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«Syllabus NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion ...»

-- [ Page 1 ] --


(Slip Opinion)


NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.





No. 08–1119. Argued December 1, 2009—Decided March 8, 2010* 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 litigation—a 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]”; upholding application of §528’s disclosure requirements to attorneys; and finding §526(a)(4) unconstitutional because it broadly prohibits debt relief agencies —————— * Together with No. 08–1225, United States v. Milavetz, Gallop & Milavetz, P. A., et al., also on certiorari to the same court.

from advising assisted persons to incur any additional debt in contemplation of bankruptcy even when the advice constitutes prudent prebankruptcy planning.


1. 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 qualify—an 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. 5–9.

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, 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, 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. 9–18.

3. 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 reCite as: 559 U. S. ____ (2010) 3 <


quirement 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, 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 the State’s interest in preventing deception of consumers.” Id., at 651. Section 528’s requirements share the essential features of the rule challenged in Zauderer. The disclosures are intended to 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, 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. 18–23.

541 F. 3d 785, affirmed in part, reversed in part, and remanded.

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 part and concurring in the judgment.

Cite as: 559 U. S. ____ (2010) 1

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.

–  –  –

JUSTICE SOTOMAYOR delivered the opinion of the Court.

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.

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 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 at a creditors’ meeting or appearing in a case or proceeding on behalf of another or providing legal representation with respect to a case or proceeding” in bankruptcy. §101(4A). An “assisted person” is someone with limited nonexempt property whose debts consist primarily of consumer debts. §101(3). The BAPCPA subjects debt relief agencies to a number of restrictions and requirements, as set forth in §§526, 527, and 528. As —————— 1 Congress excluded from the definition of “debt relief agency” any “officer, director, employee, or agent of a person who provides [bankruptcy] assistance”; any “nonprofit organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986”;

“a creditor of [an] assisted person” who is helping that person “to restructure any debt owed... to the creditor”; “a depository institution”; or “an author, publisher, distributor, or seller of works subject to copyright protection under title 17, when acting in such capacity.” §§101(12A)(A)–(E).

Cite as: 559 U. S. ____ (2010) 3

Opinion of the Court

relevant here, §526(a) establishes several rules of professional conduct for persons qualifying as debt relief agencies. Among them, §526(a)(4) states that a debt relief agency shall not “advise an assisted person... to incur more debt in contemplation of such person filing a case under this title or to pay an attorney or bankruptcy petition preparer fee or charge for services performed as part of preparing for or representing a debtor in a case under this title.” Section 528 requires qualifying professionals to include certain disclosures in their advertisements. Subsection (a) provides that debt relief agencies must “clearly and conspicuously disclose in any advertisement of bankruptcy assistance services or of the benefits of bankruptcy directed to the general public... that the services or benefits are with respect to bankruptcy relief under this title.” §528(a)(3). It also requires them to include the following, “or a substantially similar statement”: “We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.” §528(a)(4). Subsection (b) requires essentially the same disclosures in advertisements “indicating that the debt relief agency provides assistance with respect to credit defaults, mortgage foreclosures, eviction proceedings, excessive debt, debt collection pressure, or inability to pay any consumer debt.” §528(b)(2). Debt relief agencies advertising such services must disclose “that the assistance may involve bankruptcy relief,” §528(b)(2)(A), and must identify themselves as “debt relief agenc[ies]” as required by §528(a)(4), see §528(b)(2)(B).

II The plaintiffs in this litigation—the law firm Milavetz, Gallop & Milavetz, P. A.; the firm’s president, Robert J.

Milavetz; a bankruptcy attorney at the firm, Barbara Nilva Nevin; and two of the firm’s clients (collectively Milavetz)—filed a preenforcement suit in Federal District Court seeking declaratory relief with respect to the Act’s debt-relief-agency provisions. Milavetz asked the court to hold that it is not bound by these provisions and thus may freely advise clients to incur additional debt and need not identify itself as a debt relief agency in its advertisements.

Milavetz first argued that attorneys are not “debt relief agenc[ies]” as that term is used in the BAPCPA. In the alternative, Milavetz sought a judgment that §§526(a)(4) and 528(a)(4) and (b)(2) are unconstitutional as applied to attorneys. The District Court agreed with Milavetz that the term “debt relief agency” does not include attorneys, App. to Pet. for Cert. in No. 08–1119, p. A–15, but only after finding that §§526 and 528—provisions expressly applicable only to debt relief agencies—are unconstitutional as applied to this class of professionals.

The Court of Appeals for the Eighth Circuit affirmed in part and reversed in part. 541 F. 3d 785 (2008). Relying on the Act’s plain language, the court unanimously rejected the District Court’s conclusion that attorneys are not “debt relief agenc[ies]” within the meaning of the Act.

The Court of Appeals also parted ways with the District Court concerning the constitutionality of §528. Concluding that the disclosures are intended to prevent consumer deception and are “reasonably related” to that interest, the court upheld the application of §528’s disclosure requirements to attorneys. Id., at 796–797 (citing Zauderer v.

Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U. S. 626, 651 (1985)).

A majority of the Eighth Circuit panel, however, agreed with the District Court that §526(a)(4) is invalid. Determining that §526(a)(4) “broadly prohibits a debt relief agency from advising an assisted person... to incur any additional debt when the assisted person is contemplating bankruptcy,” even when that advice constitutes prudent prebankruptcy planning not intended to abuse the bankCite as: 559 U. S. ____ (2010) 5 <

Opinion of the Court

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