# United Stat es Court of Appeals For the First C ircuit

No. 02-9007 Volume II of II IN RE WILLIAM C. SHERIDAN,

WILLIAM C. SHERIDAN, Defendant, Appellant,

v. NANCY MICHELS, Plaintiff, Appellee.

APPEAL FROM THE BANKRUPTCY APPELLATE PANEL

OF THE FIRST CIRCUIT

Before Selya, Circuit Judge , Cyr, Senior Circuit Judge , and Lynch, Circuit Judge .

William C. Sheridan , pro se. NancyH. Michels , with whom the Law Offices of Michels & Michels and Carole A. Mansur were on the brief for appellee.

March 29, 200419 It is true that, after the court's decision, the order

suspending Sheridan will no longer be final. But the district court may simply reinstate the remedy chosen by the bankruptcy court. -35-

LYNCH, Circuit Judge (dissenting) . With regret, I dissent. The majority decides this case on an argument that Sheridan never raised in the bankruptcy court, in the BAP, or o n appeal, and that Sheridan expressly refused to adopt when this court raised it sua sponte and asked for his view. The majority then decides that issue the wrong way. The result is to relegate Sherid an to a new round of litigation in the courts below, mor e than two years after the bankrup tcy court suspended him from practice. For Sheridan, this is a pyrrhic victory, and one that he asked us not to give him. 19

The principal opinion by Judge Cyr and the op inion by Judge Selya concurring in the judgment agree on two points that I believe are not only mistaken but also certain to have consequences beyondthe narrow realm of attorney discipline in bankruptcy cases: (1) that this is an appropriate case for invoking the LaGuardia / Weinstein doctrine to justify this court in addressing an issue that Sheridan elected not to raise; and (2) that the disc i plinaryproceeding against Sheridan was not a "core proceeding" under § 157. I also dissent from the principal opinion's conclusion that Sheridan neither consented nor waived his objections to entry of a final order in the bankruptcy court.-36- I. The principal opinion reaches the "core proceeding" question in this case only by holding that while Sheridan perhaps forfeitedthe issue, he never consented to the entry of a final judgment or otherwise waived the requirements of § 157. I cannot join that conclusion: (i) it requires a restrictive interpretation of § 157(c) that conflicts with the views of at least five circuits andthe leadin g commentator on bankruptcy law; and (ii) it undermines this court's jurisprudence of waiver and consent to say,

on this record, that Sheridan ever disputed the finality of the bankruptcy court's order. A. Section 157 and Finality

A bankruptcy judge's power to enter final orders is not limitedto core proceedings. Rather, a bankruptcy court has the authorityto enter a dispositive order in any proceeding, irrespective of core/non-core status, if the parties consent. See § 157(c)(2); see also In re S. Indus. Banking Corp. , 809 F.2d 329, 331 (6th Cir. 1987) ("A related proceeding with the consent of all parties functionally has the same effect as a core proceeding . .

. ."). This court held unequivocally in In re G.S.F. Corp. , 938 F.2d1467 (1st Cir. 1991), that such consent can be implied from a party's litigation conduct. See id. at 14 77 ("[ I]mplied consent will suffice."). We upheld app ell ate jurisdiction in that case because the parties had, by their conduct before the ban kru ptcy20 In a non-bankruptcy case, this issue would normally be

characterizedas "waiver." In bankruptcy cas es, th e more common rubric is that of "implied consent." The difference in terminology is not important; notions of waiver and consent are closely intertwinedin the context of a litigant's asserted right to an Article III tribunal, as the S upreme Court has made clear. See, e.g. , Commodity Futures Trading Comm'n v. Schor , 478 U.S. 833, 849 (1986) ("[T]he relevance of concep ts of waiver to Article III challenges is demonstrated by our decision in Northern Pipeline , in which the absence of consent to an initial adjudication before a non-Article III tribunal was relied on as a significant factor in determining that Article III forbade such adjudication."). Indeed, several courts of appeals have used both terms to describe the inquiry under § 157(c)(2). See, e.g. , In re Johnson , 960 F.2d 396, 403-04 (4th Cir. 1992); Home Ins. Co. v. Cooper & Cooper, Ltd. , 889 F.2d74 6, 749 ( 7th Cir. 1989); see also In re Nell , 71 B.R. 305, 310 n.4 (D. Utah 1987). The terms are used interchangeably in this opinion, as the substantive standard is the same: because Sheridan knew of his right to seek de novo review in the district court and chose not to do so, th e sanction s order should have been deemed final and the entire core/non-core problem avoided. -37- court, "acquiesce[d]" in the treatment of the proceeding as core. Id. If, by his conduct, Sheridan likewise indicated his knowing acquies cen ce in the bankruptcy court's treatment of his case as core, then the sanctions order was final, the BAP had appellate jurisdiction, and the core/n on-co re status of the disciplinary hearing is irrelevant. 20

The principal opinion seems to interpret In re G.S.F. to require some "affirmative" expression of consent before a party will be held to have waived the procedures requi red b y § 157(c). Op. at 8-10 . That decision does not announce such a restrictive andformalistic rule; it didnot r equire any particular conduct, but merely examined the record for "indication[s] of acquiescence." 938 F.2d at 1477. Further, in concluding that "implied consent-38-

will suffice" under § 157(c)(2), this court cited cases like In re Daniel s-He ad& Assocs. , 819 F.2d 914 (9th Cir. 1987), In re S. Indus. Banking Corp. , supra , and In re Hatfield , 117 B.R. 387 (Bankr. C.D. Ill. 1990), each of which held that the absence of a timely objection to the bankruptcy court's jurisdiction is enough to establish consent. See 819 F.2d at 919; 80 9 F.2d a t 331; 117 B.R. at 389 n.1.

