thank your honor may please the court i'm brian michael have represent the appellant in this case mr lloyd cadwell and your honour's this case presents an opportunity for the court to reverse the district court opinion dismissing mr  complaint against k l on a motion to dismiss feel that the district court opinion was clear air where in the complaint mr cadwell had alleged that k e l o violated eleven u s c five twenty six a four as a debt relief agency which advised mr cadwell as an assisted person we're all over that we know now is your hero it's a question statutory interpretation which you need to get to yes for the statutory interpretation in this case initially your honor the district court found that mr cadwell had alleged and the discord except it is true all four elements of statutory interpretation debt relief agency assisted person advice to incur debt and the actual payment of attorney's fees by mr cadwell after the signing of a chapter seven contract with  the issue with the dish record as the court is well aware was that what it interpreted the statute to mean does not comply with what the statute actually says and it can i ask you this one of the the statute i guess it manifests itself in what the supreme court said in the middle of it's or malevolence or however you pronounce it is sort of where the hinge point in the statute is right does the does the incurring the advice to incur is that a does that occur sort of outside the parentheses or inside the parentheses such such that does it does the statute say that a debt relief agency including law firm shall not advise an assisted person or prospective assisted person to incur more debt either one in contemplation of a bankruptcy proceeding or two to pay the lawyer or does it say the debt relief agency shall not assist in it are shall not advise an assisted person one to incur debt in contemplation of a bankruptcy proceeding or two to pay the lawyer you see what i'm saying here or does that either go and the difficulty is that the supreme court in the lab it's seemed to put the either in a place that i wouldn't have expected it and i believe the supreme court was clear in that it was two separate components of the statute and really what you look at is does it lead to an absurd result if you just say you can't pay for bankruptcy there would know there would be no more bankruptcy at that point so it it can't say you just can't pay it turns out it's got to be you're saying advice to incur debt either in contemplation or to pay your lawyer person to pay an attorney it seems to the in contemplation focuses on the in currency of what i call general debt in my brief euro in contemplation of such or is it a proper motivation for the debtor to incur debt they cited some examples of refinancing a mortgage or purchasing a car which may be proper financial advice by an attorney and the attorney was free to discuss those what they didn't like was go out run up some debt will discharge this in the bankruptcy and that seems to be the distinction in both parts of the statute when you look at really the difference between the first part and second part is where the money ends up does it end up in the debtors hands when they incur new debt then you use the improper motivation standard did they really use that for did they use the new debt for something that may be proper like a refinance of the mortgage or a car or did it end up in the hands of the attorney and under what appears to be the lack of the in contemplation of language in the second part of the statute we would submit your honor that the lack of the in contemplation language in the lack of this type of test this improper motivation test sets out a per se standard where congress looked at attorney advice of dollars or whatever it was if the only real case that's dealt with this issue is the unpublished opinion inside dell and in that case the bankruptcy judge who you would assume mr miller with general bankruptcy practice and deals with it on daily basis what she said in that instance when she looked at it there was a conflict as to was there some type of of improper motivation in this in what she said it doesn't matter when the attorney advises the client to pay bankruptcy attorneys fees through the occurrence of debt what needs to be to be looked at is did the attorney advise that person to do that and when they actually charged the card she considered that a tacit encourage meant to incur new debt so you really have to get away from the improper motivation about whether this was fraud or whether it wasn't fraud because what congress has set up in this instance is almost like a strict liability per se test where if you do this if you would advise a client has a debt relief agency to incur debt in the money ends up paying for chapter seven attorneys fees or some even to pay a reasonable amount of attorney's fees i mean you can always make a debt above a certain amount incurred for legal representation non dischargeable why would congress want to say you can go to the a t m and get cash and pay but you can't use the graphic card and i'm sorry he can't instruct your advise you to use the critical it's if you're looking at credit cards it's per se fraudulent because when the client uses the credit card pay a bankruptcy attorneys fees there will be a bankruptcy in the very near future and that debt will be discharged so you have a situation where congress understood that nobody is going to go in pay a bankruptcy attorney on a credit card and then not file a bankruptcy in till they've paid off the credit card you're in a situation where imminently the bankruptcy will be filed in this case there's a contract to file the bankruptcy there's a contract which lays out a payment schedule but there does have to be i mean he could have file this is not your interest here's what