The Supremes Dodge Again - Executive Benefits Insurance Agency v. Arkison
by: Restructuring & Bankruptcy of Greenberg Traurig, LLP  -  GT Restructuring Review
Saturday, June 14, 2014

How do you get all nine Supreme Court Justices to agree in a case that follows up on a decision that created a deep 5 to 4 split? By saying as little as possible.

That’s exactly what Justice Thomas did in today’s 9 to 0 decision in Executive Benefits Insurance Agency v. Arkison, ___U.S. ___ (June 9, 2014). Executive Benefits raised a series of follow-up questions about what the Court meant in its seminal Article III bankruptcy court jurisdiction decision in Stern v. Marshall, 564 U.S. ___, 131 S.Ct. 2594 (2011). Stern was a very unclear opinion, with stray phrases and alternative rationales creating great confusion among the lower courts as to what limitations it imposed on the bankruptcy courts’ jurisdiction. In Executive Benefits, Justice Thomas carefully avoids saying anything about Stern, limiting his discussion to the narrow statutory question of how Stern-type claims should be handled procedurally by the bankruptcy and district courts.

We are given no hint as to whether Stern announced a purely private constitutional right that could be waived or a structural rule that could not. Thus, the authority of bankruptcy judges to enter final orders by consent on Stern claims and non-core claims remains under a constitutional cloud. As noted in an earlier blog post, the Courts of Appeal have reached inconsistent opinions on that point.

Of course, one shouldn’t look a gift horse in the mouth. Executive Benefits, while unsatisfying from a theoretical perspective, does allow the bankruptcy system to function largely intact. The opinion provides a very practical solution to the Stern dilemma by allowing bankruptcy judges to treat Stern claims just like non-core claims. We should be thankful for that because an answer to the Article III question could have been much worse.

 

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