The principal opinion contends that such cases must have been wrongly decided in light of the 1987 advisory committee notes to Fed. R. Bankr. P. 7008, which emphasize "express" consent. See Op. at 8 n.2. That argument, however, is undercut by the Supreme Court's recent decision in Roell v. Withrow , 123 S. Ct. 1696 (2003), in which the Court held that consent to proceedings before

a federal magistrate judge can be implied from a party's litigation conduct. Id. at 1703. In Roell , as in this case, a federal rule interpreting the underlying statute required advance, written consent from both parties. Id. at 1701. As in this case, that rule was not satisfied. Nevertheless, the Roell Court held that under the terms of the statute itself, implied consent was all that

was required. Id. at 1703. The same logic applies under § 157(c), which requires only "consent," not "express consent." M oreo ver, Congress knew how to require express consent when it wanted that result -- it did so in § 157 only a few paragraphs later. See 28 U.S.C. § 157(e) ("express co nse nt" is required from all parties-39-

before the bankruptcy court may hold a jury trial). In light of Roell and Congress's calculated choice of words in § 157, the principal opinion's restrictive interpretation of the consent requirement in § 157(c) is unjustified.

Under the view adoptedby the principal opinion today, a party's complete failure to object to core treatment is not sufficient to show consent. That position, if adopted by this court, would place this circuit directly in conflict with the views of at lea st five of our sister circuits. See In re Tex. Gen. Petroleum Corp. , 52 F.3d 1330, 1337 (5th Cir. 1995) ("A party who fails to object to a bankruptcy court's assumption of co r e jurisdiction consents to that court's entry of final judgment."); Abramowitz v. Palmer , 999 F.2d 1274, 1280 (8th Cir. 1993) (finding impliedconsent where "[n]either party object[ed] to the bankruptcy court's entering a final judgment"); In re Johnson , 960 F.2d 396, 403-04 (4th Cir. 1992) (finding implied consent because the parties "failed to object to the bankruptcy court's determination" of the matters in dispute); In re Daniels-Head , 819 F.2d at 919 (failure to raise a timely objection to core treatment constitutes implied consent); In re Men's Sportswear, Inc. , 834 F.2d 1134, 1137-38 (2d Cir. 1987) (party's failure to object to bankruptcy court's exercise of core jurisdiction despite mul t iple opportunities to lod ge such an objection "can only be construed as implied21 But see Home Ins. Co. , 88 9 F.2d at 749-50 (express consent

required). -40- consent"). 21 The leading treatise on bankruptcy law likewise concludes that the failure to object to core treatment should be enough to show consent. See 1 Collier on Bankruptcy § 3.02[6][b] (rev. 15th ed. 2003) ("It is unstated, but probably implied in section 157(b)(3), and it has been held, that failure to make timelyobjection to th e characterization of the proceeding as a

core proceeding will be deemed a consent to the jurisdiction of the bankruptcycourt to enter dispositive orders andjudgments in like

man ner as section 157(c)(2)."); id. § 3.03[4] ("The effect of failure to interpose an ob jec tion [to core treatment] at the pleading stage should be consent to the final order being entered by the bankruptcy judge."). B. Waiver in the Bankruptcy Court

If the principal opinion's res trictive view of consent

un der § 157(c)(2) is wrong, it collapses. That is because under the test adopted by other circu its and (i n my view) endorsed by this court itself in In re G.S.F. , Sheridan waived any right he may have had to de novo review in the district court.

Sheridan utterlyfai led even to identify the core/noncore issue in the bankruptcy court, let alone raise a coherent object ion to the core status of the proceeding, despite multiple opportunities to do so. Neither in his responsive pleadings nor in22 Th e bankruptcy court expressly found that Sheridan "is an

experiencedattorney who has practiced [bankruptcy law] for a significant period of time." 2001 WL 1757058, at *24. The court further foundthat in light of that extensive experience, Sheridan "was aware" of the applicable rul es and practices in bankruptcy court. Id. Nevertheless, the principal opinion says that Sheridan's extensive experience as a bankruptcy attorney does not support the infe renc e that he knowingly acquiesced in core treatment because "these disciplinary proceedings arose, at least in part, from Sheridan's numerous physical ailments and mental impairments." Op. at 15 n.7. That is a non-sequitur: whether Sheridan's misconduct was related to his alleged disabilities has nothing to do with whether Sheridan knew, basedon his years of practicing bankruptcy law, that he was obliged to alert the bankruptcy j udg e if he objected to the treatment of his disciplinary proceeding as core. The principal opinion does not suggest that a disability actually prevented Sheridan from objecting to core treatment. In any event, the principal opinion's willingness to attribute Sheridan's professional misconduct to his disabilities is puzzling, given that (1) the bankruptcy court made no finding of any disability, and (2) the BAP held that Sheridan utterly failed to support his claim of disability. See 282 B.R. at 92 & n.15. -41- his various motions to the bankruptcy court did Sheridan -- an experiencedbankruptcy attorney 22 –- argue that the proceedings were non-core, that the bankruptcy court could not enter a final judgment against him, that he was entitled to de novo review of the facts and the law in the dis tric t court, or anything else that could be interpreted as a reference to § 157(c).

