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Friday, October 09, 2009

Courts - 2005 Bankruptcy law requirement to go before SCOTUS

It is the challenge to the "we are a debt relief agency" requirement of the 2005 revisions, familiar to bankruptcy practitioners, that has reached the SCOTUS.

Thomas B. Scheffey writes in The Connecticut Law Tribune. Some quotes from the long report:

Robert Milavetz, the founder of an 11-lawyer bankruptcy firm in the suburbs of Minneapolis, wasn't pleased when Congress started telling bankruptcy lawyers what they could and could not say to clients.

Specifically, he -- along with attorneys from Connecticut and elsewhere -- didn't like a 2005 law that seemed to forbid lawyers from advising bankruptcy clients to incur any more debt. Another part of the new law apparently required bankruptcy lawyers to include in their advertisements that "we are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code."

Milavetz made a federal case of it, seeking declaratory relief in a Minnesota federal court.

The U.S. government argued that Congress' orders were not a violation of the First Amendment right to free speech, or commercial free speech law.

The 8th U.S. Circuit Court of Appeals rendered a split decision, holding that the directive to not advise taking on debt was unconstitutional, but that the advertising requirement had a rational basis in a legitimate governmental purpose.

Both the government and Milavetz wanted to go to the U.S. Supreme Court and appeal the parts they lost. To handle the petition for certiorari, Milavetz sought out bankruptcy scholar D. Eric Brunstad, a partner in the Hartford, Conn., office of Dechert and a veteran of more than 40 U.S. Supreme Court cases, including 10 oral arguments.

Both the Justice Department and Brunstad beat steep odds and won their petitions for certiorari, and the combined cases have a total of six issues. Arguments are set for December.

Posted by Marcia Oddi on October 9, 2009 03:09 PM
Posted to Courts in general