Wellness – What a Great Read!

I finally got around to writing my brief on the Wellness case.  I already forgot what a great read it is, especially if you like fundamental constitutional law which usually means you like American history.

The Wellness opinion thankfully seems to resolve the issue of what to do when the bankruptcy court’s authority seems to be infringing on the “constitutional birthright” of the Article III courts as Justice Roberts likes to say.  For sure now, a Stern matter,  that is a a matter that Congress designated as core but is possibly unconstitutionally core, may be decided on a final basis by a bankruptcy court if the parties consent.  And consent does not have to be express, only “knowing and voluntary.”

Justice Sotomayor has some good lines.

“[I]t is no exaggeration to say that without the distinguished service of these judicial colleagues [bankruptcy judges and magistrate judges], the work of the federal court system would grind nearly to a halt.”

“Congress may make available a quasi-judicial mechanism through which willing parties may, at their option, elect to resolve their differences.” “The option for parties to submit their disputes to a non Article III adjudicator [is] at most a “de minimis” infringement on the prerogative of the federal courts.”

 “[B]ankruptcy courts possess no free-floating authority to decide claims traditionally heard by Article III courts.  Their ability to resolve such matters is limited to ‘a narrow class of common law claims as an incident to the [bankruptcy courts’] primary, and unchallenged, adjudicative function.’  ‘In such circumstances, the magnitude of any intrusion on the Judicial Branch can only be termed de minimis.’  Finally, there is no indication that Congress gave bankruptcy courts the ability to decide Stern claims in an effort to aggrandize itself or humble the Judiciary.”

“To hear the principal dissent tell it, the world will end not in fire, or ice, but in a bankruptcy court.”

I frankly expected the court to say in Wellness that determining what the debtor owns is so fundamental to bankruptcy that it is core and end the matter there, for now at least.  Dissenters Roberts and Thomas both started there.

Roberts says,

“English bankruptcy commissioners had authority not only to collect property in the debtor’s possession, but also to ’cause any house or tenement of the bankrupt to be broken open,’ in order to uncover and seize property the debtor had concealed. 2 W. Blackstone, Commentaries *485.”

After all, the claims “quantification process” is by definition governed by non-bankruptcy law, and always the proper subject for Article III courts or state courts.  It is a “primary, and unchallenged, adjudicative function” of the bankruptcy court.  Creditors must file a proof of claim in bankruptcy and the final resolution of the claim is left to the bankruptcy court, often on a largely summary basis.  The argument for letting it work this way is that there would never be a gathering up of the debtor’s assets and distributing those to creditors if all creditors’ claims had to go through the litigation process outside of bankruptcy court first.  In other words, it is a pragmatic decision in my opinion.

The dissents of Roberts and Thomas are aimed at the fear of letting the camel get his head under the tent.  Who knows where it will go next?

In his dissent, Justice Roberts says,

“the serious constitutional question [is] whether private parties may consent to an Article III violation.  In my view, they cannot.  By reserving the judicial power to judges with life tenure and salary protection, Article III constitutes ‘an inseparable element of the constitutional system of checks and balances’—a structural safeguard that must ‘be jealously guarded.’”

He adds, at length,

“The encroachment [on exclusivity of the Article III court’s powers] at issue here may seem benign enough.  Bankruptcy judges are devoted professionals who strive to be fair to all sides, and litigants can be trusted to protect their own interests when deciding whether to consent.  But the fact remains that Congress controls the salary and tenure of bankruptcy judges, and the Legislature’s present solicitude provides no guarantee of its future restraint.”

“Ultimately, … the structural protections of Article III are only as strong as this Court’s will to enforce them.”

In his dissent, Thomas agreed that alter ego here may be core and the decision should be limited to that.  He added,

“I agree with THE CHIEF JUSTICE that individuals cannot consent to violations of the Constitution, but this principle has nothing to do with whose interest the violated provision protects.  Anytime the Federal Government acts in a manner inconsistent with the separation of powers, it acts in excess of its constitutional authority.  That authority is carefully defined by the Constitution, and, except through Article V’s amendment process, that document does not permit individuals to bestow additional power upon the Government.”

Thomas went to great length thereafter to explain his differences with the majority opinion.

I’m going to print out the opinion so I can read it more casually.  Since there don’t seem to be newspapers anymore, I am always looking for something to read at lunch.

Leave a Reply


− 4 = three