Nor did Sheridan identify this issue at the bench trial. The bankruptcy court entered a pretrial scheduling order on January 16, 2001 that required the parties to identify all disputed issues of law and applicable defenses. Sheridan, in response, raised various legal objections, not one of which addressed the core/noncore status of the proceeding or the bankruptcy court's power to23 Sheridan's reply stated only tha t the complaint failed to

allege violations of the applicable rules of ethics and that, in the alternative, his conduct should be excused because of hi s disabilities.

24 AO 2090-2 provides, in relevant part, that "[a]ny attorney admittedor permitted to practice before [the bankruptcy] court shall be deemed to have conferred disciplinary juri sdic tion upon th[e] court for anyalleged attorney misconduct arising during the -42- enter a final judgment against him. 23 Even during the bench trial, Sheridan made no argument that the court was obliged to enter its findings as "proposed findings of fact" under § 157(c)(1). On October 12, 2001, the bankruptcy court entered a final opinion and order suspending Sheridan frompractice. Michels v. Sheridan , No. 00-1140-JMD, 2001 WL 1757058 (Bankr. D.N.H. Oct. 12, 2001).

The principal opinion explains all of this by saying that Sherid an could not have raised the core/non-core issue prior to judgment because he had no idea that the bankruptcy court intended to enter a binding sanctions order. Op. at 13. That is simply not so. Sheridan has never claimed, and could not claim, that he was

unaware that the bankruptcy court inte nded to sanction him directly. The bankruptcy court's January 16, 2001 pretrial scheduling order stated that the complaint against Sheridan had been commenced under Administrative Order 2090-2 of the New Hampshire bankruptcy courts. That order expressly allows the bankruptcycourt to issue binding orders sanctioning and disbarring attorneys by deeming attorneys who practice before the bankruptcy court to have consented to disciplinary jurisdiction. 24 Sheridancourse of a case pending before th[e] court in which that attorney

has participated in any way."

25 Sheridan argued in his opening brief that AO 2090-2 was not promulgated until February 2001, after the disciplinary complaint against him was filed. That is not true: the administrative order was adopted in October 2000, and Sheridan is fairly charged with knowledge of its contents. An amended version of AO 2090-2 became effective in February 2001, but the amendments did not affect any portion of the order relevant to Sheridan's case. -43- was clearly on notice that the bankruptcy court intended to hold such a proceeding, yet he did not dispute that it was a core proceeding or that any resulting order would be final. 25

Even in his multiple motions for reconsidera tion after the bench trial, Sheridan failed to raise the core/non-core issue. In his Octobe r 2 2, 2001 motion, Sheridan responded to the bankruptcyjudge's statement that bankruptcy court s have the substantive power to discipline a tt orneys under the "inherent power" doctrine of Ex parte Burr , 22 U.S. 529 (1824). See Sheridan , 2001 WL 1757058, at *1. Because the principal opinion relies heavily on Sheridan's respo nse to conclude that he raised and pressed the core/non-core argument, I quote it here:

First, Ex parte Burr , supra (U.S. 1824) concerns broadpowers inherent in the exercise of the judicial power un der Article III of the United States Constitution. However, although the United States BankruptcyCourt is a "unit of the [Federal] district court," it is well established that the powers of Bankruptcy judges are limited to those "conferredunder" the United States Bankruptcy Code. 28 U.S.C. Section 151. As such the Bankruptcy court does not share all of the powers of the district court. Thus, in Northern Pipeline Co. vs. Marathon Pipeline Co. , 458 U.S. 50 (1982) the United States Supreme Court held that it was26 Thi s pa ssage is quoted exactly from Sheridan's October 22

motion; any mistakes or grammatical errors are his. -44- unconstitutional for the Bankruptcy Courts to exercise the "essential attributes of judicial power of the Article III district court ," an d that the bankruptcy court's pow er w as limited to "core proceedings" of the administration of the bankruptcy estate under the bankruptcy code. 28 U.S.C. section 157(b)(1). It is axiomatic that since the bankruptcy court does not share in the "essential" powe rs of Article III judges, it follows that the bankruptcy court does not share in the "inherent authority" derived f rom th e exercise of Article III judicial power. 26

This was Sheridan's sole reference to "core proceedings" or § 157 in the bankruptcy court.

As the context makes clear, Sheridan was not objecting in these paragraphs to the finality of the bankruptc y cour t's order against h im. Nor did the bankruptcy court understand him to b e making such an argument. Rather, Sheridan was contending only that bankruptcycourts do not enjoy the "inherent power" described in Ex parte Bur r to discipline attorneys . This is simply an attack on

one of the bankruptcy court's asserted sour ces of disciplinary authority. It is distinct from the contention that the principal opinion attributes to Sheridan: namely, that the bankruptcy court, while empowered to conduct disciplinary proce edings , was not permittedto enter a final order against Sheridan under § 157(c)(1). Sheridan, an experienced bankruptcy lawyer, knows the difference. Indeed, the principal opinion itself recognizes that the question whether a bankruptcy court has the power to discipline27 For example, the principal opinion concedes that bankruptcy

courts have substantive disciplinary authority, but it holds that the exercise of that power in this particular case was not a "core proceeding." See Op. at 28-29. Sheridan essentially argued the opposite: he challenged the substantive power of bankruptcy courts to discipline attorneys, but did not contest that the invocation of that power, if valid, would be a core proceeding.

