On May 16, 2016, a unanimous U.S. Supreme Court ruled that private attorneys hired by states to collect back taxes and other debts did not mislead investors by sending collection letters to borrowers using the state Attorney General’s letterhead. The Court found that the attorneys were acting as agents of the Attorney General and, therefore, did not run afoul of the Fair Debt Collection Practices Act.

Under Ohio law, overdue debts owed to state-owned agencies and instrumentalities are certified to the state’s Attorney General for collection. The Attorney General appoints private attorneys, named “special counsel,” to act on the Attorney General’s behalf. The Attorney General requires that special counsel use the Attorney General’s letterhead to communicate with debtors. Consistent with that direction, private attorneys sent debt collection letters to debtors on the Attorney General’s letterhead. The signature block of each letter contained the name and address of the signatory as well as the designation “special” or “outside” counsel to the Ohio Attorney General. Each letter also identified the sender as a debt collector seeking payment for debts to a state institution.

The debtors filed a putative class action in the U.S. District Court for the Southern District of Ohio alleging that special counsel had violated the FDCPA by using the Attorney General’s letterhead as a deceptive and misleading means to attempt to collect consumer debts. The District Court granted summary judgment for defendants, concluding that special counsel are “officers” of the State of Ohio and also that their use of the Attorney General’s letterhead was neither deceptive nor misleading. The Court of Appeals for the Sixth Circuit vacated the District Court’s judgment, holding that because special counsel are independent contractors, they are not entitled to the FDCPA’s state-officer exemption. The Sixth Circuit concluded that there was a genuine issue of material fact as to whether an unsophisticated consumer would be misled into believing the Attorney General was collecting on the account and remanded the case for trial on this issue.

The first question the Supreme Court decided was whether “special counsel” are exempt from the FDCPA under a provision that protects state “officers.” The Court found that special counsel are not “officers” within the meaning of the FDCPA and, instead, operate simply as “debt collectors.” Turning to the second question, whether special counsel’s use of the Attorney General’s letterhead resulted in a false or misleading representation under the FDCPA, the Court found that the use of the letterhead accurately conveyed that special counsel was acting on behalf of the Attorney General. The letterhead appropriately alerted the debtor to the basis for the payment obligation and the official responsible for enforcement of debts owed to the state, while the signature block conveyed who the Attorney General had engaged to collect the debt. Indeed, special counsel used the Attorney General’s letterhead at the direction of the Attorney General. Therefore, the private attorneys did not mislead borrowers under § 1692e of the FDCPA.

The case is Sheriff, et al. v. Gillie, et al., case number 15-338, in the U.S. Supreme Court.