we do short of filing bankruptcy but certainly that could have been the advice but that was your position is congress should have the same that's a rare situation when the tourney gives that advise well not only is it rare it just didn't happen in this case ron i know but with congress one thing about this case certainly and that's where you would you would look at if you just say to somebody don't f vice that would be covered by the statute it believe yes your honor it would be they would be a prospective assisted person at that it says preparing for all representing a debtor in the case so i'm not sure that just general advice and if the advice is don't fall i'm not sure that would fit the statute because you wouldn't be preparing for  representing a debtor in a case under the bankruptcy time in the first part of the statue your honor it says advise and assist a person or a prospective assisted person and that seems to cover someone coming in talking about bankruptcy who may know i was trying to help you out but i'll be willing to abandon the effort i appreciate that you know it's a small point and you know let's hear now from mr herman it charmin our policy as i'm probably the one that did it but it looks like i've given the folks are going against you twenty five minutes and you're only fifteen now our hope you would accept that as a complement but if you need another five minutes you can i'm not suggesting  advice to incur debt in of itself is not in a pro is not improper it's advice to encourage that in contemplation of well no that's the issue but i thought the district court held that they didn't adequately even if the in contemplation didn't apply i thought there was at least the implication in the district court's been yeah i thought it was more than that that they had not alleged that he had advised him to incur more debt to retain his services i don't actually i'm sorry i actually understood the district court opinion to be saying that the the allegation but advice to pay by credit card which is what a paraphrase didn't require to an improper purpose beyond the incurring of debt to get there well that's fine that makes sense it didn't make sense otherwise to say instructed him to pay  instruct him to pay the initial try retainer back credit card was not advice to incur more debt correct ok that's all right that's helps to court was was saying it's advice to a card that in your your case depends on in contemplation of sorts person filing a case modifying pay an attorney yes and no yes can i ask a question just to make sure we've tied up the point barnes was just asking about do you agree that if the statute is properly read to say that the debt relief agency should not advise an assisted person to incur more debt to pay his lawyer that the allegation in paragraph ten is sufficient ahead in paperback two weeks later you agree with the position of the united all going to pay a credit card i'm sorry to hear you agree with the position of the united states in this it needs to go back down but the court interpret this second clause i think the court did interpret the second clause i think the lower court turned around and said and this gets in support of the constitutionality of that second portion and constitutional avoidance i think the court went ahead and said you need to i have now a a statute that says advice to pay a fee under this title to an attorney well that can't be the test because we know the bankruptcy he says incur more debt to pay an attorney it buys him to incur more debt to pay the attorney but that is exactly what miller bits was fighting about no it wasn't what was funny about in the sense that the bankruptcy abuse and prevention act and consumer act was designed for abuse and that there was no that's what congress that's what that phrase means with same congress knows what it means that's why there has to be an improper purpose problem a problem i have there's all kinds it's semantic and structural problems i have with your position w tourney then everything after everything after title and before is a perfect if you if it's if it is a violation to advise somebody to incur of such person filing a case modifying to pay an attorney then the paying an attorney for advice incurring more debt to pay an attorney for advice is incurring more debt you got the general in contemplation don't incur any more diet you can't advise him to incur any more debt in contemplation of bankruptcy and oh by the way you can't advise him to incur debt to pay an attorney in contemplation of bankruptcy with a specific is incorporated in the general the rest of the everything after title is is pointless attorney involved as an assisted person and they define assisted person why counsel said you can't advise him to incur debt to pay an attorney regardless of whether it's for improper purpose or not that calls the first clause covers improper purpose and when you say or that means another way an alternative way of violating the sanction and that is incurring more debt to pay the attorney regardless of in contemplation that would be the position that at that point you have a constitutional you have an unconstitutional statute because you're regulating the advice of an attorney to incur debt which is not for an improper purpose just in general advice to pay and you saying we know that the bankruptcy abuse and prevention act is a compelling interest from congress we know is to prevent fraud abuse protect creditors but there are situations in which an attorney can give advice to incur debt and it would not be to discharge our busa system as an attorney i can say to the client this is what i want to do you go ahead and pay my credit  you go ahead and say well client you've told me you have five hundred dollars and a credit card i want you to pay me to five hundred but take the