Does President Obama need to nominate 339 (or so) bankruptcy judges?

Tuan Samahon's new article, Are Bankruptcy Judges Unconstitutional?, 60 Hastings L. Journal 233 (2008), offers a fresh twist on the constitutionality of the bankruptcy judiciary. He sidesteps the Northern Pipeline v. Marathon debate about whether bankruptcy judges can or should be shielded by Article III tenure. Instead, he maps out an Article II challenge to the current appointment process for bankruptcy judges. Today, candidates apply for vacant bankruptcy judges positions, are reviewed by a merit selection panel and then are chosen by the U.S. Courts of Appeals. Prof. Samahon argues that modern bankruptcy judgeships have qualities such as safeguards against removal, expansive jurisdiction, and hefty duties that are incompatible, or at least colorably incompatible, with inferior officer status. While the "Excepting Clause" of the Appointments Clause in Article II permits "inferior officers" to be appointed by the courts, if bankruptcy judges are in fact "principal officers" of the United States, the Constitution would require the President to nominate and the Senate to confirm bankruptcy judges.

Prof. Samahon analyzes the tension between Morrison v. Olson and Edmond v. United States, suggesting that an appointments clause challenge to bankruptcy courts could come out either way. If Morrison is overruled, then existing bankruptcy judgs should be safe. However, if Morrison is good law and an appointment challenge succeeds, we would have 339 new positions to fill. And the fix used post-Marathon, vesting appointment in circuits courts won't work, leaving the Senate and its staffers with a big task and lots of bankruptcy professionals with new opportunities.

The article has an interesting twist for judicial egos. Surely most judges would like to retain their positions and not have to endure a Presidential appointment and Senate confirmation process. Yet, it's an odd world where judges clamor to establish their "inferiority," especially after years of the bankruptcy judiciary working to establish its reputation as a highly-qualified and effective judiciary.

Comments

[Patches]

So if the Senate has to appoint BK judges, you think that will tweak us having to appeal to the local Art. III judge before going to the Cir. Appeals? I know we have that deal where some issues go straight to Cir. Appeals, but do you think their powers to hold someone or some entity in "Criminal Contempt" will appear?

[Tuan]

Patches,

To clarify -- the Senate doesn't get to appoint, just confirm.

I'm not sure I exactly understand your question, but let me take a stab. My position is not that every decision has to be subject to an Article III district court judge. The BK judges have to be "inferior" to the Circuit Courts in the sense of being subordinate, i.e. supervised and directed at some level by them. But ordinary appellate review with the power to discipline and remove bankruptcy judges might do the trick (i.e. not much would have to change under this conception of "subordinate"). A BK judge can simultaneously be very powerful -- e.g. wielding criminal contempt powers -- AND still be "lesser" in the sense of being subordinate to, or supervised by Article III judges.

[Adam Levitin]

So when are we going to start seeing litigation challenging bankruptcy court jurisdiction under Morrison? And does the district court's ability to withdraw the reference change anything?

[Tuan]

Adam,

I've received expressions of interest re: an Article II challenge, but I suspect it will take a non-repeat player (read: non-bankruptcy lawyer) to be the one to challenge. It may just be a question of will. Perhaps someone in bankruptcy involuntarily? If you want to pair me with a good bankruptcy practitioner, I'd be happy to advise.

One possible dodge is that if someone raises the issue, the bankruptcy court could say, "fine, go to the district court, which has an officer who indisputably has authority." Or the district court might withdraw the reference. But appointments clause challenges don't need to be brought at the trial court level to preserve the issue. In Freytag v. Commissioner (1991), the Court determined that it could entertain an appointments clause challenge raised for the first time on appeal. And the issue might eventually be presented often enough that the bankruptcy courts would have to address it.

[Patches]

Ya, after reading through half of you paper, I realized my question was sorely lacking in specificity but awesome try with my kooky question.

I guess my thinking is that things would be so much easier and we could hammer out some of massive amounts of quirks with 05 law if we could just get to the cir. court of appeals without having to go through the local Art III. That said, just saw a CLE with boss where Judge Boham mentioned that under his powers under 105 he can sua sponte order an ex-spouse in civil contempt and jailed for spousal support or I guess looting the estates assets. Most if not all of the time that stuff is removed to the family law court via Relief from Stay but he did mention that it was in the cards. Granted it was a hypothetical but doesn't he have to go through an Art. III for that? (a bit off sub. I know)

We all know Judges make mistakes but most of the time the rulings are affirmed by the Art. IIIs anyway. It's that extra step that makes things so slow in BK.
I commented on Bobs AACER review and wondered if the reason why we have not been able to reach the pre-05 filing levels is because we are unable to process as many because of the changes. If we were able to appeal straight to the Cir. of Appeals we would be able to grow into the law faster. Notwithstanding the run in 05 which probably took some bks off the market so to speak.

If you do get a case on subject I hope (for the sake of my sanity) that we won't have to reappoint all new judges. I know more likely than not we would have another one of those transition periods (we saw how that worked out in the past, great info in that paper BTW)and let the current judges finish their appointments.

[lmclark]

I agree that the Article II question has potential as a challenge to the legitimacy of the appointment process of the officers who preside over bankruptcy cases -- but it also presents an interesting opportunity. Perhaps Morrison needs to be revisited, because it impermissibly superimposed a 20th century pejorative onto an 18th century term that did not necessarily connote that pejorative.

If "inferior" really means simpy "below" without the pejorative, then a reasonable reading of Art II is that Congress could assign to "the courts" the duty of appointing bankruptcy judges as Art III "inferior officers" -- meaning of course that the entire edifice of "units of the district court" could be dismantled, solving a myriad of judicial power issues that plague the bankruptcy system.

That is where I would like to see this discussion go (though I recognize the danger as well -- the implication of such an approach is that the appointments mechanism proposed for bankruptcy judges could equally apply to other judicial officers below the Supreme Court. That Congress may do such a thing, however, certainly does not mean that Congress must do such a thing. I would hope that Congress (especially the Senate) would prefer to leave its current appointments process for district and circuit judges undisturbed.

[Patches]

I remember the heck we got on this one case about 5-6 years ago a TV Station. There was a Federal District Court action taken in New York against one of our debtors down here. The crux of me mentioning it is that we had this power struggle on Jurisdiction. This Texas Bankruptcy Judge of course had Jurisdiction of the assets but the adverse party did not stop the action in Federal District Court in New York. Violation of Stay right? You have an Art III execution on escrow funds as well as the jurisdiction over the companies assets by the BK Judge down here. Whose competing order do you go by? An Art III or Bankruptcy Judge? Of course the Automatic Stay is a statutory Injunction and not an "order" but you get the picture. If there was an Order for Turnover signed how could you execute it against funds held in the Courts Registry in New York, held by Order up there? Well, after some major wrangling and an appearance in New York we finally got the escrow funds from the courts registry in New York to be placed into the courts registry down here.

I think things would have gone much smoother if our BK Judge was considered to have Art. III inferior officer status in that instance. It would have been much easier to just file a Suggestion of Bankruptcy in the Federal District Court up there and just be done with it.

[Tuan]

lmclark:

I agree with your assessment. Morrison was incorrect on this point, and its overruling on this point -- with Edmond's analysis as superseding -- opens up interesting policy alternatives, including as you suggest the theoretical possibility that bankruptcy judges could be given Article III tenure without the necessity of going through nomination and Senate advice and consent (see implications section of paper).

[Bankruptcy Judge]

Happy to deemed "inferior" if it means I can put my kids through college.