28 The principal opinion emphasizes Sheridan's citation to Northern Pipeline Constr. Co. v. Marathon Pipe Line Co. , 458 U.S. 50 (1982), which it describes as " the seminal case regarding the constitutional limitations which undergird the pivotal core/noncore distinction." Op. at 16 (emphasis in original). There is no d oubt t hat the "core proceeding" concept reflects some of the Article III issues discussed in the plurality opinion in Northern Pipeline . But it is more than a stretch to say that Sheridan's reference to that case amounts to an argument that the proceeding below was non -co re under § 157. Congress did not create the core/non-core distinction unti l after Northern Pipeline , so the citation alone hardly suffices to raise the issue. More fundamentally, Northern Pipeline discussed at least five ways in which the Bankruptcy Act of 1978 unconstitutionally vested the "essential attributes" of judicial power in Article I bankruptcy judges, only one of which was the fact that bankruptcy judges were empowered to issue final orders that were binding and enforceable. See 458 U.S. at 85-86. Significantly, another of the "essential attributes" cited by the Northern Pipeline Court was the power of bankruptcy judges to exercise "all ordinary powers of district courts," including issuing extraordinary writs and orders. Id. at 85. This -- and not the core/non-core distinction -- was t he proposition for which Sheridan cited Northern Pipeline . Sheridan has consistently argued that under Northern Pipeline , bankruptcycourts lack the "inherent power" that d istr ict courts enjoyto discipline attorneys in the absence of statutory authorization. As noted above, this is logically distinct from the argument that bankruptcy courts can discipline attorneys but cannot enter final orders. -45- attorneys is a question independent of whether it has the power to enter a final order . 27 Yet the principal opinion contends that by raising the former argument, Sheridan somehow also raised the latter. 28 This is unfair to bankrupt cy j udges, who should not be asked to read tea leaves to discern a litigant's argument.-46- All of this, in my view, requires the conclusion that the bankruptcycourt's ord er was final and appealable. Sheridan was plainly aware of the core/non-core distinction. He simply elected not to assert the issue, perhaps for strategic reasons. Perhaps he gambledthat the bankruptcy judge's factual findings would be favorable to him, hoping to benefit from a more favorable standard of review on appeal. Perhaps he preferred to retain the option of appealing to the Bankruptcy Appellate Panel, as he ultimately did. Whatever his reasons, Sheridan abandoned any right he may have had to de novo review in the district court by choosing not to object to core treatment. See In re G.S.F. , 938 F.2d at 1477; accord In

re Tex. Gen. PetroleumCorp. , 52 F.3d at 1337; Abramowitz , 999 F.2d at 1280; In re Johnson , 960 F.2d at 403-04; In re Daniels-Head , 819 F.2dat 919; In re Men's Sportswear , 834 F.2d at 1137-38. By refusing to infer consent from Sheridan's conduct, the majority simply encourages future bankruptcy litigants to game the systemby waitin g un til an adverse judgment before objecting to core treatment. "Inferring consent in these circumstances . . . checks the risk of gamesmanship by depriving parties of the luxury of waiting for the outcome before denying the [bankruptcy judge's] authority. Judicial efficiency is served; the Article III right is substantially honored." Roell , 123 S. Ct. at 1703. C. Waiver on Appeal

Sheridan's conduct on appeal, both in the BAP and before-47-

this c ourt, provides further assurance that he consented to core treatment. First, Sheridan elected to bring his appeal in the BankruptcyAppellate Panel rather than in the district court, despite the fact that the BAP has no authority to review proposed findings of fact or conclusi ons of law under § 157(c)(1). The principal opinion d i smisses this point, stating that Sheridan's appeal was proper because the bankruptcy judge ostensibly entered

a final order. Op. at 16 n.8. That is true, but it does not negate the inference of consent: although Sheridan had an absolute statutory righ t t o bring his appeal in the district court irrespective of the core/non-core issue , see 28 U.S.C. § 158(c)(1), andalthough the BAP notified Sheridan of that right in writing, Sheridan neve rtheless pursued his appeal in the BAP. If, as the principal opinion contends, Sheridan had believed he was entitled to de novo review in the district court, the obvious choice would have been to invoke his right to appeal to the district court and then to demand de novo review. His decision to appeal to the BAP instead is strong evidence of his consent to core treatment. Cf. CommodityFutures Trading Comm'n v. Schor , 478 U.S. 833, 849-50 (1986) (plaintiff's election to forgo review in federal court and seek relief instead in an Article I proceeding "constituted an effective waiver" of Article III objections because the party had the option of Article III adjudication but "chose to avail himself of the quicker and less expensive procedure Congress had provided29 The principal opinion emphasizes that before Sheridan stated

he "takes no position" on the core/non-core issue, he successfully briefed the argument that the proceeding below was non-core. Op. -48- him"). Sheridan never argued to the BAP that the proceeding in the bankruptcy court was non-core. He merely repeated his argument about "inherent power" under Ex parte Burr . The BAP opinion makes clear that the finality of the bankruptcy court's order was never in dispute. See, e.g. , In re Disciplinary Proceedings , 282 B.R. 79, 85 (B.A.P. 1st Cir. 2002) (referring to "final bankruptcy court orders" and indicating that the bankruptcy court's factual findings would be reviewed for clear error).

