Court Opinion

ID: 3045400
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:16:24.127916+00
Date Added: 2024-06-11T12:45:27.084346
License: Public Domain

United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 07-2405
                                 ___________

Milavetz, Gallop & Milavetz, P.A.; *
Robert J. Milavetz; Barbara N. Nevin;
                                   *
John Doe; Mary Doe,                *
                                   *
            Appellees,             *
                                   * Appeal from the United States
      v.                           * District Court for the
                                   * District of Minnesota.
United States of America,          *
                                   *
            Appellant,             *
____________________               *
                                   *
Commercial Law League of America, *
                                   *
            Amicus on Behalf       *
            of Appellee.           *
                              ___________

                  Submitted: March 11, 2008
                      Filed: September 4, 2008 (Corrected September 23, 2008)
                                 ___________

Before BYE, SMITH, and COLLOTON, Circuit Judges.
                            ___________

SMITH, Circuit Judge.
       Milavetz, Gallop & Milavetz, P.A., a law firm that practices bankruptcy law,
the firm's president, a bankruptcy attorney within the firm, and two clients1 who
sought bankruptcy advice from the firm brought suit against the United States seeking
a declaratory judgment that certain provisions of the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005 (BAPCPA)—11 U.S.C. §§ 526(a)(4) and
528(a)(4) and (b)(2)—did not apply to attorneys and law firms and are
unconstitutional as applied to attorneys. The district court granted summary judgment
to the plaintiffs and issued an order declaring that: (1) attorneys in the District of
Minnesota were excluded from the definition of a "debt relief agency" as defined by
BAPCPA; and (2) the challenged provisions were unconstitutional as applied to
attorneys in the District of Minnesota. We affirm in part and reverse in part.

                                    I. Background
       On April 20, 2005, BAPCPA was signed into law, amending and adding
multiple sections of the Bankruptcy Code ("the Code"). While some of these
amendments became effective immediately, the vast majority became effective on
October 17, 2005. See Pub. L. No. 109-8, § 1501(a), 119 Stat. 23 (2005) ("Except as
otherwise provided in this Act, this Act and the amendments made by this act shall
take effect 180 days after the date of enactment of this Act").

      One BAPCPA amendment added a new term, "debt relief agency," which is
defined in § 101(12A) of the Code. 11 U.S.C. § 101(12A).2 The amended Code

      1
        The client-plaintiffs sought prebankruptcy advice regarding the incurrence of
additional debt prior to filing bankruptcy. The Bankruptcy Code precludes a debt
relief agency from advising an assisted person from incurring additional debt in
contemplation of bankruptcy. 11 U.S.C. § 526(a)(4). Thus, these client-plaintiffs are
appearing on behalf of themselves and all others similarly situated who desire to
exercise their First Amendment rights with attorneys regarding bankruptcy
information.
      2
       Prior to BAPCPA, the term "debt relief agency" did not exist in the Code.

                                         -2-
restricts some actions of debt relief agencies, while requiring them to do others. See
11 U.S.C. § 526 ("Restrictions on debt relief agencies"); 11 U.S.C. § 528
("Requirements for debt relief agencies"). For example, § 526(a)(4) bars a debt relief
agency from advising a client "to incur more debt in contemplation" of a bankruptcy
filing, 11 U.S.C. § 526(a)(4), while §§ 528(a)(4) and (b)(2) require debt relief
agencies to include a disclosure in their bankruptcy-related advertisements directed
to the general public declaring: "'We are a debt relief agency. We help people file for
bankruptcy relief under the Bankruptcy Code[,]'or a substantially similar statement."
11 U.S.C. § 528(a)(4), (b)(2). The plaintiffs sought alternative remedies. First,
plaintiffs requested a declaratory judgment that attorneys did not fall within the
definition of "debt relief agency." If the court determined that attorneys fell within the
definition of debt relief agency, they challenged the constitutionality of §§ 526(a)(4)
and 528(a)(4) and (b)(2), as applied to attorneys.

                                    II. Discussion
                                A. Debt Relief Agencies
       Initially, we address whether attorneys fall within the Code's definition of debt
relief agencies. If they do not, we will have no need to address the constitutionality
of §§ 526(a)(4) and 528(a)(4) and (b)(2), which only apply to debt relief agencies. See
Holtan v. Black, 838 F.2d 984, 986 n.3 (8th Cir. 1988) ("Federal courts must avoid
passing upon constitutional questions unless they are essential to the disposition of the
issues before them.") (citing Three Affiliated Tribes v. Wold Engineering, 467 U.S.
138, 157 (1984) ("It is a fundamental rule of judicial restraint, however, that this Court
will not reach constitutional questions in advance of necessity of deciding them")).

      The term "debt relief agency" means any person who provides any
      bankruptcy assistance to an assisted person in return for the payment of
      money or other valuable consideration, or who is a bankruptcy petition
      preparer under section 110, but does not include–

                                           -3-
            (A) any person who is an officer, director, employee, or
            agent of a person who provides such assistance or of the
            bankruptcy petition preparer;

            (B) a nonprofit organization that is exempt from taxation
            under section 501(c)(3) of the Internal Revenue Code of
            1986;

            (C) a creditor of such assisted person, to the extent that the
            creditor is assisting such assisted person to restructure any
            debt owed by such assisted person to the creditor;

            (D) a depository institution (as defined in section 3 of the
            Federal Deposit Insurance Act) or any Federal credit union
            or State credit union (as those terms are defined in section
            101 of the Federal Credit Union Act), or any affiliate or
            subsidiary of such depository institution or credit union; or

            (E) an author, publisher, distributor, or seller of works
            subject to copyright protection under title 17, when acting
            in such capacity.