credit card and turn perfect even if we accept i think it could be read the way i just i just postured it to the court but even if we accepted the court's position there the first two ought conduct which would be outside the compelling interest of the of congress to regulate the bankruptcy is not now only tailored because they could just simply say you can't accept fees for improper purpose and then tell me when back to my redundancy point when would the second clause ever apply under your interpretation it has to be for an in proper purpose that he advised him to incur debt to pay the attorney when would that ever not be covered by the first clause to incur more debt for an improper purpose somebody says oh you violated the second clause because you advised him for an improper purpose to pay you in contemplation that's already covered by the first point when will the second clause ever have any operation that is not covered by the first clause the more general broader clause that under your interpretation covers every incurring of the debt in contemplation of bankruptcy every one of them i cannot think of one off the top of my head is it doesn't exist but if we accept that premise doesn't exist then you have a constitutional problem with good less move on to the constitutional issue you can't rewrite a statute contrary to the way congress wrote it to avoid the constitutional issues frank or even has said that on a number of occasions and it has to be that way you can't just say congress throw something up there and if there is it's unconstitutional naturally which may have been well if there's an ambiguity as to in that case what in contemplation of such person filing was and they said that's one of the considerations it'll be on the constitutional issue not unconstitutional statute they didn't say that will be a constitutional issue and both sides in contemplation of bankruptcy is a phrase that everybody understands what it means that's loading up  that's what courts have used it for for years ok well then it becomes well why is it where is the line go join to as as is just to said ok one o two why is it not advice to pay a fig to an attorney doesn't say advice to incur debt to pay for the most natural reading of the statute is that it says that vice to incur debt to pay an attorney i would submit to the court wouldn't i mean you know that what mel of it says is it's not only a narrow reading it's the most natural reading why wouldn't we just accept the most natural reading which says advice to incur a debt to pay the lawyer times which the attorney would turn around and say go ahead in make payment but we can't file until such time as the pain was done and you paid it back to go ahead and make payment but we're going to have to go ahead and we affirm the debt to the bankruptcy court the trustee you not to be able unconstitutional is face outside the first amendment is you've got to show there's no situation in which it can be constitutionally applied and we know that that's not i'm sorry speaking for myself there is there are circumstances in which it can be applied which is where they turn he doesn't say and then we'll replay it before you file for bankruptcy they have it and that they're allowed to plead their case and then unconstitutional as applied you've got to show the case that they've pleaded it will be unconstitutional to block the statute to that or if you want to do a face or tack there's no conceivable basis no circumstance in which it can be constitutionally plot that's just facial constitution ality outside the first amendment and the you know anything i've been through to the court's attention is the representation here is that there has been advice given to pay debt that's the allegation supposedly in paragraph eleven encouraged it copied it occurred that however the record is also contains or the complaint also contained that attachment exhibit incorporate into the allegations the payment authorization which the debtor said he was paying by debit card and he signs it so we have a exhibit contradicting the allegation in the complaint and although not argued not before this court it's my understanding that at exhibit two a complaint which contradicts the allegations of the complaint controls so you have a debtor representing i'm not paying by credit card i'm paying my debit are and i know i'm coming up on my time that if we look to this is a first amendment challenge this is advice attorney's advice to a client i always thought that was under a different intermediate yeah well i mean attorneys not on the sidewalk with a billboard saying pay your bankruptcy retainer fee with a credit card strike one for debtors freedoms this is this is attorney client communication bombs scalia said most commercial speech is for profit he said that a board of trustees difference is whether or not it's part of a transaction so that being said if we apply the strict scrutiny replied intermediate scrutiny if the compelling reason is to stop abuse and you have instances in which the attorney can and advise the client to incur debt to pay him which does not foster the abuse that isn't overly broad sweeps you broadly that especially if we're under intermediate scrutiny isn't congress this goes to chief judge carnes point earlier is it isn't congress intitled to make an empirical judgment that  i enlarge that's not how it goes down by and large it goes down where you say incur some debt put it on the car so that you can pay me and not we'll wait to file the petition to you've paid it off that's just that congress is entitled to make a judgment that there is inherent in this system abuse of the sort that the bankruptcy protection act or whatever it's called isn't in the target congress i think they can legislate but they can't legislate outside of the first amendment so yes they