By Lisa Soronen

State attorneys general offices are tasked with protecting the rights of consumers. Today the U.S. Supreme Court will hear oral argument in Sherrif v. Gillie where state debtors claim that a practice of an attorney general’s office required by state law violates their rights.

Under the Fair Debt Collection Practices Act (FDCPA), debt collectors may not make false, deceptive or misleading representations. FDCPA targets independent debt collectors who lack incentives to act fairly because they “are likely to have no future contact with the consumer and often are unconcerned with the consumer’s opinion of them.”

The definition of debt collectors excludes “officers” of the state.

In Ohio, the attorney general is responsible for collecting debts owed to the state. Under Ohio law the attorney general may appoint “special counsel” to collect the debt on its behalf. Special counsel must use the attorney general's letterhead.

Two people sued the Ohio attorney general upon receiving debt collection letters on attorney general letterhead signed by private attorneys whose signature block indicated they were outside/special counsel to the attorney general. The debtors claimed the used of the letterhead was misleading in violation of the FDCPA.

The Supreme Court will decide whether “special counsel” hired by the attorney general are “officers” per the FDCPA. Assuming they are not, the court will decide whether using attorney general letterhead violates the FDCPA.

The 6th U.S. Circuit Court of Appeals concluded that “special counsel” aren’t “officers” of the State. The court looked to the federal Dictionary Act definition of officer that “includes any person authorized by law to perform the duties of the office.” Special counsel aren’t “authorized by law” to collect debts on behalf of the state because a contract, rather than a state statute, grants them authority. Special counsel aren’t authorized to perform “the duties” of the attorney general’s office because they can’t perform all the duties of the attorney general’s office.

The lower court also ruled that a reasonable jury could find that special counsel’s use of attorney general letterhead was confusing and a violation of the FDCPA. While the letters contained indications that they were sent by an attorney acting as a debt collector separate from the attorney general: “[t]hese representations may clarify the confusing impact of the letterhead for the least sophisticated consumer, or they may be overshadowed by the larger presence of the Great Seal of Ohio and the Attorney General’s name.”

An amicus brief filed by Michigan and 11 other states supporting Ohio cites a recent study concluding that all 50 states use “private collection attorney generalencies to some degree and ‘at some point in the process.’” 

If the Supreme Court rules that state debt collectors who are not state employees are covered by the FDCPA ,states may still rely on them for debt collection. But all provisions of the FDCPA will apply to them including the prohibition against false, deceptive, or misleading representations, which may or may not include using attorney general letterhead, depending on how the court rules on that issue.

Lisa Soronen is the executive director of the State and Local Legal Center and writes frequently for the NCSL blog about the U.S. Supreme Court.