The final and most telling indication of She ri dan's consent to core treatment came before this court. Invited by the court to file a supplemental brief on the core/non-core question, Sheridan expressly declinedto argue that the disciplinary hearing

was non-core. His supplementa l br ief acknowledged the core/noncore issue and e ven cited § 157(c)(1), the provision barring bankruptcy judges from entering final orders in non-core proceedings absent the consent of the parties. Nevertheless, Sheridan refused to assert that the disciplinary proceeding was

non-core –- he stated simply that he "takes no position" on whether the bankruptcy court order was fin al, a nd he urged this court to provide prompt and clear guidance on the merits of his appeal because his case had already been pending too long. 29at 16 n.8. Of course he did–- the whole point of the supplemental

briefing was to address that argument, and Sheridan duly traced its contours. Yet despite demonstrating that he knew how to make the argument if he were so inclined, Sheridan expressly stated that he "takes no position" on the matter. The princi pal opinion attributes the argument to him anyway. -49- II. The second reason I cannot jo in the judgment is the majority's extension of the LaGuardia / Weinstein exception to o ur rules of waiver and forfeiture. See Op. at 17-19. The LaGuardia exception is inapplicable on these facts, and by invoking it here, the majority approves a novel andex tremely unwise expansion of that doctrine.

Under LaGuardia andits progeny, the court of appeals may review de novo an argument that is raised for the first time on appeal only if: (1) the argument involves a purely legal question of constitutional import that can be resolved with certitude on the existing record; (2) addressing the argument will promote judicial economy because the same issue will arise in nearly identical terms in other cases; and (3) the argument, if meritorious, would almost certainlyentitle the appellant to prevail, so that failing to address it would result in a miscarriage of justice. See United States v. LaGuardia , 902 F.2d1010, 1013 (1st Cir. 1990); see also Castillo v. Matesanz , 348 F.3d 1, 1 2 (1st C ir. 2003); In re Weinstein , 164 F.3d 677, 685 (1st Cir. 1999); Sammartano v. Palmas del Mar Props., Inc. , 161 F.3d 96, 98-99 (1st Cir. 1998). Until30 The principal opinion insists that the core/non-core question

is a question of "constitutional import," presumably be caus e Congress created the core/non-core distinction in response to a Supreme Court case predicated on Article III. Op. at 19 & n.10. That argument is misplaced for two reasons. First, the fact that a statutory scheme reflects con siderations of constitutional law does not elevate the statute itself to constitutional stature. We do not say, for example, that service of process under Fed. R. Civ. P. 4 is a question of constitutional dimensions, even though that Rule was plainlywritten to comport with constitutional due process concerns. Indeed, if the core/non-core issue is a matter of constitutional law, so too is the rest of the Bankruptcy Code insofar as it reflects Congress' s j udgment about how best to implement its powers under the Bankruptcy Clause, U.S. Const. Art. I, § 8, cl. 4. -50- today, LaGuardia provided a narrow exception to the raise-or-waive rule, which this court ord inarily applies "with a near-religious fervor." Nat'l Ass'n of Soc. Workers v. Harwood , 69 F.3d 622, 627 (1st Cir. 1995). Cases qualifying for the exception, we have said, are "few and far between." Id.

The majority's resort to LaGuardia on facts like these is unpr eceden tedin multiple respects. First, this court has never invokedthe LaGuardia exception when the party on whose behalf the court would intervene has not actually raised the issue on appeal. Here, not only did Sheridan fail to raise the core/non-core issue

on appeal, but he also explicitly declined to advocate the position when asked.

In addition, the usual predicate conditions for invoking LaGuardia are absent here. The core/non-core distinction is not a matter of constitutional law or import, no more than any other quest ion of statutory interpretation under the Bankruptcy Code. 30S econd , the core/non-core distinction is nothing like the

problems of constitutional law or import that have previously served as a predicate for this court's resort to LaGuardia . See, e.g. , Castillo v. Matesanz , 348 F.3d 1, 11-16 (1st Cir. 2003) (ineffective assistance of counsel under the Sixth Amendment); In re Weinstein , 164 F.3d 677, 684-85 (1st Cir. 1999) (takings claim under the Fifth Amendment); Nat'l Ass'n of Soc. Workers v. Harwood , 69 F.3d 622, 629 (1st Cir. 1995) (immunity of state legislature fromFirst Amendment claim under federal common law, by analogy to the Speech and Debate Clause); United States v. Merc edes-Amparo , 980 F.3d 17, 19 (1st Cir. 1992) (due process concerns in prosecutorial breach of plea bargain agreement). In the few cases in which this court has invoked LaGuardia in the absence of a claim baseddirectly in constitutional law, we have done so to vindicate a stron g gov ernmental interest of a kind not present here. See, e.g. , Chestnut v. City of Lowell , 305 F.3d 18, 21 (1st Cir. 2002) (per curiam) (en banc) (relieving a city of punitive damages award under Ci ty of Newport ); In re 604 Columbus Ave Realty Trust , 968 F.3d1332, 1343-44 (1st Cir. 1992) (permitting the FDIC to raise special governmental defenses based on federal common law). -51- Nor is the core/non-core determination " stri ctly a question of law." LaGuardia , 902 F.2d at 1013. The principal opinion itself recognizes that the core/non-core question in this case is not a purelylegal one -- the court does not hold that attorney disciplinary proceedings are always non-core, but rather that the proceeding was non-core "[i]n the particular circumstances of the instant case." Op. at 5. And the core/non-core status of an omnibus attorney disciplinary proceeding initiated by a bankruptcy court is hardly a question that is "almost certain to be presented in identical terms in other cases." LaGuardia , 902 F.2d at 1013 .

