Milavetz, Gallop & Milavetz, P.A. v. United States. United States

559 U.S. 229

130 S.Ct. 1324

176 L.Ed.2d 79

MILAVETZ, GALLOP & MILAVETZ, P.A., et al., Petitioners,

v.UNITED STATES.

United States, Petitioner,

v.Milavetz, Gallop & Milavetz, P.A., et al.

Nos. 08–1119

08–1225.

Supreme Court of the United States

Argued Dec. 1, 2009.

Decided March 8, 2010.^*

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.

Opinion

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 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, 105 S.Ct. 2265, 85 L.Ed.2d 652 (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 incurany additional debt when the assisted person is contemplating bankruptcy,” even when that advice constitutes prudent prebankruptcy planning not intended to abuse the bankruptcy laws, 541 F.3d at 793, the majority held that § 526(a)(4) could not withstand either strict or intermediate scrutiny. In dissent, Judge Colloton argued that § 526(a) (4) should be read narrowly to prevent only advice to abuse the bankruptcy system, noting that this construction would avoid most constitutional difficulties. See id., at 799 (opinion concurring in part and dissenting in part).

In light of a conflict among the Courts of Appeals,² we granted certiorari to resolve the question of § 526(a)(4)'s scope. 556 U.S. 1281, 129 S.Ct. 2766, 174 L.Ed.2d 269 (2009). We also agreed to consider the threshold question whether attorneys who provide bankruptcy assistance to assisted persons are “debt relief agenc[ies]” within the meaning of § 101(12A) and the related question whether § 528's disclosure requirements are constitutional.

III

A

We first consider whether the term “debt relief agency” includes attorneys. If it does not, we need not reach the other questions presented, as §§ 526 and 528 govern only the conduct of debt relief agencies, and Milavetz challenges the validity of those provisions based on their application to attorneys. The Government contends that “debt relief agency” plainly includes attorneys, while Milavetz urges that it does not. We conclude that the Government has the better view.

As already noted, a debt relief agency is “any person who provides any bankruptcy assistance to an assisted person” in return for payment. § 101(12A). By definition, “bankruptcy assistance” includes several services commonly performed by attorneys. Indeed, some forms of bankruptcy assistance, including the “provi[sion of] legal representation with respect to a case or proceeding,” § 101(4A), may be provided only by attorneys. See § 110(e)(2) (prohibiting bankruptcy petition preparers from providing legal advice). Moreover, in enumerating specific exceptions to the definition of debt relief agency, Congress gave no indication that it intended to exclude attorneys. See §§ 101(12A)(A)-(E). Thus, as the Government contends, the statutory text clearly indicates that attorneys are debt relief agencies when they provide qualifying services to assisted persons.³

In advocating a narrower understanding of that term, Milavetz relies heavily on the fact that § 101(12A) does not expressly include attorneys. That omission stands in contrast, it argues, to the provision's explicit inclusion of “bankruptcy petition preparer[s]”—a category of professionals that excludes...