11 U.S.C. § 101(12A) (emphasis added).

      Further, the Code defines the term "bankruptcy assistance" to mean:

      any goods or services sold or otherwise 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 under
      this title.

Id. at § 101(4A) (emphasis added).

                                         -4-
        Additionally, the Code defines the term "assisted person" as "any person whose
debts consist primarily of consumer debts and the value of whose nonexempt property
is less than $164,250."3 Id. at § 101(3).

        The plaintiffs argue that attorneys are not "debt relief agencies" because the
definition of debt relief agencies makes no direct reference to attorneys, even though
"attorney" is a defined term in the Code, id. at § 101(4),4 but does include the term
"bankruptcy petition preparer" which, by definition, excludes debtor's attorneys and
their staff. See 11 U.S.C. § 110(a)(1).5 Plaintiffs contend that the omission of any
reference to attorneys or lawyers while specifically including bankruptcy petition
preparers shows Congress's intent to exclude attorneys from the definition of debt
relief agencies. Because the plaintiffs contend that constitutionality issues arise in §§
526(a)(4) and 528(a)(4) and (b)(2) if attorneys are debt relief agencies, they assert that
the doctrine of constitutional avoidance should be used to interpret "debt relief
agency" to exclude attorneys and thus avoid the potential constitutional issues.

      Conversely, the government argues that attorneys are debt relief agencies
because the broadly worded definition of the term plainly includes attorneys, see 11

      3
      When this suit was commenced, the dollar amount in § 101(3) was $150,000.
Subsequently, on April 1, 2007, the amount was adjusted pursuant to 11 U.S.C. § 104.
The change, however, is inconsequential for purposes of this case.
      4
        "The term 'attorney' means attorney, professional law association, corporation,
or partnership, authorized under applicable law to practice law." 11 U.S.C. § 101(4).
This definition makes no reference to "debt relief agencies" or to subsection (12A).
      5
       "'[B]ankruptcy petition preparer' means a person, other than an attorney for the
debtor or an employee of such attorney under the direct supervision of such attorney,
who prepares for compensation a document for filing [by the debtor in connection
with his bankruptcy case]." 11 U.S.C. § 110(a)(1) (emphasis added); see also id. at §
110(a)(2) (defining "document for filing" as used in § 110(a)(1)).

                                           -5-
U.S.C. § 101(12A) (defining "debt relief agency" as "any person who provides any
bankruptcy assistance to an assisted person in return for the payment"), and providing
legal representation is included in definition of bankruptcy assistance. See id. at
101(4A) ("bankruptcy assistance means any goods or services sold or otherwise
provided to an assisted person with the express or implied purpose of providing . . .
advice, counsel, . . . or legal representation with respect to a case or proceeding under
this title").

        Whether attorneys fall within the Code's definition of debt relief agencies is an
issue of first impression among the Courts of Appeals. Although the plain language
of the definition appears to include bankruptcy attorneys and does not appear to be
ambiguous, lower "[c]ourts that have addressed the issue of whether attorneys are debt
relief agencies have not been unanimous." In re Irons, 379 B.R. 680, 685 (Bankr. S.D.
Tex. 2007) (citing cases). Nevertheless, the majority of courts have held that
compensated bankruptcy attorneys are debt relief agencies as that term is defined in
the Code. Id. (finding debtor's counsel was a debt relief agency); Olsen v. Gonzales,
350 B.R. 906 (D. Or. 2006) (same); In re Robinson, 368 B.R. 492 (Bankr. E.D. Va.
2007) (finding debtor's counsel was debt relief agency); Hersh v. United States, 347
B.R. 19 (N.D. Tex. 2006) (finding that bankruptcy attorneys are debt relief agencies);
In re Norman, No. 06-70859, 2006 WL 3053309 (Bankr. E.D. Va. 2006) (finding
debtor's counsel qualified as a debt relief agency); but see In re Attorneys at Law and
Debt Relief Agencies, 332 B.R. 66 (Bankr. S.D. Ga. 2005) (holding that attorneys are
not debt relief agencies); In re Reyes, 361 B.R. 276 (Bankr. S.D. Fla. 2007) (finding
that attorneys, generally, are not debt relief agencies, but ruling that debtor's counsel
in case at bar was not a debt relief agency because service was provided pro bono and
thus counsel did not receive valuable consideration in return for the bankruptcy
assistance provided).

     In this case, the district court acknowledged that the definition of debt relief
agency, "at first glance," appeared to include attorneys, but it ultimately relied on the

                                          -6-
doctrine of constitutional avoidance to conclude that attorneys did not fall within the
definition because if they did portions of §§ 526 and 528 would be unconstitutional
as applied to attorneys. The doctrine of constitutional avoidance dictates that "where
an otherwise acceptable construction of a statute would raise serious constitutional
problems, the Court will construe the statute to avoid such problems unless such
construction is plainly contrary to the intent of Congress." Edward J. DeBartolo Corp.
v. Florida Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575 (1988).
Thus, if interpreting "debt relief agency" to include attorneys "would raise serious
constitutional problems," then we should look for another interpretation "that may
fairly be ascribed" to the definition that does not raise these concerns. Id. at 576–77.
We will not, however, adopt an alternative interpretation that is "plainly contrary to
the intent of Congress." Id. at 575.

