Banking and Finance Law Daily Ohio’s special counsel did not violate consumer debt collection protections
Monday, May 16, 2016

Ohio’s special counsel did not violate consumer debt collection protections

By Richard A. Roth, J.D.

Private attorneys acting under contract as special counsel to collect debts owed to the state of Ohio did not engage in misrepresentations that violated the Fair Debt Collection Practices Act, the Supreme Court has unanimously decided. By basing its decision on whether the attorneys’ use of the attorney general’s official letterhead had violated the FDCPA, the Court avoided deciding whether the attorneys were officers of the state who were exempt from the act’s requirements (Sheriff v. Gillie, May 16, 2016, Ginsburg, R.).

According to the majority opinion of the U.S. Court of Appeals for the Sixth Circuit, Ohio law authorizes the state’s AG to use special counsel to collect debts owed to the state. These special counsel are, by state law or by contract, independent contractors who are compensated on a contingent fee basis, and they are required to meet the standards of the FDCPA. The panel majority observed that Ohio law requires special counsel to use the AG’s official letterhead when they are collecting certain unpaid taxes, but not when they are collecting debts such as unpaid bills for medical care or school tuition.

The Sixth Circuit panel majority decided that the private attorneys were not exempt officers of the state of Ohio. It also decided that it was possible that their use of the official letterhead violated the FDCPA by misrepresenting their status, meaning that question was to be decided by a jury (see Gillie v. Law Office of Eric A. Jones, LLC, discussed in Banking and Finance Law Daily, May 11, 2015).

FDCPA violations. The Court stepped around the need to decide who is a state officer. According to the unanimous opinion, it did not matter whether the private attorneys were state officers. Even if they were subject to the FDCPA, their use of the AG’s official letterhead did not constitute a misrepresentation.

The use of the official letterhead was neither false nor misleading, Justice Ginsburg’s opinion said. Instead, it "accurately conveys that special counsel, in seeking to collect debts owed to the State, do so on behalf of, and as instructed by, the Attorney General."

The consumer’s attorneys had admitted that the FDCPA would not have been violated if the collection letters, rather than using the letterhead, had stated that the private attorneys were acting as special counsel to the attorney general to collect a debt. It would be irrational to say that using a combination of the official letterhead and the private attorney’s signature block to convey the same information was somehow misleading, according to the opinions.

The private attorneys had not misrepresented that the letters were authorized by the state, Justice Ginsburg added.

Federalism. In the Sixth Circuit, the state of Ohio had argued that applying the FDCPA in this case would violate principles of federalism by interfering with how the state chose to carry out is business. While the appellate court rejected that position, the Supreme Court was more receptive. Collecting money owed is a "core sovereign function," Justice Ginsburg wrote. Federal law should not unnecessarily be interpreted in a way that impinged on the state’s choice of how to carry out a sovereign function.

Effect on consumers. The Court also was unconcerned about whether consumers might be confused or intimidated by the letterhead’s appearance on a collection letter. A single telephone call to the AG’s office would resolve any confusion, the opinion pointed out.

The letters in question did not threaten criminal prosecution, civil penalties, or any other enforcement actions that were unique to the state, the opinion added. And, there was nothing wrong with the possibility that consumers might be coerced into putting their obligations to the state above other debts. The state did have unique collection powers, and the FDCPA "does not protect consumers from fearing the actual consequences of their debts."

The case is No. 15-338.

Supreme Court docket. For details about this and other petitions and cases pending before the Supreme Court, please consult this list of selected banking and finance law cases awaiting action in the 2015 term. Issued opinions, granted petitions, pending petitions, and denied petitions are listed separately, along with a summary of the questions presented and the current status of each case.

Attorneys: Eric A. Murphy, State Solicitor of Ohio, for Mark J. Sheriff, et al. E. Joshua Rosenkranz (Orrick, Herrington & Sutcliffe LLP) for Pamela Gillie et al. Sarah E. Harrington, Assistant to the Solicitor General, for amicus curiae United States.

Companies: Law Office of Eric A. Jones, LLC; Wiles, Boyle, Burkholder & Bringardner Co., LPA

MainStory: TopStory DebtCollection SupremeCtNews

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