Bellingham Oral Argument Recap: Bankruptcy and the Slippery Slope
The Supreme Court’s recent strong record of confining bankruptcy judges within a tight sphere of power seemed a bit shaky on Tuesday, but mainly because the Court spent significant time looking beyond bankruptcy law, according to a SCOTUSBlog analysis of Tuesday’s oral argument in Executive Benefits Insurance Agency v. Arkison (In re Bellingham) currently before the Supreme Court. Concerns about the impact that a decision in a chapter 7 case may have on the ranks of federal magistrate judges, and even on arbitrators who keep a lot of private disputes out of courts, were evident during the argument on In re Bellingham. That case was about the power that federal law appears to give to a bankruptcy judge, and it is a test of whether, if that power contradicts the limits of the Constitution’s Article III, the power can be exercised anyway because the parties consent to it. It was immediately clear that if insurance firm Executive Benefits wins the case, the chances are good that bankruptcy judges will have less power than Congress wanted them to have, and that the lost power would not be revived just because the parties agreed that it should exist. With Justice Scalia, the Court’s strongest proponent of a strict construction of the Constitution, taking the lead, there were fervent comments from the bench suggesting that bankruptcy judges who are not appointed under Article III might well wind up with a diminished role: they would not be able to issue final decisions on many disputes, and might not even be able to propose decisions for adoption by an Article III judge. That impression was consistent with the Court’s most recent major decision on bankruptcy court authority, the 2011 decision in Stern v. Marshall. Chief Justice Roberts, the author of the main Stern opinion, bluntly suggested on Tuesday that if Congress cannot act to beef up the roles of bankruptcy judges without violating Article III, why would the Court permit “people taken off the street” to do so just because they were parties to a case and had consented to enlarged bankruptcy court authority?