Third Court Finds Portions of BAPCPA Unconstitutional
The U.S. District Court for the District of Connecticut joined two earlier courts in declaring that the provisions of 11 U.S.C. section 526(a)(4) limiting the attorneys ability to advise bankruptcy clients or prospective clients to take on additional debt unconstitutional.
The Trustee moved for dismissal, hoping that the Court would follow the Eastern District of Pennsylvania in determining that in the absence of a threat to enforce the provisions against the plaintiff, there was no "injury in fact" and thus, no standing. However, the Connecticut Court held that the chilling effect on the attorney's speech was sufficient to constitute an injury in fact.
The Court went on to hold that the provisions of 536(a)(4) were facially unconstitutional. Because the Court determined that the provisions were unconstitutional under either strict scrutiny or the more lenient Gentile test, the more lenient standard was applied. The Court determined that the provision is overbroad and "restricts attorney speech beyond what is 'narrow and necessary' to further the governmental interest. This decision, like the two similar previous decisions in Oregon and Texas, relied heavily on the determination that the provision, as written, prohibited attorneys from advising their clients to take certain actions that were perfectly legal and potentially prudent.
Prior Rulings on the Constitutionality of BAPCPA:
Hersh v. United States (N.D. Tex. 2006)
Olsen v. Gonzales (D. Or. 2006)
Geisenberger v. Gonzales (D. Pa. 2006)
