May 17, 2016 BY Eric Retter
U.S. Supreme Court Deemed The Use of Attorney General Letterhead is Not Misleading When Used by Private Attorneys in Special Counsel
The Supreme Court issued its opinion Monday in Sheriff v. Gillie, No. 15-338, ___ U.S. ___ (2016). The case involved the collection of debts owed to the state by private law firms that had been appointed as special counsel by the Ohio Attorney General for the purposes of collecting those debts. The private law firms, pursuant to Ohio law, sent collection letters on the Ohio Attorney General letterhead, but provided their own firm information as well as statements alerting the recipient that the communications were from a debt collector. The questions presented to the Court were (1) do special counsel appointed by the Ohio Attorney General qualify as “state officers” exempt from the Fair Debt Collection Practices Act (“FDCPA”), and (2) is the special counsel’s use of the Attorney General’s letterhead a false or misleading representation proscribed by 15 U.S.C. § 1692e? Sheriff v. Gillie, No. 15-338 at *2, ___ U.S. ___ (2016).
The Court did not answer the first question, but assumed arguendo that special counsel were not state officers. The Court held unanimously that the use of the Attorney General letterhead does not violate § 1692e of the FDCPA. The Court held that it was not false or misleading to use the attorney general’s letterhead when collecting debts for the state as a special counsel. Id. at *2. In its opinion, the Court placed reliance on the special relationship between the Attorney General’s office and special counsel, noting that the Attorney General’s office often actively participated in more sensitive or complex cases. It concluded that “given special counsel’s alliance with attorneys within the Attorney General’s Office, a debtor’s impression that a letter from special counsel is a letter from the Attorney General’s Office is scarcely inaccurate.” Id. at *5. The Court further held that the collection law firm did not violate §1692e9’s requirement that debt collectors use the “true name” of the debt collector’s business by sending the letter on the Ohio Attorney General’s letterhead, reasoning that “[f]ar from misrepresenting special counsel’s identity, letters sent by special counsel accurately identify the office primarily responsible for the collection of the debt (the Attorney General), special counsel’s affiliation with that office, and the address (special counsel’s law firm) to which payment should be sent.” Id. at *9.
Plaintiffs argued that confusion was created because of the “risk of intimidation.” Id. at *10. First, Plaintiffs argued that “invocation of the Attorney General’s imprimatur could lead debtors to prioritize their debt to the State of other private debts out of a belief that the consequences of failing to pay a state debt would be more severe.” The Court noted that this concern was not inaccurate, as the state has more collection methods at its disposal. It further rejected plaintiffs fears that “debtors might worry that the letters imply that the Attorney General … intends to take punitive action against them.” Ultimately the Court reasoned that §1692e “bars debt collectors from deceiving or misleading consumers; it does not protect consumers from fearing the actual consequences of their debts.” Id. at *11.
It is important to note that Congress originally enacted the FDCPA, “to eliminate the abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent state action to protect consumes against debt collection abuses.” 15 U.S.C. § 1692(e). Many lower court decisions often focus on heavily on the first prong, and this decision may serve as a signal for lower courts to employ a more equitable approach in FDCPA lawsuits.
Ultimately, this case does not have immediate application to debts collected by law firms for private entities. The big focus was on the special relationship with a state entity, which will not apply for work carried out on behalf of private debt holders. However, this decision may signal a return to a more sensible application to what terms like “false” or “misleading” mean. We will continue to monitor developments in this area of the law in the wake of this decision by the Supreme Court.