can turn around and say we have this compelling interest yes we're going to try to we're going to try to prevent that and legislate against it but they need to narrowly tale of that statute and if in fact we're reading it as advice to encourage debt to pay a fee and there is instances where the attorney can give advice as not to abuse a system which is the compelling interest then it becomes overly broad sweeping which was the whole reason why i thought constitutional voice would be the way to go which is to impute an improper purpose like militants did ok counsel this is a good time to hear from good morning your honor it's a pleasure to be here jennifer utrecht on behalf of the united states i think that we have already addressed the first two points that i wanted to make in some detail which to summarize were the most natural reading of the statute is as your honour's discussed earlier parsing the statute in a manner that bans as the second prong advice to incur debt to pay an attorney or is put in the house report on the statute in order to pay an attorney the second point that i want to make that the way that the district court interpreted the statute by taking the test for mill of its about which the improper purpose would render the second portion of the statutes a perf lewis we we have taken the position that the second portion of the statute is violated any time that someone to gives advice to incur debt to pay for an attorney and representation referred representation in bankruptcy and as that advice itself that is the improper purpose and there are a number of reasons for that  first such advice just like the discussion in mill of its about the problems with the in contemplation of filing prong such advice is going to potentially harm the debtors under section five two three of the bankruptcy code any debt that is obtained under false pretenses cannot be discharged if an attorney were to advise their clients to take on debt or encourage their client to take on debt in order to pay for his representation without giving full information to his client about what the consequences of that were it would lead to the client suddenly having debt that could not be discharged reason it could be george aren't there are several reasons it wouldn't be discharged well the first reason there would not be discharge is because it would be debt tainted or false pretenses which would be a debt or a city that use most of it to the subject of intent of the debtor at the time of incurring the debt the second potential problem here for abuse is that there is harm to creditors if this debt is discharged the creditors have essentially been forced into subsidizing the bankrupt the very bankruptcy proceedings that are going to have the debt that they own discharged and the third potential problem those are the two things discussed in militias we think those concerns apply equally here the third potential problem with advice to incur debt in order to pay an attorney is the potential for attorney overreach even when an attorney believes they might be acting in their client's best interest by giving this type of advice there is always a risk that their exercise of professional judgment is going to be clouded by their own peculiar e interest there's a risk that the circumstances of having a vulnerable debtor in these without in full information about what should happen will sort of give uninformed acquiescence into a course of action that isn't happen here is that is that a violation or is it takes some further abuse than that was your honor to be clear there's no allegations here that the attorney told his client to pay back the credit card before filing but you say when  that's left out it is about lation and this without any of them because those allegations do not exist that would be a violation for an attorney to give affirmative instruction or encouragement to incur debt for the purpose of paying for representation  we believe that the statute has room for attorneys to discuss options with their clients to say these are the various ways in which you can pay for bankruptcy and best practices attorney would say there are many consequences for potentially taking out debt and you should be aware of those consequences if you're going to take this path you should know that you need to pay this back but because there is a potential for conflict of interest here an appearance of impropriety because this has problems with you i cannot it's the term advice refers to affirmative instruction or encouragement and so long as the attorney is not actually encouraging a course of action that says incur debt and is simply saying here are your options here are the risks that come with each of those  what do you you know i i cannot as a matter of avoiding conflicts of interest tell you to do something that could potentially harm you simply to pay me but i want you to know that one of the things that you could do is you could take out debt from family members you could ask for a gift you could stop paying your credit card payments which is usually what happens before filing for bankruptcy anyway and the amount of money that you save stopped from doing that can go to my retainer we can put off filing for bankruptcy until you're able to scrounge up enough so you agree you're in paragraph ten which uses the word instruct you just said advice as the court said in mill of its means instruction or affirmative encouragement so the allegation here in paragraph ten instruct sufficient so your honor to be clear the reason that we brought that argument up in our brief is because the thrust of the plaintiff's complaint in this case is including the allegations about the putative class members suggest that the statute was violated simply because they accepted a carte credit card payment and we do not believe the statute