Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_03-cv-01967/USCOURTS-caed-2_03-cv-01967-3/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

In re:

PLANET PRO, INC.,

Debtor. Bk. Ct. No. 03-23152-C-11

Adv. Case No. 03-2271

 /

NO. CIV. S-03-1967 LKK

SEETARAMA SARMA,

Appellant.

v. O R D E R

PLANET PRO, INC.,

Appellee.

 /

Pending before the court is appellant Seetarama Sarma’s motion

to set aside or revise judgment. The court previously entered

judgment on April 16, 2007 after the Ninth Circuit reversed this

court’s order remanding Sarma’s adversary proceeding. Sarma now

argues that the bankruptcy court never possessed subject matter

jurisdiction to dismiss the adversary proceeding because the

parties did not consent to jurisdiction. I cannot agree.

Case 2:03-cv-01967-LKK Document 121 Filed 05/16/07 Page 1 of 5
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Bankruptcy courts possess two tiers of authority depending on

whether a proceeding is “core” or “non-core.” Dunmore v. U.S., 358

F.3d 1107, 1114 (9th Cir. 2004). A non-core proceeding is one that

does not depend on the Bankruptcy Code for its existence. Sec.

Farms v. Int’l Bd. of Teamsters, 124 F.3d 999, 1008 (9th Cir.

1997). In core proceedings, a bankruptcy court may hear matters

and enter final orders and judgments. 28 U.S.C. § 157(b)(1). In

non-core proceedings, however, a bankruptcy court is limited to

hearing matters and submit proposed findings of fact and

conclusions of law for the district court to review. 28 U.S.C. §

157(c)(1). Nevertheless, if the parties consent, the district

court may enlarge a bankruptcy court’s power to adjudicate non-core

proceedings. 28 U.S.C. § 157(c)(2). 

The current scheme was enacted in response to Northern

Pipeline Construction Company v. Marathon Pipe Line Company, 458

U.S. 50 (1982), which ruled that the prior bankruptcy scheme, the

Bankruptcy Act of 1978, violated Article III by conferring judicial

power on bankruptcy judges who lacked life tenure and salary

protection. In that case, the Supreme Court found that the

bankruptcy courts were not acting as merely adjuncts to Article III

district courts because the latter did not retain the “essential

attributes” of judicial power, id. at 87, such as issuing binding

and enforceable final judgments, id. at 85-86.

Here, Sarma argues that the adversary proceeding was non-core,

given that it pertained to state employment law issues, and that

the parties did not consent to jurisdiction under 28 U.S.C. §

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 Furthermore, the bankruptcy court did, in fact, have 1

“specific authorization” from the district court to resolve non3

157(c)(2), which permits the district court to expand the

bankruptcy court’s jurisdiction to include non-core proceedings.

Fatally for Sarma, however, consent can be implied from action.

See Daniels-Head & Associates v. William M. Mercer, Inc., 819 F.2d

914, 919 (9th Cir. 1987) (“consent implied from the parties’

actions is sufficient”); In re Mann, 907 F.2d 923, 926 (9th Cir.

1990) (holding that where the party never objected to the

bankruptcy court’s jurisdiction prior to the time it rendered

judgment against him, “he consented to the court's jurisdiction”);

DuVoisin v. Foster, 809 F.2d 329, 331 (6th Cir. 1987) (“the absence

of a timely objection to the bankruptcy court's jurisdiction

constitutes implied consent to the resolution of the controversy”).

Sarma responds in two ways, none availing. First, Sarma

contends that he did in fact object to the bankruptcy court’s

jurisdiction. He points out that in his opening brief filed in

this court on October 21, 2003, he stated that “the bankruptcy

court did not have jurisdiction to enter a final order in this

dispute without specific authorization from the district court.

. . . Sarma timely objected to the bankruptcy court’s conducting

a jury trial and [] entering a final order.” Br. at 28-29. It is

plain, however, that Sarma’s main dispute was directed toward the

bankruptcy court’s finding that he had waived his right to a jury

trial -- not that the bankruptcy court lacked jurisdiction with

regard to non-core proceedings.1

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core matters by virtue of General Orders 182 and 223, which

automatically refer all bankruptcy matters to bankruptcy judges.

Section 157(c)(2) provides that the district court may refer noncore proceedings to bankruptcy judges upon the consent of the

parties. 28 U.S.C. § 157(c)(2). Accordingly, to the extent that

Sarma claimed that the district court never authorized the

bankruptcy court to hear the proceeding, this is incorrect. 

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Furthermore, there were numerous other opportunities for Sarma

to raise his complaint. Sarma did not object to the bankruptcy

court’s jurisdiction in his notice of removal or in his motion to

transfer venue, nor did he object at the pretrial conference held

on Jury 22, 2003 or at the trial itself. This, in itself,

evidences consent to the bankruptcy court’s jurisdiction. See In

re Mann, 907 F.2d at 926 (“[H]e never objected to the court's

jurisdiction prior to the time it rendered judgment against him.

Through this conduct, he consented to the court's jurisdiction.”).

Finally, in the appeal before the Ninth Circuit, Sarma did not

raise his objection to the bankruptcy court’s jurisdiction in his

cross-appeal.

Second, Sarma argues that, because consent cannot be lightly

inferred in the context of proceedings before magistrate judges,

see Nasca v. Peoplesoft, 160 F.3d 578 (9th Cir. 1998), neither can

consent be inferred in the context of proceedings before bankruptcy

judges. This comparison was expressly rejected in In re DanielsHead, which held that there were differences between the Federal

Magistrates Act and the Bankruptcy Act with regard to the issue of

implied consent. 819 F.2d at 918 (“[T]he Magistrates Act

specifically requires the parties' explicit consent to the

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magistrate's jurisdiction . . . The 1984 [Bankruptcy] Act, on the

other hand, does not, on its face, require explicit consent.”).

Accordingly, the court orders as follows:

1. The motion to set aside or revise the judgment is DENIED.

2. The hearing currently set for May 21, 2007 is hereby

VACATED.

IT IS SO ORDERED.

DATED: May 15, 2007.

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