        "We review the district court's statutory interpretation de novo." United States
v. Mendoza-Gonzalez, 520 F.3d 912, 914 (8th Cir. 2008). To interpret the statute we
first "determine whether the language at issue has a plain and unambiguous meaning
with regard to the particular dispute in the case." Id. (quoting Robinson v. Shell Oil
Co., 519 U.S. 337, 340 (1997)). "If so, we apply the plain language of the statute." Id.
"A mere disagreement among litigants over the meaning of the statute does not prove
ambiguity; it usually means that one of the litigants is simply wrong." Bank of Am.
Nat'l Trust & Sav. Ass'n v. 203 N. LaSalle St. P'ship, 526 U.S. 434, 461 (1999).

       The plain reading of the definition of debt relief agency, and the defined terms
that make up that definition, leads us to conclude that attorneys who provide
"bankruptcy assistance" to "assisted persons" are unambiguously included in the
definition of "debt relief agencies." See Olsen, 350 B.R. at 912 ("[I]t is the plain
language of the Act that leads to the conclusion that attorneys are to be included in the
definition of 'debt relief agency,'" and "[t]hus, further use of the tools of statutory
construction is not necessary"). The statutory language sweeps broadly and clearly

                                          -7-
covers the legal services provided by attorneys to debtors in bankruptcy unless
excluded by another provision.

       Congress specifically listed five exclusions from the definition of "debt relief
agency," and if it meant to exclude attorneys from that definition it could have
explicitly done so. Id.; 11 U.S.C. § 101(12A). Moreover, if attorneys were not
included in the definition of debt relief agencies, Congress would have had no reason
to include § 526(d)(2), which expressly provides that nothing in §§ 526, 527, or 528
(the sections covering debt relief agencies) "shall be deemed to limit or curtail the
authority or ability of a State . . . to determine and enforce qualifications for the
practice of law under the laws of that State; or of a Federal court to determine and
enforce the qualifications for the practice of law before that court." 11 U.S.C. §
526(d)(2)(A) and (B). The legislative history provides further indication that attorneys
are included in the definition. See H.R. Rep. No. 109-31, 109th Cong. 1st Sess. at 4
(April 8, 2005) ("The bill's consumer protections include provisions strengthening
professionalism standards for attorneys and others who assist consumer debtors with
their bankruptcy cases") (emphasis added).6

       Because attorneys were not specifically excluded from the definition of debt
relief agencies, we hold that attorneys that provide "bankruptcy assistance" to
"assisted persons" are "debt relief agencies" as that term is defined by the Code.

      6
        Additionally, while we recognize that the Supreme Court has stated that "failed
legislative proposals are a particularly dangerous ground on which to rest [a statutory
interpretation]," Lockhart v. United States, 546 U.S. 142 (2005) (internal quotation
marks and brackets omitted), we note that on March 9, 2005, Senator Feingold
proposed amendment No. 93 to Congress which would have excluded attorneys from
the definition of debt relief agencies, see 151 Cong. Rec. S2306–02, 2316 (daily ed.
Mar. 9, 2005) (statement by Sen. Feingold) ("This amendment would exclude lawyers
from the provisions dealing with 'debt relief agencies' . . . ."), but the Senate did not
address the proposal.

                                          -8-
Interpreting the definition of "debt relief agency" to exclude bankruptcy attorneys
would be contrary to Congress's intent.

                          B. Constitutionality of § 526(a)(4)
      Having concluded that attorneys providing bankruptcy assistance to assisted
persons are debt relief agencies under the Code, we now must determine whether the
challenged provisions placing restrictions and requirements on debt relief agencies are
unconstitutionally overbroad as applied to these types of attorneys.7 One of the
sections challenged by the plaintiffs in this case is § 526(a)(4), which states:

      (a) A debt relief agency shall not–
                                        ...
             (4) advise an assisted person or prospective 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.

11 U.S.C. § 526(a)(4).

      Plaintiffs assert that the prohibition against advising an assisted person or
prospective assisted person to incur more debt in contemplation of bankruptcy violates

      7
        Even though a more narrowly drawn version of § 526(a)(4) would likely be
valid as applied to the plaintiffs in this case, our analysis applies to all attorneys
falling within the definition of debt relief agencies, not merely the plaintiff-attorneys.
See Members of City Council of City of Los Angeles v. Taxpayers for Vincent, 466
U.S. 789, 798–99 (1984) (explaining that the overbreadth doctrine allows a party to
challenge a broadly written statute "even though a more narrowly drawn statute would
be valid as applied to the party in the case," as "the statute's very existence may cause
others not before the court to refrain from constitutionally protected speech or
expression") (internal quotations and citation omitted).

                                           -9-
the First Amendment. The parties disagree as to the level of scrutiny we apply to the
constitutional analysis of this limitation on speech. Plaintiffs claim that we should
review the constitutionality of § 526(a)(4) under the strict scrutiny standard as the
restriction on attorney advice is content-based. See Turner Broad. Sys., Inc. v. FCC,
512 U.S. 622, 642 (1994) ("Our precedents thus apply the most exacting scrutiny to
regulations that suppress, disadvantage, or impose differential burdens upon speech
because of its content"). Under strict scrutiny review, the government has the burden
to prove that the constraints on speech are supported by a compelling governmental
interest and are narrowly tailored, such that the statutory effect does not prohibit any
more speech than is necessary to serve the governmental interest. Republican Party
of Minnesota v. White, 536 U.S. 765, 774–75 (2002).

