Starting from the case of Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272 (1855), this article looks at the roots of the recent decision in Stern v. Marshall, 131 S. Ct. 2594 (2011). In Murray’s Lessee, the U.S. government obtained a lien against property purchased by a Customs Collector with funds embezzled from his position. This lien was obtained by statute through the solicitor of the Treasury, in what would likely now be considered a Article I court. A later lien-holder challenged this lien, but the Supreme Court upheld it as the Custom Collector was a "public debtor". It nonetheless cautioned that "a private individual could not acquire the property of another without a court’s blessing." The paper draws the conclusion that "Murray’s Lessee reinforces the idea that those who wield the federal judicial power are in the first instance those who must mediate the use fo force that one private individual brings to bear against another."
The paper continues through the 19th century, examining the decision making authority of administrative agencies, such as the Interstate Commerce Commission, finding that "[i]f a matter fell outside the scope of a traditional common law writ, but was within the scope of Congress’s enumerated powers in Article I, Congress was not required to entrust the matter in the first instance to an Article III judge." This includes putting factual determinations solely within the province of the administrative agency.
Bankruptcy, however, did not take the path of being handled by an administrative agency, instead being entrusted to "inferior officers" to whom the Article III judges delegated their work, reserving review of such work. Because all of bankruptcy remains within the court system (opposed to a non-judicial agency) all matters can be delegated, with the question remaining of what type of oversight is necessary.
Moving past this review, the paper opines that the decision in Stern may cause difficulties on the ground. (This is the "blue collar" or working aspect of the title.)
First, in regard to proposed findings of fact and conclusions of law, parties under Rule 9033(b) only have fourteen days to file an objection, contrasted with the longer periods for bringing an appeal.
Further, complicating matters on the ground is that §157(b)(1) provides that bankruptcy judges can enter final orders and judgments, subject only to appellate review, on "core" matters. § 157(b)(2) then lists those "core" matters, including counterclaims such as was at issue in Stern. Regarding "non-core" issues, however, § 157(c)(1) requires that bankruptcy judges only submit proposed findings of fact and conclusions of law. By holding that Congress acted impermissibly by allowing final judgments on counterclaims, Stern does not decide, however, whether such counterclaims automatically become "non-core". Absent Congressional action, bankruptcy judges might lack the authority to either enter final judgment or even make proposed findings of fact and conclusions of law regarding counterclaims.
Such arguments notwithstanding, the paper argues that while Supreme Court Justices must reconcile multiple strands of Article III jurisprudence, bankruptcy judges have the opportunity and obligation to apply a more pragmatic approach that recognizes that "[m]ost bankruptcy matters are settled through bargaining that takes place in the shadow of the law." This, concludes the paper, is exactly how bankruptcy courts have interpreted and applied Stern, viz. By determining that they remain able to hear all matters within the district court’s bankruptcy jurisdiction, regardless of whether their authority allows entry of a final judgment or is limited to making findings of fact and conclusions of law.
This article was orginally published in the American Bankruptcy Law Journal and is available, for purchase, at: