In a unanimous decision issued today, the United States Supreme Court held that private attorneys hired by the Ohio Attorney General to collect debts owed to state agencies were “state officers” otherwise exempt from portions of the Fair Debt Collections Practices Act (“FDCPA”). Further, even if the private attorney did not have “state officer” status, the transmittal of letters on Ohio Attorney General letterhead did not otherwise violate specific sections of Section 1692e of the FDCPA.
Under Ohio law, the Attorney General is permitted to appoint special counsel to assist in the collection of debts. Exercising its power in this regard, two private law firms were appointed to send out collection letters on the Ohio Attorney General’s letterhead. Some of these letters demanded payment in full and asked recipients to contact the private law firm who sent the letter originally. The letters were signed by the respective non-public sector attorneys with the designation that they were “Outside Counsel for Attorney General’s Office.”
Gillie, and others, filed a punitive class action asserting that the law firms violated the FDCPA by sending letters on Ohio Attorney General letterhead and by using deceptive and misleading means to collect a debt. The United States District Court for the District of Ohio granted summary judgment in favor of the law firms, finding: (1) they were officers of the State of Ohio and thus exempt from the FDCPA; and (2) use of the letterhead was not false or misleading. The Sixth Circuit reversed, holding that special counsel are independent contractors and not exempt from the FDCPA. The Circuit Court further concluded that whether a consumer was misled into believing that the Ohio Attorney General was collecting the account was an issue of fact.
The Supreme Court reversed and remanded the Sixth Circuit’s decision. Writing for the Court, Judge Ginsberg found use of the “Special Counsel” designation neither false nor misleading as to any of the prohibitions contained in the FDCPA. Indeed, the designation of “Special Counsel” was completely accurate and whether the law firm use its own letterhead with a similar disclosure would not change the outcome under the FDCPA. As to the issues that the letters, by themselves, were deceptive and misleading to consumers, the Court was similarly unpersuaded. As the Court wrote, “[Section] 1692e bars debt collectors from deceiving and misleading consumers, it does not protect consumers from fearing the actual consequences of their debt.”
The FDCPA is guided by the “least sophisticated consumer” standard, which safeguards “bill collectors from liability for ‘bizarre or idiosyncratic interpretations of collection notices’ by preserving at least a modicum of reasonableness.” The Gillie decision follows the arguments made by many in the industry that words mean what they say and nothing more.