       In contrast, the government argues that § 526(a)(4)'s restrictions are a type of
ethical regulation, invoking the more lenient standard outlined in Gentile v. State Bar
of Nev., 501 U.S. 1030 (1991). Under the Gentile standard, we would balance the First
Amendment rights of the attorneys against the government's legitimate interest in
regulating the activity in question—the prohibition of advising assisted persons to
incur more debt in contemplation of bankruptcy—and then determine whether the
regulations impose "only narrow and necessary limitations on lawyers' speech." Id.
at 1075.

        According to the government, § 526(a)(4) should be interpreted as merely
preventing an attorney from advising an assisted person (or prospective assisted
person) to take on more debt in contemplation of bankruptcy when the incurrence of
such debt is done with the intent to manipulate the bankruptcy system, engage in
abusive conduct, or take unfair advantage of the bankruptcy discharge. However, the
plain language of the statute does not permit this narrow interpretation. Rather, §
526(a)(4) broadly prohibits a debt relief agency from advising an assisted person (or
prospective assisted person) to incur any additional debt when the assisted person is
contemplating bankruptcy. The statute's blanket prohibition applies even if the

                                         -10-
additional debt would not be discharged during the bankruptcy proceedings. 11 U.S.C.
§ 526(a)(4).

       Thus, regardless of whether the government's interest in prohibiting the speech
was legitimate (Gentile standard) or compelling (strict scrutiny standard), § 526(a)(4)
is unconstitutionally overbroad as applied to attorneys falling within the definition of
debt relief agencies because it is not narrowly tailored, nor narrowly and necessarily
limited, to restrict only that speech that the government has an interest in restricting.
Instead, § 526(a)(4) prohibits attorneys classified as debt relief agencies from advising
any assisted person to incur any additional debt in contemplation of bankruptcy; this
prohibition would include advice constituting prudent prebankruptcy planning that is
not an attempt to circumvent, abuse, or undermine the bankruptcy laws. Section
526(a)(4), as written, prevents attorneys from fulfilling their duty to clients to give
them appropriate and beneficial advice not otherwise prohibited by the Bankruptcy
Code or other applicable law.8

       There are certain situations where it would likely be in the assisted person's, and
even the creditors', best interest for the assisted person to incur additional debt in
contemplation of bankruptcy. However, under § 526(a)(4)'s plain language an attorney
is prohibited from providing this beneficial advice—even if the advice could help the
assisted person avoid filing for bankruptcy altogether. For instance, it may be in the
assisted person's best interest to refinance a home mortgage in contemplation of

      8
        Several bankruptcy courts are in agreement with our decision. See Zelotes, 363
B.R. at 667 ("Because § 526(a)(4) is not sufficiently 'narrowly tailored to achieve the
desired objective,' it is unconstitutional as applied to bankruptcy attorneys."); Hersh,
347 B.R. at 25 (concluding that § 526(a)(4) is unconstitutional because: "(1) it
prevents lawyers from advising clients to take lawful actions; and (2) it extends
beyond abuse to prevent advice to take prudent actions," and therefore imposes
"limitations on speech beyond what is 'narrow and necessary'"); Olsen, 350 B.R. at
916 ("[S]ection 526(a)(4) is overly restrictive in violation of the First Amendment"
even if reviewed under Gentile standard).

                                          -11-
bankruptcy to lower the mortgage payments. This could free up additional funds to
pay off other debts and avoid the need for filing bankruptcy all together. Hersh, 347
B.R. at 24. Moreover, it may be in the client's best interest to incur additional debt to
purchase a reliable automobile before filing for bankruptcy, so that the debtor will
have dependable transportation to travel to and from work, which will likely be
necessary to maintain the debtor's payments in bankruptcy. Id. Incurring these types
of additional secured debt, which would often survive or could be reaffirmed by the
debtor, may be in the debtor's best interest without harming the creditors.9

       Factual scenarios other than these few hypothetical situations no doubt exist and
may further illustrate why incurring additional debt in contemplation of bankruptcy
may not be abusive or harmful to creditors. Nonetheless, § 526(a)(4), as written, does
not allow attorneys falling within the definition of debt relief agencies to advise
assisted persons (or prospective assisted persons)—i.e. clients (or prospective clients)
meeting the definition of assisted person—to incur such debt. Thus, § 526(a)(4) is not
narrowly tailored nor narrowly and necessarily limited to prevent only that speech
which the government has an interest in restricting. Therefore, we hold that §

      9
      See Erwin Chemerinsky, Constitutional Issues Posed in the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005, 79 Am. Bankr. L.J. 571, 579
(Summer 2005).

      [Section 526(a)(4)'s] prohibition is particularly troubling when it might
      be completely legal and even desirable for the client to incur such debt.
      For example, there may be instances where it is advisable for a client to
      obtain a mortgage, to refinance an existing mortgage to obtain a lower
      interest rate, or to buy a new car on time. There would be no fraud in
      doing so if the client intended to pay such debt notwithstanding the filing
      of a contemplated bankruptcy case. For example, the client may intend
      to keep all payments fully current and to reaffirm such debt once the case
      is filed.