Similarly, the merits of the core/non-core issue in this

case are neither "highly persuasive," Harwood , 69 F.3d at 628, nor "so compelling as virtually to insure [the appellant's] success,"-52-

Sammartano , 161 F.3d at 98-99; United States v. Slade , 980 F.2d 27, 31 (1st Cir. 1992). Sheridan has not advanced the core/non-core argument at all, let alone advanced it in a "highly persuasive" manner, and the pr inci pal opinion's reasoning is not "so compelling" that the outcome is essentially predetermined. See Correa v. Hosp. San Francisco , 69 F.3d 1184, 1196 (1st Cir. 1995) (declining to invoke LaGuardia where the forfeited argument merely advanced one of two possible constructions of a statute).

Lastly, this case does not meet the final criterion for invoking LaGuardia : that if the issue were meritorious, failing to reach it would constitute a "miscarriage of justice." 902 F.2dat 1013. It could hardly be a miscarriage of justice to reach the merits of Sheridan's appeal given that both parties have urged us to do so. If there is any miscarriage of justice in this case, it is the disservice done to both sides in remanding this case fo r another round of litigation below.

If LaGuardia can apply here, it can apply in any case in which an appellate judge wishes to raise and decide an issu e sua sponte , no matter how compel ling t he evidence of waiver or forfeiture and regardless of whether a party advocates that position. I will not be surprised if this aspect of the court's decision today is regretted by this court and the bar for years to

come.31 See generally1 Collier on Bankruptcy § 3.0 2[3 ] (rev. 15th

ed. 2003) (listing examples of proceedings recognized as "core" even though they do not fall within the express terms of § 157(b)).

-53- III. Finally, I disagree with the majority's conclusion that the proceeding against Sheridan was non-core. In my view, the only interpretation of § 157 that is consistent with the purposes of the federal bankruptcy laws and Congress's intent in the 1984 bankruptcy amendments is that the disciplinary proceeding against Sheridan, which arose out of misconduct occurring in indisputably core proceedings, constituted a core proceeding. A. Interpretation of 28 U.S.C. § 157 1. Plain text of § 157 Whether the disciplinary proceeding against Sheridan was

a "core proceeding" under 28 U.S.C. § 157 is a matter of statutory construction. The plain text of § 157 makes no explicit reference to attorney discipline, sanctions, contempt, or anything similar, just as it fails to describe other proceedings that courts have recognizedas core. 31 Nor is the statutory term "core proceeding" self-defining.

Nevertheless, the principal opinion purports to find support in the text of § 157. It discusses the various categories of core proceedings in § 157(b)(2), emphasizing that "each of the enumeratedmatters relates to a function essential to the-54-

administration of the bankruptcy case." Op. at 21. The proceeding against Sheridan, the prin cipal opinion contends, was different: it did not arise in any single bankruptcy case, so there was no relevant "case" to administer. Accordingly, it must have been noncore. This is an expressio unius rationale: Congress provided a list of core proceeding categories in § 157(b); that list does not include omnibus attorney disciplinary hearings or similar proceedings spanning multiple bankruptcy cases; therefore Congress meant to exclude such proceedings from "core" treatment.

This is flawed logic . As the Supreme Court reiterated last Term, the expressio unius canon applies only when t h e statutorylist in question "justif[ies] the infere nce that items not m ent ioned were excluded by deliberate choice." Barnhart v. Peabody Coal Co. , 537 U.S. 149, 168 (2003). No such inference is possible here. It is true that Congress, in drafting the categories of cor e p roceedings in § 157(b)(2), referred to " the estate" ( i.e. , in the singular), but that choice of words merely reflects the reality that the vast majority of bankruptcy proceedings pertain to a single debtor. Nothing in the statute says a proceeding is non-core if it involves more than one estate, andCongress knew how to exclude matters f rom § 157(b) when it wishedto do so. See, e.g. , § 157(b)(2)(O) (excluding personal injuryand wrongful death claims from core treatment). The

c lincher is that Congress specifically provided that the l ist o f32 Long before Northern Pipeline andCongress's 1984 enactment

of § 157, the Supreme Court recognized that a court's power to regulate the conduct of the bar, including the power to suspendand disbar attorneys, is essential to the administration of justice and the protection of the public. See, e.g. , Roadway Express, Inc. v. Piper , 447 U.S. 752, 764-67 (1980); Theardv. United States , 354 U.S. 278, 281 (1957); Ex parte Bradley , 74 U.S. 364, 374 (1868); Ex parte Garland , 71 U.S. (4 Wall.) 333, 378-79 (1867); Ex parte Burr , 22 U.S. (9 Wheat.) 529, 531 (1824); see also In re Snyder , 472 U.S. 634, 643-45 (1985) ("Co urts have long recognized an inherent authority to suspend or disbar lawyers."). -55- examples in § 157(b)(2) is not exhaustive. See 28 U.S.C. § 157(b)(2) (core proceedings "are n ot limited to" the listed categor ies ); see also 1 Collier on Bankruptcy, supra, § 3.02[3] ("It should be emphasized at the outset that section 157(b)(2) is not limiting . . . .").

