Supreme Court Will Review FDCPA Case Targeting Ohio Special Counsel Law

By Brendan Connors and William Hurd

 

On December 11, 2015, the U.S. Supreme Court agreed to hear a case involving Ohio‘s “special counsel” law under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692-1692p, a case that is likely to have much wider implications involving the standard for when a whether a debt-collection method is “false, deceptive, or misleading.”

 

Ohio law authorizes the State’s Attorney General to contract with private attorneys to collect on debts owed to the State. Ohio Rev. Code § 109.08. This law requires that these special counsel use the Attorney General’s office letterhead when collecting on tax debts, and the Attorney General has since construed the law as affording him discretion over whether special counsel may use the letterhead when collecting other debts owed to the State.

 

The FDCPA bars “debt collectors” from “us[ing] any false, deceptive, or misleading representation or means.” 15 U.S.C. § 1692e. But, the statute simultaneously does not apply to “any officer or employee” of a “State to the extent that collecting or attempting to collect any debt is in the performance of his official duties.” 15 U.S.C. § 1692a(6)(C).

 

In the case at hand, Ohio Attorney General Michael DeWine contracted with the defendants – two attorneys and their law firm – to act as special counsel in collecting certain student loan debts owed by the plaintiffs to the University of Akron. The defendants sent the plaintiffs separate letters related to their debts, each of which used the Attorney General’s letterhead. The plaintiffs brought a putative class action against the defendants, alleging that the use of state letterhead was misleading in a way that violated 15 U.S.C. § 1692e.

 

This case presents two important questions:

 

·         “Are special counsel-lawyers appointed by the Attorney General to undertake his duty to collect debts owed to the State-state “officers” within the meaning of [the FDCPA]?”

 

·         “Is it materially misleading under [the FDCPA] for special counsel to use Attorney General letterhead to convey that they are collecting debts owed to the State on behalf of the Attorney General?”

 

Although the district court granted summary judgment to the defendants, a divided panel of the Sixth Circuit reversed on appeal. The appeals court first concluded that special counsel did not qualify for “officer” status under § 1692(a)(6)(C). While state law authorized the Attorney General to appoint special counsel, the court found that special counsel were not “authorized by law” because they obtained their authority from a contract (rather than a law) and also because they “cannot perform all duties of the Attorney General's office” nor any other office. With respect to the second question, under the so-called “least sophisticated consumer” standard, the court concluded that a jury could reasonably find that special counsel’s use of Attorney General letterhead is misleading.

 

Following the Sixth Circuit’s denial of rehearing en banc, the defendants filed a petition for writ of certiorari with the Supreme Court. The petition noted that a circuit split exists over the general test courts should use in analyzing whether a debt-collection method is “false, deceptive, or misleading.” The majority of circuits use the “least sophisticated consumer” standard described above, while the First, Seventh, and Eighth Circuits employ a more rigorous test that is not as debtor-friendly. A Supreme Court ruling on this question could have wide-ranging implications.

 

In granting the defendants’ petition for review last Friday, the Supreme Court, per its custom, did not comment on its decision to hear the case.  The case is Sheriff v. Gillie, No. 15-338.