559 U.S. 229 (2010), 08-1119, Milavetz, Gallop & Milavetz, P.A. v. United States
|Docket Nº:||08-1119, 08-1225.|
|Citation:||559 U.S. 229, 130 S.Ct. 1324, 176 L.Ed.2d 79, 78 U.S.L.W. 4197|
|Opinion Judge:||Sotomayor, Justice.|
|Party Name:||MILAVETZ, GALLOP & MILAVETZ, P.A., et al., Petitioners, v. UNITED STATES. United States, Petitioner, v. Milavetz, Gallop & Milavetz, P.A., et al.|
|Attorney:||G. Eric Brunstad, Jr., Hartford, CT, for Milavetz, Gallop & Milavetz, P.A., et al. William M. Jay, Washington, DC, for United States. Alan S. Milavetz, Chad Wm. Schulze, Walter Hodynsky, Milavetz, Gallop & Milavetz, P.A., Edina, MN, Thomas F. Miller, Thomas F. Miller, P.A., Wayzata, MN, G. Eric B...|
|Judge Panel:||SOTOMAYOR, J., delivered the opinion of the Court, in which ROBERTS, C.J., and STEVENS, KENNEDY, GINSBURG, BREYER, and ALITO, JJ., joined, in which SCALIA, J., joined except for n. 3, and in which THOMAS, J., joined except for Part III-C. SCALIA, J., and THOMAS, J., filed opinions concurring in p...|
|Case Date:||March 08, 2010|
|Court:||United States Supreme Court|
Argued December 1, 2009
ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
[176 L.Ed.2d 82] [130 S.Ct. 1327] Syllabus [**]
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) amended the Bankruptcy Code to define a class of bankruptcy professionals termed "debt relief agenc[ies]." 11 U.S.C. §101(12A). That class includes, with limited exceptions, "any person who provides any bankruptcy assistance to an assisted person . . . for . . . payment . . ., or who is a bankruptcy petition preparer." Ibid. The BAPCPA prohibits such professionals from "advis[ing] an assisted person . . . to incur more debt in contemplation of [filing for bankruptcy] . . . ." §526(a)(4). It also requires them to disclose in their advertisements for certain services that the services are with respect to or may involve bankruptcy relief, §§528(a)(3), (b)(2)(A), and to identify themselves as debt relief agencies, §§528(a)(4), (b)(2)(B).
The plaintiffs in this litigationa law firm and others (collectively Milavetz)filed a preenforcement suit seeking declaratory relief, arguing that Milavetz is not bound by the BAPCPA's debt-relief-agency provisions and therefore can freely advise clients to incur additional debt and need not make the requisite disclosures in its advertisements. The District Court found that "debt relief agency" does not include attorneys and that §§ 526 and 528 are unconstitutional as applied to that class of professionals. The Eighth Circuit affirmed in part and reversed in part, rejecting the District Court's conclusion that attorneys are not "debt relief agenc[ies]"; [130 S.Ct. 1328] upholding application of §528's disclosure requirements to attorneys; and finding §526(a)(4) unconstitutional because it broadly prohibits debt relief agencies from [176 L.Ed.2d 83] advising assisted persons to incur any additional debt in contemplation of bankruptcy even when the advice constitutes prudent prebankruptcy planning.
Attorneys who provide bankruptcy assistance to assisted persons are debt relief agencies under the BAPCPA. By definition, "bankruptcy assistance" includes several services commonly performed by attorneys, e.g., providing "advice, counsel, [or] document preparation,"
§101(4A). Moreover, in enumerating specific exceptions to the debt relief-agency definition, Congress indicated no intent to exclude attorneys. See §§101(12A)(A)(E). Milavetz relies on the fact that §101(12A) does not expressly include attorneys in advocating a narrower understanding. On that reading, only a bankruptcy petition preparer would qualifyan implausibility given that a "debt relief agency" is "any person who provides any bankruptcy assistance . . . or who is a bankruptcy petition preparer," ibid. Milavetz's other arguments for excluding attorneys are also unpersuasive. Pp. 1331 -1333, 235-239, 176 L.Ed.2d, at 86-88.
2. Section 526(a)(4) prohibits a debt relief agency only from advising a debtor to incur more debt because the debtor is filing for bankruptcy, rather than for a valid purpose. The statute's language, together with its purpose, makes a narrow reading of §526(a)(4) the natural one. Conrad, Rubin & Lesser v. Pender, 289 U.S. 472, 53 S.Ct. 703, 77 L.Ed. 1327, supports this conclusion. The Court in that case read now-repealed § 96(d), which authorized reexamination of a debtor's attorney's fees payment "in contemplation of the filing of a petition," to require that the portended bankruptcy have "induce[d]" the transfer at issue, id., at 477, 53 S.Ct. 703, 77 L.Ed. 1327, understanding inducement to engender suspicion of abuse. The Court identified the "controlling question" as "whether the thought of bankruptcy was the impelling cause of the transaction," ibid. Given the substantial similarities between §§96(d) and 526(a)(4), the controlling question under the latter is likewise whether the impelling reason for "advis[ing] an assisted person . . . to incur more debt" was the prospect of filing for bankruptcy. In practice, advice impelled by the prospect of filing will generally consist of advice to "load up" on debt with the expectation of obtaining its discharge. The statutory context supports the conclusion that §526(a)(4)'s prohibition primarily targets this type of conduct. The Court rejects Milavetz's arguments for a more expansive view of §526(a)(4) and its claim that the provision, narrowly construed, is impermissibly vague. Pp. 1334 -1339, 239-248, 176 L.Ed.2d, at 88-94.
