A prominent lawyers group is defending the right of bankruptcy judges to have the final say in their courtrooms, a right upon which a 2011 Supreme Court ruling has cast doubt.
The American Bar Association, whose 400,000 members include many of the country’s lawyers and judges, has filed a friend-of-the-court brief urging the Supreme Court to narrowly interpret its prior ruling by confirming bankruptcy courts’ broad ability to enter final orders and judgments.
The high court shook up the bankruptcy world in 2011, when its ruling (in an inheritance battle involving the late Anna Nicole Smith) called into question the ability of bankruptcy judges to hear, let alone rule, on certain bankruptcy matters, including lawsuits. While bankruptcy courts are part of the federal court system, bankruptcy judges aren’t so-called Article III judges, who are confirmed by Congress and don’t face term limits. Instead, they’re appointed by circuit courts and serve 14-year terms.
The effect of the ruling in Stern v. Marshall has been to prolong litigation, as plaintiffs and defendants battle over whether a bankruptcy or district judge should hear their case.
As those litigation battles have played out, courts have split as to whether Stern v. Marshall broadly limited bankruptcy courts’ powers. The extent of those powers is at issue in a new case before the Supreme Court, prompting the ABA’s brief.