Ferguson v. Skrupa
The Supreme Court upheld a Kansas law banning the business of "debt adjusting" for anyone except lawyers, reversing a lower court that had struck the law down as unwise regulation of a legitimate business.
The ruling firmly rejected the idea that judges may second-guess a legislature's economic judgments under the Due Process Clause, marking a sharp break from an earlier era when courts struck down economic laws they personally found unwise.
“Under the system of government created by our Constitution, it is up to legislatures, not courts, to decide on the wisdom and utility of legislation.”
The Court's core statement that judges should not second-guess legislative economic policy choices.
How it got here: A three-judge federal district court sided with the debt adjuster and enjoined the Kansas law as unconstitutional; Kansas officials appealed directly to the Supreme Court.
The Case in Depth
What happened
A Kansas man running "Credit Advisors," a debt-adjusting business that collected payments from indebted people and distributed them to creditors, was barred by a new Kansas law that made debt adjusting illegal unless done by a lawyer. He sued, arguing his business was useful, not harmful, and that Kansas could not simply outlaw it.
The question before the Court
Could Kansas ban the business of "debt adjusting" for anyone but lawyers, even though a lower court thought the business was useful and harmless?
Why it matters
The decision means state legislatures, not judges, get to decide whether to ban or regulate businesses like debt adjusting, even if a business seems useful to some. It also signals that courts nationwide should stop using the Due Process Clause to strike down ordinary economic and business regulations simply because judges think them unwise.
What changes now
This is a final merits decision. The Kansas law banning non-lawyer debt adjusting is reinstated, and the injunction against it is dissolved. The ruling also served as a broader signal to lower courts to stop scrutinizing ordinary economic regulations under the Due Process Clause, since the Court explicitly disavowed that approach going forward.
What this does not decide
The Court did not decide whether debt adjusting is actually harmful or beneficial, nor whether Kansas's law is good policy. It decided only that such policy judgments belong to the legislature, not the courts, under the Due Process Clause.
Concurrences and dissents
Concurrence — Justice Harlan
Justice Harlan agreed the Kansas law should be upheld but on narrower grounds: he would ask only whether the law bears a rational relationship to a constitutionally permissible objective, citing Williamson v. Lee Optical Co., rather than join the majority's broader discussion rejecting judicial scrutiny of economic wisdom.
How the Court got there
The legal reasoning, step by step
- The Court rejected the lower court's approach of asking whether debt adjusting was a "legitimate" or "useful" business, holding that judges have no constitutional authority to weigh the wisdom or social value of a business when reviewing economic legislation.
- The Court traced how, decades earlier, it had used the Due Process Clause to strike down economic laws it viewed as unwise -- such as maximum-hour laws, minimum-wage laws, and bread-weight rules -- but explained that this approach had "long since been discarded" in favor of deferring to legislatures on economic policy.
- Applying this deferential approach, the Court held that so long as a state law does not violate a specific constitutional guarantee, courts must let the legislature's economic judgment stand, even if the law might be unwise or could be debated as good or bad policy.
- Because Kansas could rationally decide that debt adjusting invited abuse of financially distressed people, the ban on non-lawyers doing this work was a permissible legislative choice, not a due process violation.
- On the separate equal protection challenge to exempting lawyers from the ban, the Court held that the classification was not "invidious discrimination" because debt adjusting involves legal judgments -- such as sorting creditor claims and navigating bankruptcy law -- that only lawyers may give advice on.
Doctrinal impact
Cases affected by this decision
Abrogates Adams v. Tanner (244 U. S. 590)
The Court said reliance on this 1917 ruling banning useful-business prohibitions was mistaken and its philosophy had been abandoned.
Overrules Adkins v. Children's Hospital (261 U. S. 525)
The Court noted this minimum-wage ruling had already been overruled by West Coast Hotel Co. v. Parrish.
Limits Lochner v. New York (198 U. S. 45)
Cited as an example of a discarded doctrine letting courts strike down economic laws as unwise.