Section 528's disclosure requirements are valid as applied to Milavetz. Consistent with Milavetz's characterization, the Court presumes that this is an as applied challenge. Because §528 is directed at misleading commercial speech and imposes only a disclosure requirement rather than an affirmative limitation on speech, the less exacting scrutiny set out in Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 105 S.Ct. 2265, 85 L.Ed.2d 652, 17 Ohio B. 315, governs. There, the Court found that, while unjustified or unduly burdensome disclosure requirements offend the First Amendment, "an advertiser's rights are adequately protected as long as disclosure requirements are reasonably related to [176 L.Ed.2d 84] the State's interest in preventing deception of consumers." Id., at 651, 105 S.Ct. 2265, 85 L.Ed.2d 652, 17 Ohio B. 315 Section 528's requirements share the essential features of the rule challenged
in Zauderer. The disclosures are intended to [130 S.Ct. 1329] combat the problem of inherently misleading commercial advertisements, and they entail only an accurate statement of the advertiser's legal status and the character of the assistance provided. Moreover, they do not prevent debt relief agencies from conveying any additional information through their advertisements. In re R. M. J., 455 U.S. 191, 102 S.Ct. 929, 71 L.Ed.2d 64, distinguished. Because §528's requirements are "reasonably related" to the Government's interest in preventing consumer deception, the Court upholds those provisions as applied to Milavetz. Pp. 1339-1341, 248-253, 176 L.Ed.2d, at 94-97.
541 F.3d 785, affirmed in part, reversed in part, and remanded.
G. Eric Brunstad, Jr., Hartford, CT, for Milavetz, Gallop & Milavetz, P.A., et al. William M. Jay, Washington, DC, for United States. Alan S. Milavetz, Chad Wm. Schulze, Walter Hodynsky, Milavetz, Gallop & Milavetz, P.A., Edina, MN, Thomas F. Miller, Thomas F. Miller, P.A., Wayzata, MN, G. Eric Brunstad, Jr., Counsel of Record, Collin O'Connor Udell, Matthew J. Delude, Alexander R. Bilus, Michael J. Newman, Joshua Richards, Justin C. Danilewitz, Kate O'Keeffe, Francesco P. Trapani, Evan Posner, Dechert LLP, Hartford, CT, Michael Docherty, Attorney at Law, Edina, MN, for Petitioners. Ramona D. Elliott, General Counsel, P. Matthew Sutko, Associate General Counsel, Executive Office for United States Trustees, Washington, DC, Elena Kagan, Solicitor General, Counsel of Record, Tony West, Assistant Attorney General, Malcolm L. Stewart, Deputy Solicitor General, William M. Jay, Assistant to the Solicitor General, Mark B. Stern, Mark R. Freeman, Attorneys, Department of Justice, Washington, DC, for respondent. SOTOMAYOR, J., delivered the opinion of the Court, in which ROBERTS, C.J., and STEVENS, KENNEDY, GINSBURG, BREYER, and ALITO, JJ., joined, in which SCALIA, J., joined except for n. 3, and in which THOMAS, J., joined except for Part III-C. SCALIA, J., post, p. 253, and THOMAS, J., post, p. 255, filed opinions concurring in part and concurring in the judgment.
Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA or Act) to correct
perceived abuses of the bankruptcy system. Among the reform measures the Act implemented are a number of provisions that regulate the conduct of "debt relief agenc[ies]"i.e., professionals who provide bankruptcy assistance to consumer debtors. See 11 U.S.C. §§101(3), (12A). These consolidated cases present the threshold question whether attorneys are debt relief agencies when they provide qualifying services. Because we agree with the Court of Appeals that they are, we must also consider whether the Act's provisions governing debt relief agencies' advice to clients, §526(a)(4), and requiring them to make certain disclosures in their advertisements, §§528(a) and (b)(2), violate the First Amendment rights of attorneys. Concluding that the Court of Appeals construed §526(a)(4) too expansively, we reverse its judgment that the provision is unconstitutionally overbroad. Like the Court of Appeals, we uphold §528's disclosure requirements as applied in these consolidated cases.
[130 S.Ct. 1330] I
In order to improve bankruptcy law and practice, Congress enacted through the BAPCPA a number of provisions directed at the conduct of bankruptcy professionals. Some of these measures apply to the broad class of bankruptcy professionals termed "debt relief agenc[ies]." That category includes, with limited exceptions, "any person who provides any bankruptcy assistance to an assisted person in return for . . . payment . . ., or who is a bankruptcy [176 L.Ed.2d 85] petition preparer." §101(12A). 1 "Bankruptcy assistance" refers to goods or services
"provided to an assisted person with the express or implied purpose of providing information, advice, counsel, document preparation, or filing, or attendance...
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