Gillie v. Law Office of Eric A. Jones, LLC, No. 14-3836 (6th Cir. May 8, 2015), presented the Sixth Circuit with the question of whether “special counsel” “appointed” by the Ohio Attorney General’s office to collect the State’s debts had violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692e(9) and 1692e(14), by attempting to collect debts on the Ohio Attorney General’s letterhead. The Sixth Circuit ultimately concluded that the case presented a question of fact better left to a jury. On the path to reaching that conclusion, the Sixth Circuit reached a number of interesting and potentially far-reaching conclusions. 

Interestingly, the Ohio Attorney General (“OAG”, Mike DeWine, intervened in the case, arguing that special counsel had acted permissibly under the FDCPA when writing on his letterhead. The Ohio Attorney General explained that special counsel were required to use his office’s letterhead. According to the Ohio Attorney General special counsel were exempt under the FDCPA’s exemption for state officers. Thus, the Sixth Circuit first considered whether “special counsel” “appointed” by the Ohio Attorney General under Ohio Revised Code § 109.08 to collect the State’s debts were exempt from the FDCPA as an “officer or employee” collecting a debt “in the performance of his official duties” under 15 U.S.C. § 1692a(6)(C). The court concluded they were not. 

Turning to the Dictionary Act (1 U.S.C. § 1), the court considered the definition of “officer” (i.e., “any person authorized by law to perform the duties of the office” (emphasis added)). Considering the phrase, “authorized by law,” the court determined that Ohio Revised Code § 109.08 does not authorize special counsel to act as an officer of the state; instead, it simply authorized the Attorney General to delegate the ability to collect on debts owed the state. Special counsel derived their ability to collect debts from the contract between the Attorney General and special counsel and the assignment of work by the Ohio Attorney General to special counsel, not from § 109.08. Thus, special counsel were not authorized by law, merely by contract. Turning to a second phrase, “duties of the office,” the court concluded that special counsel were not entitled to perform all duties of a public office, nor were they associated with any other public office. “Without a legislatively designated office or the authority to exercise sovereign powers, special counsel are not officers of the state.”  

“Even if the Dictionary Act were inapplicable to this case, [the court’s] conclusion would have been the same.” The word “appoint” in § 109.08 did not provide any special powers to special counsel; instead, special counsel are independent contractors, subject to the FDCPA. “The Attorney General has legally distanced himself and the OAG from special counsel so that the State of Ohio does not suffer the negative consequences of special counsel’s actions. Now, he wishes to see that special counsel get treated as if they are officers of the State of Ohio, directly under his supervision. The Attorney General cannot have it both ways[.]”

Turning to Federalism concerns and whether special counsel qualified as “officers” under Ohio law, the Court reached the same conclusion—special counsel lacked sovereign functions and had not been elected or appointed to an office; as a result they were not “officers.” 

Finally, the court addressed whether special counsel had violated the FDCPA by using the Office of Attorney General’s letterhead, as explicitly required by the Attorney General. The Court concluded that a debtor could be misled into thinking the Office of Attorney General was contacting her (rather than an independent contractor) because of the use of the Attorney General’s letterhead. Reading the letter as whole, however, there were “clear indications” the letter was being sent by an attorney who was acting as a debt collector, including the letters designating the signatory as outside counsel or special counsel to the attorney general. Between the Ohio Attorney General’s letterhead and the “clear indications” that the letter was sent by an entity outside the Attorney General’s office, the letter contained contradictory information that was inherently confusing. Because of the failure to include language explicitly clarifying the sender’s relationship to the Ohio Attorney General, a jury could reasonably find that the least sophisticated consumer would have been misled by the letter and, moreover, that the misrepresentation could have intimidated a person into paying the debt—i.e., could be material.

Notably, in reaching this conclusion, the Court stated that all violations of § 1692e require a showing of materiality. Thus, though it was clear that defendants had violated § 1692e(9) and § 1692e(14) “in the technical sense”—“Mike DeWine is not the true name of any Defendant, Sarah Sheriff is not a special counsel, and the official letterhead certainly implied that the letter was issued by the OAG”—plaintiffs were required to make a showing of materiality before they could recover. 

In closing, the court rejected the Attorney General’s contention that the relationship between special counsel and his office somehow protected special counsel. The court explained as follows:

Special counsel had an affirmative duty as debt collectors to abide by the provisions of the FDCPA. The FDCA prohibits, as a per se deception, the false implication that a collection notice is being sent by a government actor. This deception may inappropriately influence a consumer’s decisions by inducing prompt payment, regardless of the debtor’s circumstances or the accuracy of the alleged indebtedness. That an OAG employee could attain the same leverage against the alleged debtor is not at issue in this case—employees and officers of a state are exempt from the FDCPA. Whether or not the use of the letterhead by special counsel was compelled by the OAG, a jury could reasonably find that special counsel’s use of the letterhead is confusing; and therefore a violation of § 1692e, as a materially false, deceptive and misleading practice. We recognize the importance of a state’s ability to collect on its own accounts, but once it has assigned debts to an independent, third-party debt collector, the federal rules apply. That is what happened in this case. And special counsel are liable if a jury finds that they have held themselves out as something they are not.

Judge Sutton dissented.  First, he concluded that the plain and unambiguous language of the FDCPA exempted special counsel from liability—simply put, special counsel were “officers” for purposes of the FDCPA. “Under the Dictionary Act and the clear-statement rule established by Gregory v. Ashcroft, 501 U.S. 452 (1991), the deputizing of private lawyers to act as assistant attorneys general makes them ‘officers’ of the State for these collection purposes.” Additionally, Judge Sutton believed that the letter was not false, deceptive, or misleading as a matter of law—special counsel, as an agent of the Attorney General, were acting for and on the behalf of the Attorney General. Use of the Attorney General’s letterhead was completely consistent with this reality.  

Beyond the implications for debt collectors acting on behalf of a state agency, there are three key points to be pulled from Gillie. First, § 1692e requires a showing of materiality regardless of what provision was allegedly violated. Plaintiffs are not entitled to a presumption of materiality. 

Second, the Sixth Circuit—as it did a few months ago in Buchanan v. Northland Grp., Inc., 776 F.3d 393, 397 (6th Cir. 2015)—reiterated that whether a letter is false, deceptive, or misleading often presents a question of fact best left to a jury. Thus, Gillie may make it more difficult for debt collectors to obtain summary judgment in their favor on § 1692e claims. 

Third, the Sixth Circuit drew a stark line between the debt-collection counsel and the State. Debt-collection counsel (i.e., special counsel) could not rely upon the debt owner’s (i.e., the State) immunity. More importantly, debt-collection counsel could not assert as a defense the State’s explicit direction to use the letterhead. “Special counsel had an affirmative duty as debt collectors to abide by the provisions of the FDCPA.” The dichotomy recognized in the opinion could be read to mean that a debt owner that directs its independent outside counsel to follow all applicable law—i.e., not violate the FDCPA—could avoid liability under the FDCPA. Indeed, such a holding would appear to be consistent with general agency principles. One could validly criticize the contention as an implication not readily apparent from the opinion, but the court’s focus on the contractual nature of the relationship between the debt-collection firm and the State suggests that it is the contract that should control the duties and responsibilities of the firm. If the firm exceeds those parameters, then the debt-collection firm has presumably exceeded the scope of their agency, and liability should not lie with the principal.