Ferguson v. Skrupa DBA Credit Advisors

Skrupa, a citizen of the state of Kansas, was in business as a "debt adjuster" making payments to a client's creditors for a monthly fee. Concerned that this activity would lend itself "to grave abuses against distressed debtors, particularly in the lower income brackets," the state passed a law restricting the practice of debt adjustment to lawyers only. Skrupa filed a suit challenging this regulation. He claimed that his business was a "useful and desirable" one, that his activities were not "inherently immoral or dangerous," and that therefore the business could not be "absolutely prohibited" by the state.

Skrupa scored a victory in district court. A three-judge panel heard all the evidence and ruled that, while Skrupa's business did fall within the scope of the law, the act constituted an unreasonable regulation of a lawful business, in violation of the Due Process Clause of the Fourteenth Amendment. The court ordered Kansas to cease enforcing the statute. The state then appealed this decision to the U.S. Supreme Court.