debt manOn May 16, 2016, in Sheriff v. Gillie, Case No. 15-338, the Supreme Court reversed a decision of the Sixth Circuit holding that private attorneys contracted by a state attorney general’s office to collect debt owed to state agencies or instrumentalities violated the Fair Debt Collection Practices Act (FDCPA) by sending collection letters on state letterhead (a practice authorized and directed by the attorney general’s office). In Ohio, the state attorney general is responsible for collecting debts owed to state agencies or instrumentalities once those debts are certified to the AG’s office. (Slip op. at 3-4). The state retained private attorneys to act as “special counsel” to the attorney general for purposes of that collection, and the attorneys sent letters, on state letterhead, to debtors seeking to collect on the past-due amounts. (Id.).

The plaintiffs, consumers who received dunning letters from private attorneys for debt owed to state agencies, brought a class action in the Southern District of Ohio alleging violations of the FDCPA. In particular, the plaintiffs alleged that the use of the attorney general’s letterhead on letters authored by private attorneys violated two subsections of the act’s prohibition on false, deceptive or misleading collection practices: “[t]he use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of … any State,” 15 U.S.C. 1692(e)(9), and “the use of any business, company, or organization name other than the true name of the debt collector’s business, company, or organization.” Id. at 1692(e)(14). In the district court, the state intervened and sought a declaratory judgment that (1) its letterhead practice did not violate the FDCPA and (2) that special counsel acting in that capacity were state “officers” statutorily excluded from the scope of debt collectors covered by the FDCPA under 15 U.S.C. 1692a(6)(C). The district court granted summary judgment to the state, siding with the state on both issues.

On appeal, the Sixth Circuit reversed. The panel first found that the special counsel did not qualify for the state officer exception because they were independent contractors. The panel also found that there was a genuine issue of material fact as to whether an unsophisticated consumer would be misled by the state letterhead and believe “it is the Attorney General who is collecting on the account.”

The Supreme Court reversed. Writing for a unanimous Court, Justice Ginsburg found that the use of state letterhead was not misleading. (The Court did not reach the issue whether the special counsel were state officers.) The Court analyzed the issue using basic agency principles: “[t]he letterhead identifies the principal—Ohio’s Attorney General—and the signature block names the agent—a private lawyer hired as outside counsel to the Attorney General.” (Slip op. at 7). The Court found the agency relationship was further supported, thereby making the use of state letterhead not misleading, by the degree of coordination between the special counsel and assistant attorneys general and other employees of the AG’s office. The Sixth Circuit had found the use of state letterhead misleading because its usage allegedly led to consumer confusion (the AG’s office received phone calls wondering if the letters were authentic), but the Court determined this was not a basis to find the letters were misleading in violation of the FDCPA: “To the extent that consumers may be concerned that the letters are a ‘scam,’ the solution is for special counsel to say more, not less, about their role as agents of the Attorney General.” (Id. at 10). The Court also rejected the Sixth Circuit’s concern that the use of the letterhead might imply the AG was planning to take punitive action, finding that the content of the letters was nonthreatening. (Id. at 11).