Practitioners well-versed in the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. generally assume a few things to be true. Those assumptions include (1) the FDCPA does not apply to creditors attempting to collect their own debts; and (2) a third-party debt collector must use its own name in collecting the debts of another. A case before the United States Supreme Court, Sheriff v. Gillie, Case No. 15-338 potentially presents an opportunity for the Court to challenge both those assumptions.
The debt collection practice at issue in Sheriff found its genesis when the Attorney General’s office for the State of Ohio appointed special counsel to collect debts owed to the state. Under the program, once the Attorney General appoints a special counsel, that attorney signs a “retention agreement” that defines the special counsel’s engagement. The retention agreements provide for a limited duration and also stipulate that the Attorney General engages the attorney “solely on an independent contractor basis.” While not a term of the engagement agreement, the Attorney General directs special counsel to utilize the letterhead for the Office of the Attorney General in connection with collection activity.
Respondents in Sheriff received letters from Petitioners, two special counsel that the Ohio Attorney General retained under the program described above. Each special counsel wrote the demand letters using the Attorney General letterhead, which included an image of the Great Seal of the State of Ohio and also included the Attorney General’s name. Both of the letters identified the Petitioners as special counsel for the Attorney General and also included the names of their separate law firms. One of the letters contained a bold-face notice reading “THIS IS A COMMUNICATION FROM A DEBT COLLECTOR”. Respondents filed suit against the special counsel arguing that they violated the FDCPA by attempting to collect a third party’s debt using a deceptive, misleading, or false representation. The United States District Court for the Southern District of Ohio granted summary judgment in favor of the special counsel debt collectors finding that the special counsel should be construed as “officers” of the State of Ohio and that the use of the Attorney General’s letterhead did not violate the FDCPA. The Sixth Circuit Court of Appeals reversed concluding that as independent contractors, the special counsel could not be considered officers of the State of Ohio. The Sixth Circuit further concluded that a jury could find that the use of the Attorney General letterhead by independent contractors could be misleading, thus actionable under the FDCPA. The Supreme Court granted cert to determine whether the special counsel could be considered exempt from the FDCPA as officers of the State of Ohio and whether use of the Attorney General’s letter could be considered deceptive.
At oral argument on March 29, questions from the justices suggest they may view the special counsel are not “officers” of the State of Ohio, but more strikingly, the justices expressed deep skepticism that using the Attorney General’s letterhead could be considered false, deceptive, or misleading. Multiple justices appeared to see little difference between a letter wherein the special counsel would state that they were acting on behalf of the Attorney General (which was acceptable) versus one written on the Attorney General letterhead (which Respondents contended was misleading). In particular, Justice Kagan pressed the attorney for the Respondents saying that a letterhead was just a way of saying “I’m acting as an agent of the State[.]” When the attorney tried to argue that using the letterhead was misleading, Justice Kagan interjected saying “you can’t really be serious about that[.]” She suggested that if the attorney sent a demand letter on his own letterhead, the recipient was likely to throw it away before reading it.
When the attorney suggested that if a debt collector sent a demand using IBM’s letterhead the debt collector would violate the FDCPA, Justice Breyer interrupted him saying “Why? Why? Why?” He then posited a hypothetical where Filene’s Basement provides pre-printed demand letters on company letterhead to a contractor instructing the contractor to collect the debt and wondered aloud, “Now, what’s wrong with that?” For Justice Alito, his concern focused on what was so misleading about receiving a demand letter on Attorney General letterhead when the debt was, in fact, owed to the State. Justice Kagan picked up on that thought process and observed that a letter such as those in this case provided two kinds of information (1) you a debt to the State of Ohio (which was true); and (2) the person signing the letter was an agent of the state (which was also true).
The questions from the justices present some interesting scenarios for FDCPA cases. First, it seems unlikely that the Court will find that the special counsel are “officers” of the state. If they were to so hold, there is little to distinguish such a conclusion from any circumstance were a creditor engages an attorney to collect debts. This would upend completely the traditional application of the FDCPA. If the special counsel are not “officers” of the State, then the FDCPA applies with full force and the question becomes whether the letters violate the statute. On this second point, the justices seemed unconvinced that using the Attorney General’s letterhead constituted a misleading or deceptive practice. If translated to private debt collection practice, could this mean that a debt collector could use his client’s letterhead for the purpose of sending debt collection letters? If so, per se liability for the use of another entity’s name would be eliminated in favor of a factual analysis of whether the particular use of the letterhead could be construed as deceptive or misleading. For example, extrapolating from the justices’ questions, one might conclude that a debt collector could use the creditor provided the creditor is owed the debt and the debt collector states that he has been hired to collect on behalf of the creditor.
Of course it remains to be seen what the Court will actually decide in its ruling It also remains an open question of whether expanding permissible debt collection activities would greatly alter debt collector activity. Debt collectors over the years learned how to operate within the bounds of the FDCPA. Why risk statutory violations by engaging in new practices that may or may not be permissible? The possibility that the scope of permissible debt collection activities could be broadened, however, presents several intriguing questions which may (or may not) be answered once the Court enters its opinion.