A. Pure Constitutional Issues
1. Article III Issues Concerning the Bankruptcy Courts
Perhapsthemostobvious(andmostfrequentlynotedanddiscussed) consti-tutionalquestionflowingfromthecurrentsystemofbankruptcyadministrationis theconstitutionalityofthebankruptcycourts. Specifically,theissueinvolvesArticle IIIquestionsconcerningwhattypesofmattersnon–ArticleIIIbankruptcycourts candecide.198 CentraltothedebateistheSupremeCourt’sfracturedopinionin NorthernPipelineConstructionCo.v.MarathonPipeLineCo.,199inwhichtheCourt
“consideredwhetherbankruptcyjudgesservingundertheBankruptcyReformAct of1978—appointedbythePresidentandconfirmedbytheSenate,butlackingthe tenureandsalaryguaranteesofArticleIII—could‘constitutionallybevestedwith jurisdictiontodecide[a]state-lawcontractclaim’againstanentitythatwasnot otherwisepartofthebankruptcyproceedings.”200 TheCourtultimately conclud-edthattheassignmentofsuchclaimstobankruptcyjudgesviolatedArticleIII.201
Inreachingthisconclusion,thepluralityopinionwrittenbyJusticeBrennan ac-knowledgedthattheCourthadupheldtheconstitutionalityof“legislativecourts and administrative agencies createdby Congress to adjudicate cases involving
‘publicrights.’”202 JusticeBrennanconcludedthattherightsatissueinthecase, however,werenotpublicrights. Althoughhedeclinedtogiveaprecisedefinition ofpublicrights,henotedthat“publicrightsmust,ataminimum,arise‘betweenthe governmentandothers.’”203 Withrespecttobankruptcy,theCourtnoted (with-outdecidingthematter)thatthe“restructuringofdebtor–creditorrelations,which isatthecoreofthefederalbankruptcypower,mustbedistinguishedfromthe
adju-197. 131S.Ct.2594(2011);seealsoTroyA.McKenzie,GettingtotheCoreofSternv.Marshall:History, Expertise,andtheSeparationofPowers,86AM.BANKR.L.J.23,44–45(2012)(“TheteachingofStern, apparently,isthatthefederaljudiciaryfacesmoredangerofencroachmentbythepoliticalbranches whenthenon–ArticleIIIadjudicatorisabankruptcycourtthanwhenitisanadministrativeagency.”).
198. Seegenerally,e.g.,DouglasG.Baird,BlueCollarConstitutionalLaw,86AM.BANKR.L.J.3,4–5 (2012)(discussingtheimpactofSternv.Marshallonbankruptcyjurisdiction);RalphBrubaker,A
“Summary”StatutoryandConstitutionalTheoryofBankruptcyJudges’CoreJurisdictionAfterSternv.
Marshall,86AM.BANKR.L.J.121(2012)(same);McKenzie,supranote197(same).
199. 458U.S.50(1982).
200. Stern,131S.Ct.at2609–10(quotingN.Pipeline,458U.S.at87n.40(pluralityopinion)).
201. N.Pipeline,458U.S.at87(pluralityopinion).
202. Id.at67.
203. Id.at69(quotingExparteBakeliteCorp.,279U.S.438,451(1929)).
dicationofstate-createdprivaterights,suchastherighttorecovercontract damag-es;”andthatwhile“[t]heformermaywellbea‘publicright,’...thelatterobviously isnot.”204
CongressrespondedtoNorthernPipelinebyrestructuringthebankruptcy courtsin1984. TheBankruptcyAmendmentsandFederalJudgeshipActof1984 (BAFJA)205providedthatthejudgesofthereconstitutedbankruptcycourtswould beappointedbytheU.S.CourtsofAppealsandwouldonlyhavetheauthorityto enterfinaljudgmentsincoreproceedings,206subjecttonormalappellatereview under“theusuallimitedappellatestandards.”207 Incontrast,foranon-core pro-ceedingotherwiserelatedtoacaseundertheBankruptcyCode,thebankruptcy judgewouldonlysubmitfindingsoffactandconclusionsoflawtothedistrictcourt, allowingthedistrictcourttoenterafinaljudgmentafterreviewingdenovoany mat-tertowhichapartyobjects.208
AfterCongressimplementedthisfix,theSupremeCourtdecidedafew non-bankruptcycasesinvolvingtheconstitutionalityofnon–ArticleIIIadjudications carriedoutbyadministrativeagencies. Mostnotably,inThomasv.UnionCarbide AgriculturalProductsCo.,209theCourtaddressedafederalstatutoryschemeinvolving data-sharingbetweencompaniesthatwererequiredtoprovidetheresearchdata forregistrationofapesticidewiththeEnvironmentalProtectionAgency.210 The federalstatuteprovidedthatdisputesaboutcompensationrelatingtodatasharing betweenthecompanieswouldbedecidedbybindingarbitration,andtheCourt heldthattheschemedidnotviolateArticleIII. Specifically,theCourtheldthat
“Congress,actingforavalidlegislativepurposepursuanttoitsconstitutionalpowers underArticleI,maycreateaseemingly‘private’rightthatissocloselyintegrated intoapublicregulatoryschemeastobeamatterappropriateforagencyresolution withlimitedinvolvementbytheArticleIIIjudiciary.”211
Similarly,inCommodityFuturesTradingCommissionv.Schor,212theCourt upheldtheconstitutionalityoftheCommodityFuturesTradingCommission’s (CFTC’s)exerciseofjurisdictiontodecideastatelawcounterclaimraisedbya
cus-204. Id.at71.