This brings us back to where we started. The underlying question on the me rits of the core/non-core issue is this: whether, in light of the structure and purpose of the core/non-core distinction and the Bankruptcy Code as a whole, § 157(b)(2) should be interpretedto embrace disciplinary proceedings like Sheridan's. See In re Hart , 32 8 F .3d 45, 48 (1st Cir. 2003). The principal opinion undertakes no such analysis. 2. Background to the 1984 Bankruptcy Amendments In fact, there is every reason to believe that Congress wanted and expected bankruptcy judges to enforce the professional responsibilities of bankruptcy attorneys through final and binding orders where the mis conduc t in question occurred in a core bankruptcyproceeding or proceedings. 32 In 1984, when Congress-56-

amendedthe Ban krupt cy Code to create the core/non-core distinction, the case law available to Congress provided no reason to think that bankruptcy courts' status as Article I tribunals would bar them from entering final disciplinary orders. In 1926, t he Suprem e Court itself held in Goldsmith v. U.S. Bd. of Tax Appeals , 270 U.S. 117 (1926), that the U.S. Board of Tax Appeals,

an Article I tribu nal, possessed the authority not only to promulgate ethical rules for admitting attorneys to practice, but also to disbar attorneys who failed to meet those standards. See id. at 121-22 (emphasizing, in holding that the Board po sse ssed this power, "the character of the work to be done by the board, the quasi judicial nature of its duties, [and] the magnitude of the interests to be affected by its decisions") . The Court explicitly rejectedthe contention that such a tribun al cannot disbar or discipline lawyers absent express statutory authority, observing that the power of the Board to do so is "so necessary . . . and so usual" that the statute creating it would be interpreted to include that power. Id. at 122.

Furthermore, Congress knew that federal courts before 19 84 had upheld the power of other Article I tribunals to issu e binding disciplinary orders against counsel appearing before them. See, e.g. , Kivitz v. SEC , 475 F.2d 956, 962 (D.C. Cir. 1973) (power of SEC to disbar attorney for ethical misconduct); Herman v. Dulles , 205 F.2d 715, 715-16 (D.C. Cir. 1953) (similar,-57-

International Claims Commission); Francis v. Virgin Islands , 11 F.2d860, 864 (3dCir. 1926) (upholding the contempt powers of the U.S. District Court for the Virgin Islands); Fleming v. United States , 279 F. 613, 616 (9th Cir. 1922) (similar, United States Court for China). Consistent with this line of cases, some courts hadby 1984 already upheld the authority of bankruptcy courts to discipline attorneys for unethical conduct in bankruptcy cases. As earlyas 1979, for example, the Second Circuit described as "nothing novel" the proposition that a debtor's counse l could be sanctionedfor breaching h is eth ical responsibilities to the bankruptcy court. See In re Arlan's Dep't Stores, Inc. , 615 F.2d 925, 943-44 (2d Cir. 1979).

Congress enacted the 1984 bankruptcy amendments against this background. Nothing in the 1984 Act or its legislative history suggests that Congress intended to deny bankruptcy judges the authority to regulate the bankruptcy bar. On the contrary, this court has held that Congress's purpose in the 1984 amendments

was to press the jurisdiction of the bankruptcy courts "to its constitutional bounds" in the wake of Northern Pipeline . See In re ArnoldPrint Works, Inc. , 815 F.2d 165, 168 (1st Cir. 1987) (Breyer, J.). The congressional sponsors of the 1984 am endmen ts describednon-core proceedings as " Marathon -type" cases, referring to the Northern Pipeline decision, and they understood that category to be "very limited." Id. Accordingly, this court33 The Supreme Court endorsed this narrow reading of Northern

Pipeline again the following year, repeatedly citing that case for the proposition that Congress's pow er to assign matters to nonArticle III tribunals is constrained "where private, common law rights are at stake." Schor , 478 U.S. at 854; see also id. (noting that "private, common law rights were his tor ically the types of matters subject to reso lution by Article III courts," citing Northern Pipeline ). -58- concludedthat "Congress intended that 'core proceedings' would be interp retedbroadly, close to or congruent with constitutional limits." Id . 3. Article III and attorney discipline Congress had n o reason to think that Article III is offended when a bankruptcy court enters a binding order against a bankruptcyat torn ey for professional misconduct in a core bankruptcyproceeding. Even the principal opinion does not so contend. Indeed, less than a year after its decision in Northern Pipeline , the Supreme Court emphasized the limits of its holding: "The Court's holding in that case establis hes on ly that Congress may n ot vest in a non-Article III court the power to adjudicate, render final judgment, and i ssue binding orders in a traditional contract action arising under state law , wit hou t consent of the litigants, and subject only to ordinary appellate review." Thomas

v. Union Carbide Agric. Prods. Co. , 473 U.S. 568, 584 (1985) (emphasis added). 33