                                          -12-
526(a)(4) is substantially overbroad,10 and unconstitutional as applied to attorneys
who provide bankruptcy assistance to assisted persons, as those terms are defined in
the Code.

                   C. Constitutionality of § 528(a)(4) and (b)(2)
       The plaintiffs also challenged the constitutionality of §§ 528(a)(4) and
(b)(2)(B), claiming that the advertising disclosure requirements mandated by those
sections violate the First Amendment rights of bankruptcy attorneys through
compelled speech. The disclosure requirements of § 528(a)(4) are supplemented by
§ 528(a)(3). These sections state:

      (a) A debt relief agency shall–
                                          ...
             (3) clearly and conspicuously disclose in any advertisement of
             bankruptcy assistance services or of the benefits of bankruptcy
             directed to the general public (whether in general media, seminars
             or specific mailings, telephonic or electronic messages, or
             otherwise) that the services or benefits are with respect to
             bankruptcy relief under this title; and

             (4) clearly and conspicuously use the following statement in such
             advertisement: "We are a debt relief agency. We help people file
             for bankruptcy relief under the Bankruptcy Code." or a
             substantially similar statement.

11 U.S.C. § 528 (a)(3), (4).

      10
         See Veneklase v. City of Fargo, 248 F.3d 738, 747 (8th Cir. 2001) ("For us to
find a statute unconstitutionally overbroad, its 'overbreadth . . . must not only be real,
but substantial as well, judged in relation to the statute's plainly legitimate sweep.'")
(quoting Broadrick v. Oklahoma, 413 U.S. 601, 615 (1973)).

                                          -13-
      Similarly, § 528(b)(2)(B) states:

      (2) An advertisement, directed to the general public, 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 shall–
                                          ...
             (B) include the following statement: "We are a debt relief agency.
             We help people file for bankruptcy relief under the Bankruptcy
             Code." or a substantially similar statement.

11 U.S.C. § 528(b)(2)(B).

       As both §§ 528(a)(4) and (b)(2)(B) require debt relief agencies—which includes
attorneys providing bankruptcy assistance to assisted persons—to disclose in their
advertising that "'We are a debt relief agency. We help people file for bankruptcy
relief under the Bankruptcy Code.' or some substantially similar statement," the
statutes compel speech that, similar to a restriction on speech, receives constitutional
protection under the First Amendment. See Wooley v. Maynard, 430 U.S. 705, 714
(1977) ("[T]he right of freedom of thought protected by the First Amendment against
state action includes both the right to speak freely and the right to refrain from
speaking at all"); Turner Broad. Sys., Inc., 512 U.S. at 642 (stating that "[l]aws that
compel speakers to utter or distribute speech bearing a particular message are subject
to" constitutional scrutiny).

       The government contends that Congress enacted § 528's disclosure
requirements to address problems with deceitful or unclear advertising by bankruptcy
attorneys, bankruptcy petition preparers, or other debt relief entities. This position is
supported by legislative history. See 151 Cong. Rec. H2063-01, 2066 (daily ed. Apr.
14, 2005) (statement by Rep. Moran) (stating that certain BAPCPA provisions are
intended to "[p]revent deceptive and fraudulent advertising practices by debt relief

                                          -14-
agencies . . ."). But before we can determine whether the government's justification
for mandating the disclosures passes constitutional scrutiny, we must first decide the
appropriate standard for reviewing the constitutionality of the required disclosures.

       We find guidance for this issue from the Court in Zauderer v. Office of
Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626 (1985). In
Zauderer, the Supreme Court considered the constitutionality of a state bar
disciplinary regulation requiring attorneys that advertised contingent-fee
representation to disclose in their advertisements that clients may still have to bear
certain costs even if the case was unsuccessful. Id. at 633. As the regulation only
required an attorney to "include in his advertising purely factual and uncontroversial
information about the terms under which his services w[ould] be available," and "the
extension of First Amendment protection to commercial speech is justified principally
by the value to consumers of the information such speech provides, [the attorney's]
constitutionally protected interest in not providing any particular factual information
in his advertising is minimal." Id. at 651. The Court "recognize[d] that unjustified or
unduly burdensome disclosure requirements might offend the First Amendment by
chilling protected commercial speech," but held "that 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. (emphasis added).

       On the other hand, restrictions on non-deceptive advertising are reviewed under
intermediate scrutiny. See Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of
New York, 447 U.S. 557, 564 (1980) (ruling that restrictions on commercial speech
that is neither misleading nor related to unlawful activity must assert a "substantial
interest to be achieved by [the] restrictions" and "the restrictions must directly advance
the state interest involved"). Under this standard, the limitation must be narrowly
drawn. Id. ("[I]f the governmental interest could be served as well by a more limited
restriction on commercial speech, the excessive restrictions cannot survive").

                                          -15-
       The district court in this case reviewed § 528's disclosure requirements under
the intermediate scrutiny standard, but we conclude that rational basis review is
proper. The disclosure requirements here, like those in Zauderer, are intended to avoid
potentially deceptive advertising. See Zauderer, 471 U.S. at 651, n.14 (rejecting a
more strict analysis of the disclosure requirements at issue in that case, and noting that
"the First Amendment interests implicated by disclosure requirements are
substantially weaker than those at stake when speech is actually suppressed . . .").

