanded for trial the question of whether use of the Attorney General’s letterhead is misleading.

The Supreme Court granted certiorari and reversed the Sixth Circuit’s holding in a decision issued on May 16, 2016. The Court assumed, arguendo, that special counsel do not rank as “state officers,” but nevertheless found that their use of the Attorney General’s letterhead does not offend 15 U.S.C. § 1692e.

The Court explained that special counsel’s use of the Attorney General’s letterhead accurately conveys that special counsel act on behalf of the Attorney General. This conclusion is bolstered by the character of the relationship between special counsel and the Attorney General: special counsel work closely with attorneys in the Attorney General’s Office. In addition, the Court found that there is no violation of 15 U.S.C. § 1692e(9) because the Attorney General explicitly authorized—indeed required—special counsel to use his letterhead in sending debt collection communications. Ultimately, the Court saw no reason to construe the FDCPA in a manner that would interfere with the Attorney General’s chosen method of fulfilling his statutory obligation to collect the State’s debts.

The opinion may be found here:  http://www.supremecourt.gov/opinions/15pdf/15-338_lkgn.pdf.