should be interpreted as simply banning all advice to pay attorneys including paying attorneys including accepting credit cards and payment  the term in struct doesn't say a lot about what was actually said it doesn't say whether the attorneys you know were simply disgusting options if the score believes that that is sufficient to constitute advice under middle of it says it's just a description that this is supposed to and your honor again if this court agrees that it believes that that's sufficient then we then we believe that this fall squarely within the text of the statute because our main concern in this case was ensuring that the statute was appropriately interpreted what you've said so far so we really need some help on constitutional issues yes so there are a couple points that i would like to make here first until this argument k l has not made and you know as applied allegations to the statute as appropriately interpreted it's brief and it motion to dismiss were the arguments presented there were entirely based on the idea that this statute was a ban on advice to pay attorneys generally and for reasons already discussed that we don't need to go into any further we do not believe that's an appropriate interpretation of the statute it is  ban on a device to incur debt in order to pay an attorney and the counsel for kal has suggested that there might be circumstances in which an attorney is not telling a  debtor to incur scuse me is telling a debtor to incur debt that if that should be paid back and that that perhaps would be overbroad again there are no allegation this is an as applied challenge and there are no allegations here that that is the case bar or central hutchinson hudson commercial speech this is a transaction between the consumer debtor and the attorney about how they are going to pay for the attorney's fees and there is substantial government interest in preventing the types of abuses and attorney overreach that could potentially happen here the question then becomes is there a reasonable fit between the congressional goals and the ends that are actually achieved and to that extent we believe the answer is yes  there there is a can because there has been a congressional judgment that advice to incur debt in order to pay an attorney similar to advice to incur debt in contemplation of filing is always going to have some sort of abuse of potential and that we need to prevent this sort of the attorney for attorneys professional judgment being clouded by their own peculiar area interests and to that extent we believe that the decisions in mill of it and the follow up cases in the second circuit and ninth circuit on the first amendment question would also squarely control whether the second prong of the statute is constitutional if there are no further questions  thank mr michel i think probably since that's been covered and we've covered parts of your argument as well and you covered it i'm i'm like to hear from you primarily about page fifteen of the appendix which indicates that it was preyed paid by debit card instead of a credit card and your honor if i can turn to that page the contract page for fifteen what mr cadwell actually circled was the portion of that debit master card visa he only circled master card and visa and that is advice and he got the advice in the form of an instruction the payback credit card violation complete what am i missing well in my attempt to answer your question directly your honor i did gloss over that and that is covered in paragraph ten of the complaint the instruction and will of it defines what device is it's the instruction or encouragement of an to assist a person to in incur more debt so you attached as page fourteen of the contract here is the actual credit card transaction receipt which clearly labels it as a credit card and then you have this follow up circling master card and visa and to get to judge seiler point earlier there are instances where people come in and they say we don't have any money to file bankruptcy and that's particularly the point of this statute is to not put the attorneys monetary interest in front of the service to the client in the the integrity of the bankruptcy system in potential recovery for creditors in the bankruptcy system if someone comes in to an attorney in that situation what congress has clearly said is that you just can't fund the bankruptcy on the backs of the creditors you have to tell that person either i'll do it for free or i can't do it in less you pay me that's what five twenty six a four says as far as i thought your position was you can tell the other here's the options to you for payment certainly and that's part of that conversation in the conversation one of the options you can explain to him is a credit card you cannot instruct and you can and are advise him to choose it dies because either one of those yes your honor knew it is a fine line it's not going to take much push for him to figure out that he doesn't have any cash correct and that's not a credit card and he's about to fall bankruptcy that's the way to go and that's the problem i have with the government's hypothetical is well you can't use credit cards can't tell you to use it but if you do you know we can follow the case i believe you know you then you get into a real question of did you actually advise them or did you not and that seems to go down the road of in contemplation of bankruptcy where were congress  just said you cannot vote you may have a swearing match between the debtor and the attorney but you're always going to have that and you know cause of action here to now it's what the sydell opinion says is that it doesn't matter who said what did you encourage them to do it and did you actually tacitly incursion by taking the card thank you thank you we'll take that case under submission along