205. Pub.L.No.98-353,98Stat.333(codifiedasamendedinscatteredsectionsof11and28U.S.C.).
206. Seesupranotes104–106(discussingcoreproceedings).
207. Sternv.Marshall,131S.Ct.2594,2611(2011).
208. Id.at2604.
209. 473U.S.568(1985).
210. Id.at568.
211. Id.at593–94.
212. 478U.S.833(1986).
tomeragainstabrokerinthecontextofareparationsproceeding.213 Inupholding thescheme,theCourtlookedtoavarietyoffactors,suchasthefactthattheCFTC’s orders(unlikethebankruptcycourt’sordersatissueinNorthernPipeline)wouldbe enforceableonlybyorderofthedistrictcourtandthefactthatthepartiesinitially consentedtotheCFTC’sadjudicationofthematter.214 Perhapsmostinteresting, however,wastheCourt’swillingnesstosanctionthetraditionalmodelofagency adjudication. Specifically,theCourtstressedthattheCFTC’sadjudicatory pow-ers“depart[ed]fromthetraditionalagencymodelinjustonerespect:theCFTC’s jurisdictionovercommonlawcounterclaims.”215 TheCourtfoundthis“single de-viation”fromthetraditionalagencymodelallowable,inpart,because“Congress intendedtocreateaninexpensiveandexpeditiousalternativeforumthroughwhich customerscouldenforcetheprovisionsofthe[CommoditiesExchangeAct]against professionalbrokers.”216 Hence,whereasNorthernPipelinetookanarrowreading ofthepermissibilityofnon–ArticleIIIadjudicatorsinthebankruptcycontext,Schor andThomastookmuchmoreliberalapproachestothepermissibilityofnon–Article IIIadjudicatorswhenfacedwithmoretraditionalregulatoryschemesinvolving agencies.
TheSupremeCourt’sdecisioninSternv.Marshallhighlightsthistension betweentheCourt’sArticleIIIjurisprudenceintraditionaladministrativeagency casesversusitstreatmentofbankruptcycases.217 InStern,theCourtaddressedthe constitutionalityoftheschemeforadjudicatingbankruptcymattersestablishedby BAFJA,assessingwhetherabankruptcycourtcouldconstitutionallybevestedwith jurisdictiontorenderafinaljudgmentinacoreproceedingthatinvolvedadebtor’s statelawtortiousinterferencecounterclaim.218 Inthemajorityopinionwrittenby ChiefJusticeRoberts,theCourtheldthatthedistrictcourtcouldnot constitu-tionallydecidethestatelawcounterclaim. Insoholding,theCourtrejectedthe notionthatthecounterclaimcould“bedeemedamatterof‘publicright’thatc[ould]
bedecidedoutsidetheJudicialBranch”bythebankruptcycourts.219 Specifically,the Courtnotedthateventhoughthepublicrightsexceptionisnotlimitedtoactions involvingthegovernmentasaparty,theCourthascontinued“tolimittheexception
213. Id.at835–36,841–42. Interestingly,eventhoughthereparationsproceedingitselfinvolvedadispute betweentwoprivateparties(thatis,thecustomerandthebroker),theCourtnotedthatthe “repara-tionsschemeitselfisofunquestionedconstitutionalvalidity.” Id.at856.
214. Id.at849–56.
215. Id.at852.
216. Id.at852,855.
217. Seesupranote197.
218. Sternv.Marshall,131S.Ct.2594,2610–11(2011).
219. Id.at2611.
tocasesinwhichtheclaimatissuederivesfromafederalregulatoryscheme,orin whichtheresolutionoftheclaimbyanexpertgovernmentagencyisdeemedessential toalimitedregulatoryobjectivewithintheagency’sauthority.”220 TheCourtwent ontonotethatitdealt“herenotwithanagencybutwithacourt,withsubstantive ju-risdiction,”andthatthiswas“notasituationinwhichCongressdevisedan‘expert andinexpensivemethodfordealingwithaclassofquestionsoffactwhichare par-ticularlysuitedtoexaminationanddeterminationbyanadministrativeagency spe-ciallyassignedtothattask.’”221 Instead,whatwasinvolved,accordingtotheCourt, was“themostprototypicalexerciseofjudicialpower:theentryofafinal,binding judgmentbyacourtwithbroadsubstantivejurisdiction,onacommonlawcauseof action,whentheactionneitherderivesfromnordependsuponanyagency regula-toryregime.”222
Hence,ChiefJusticeRoberts’sopinionhighlightsthefactthatCongress’s decisiontoplacebankruptcyadjudicationinthecourts,ratherthaninan administra-tiveagency,raisesArticleIIIconcerns. Inaddition,Stern—whenviewedalongside theCourt’swillingnessinSchorandThomastocondoneagencyadjudicationofeven traditionalcommonlawclaims—suggestsapotentialpathforminimizingArticle IIIconcernsandmakingbankruptcylessexceptional:Insteadofvesting adjudica-torypowerinthecourts,Congressmightempoweranagencytoadministerthe bankruptcylawsandtherebyattempttoalignbankruptcywithinthe“publicrights”
model.223
2. Separation-of-PowersIssuesRelatingtotheAppointment