       By definition, debt relief agencies provide bankruptcy assistance to assisted
persons (or prospective assisted persons) "with respect to a case or proceeding under
[the Bankruptcy Code]." 11 U.S.C. §§ 101(4A), (12A). Section 528 generally requires
debt relief agencies to disclose on its advertisements of bankruptcy assistance services
directed to the general public that their services do in fact relate to bankruptcy and that
they assist people in filing for bankruptcy. 11 U.S.C. § 528. As in Zauderer, the
plaintiffs' "constitutionally protected interest in not providing [such] factual
information in [their] advertising is minimal." 471 U.S. at 650. Further, the disclosure
requirements are reasonably and rationally related to the government's interest in
preventing the deception of consumer debtors, as the disclosure requirements are
directed precisely at the problem targeted by Congress: ensuring that persons who
advertise bankruptcy-related services to the general public make clear that their
services do in fact involve filing for bankruptcy.11

      11
         Without ruling on the issue, we note that at least one lower court has held that
§ 528's disclosure requirements are constitutionally valid even under the stricter
intermediate scrutiny analysis, as the government's interest in protecting consumer
debtors from misleading advertising is substantial, the disclosure requirements placed
on bankruptcy attorneys directly advances the government's asserted interest, and the
disclosure requirements are narrowly drawn to serve the government's interest. See
Olsen, 350 B.R. at 920 (concluding that § 528 "passes constitutional muster" under
either rational basis review or intermediate scrutiny review).

                                           -16-
       Section 528 requires debt relief agencies to disclose: "'We are a debt relief
agency. We help people file for bankruptcy relief under the Bankruptcy Code.' or a
substantially similar statement," in all of their bankruptcy-related advertising materials
directed to the general public. 11 U.S.C. §§ 528(a)(4), (b)(2). The requirement does
not prevent those attorneys meeting the definition of debt relief agencies "from
conveying information to the public; it . . . only require[s] them to provide somewhat
more information than they might otherwise be inclined to present." Zauderer, 471
U.S. at 650. Moreover, if any of these attorneys are concerned that the required
disclosures will confuse the public, we note that nothing in the Code prevents them
from identifying themselves in their advertisements as both attorneys and debt relief
agencies. Olsen, 350 B.R. at 920. Simply put, attorneys that provide bankruptcy
assistance to assisted persons are debt relief agencies under the Code, and the
disclosure requirements of § 528 only require those attorneys to disclose factually
correct statements on their advertising.12 This does not violate the First Amendment.

      12
         We recognize that the broad definitions of debt relief agency, bankruptcy
assistance, and assisted persons, might result in certain attorneys meeting the
definition of debt relief agencies even though they do not represent debtors in
bankruptcy nor help people file for bankruptcy relief under the Code. Nevertheless,
these attorneys are still subjected to the disclosure requirements of § 528(a)(4) when
they advertise "bankruptcy assistance services or . . . the benefits of bankruptcy
directed to the general public," 11 U.S.C. § 528(a)(3),(4), or when they advertise to
the general public that they "provide[] assistance with respect to credit defaults,
mortgage foreclosures, eviction proceedings, excessive debt, debt collection pressure,
or inability to pay any consumer debt." Id. at § 528(b)(2). But because § 528 permits
a "substantially similar" disclosure to the one suggested by the Code, these attorneys
can and should tailor their advertisement disclosure statements to factually represent
the "bankruptcy assistance" they provide. These tailored disclosures will meet the
requirements of § 528(a)(4) and (b)(2) as long as they are "substantially similar" to the
suggested disclosure, a decision which will require a case-by-case determination. See
Olsen, 350 B.R. at 919–20 (dismissing plaintiffs' claim that § 528 was
unconstitutional, rejecting argument that attorney who met definition of debt relief
agency but did not represent bankruptcy debtors was precluded from § 528's
disclosure requirements because § 528 permits a "substantially similar" disclosure,

                                          -17-
Id.; see also In re Robinson, 368 B.R. at 500–502 (finding that debtor's counsel was
a debt relief agency subject to the strictures of § 528, and that § 528(a)(1)'s
requirement for a written contract is constitutional); In re Norman, 2006 WL 3053309
at *4 (finding that debtor's counsel qualified as a debt relief agency and thus must
comply with the requirements of § 528(a)(1)).

      The challenged sections of § 528 only require debt relief agencies to include a
disclosure on certain advertisements. Although less intrusive means may be
conceivable to prevent deceptive advertising, § 528's disclosure requirements are
reasonably related to the government's interest in protecting consumer debtors from
deceptive advertising, and thus the section passes constitutional muster.

                                  III. Conclusion
       In sum, attorneys who provide bankruptcy assistance to assisted persons are
debt relief agencies under the Bankruptcy Code, and § 526(a)(4) is unconstitutional
as applied to these attorneys, but §§ 528(a)(4) and (b)(2) are constitutional.
Accordingly, we affirm in part and reverse in part.

COLLOTON, Circuit Judge, concurring in part and dissenting in part.

       I concur in all but Part II.B of the opinion of the court. I disagree, however,
with the court’s holding that 11 U.S.C. § 526(a)(4) is unconstitutionally overbroad in
violation of the First Amendment, and I would therefore reverse the district court’s
decision declaring this statutory provision unconstitutional.

which could be tailored to disclose that attorney advised clients about bankruptcy
assistance matters but did not represent people in bankruptcy or file bankruptcy
petitions, and stating that whether disclosure was "substantially similar" would require
case-by-case determination).

