United States Supreme Court Rules for Collections Law Firms in Unanimous Decision
A unanimous Supreme Court decision in a Fair Debt Collections Practices Act (FDCPA) lawsuit, especially one written by Justice Ginsburg, in favor of collection law firms appears as unlikely as the city of Boston erecting a bronze statue of Babe Ruth outside of Fenway Park. On May 16, 2016, the Court released a written opinion by Justice Ginsburg reversing the Sixth Circuit Court of Appeals in favor of the collections law firms, over letters sent by the law firms that the plaintiffs contended violated the FDCPA’s prohibition against employing deceptive and misleading means to collect consumer debt. Sheriff v. Gillie, 2016 WL 2842453 (2016).
Ohio law allows the Ohio Attorney General to appoint private collections attorneys, referring to them “special counsel” to act on the Attorney General’s behalf in order to collect overdue debts to state-owned agencies and instrumentalities. Id. at *3. The Attorney General requires that the special counsel use the Attorney General’s letterhead in communicating with the debtors. Id.
The plaintiffs received the collections letters from the special counsel using the Attorney General’s letterhead and filed a class action in the United States District Court of the Southern District of Ohio, asserting that the collections law firms violated the Fair Debt Collections Practices Act by employing deceptive and misleading means to collect consumer debts in using the Attorney General’s letterhead. Id. at *4.
The Ohio Attorney General intervened as a defendant and counter-claimant, and sought a declaratory judgment that special counsels' use of its letterhead, as authorized by Ohio law, was neither false nor misleading, and that the special counsel should be deemed officers of the State and thus outside of the FDCPA’s purview. Id.
The District Court granted summary judgment for the special counsel, concluding that the use of the Attorney General’s letterhead was not false or misleading as the special counsel were officers of the state. Sheriff, 2016 WL 2842453, at *5. The Sixth Circuit Court of Appeals vacated the District Court’s judgment, alleging that the special counsel were independent contractors and thus not entitled to the FDCPA’s state-officer exemption. Id.
In concluding that the letters did not violate the FDCPA’s prohibition against false and misleading letters, the United States Supreme Court pointed out that:
[T]he Attorney General authorized – indeed required – special counsel to use his letterhead in sending debt collection communications. Special counsel create[d] no false impression in doing just what they have been instructed to do. Instead, their use of the Attorney General’s letterhead conveys on whose authority special counsel writes to the debtor ...
Id. at *6.
In this case, the special counsel followed Ohio law by sending collection letters for debts owed to the State of Ohio utilizing the Ohio Attorney General’s letterhead. Much to the chagrin of many consumer attorneys, the United States Supreme Court made the correct decision.
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