                                         -18-
       Milavetz, Gallop, & Milavetz, P.A., mounts a facial attack on § 526(a)(4),
arguing that the section’s potential application to attorneys in hypothetical situations
requires that the statute be declared impermissibly overbroad and unconstitutional.
This case involves a facial challenge in the First Amendment context, “under which
a law may be overturned as impermissibly overbroad because a substantial number of
its applications are unconstitutional, judged in relation to the statute’s plainly
legitimate sweep.” Wash. State Grange v. Wash. State Republican Party, 128 S. Ct.
1184, 1190 n.6 (2008). This “overbreadth doctrine,” however, is “strong medicine
that is used sparingly and only as a last resort.” New York State Club Ass’n, Inc. v.
City of New York, 487 U.S. 1, 14 (1988) (internal quotations omitted). It should be
applied only when there is “a realistic danger that the statute itself will significantly
compromise recognized First Amendment protections of parties not before the Court.”
 City Council of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789, 801 (1984). The
Supreme Court recently emphasized that it has “vigorously enforced the requirement
that a statute’s overbreadth be substantial, not only in an absolute sense, but also
relative to the statute’s plainly legitimate sweep.” United States v. Williams, 128 S.
Ct. 1830, 1838 (2008).13

      13
         The district court purported to consider only an “as-applied” challenge to
§ 526(a)(4), rather than an overbreadth challenge, and ultimately declared the section
“unconstitutional as applied to attorneys.” Milavetz, Gallop & Milavetz, P.A. v.
United States, 355 B.R. 758, 766 n.4, 769 (D. Minn. 2006). The majority correctly
recognizes that the district court’s approach is really an overbreadth analysis, and
considers the statute under that framework. See ante, at 9 & n.7, 11, 13 & n.10. The
“as applied” method of analysis, by contrast, considers the statute’s application to a
“particular claimant” based on “harm caused to the litigating party.” Turchick v.
United States, 561 F.2d 719, 721 n.3 (8th Cir. 1977). “The ‘as applied’ method
vindicates a claimant whose conduct is within the First Amendment but invalidates
the challenged statute only to the extent of the impermissible application.” Id.
(emphasis added). The district court and the majority have declared § 526(a)(4)
unconstitutional in all of its applications to all attorneys, and the supporting reasoning
is thus consistent with “facial overbreadth analysis.” Id. (punctuation omitted).

                                          -19-
       To resolve the constitutional challenge brought by Milavetz, we must first
construe the disputed statute. When presented with a constitutional challenge to an
Act of Congress, we have not only the power, but the duty, to adopt a narrowing
construction that will avoid constitutional difficulties whenever possible. Boos v.
Barry, 485 U.S. 312, 330-31 (1988). In Boos, for example, the Court considered a
provision of federal legislation that made it unlawful “to congregate within 500 feet
of any [embassy, legation, or consulate] and refuse to disperse after having been
ordered so to do by the police.” Id. at 329 (internal quotation omitted). The Court
observed that “[s]tanding alone, this text is problematic because it applies to
any congregation within 500 feet of an embassy for any reason.” Id. at 330 (first
emphasis added). Nonetheless, citing the “duty to avoid constitutional difficulties by
[adopting a narrowing construction] if such a construction is fairly possible,” the
Court construed the statute narrowly to permit the dispersal of only congregations that
are directed at an embassy, and to allow dispersal “only when the police reasonably
believe that a threat to the security or peace of the embassy is present.” Id. at 330-31
(internal quotation omitted). Similarly, in United States v. X-Citement Video, Inc.,
513 U.S. 64 (1994), the Court emphasized that “it is incumbent upon” a federal court
to read a statute to eliminate constitutional doubts, “so long as such a reading is not
plainly contrary to the intent of Congress.” Id. at 78.

        The challenged provision in this case provides in part that “[a] debt relief
agency shall not . . . advise an assisted person or prospective assisted person to incur
more debt in contemplation of such person filing a case under this title.” 11 U.S.C.
§ 526(a)(4). Milavetz argues that according to this provision, a debt relief agency may
not advise a client to incur any debt for any purpose when the client is contemplating
the filing of a petition for bankruptcy. As such, Milavetz contends that an attorney
could be sanctioned for “fulfilling his duty to his client to give legal and appropriate
advice not otherwise prohibited by the Bankruptcy Code.” (Brief of Appellee 30).
Even under Milavetz’s broad construction of the statute, a facial challenge resting on
a “few hypothetical situations,” ante, at 12, is unlikely to justify invalidating a statute

                                           -20-
in all of its applications, because “the mere fact that one can conceive of some
impermissible applications of a statute is not sufficient to render it susceptible to an
overbreadth challenge.” Vincent, 466 U.S. at 800.

       It is unnecessary to resolve whether § 526(a)(4) is impermissibly overbroad
when given its broadest reading, however, because the government suggests an
acceptable narrowing construction of the statute that would avoid most constitutional
difficulties. The government contends that “in contemplation of” filing for
bankruptcy is a term of art that denotes an action taken with the intent to abuse the
protections of bankruptcy laws. Under this view, the statute should be construed to
prohibit only advice that a client engage in conduct for the purpose of manipulating
the bankruptcy system.

       The text, structure, and legislative history of § 526(a)(4) provide adequate
support for a narrowing construction. Particularly given the latitude of federal courts
to narrow a text to avoid constitutional difficulties, see Boos, 485 U.S. at 330-31, the
words “in contemplation of . . . filing a case” need not create impermissible
overbreadth. Rather, we may recognize that the phrase “in contemplation of” has been
construed in the bankruptcy context to mean actions taken with the intent to abuse the
protections of the bankruptcy system. Black’s Law Dictionary reflects this
understanding, defining “contemplation of bankruptcy” as “the thought of declaring
bankruptcy because of the inability to continue current financial operations, often
coupled with action designed to thwart the distribution of assets in a bankruptcy
proceeding.” Black’s Law Dictionary 336 (8th ed. 2004) (emphasis added).
American and English authorities construing the bankruptcy laws also support the
proposition that the words “in contemplation of” may be understood to require an
intent to abuse the bankruptcy laws. In re Pearce, 19 F. Cas. 50, 53 (D. Vt. 1843)
(No. 10873) (concluding that an act was done “in contemplation of bankruptcy” if it
was done “in anticipation of breaking or failing in his business, of committing an act
of bankruptcy, or of being declared bankrupt at his own instance, on the ground of

                                         -21-
inability to pay his debts, and intending to defeat the general distribution of effects,
which takes place under a proceeding in bankruptcy.”) (emphasis added); Morgan v.
Brundrett, 5 Barn. & Ad. 289, 296, 110 Eng. Rep. 798, 801 (K.B. 1833) (Parke, J.)
(interpreting “in contemplation of bankruptcy” to mean that “the payment or delivery
must be with intent to defeat the general distribution of effects which takes place
under a commission of bankruptcy.”); Fidgeon v. Sharpe, 5 Taunt. 539, 545-46, 128
Eng. Rep. 800, 802-03 (C.P. 1814) (Gibbs, C.J.) (An act made in contemplation of
bankruptcy “must be intended in fraud of the bankrupt laws.”); cf. Buckingham v.
McLean, 54 U.S. 151, 167 (1851) (“To give to these words, contemplation of
bankruptcy, a broad scope, and somewhat loose meaning, would not be in furtherance
of the general purpose with which they were introduced.”); id. at 169 (relying on
English bankruptcy decisions as instructive authority on meaning of the former
Bankrupt Act). Our duty to construe the statute to avoid constitutional difficulties
counsels that we should look to these authorities for a plausible alternative to the
broad construction urged by Milavetz.

       The structure of § 526(a)(4) also supports a narrowing construction. The
prohibitions of this statute can be enforced only through the civil remedies provided
in § 526(c). An attorney who violates § 526(a)(4) can be sanctioned in just three
situations: if a debtor sues the attorney for the available remedies – remittal of fees,
actual damages, and reasonable attorney’s fees and costs; if a state attorney general
sues for a resident’s actual damages; or if a court finds that the attorney intentionally
violated § 526(a)(4), and chooses to “impose an appropriate civil penalty.” 11 U.S.C.
§ 526(c). The remedies for a violation thus emphasize actual damages. But legal and
appropriate advice that would be protected by the First Amendment, yet prohibited by
a broad reading of § 526(a)(4), should cause no damage at all. If an attorney advises
a debtor to refinance his home to lower mortgage payments, or to purchase a reliable
car to enable him to pay off his debts, see ante, at 11-12, then a debtor following that
advice would suffer no damage. There is no reason to believe that a client could
recover the remittal of attorney’s fees or that a court would find a civil penalty

                                          -22-
“appropriate” as a remedy for legal advice that benefits both the debtor and his
creditors. Rather, a debtor is likely to have a remedy against an attorney only in the
case of an abusive bankruptcy petition, where the debtor may suffer damages if the
petition is dismissed as abusive, see 11 U.S.C. § 707(b)(1), and where an attorney
general or a court has reason to seek or impose sanctions against an abusive debt relief
agency. The remedial focus of § 526 thus bolsters the proposition that § 526(a)(4)
was aimed only at advice given by a debt relief agency that is designed to abuse the
bankruptcy process.

       The incorporation of an abusive purpose requirement into § 526(a)(4) is also
consonant with the evident purpose of the statute. The government argues, and
Milavetz acknowledges, that a principal goal of Congress in passing the statute was
to “preclude debtors from taking on more debt knowing that it will later be discharged
during bankruptcy.” (Brief of Appellee 34). A narrowing construction of § 526(a)(4)
is in accord with expressions of desire in the legislative history to address
“misconduct by attorneys and other professionals,” and “abusive practices by
consumer debtors who, for example, knowingly load up with credit card purchases or
recklessly obtain cash advances and then file for bankruptcy relief.” H.R. Rep. No.
109-31, pt.1, at 5, 15 (2005) (internal quotation omitted), as reprinted in 2005
U.S.C.C.A.N. 88, 92, 101. Milavetz itself argues that a broad construction of
§ 526(a)(4) “goes beyond” this congressional purpose, and is “absurd,” because it
would prevent an attorney from advising a client to take actions that might avoid the
need for filing bankruptcy altogether. (Brief of Appellee 34). Given our duty to
construe an Act of Congress in a manner that eliminates constitutional doubts, there
is no need to adopt a construction that one party says is absurd, that the other party
says was unintended by Congress, and that sweeps in salutary legal activity that would
be a strange target for a statute entitled the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005.

                                         -23-
     For these reasons, I would reverse the district court’s decision declaring
unconstitutional the provision codified at 11 U.S.C. § 526(a)(4).
                       ______________________________

                                     -24-