The proceeding at issue in Sheri dan's case is funda mentallydifferent from a traditional common-law cause of-59-

action. The privilege to practice law, including the privilege to practice before a federal tribunal, is a matter of public license. See In re Snyder , 472 U.S. 634, 644 (1985). It is well-settled that courts have the authority to revoke that license where necessaryto protect the public. See id. ; In re Ruffalo , 390 U.S. 544, 550 (1968); Theardv. United States , 354 U.S. 278, 281 (1957); Ex parte Wall , 107 U.S. 265, 288-89 (1882). Further, a disciplinaryproceeding is a matt er bet ween the court and the attorney only; no right to a jury trial attaches. See Ex parte Wall , 107 U.S. at 288. It is akin to the enforcement of a "public right," and as then-Judge Breyer noted for this court in Arnold Print Works , the Supreme Court in Northern Pipeline found nothing unconstitutional in a bankruptcy judge issuing dispositive orders in such cases. See 815 F.2d at 170. 4. Purposes of the Bankruptcy Code No r is there any reason to infer from the overarchin g purposes of the Bankr uptcy Code that Congress wantedto limit ba nkru ptcyjudges' power to issue final and binding orders disbarring, suspending, or otherwise disciplining attorneys who act unethicallyin core proceedings. On the contrary, the need to maintain attorney discipline and enforce the rules of professional responsibility is, if anything, stronger in the bankruptcy context, where considerations of speedandcost-effectiveness are paramount: A sine qua non in restructuring the deb to r-creditor relation shi p is the court's ability to police the-60-

fiduciaries . . . wh o are responsible for managing the debtor's estate in the best interest of creditors. The bankruptcyc ourt m ust be able to assure itself and the creditors who rely on the process that court-a p proved managers of the debtor's estate are p erforming their work, conscientiously and cost-effectively. In re Southmark Corp. , 163 F.3d 925, 931 (5th Cir. 1999) (holding that a pro fes sional malpractice claim by a Chapter 11 debtor against a court-appointed accountant was a c ore pr oceeding). Bankruptcycourts are charged with the rehabilitation of financiallydistressed debtors and the reorganization or liquidation of their assets, often under the press of time because of the threat of financial loss. In re McLean Indus. , 68 B.R. 690, 695 (Bankr. S.D.N.Y. 1986); see also United States v. Mourad , 289 F.3d174, 179 (1st Cir. 2002) (observing that the power to regulate attorney behavior is necessary "i f the bankruptcy courts are to carry out efficiently and effectively the duties assigned to them by Congres s" (q uoting In re Volpert , 110 F.3d 494, 500 (7th Cir. 1997))). Involving the district court in such disciplinary matters would"unduly burden the already complex and congestedcalendars of the district courts, and unde rmi ne the reasons for the district court's reference of Code cases to the bankruptcy courts." In re McLean Indus. , 68 B.R. at 696; see also In re Mem'l Estates, Inc. , 116 B.R. 108, 112 (N.D. Ill. 1990) (imposition of sanctions must be

a core proceeding because "any other interpretation would seriously hamper the bankruptcy court in its administration of the estate and-61-

wouldprovide additional methods of mult iplyi ng litigation for those seeking to hinder and delay the proceedings in the bankruptcy court"). Congress, moreover, must have been aware that problems of attorney discipline are particularly acute in the consumer bankruptcy area, see In re Bruzzese , 214 B.R. 444, 450-51 (Bankr. E.D.N.Y. 1997), such as the Chapter 13 proceedings in which Sheridan specialized. Consumer debtors, like those whom Sheridan represented, rarely have the resources or sophistication to bring tort claims for legal malpractice. Indeed, because of the high vol ume of consumer bankruptcy filings and the speed at which bankruptcycourts must process suc h peti tions, many consumer debtors "neve r d iscover that their attorneys have committed malpractice." Id. at 450. Direct discipline by the bankruptcy court may be the only feasible means in many cases o f pro tecting debtors and ensuring the ethical conduct of the consumer bankruptcy bar in core proceedings. For this reason, "[b]ankruptcy judges are expectedby Congress, the public, the appointing courts of appeals, andthe leadership of the bar to maintain high standards of performance by all lawyers appearing before them. This is 'part of the job description.'" Id. at 450-51. 5. "Core comes from core" I do not contend that Cong ress intended all attorney disciplinaryproceedings in the bank rupt cy courts to be core-62-

proceedings, regardless of how they arise. There are situations in which the justifications for permitting bankruptcy judges to issue binding disciplinary orders are less compelling –- for example, when an attorney acts unethically in a non-core proceeding in which the parties have refused to consent to the entry of a final order

on the merits. In such cases, the bankruptcy court must recommend find ings of fact and conclusions of law to the district court in anyevent; there is little reason to treat the disciplinary issues alone as within the bankruptcy court's core powers.

As to unethical conduct in core proceedings, however, Congress's purposes in the Bankruptcy Code are much better served by a rule that permits bankruptcy judges to issue final and binding disciplinaryorders directly, without resort to the district court but with normal rights to appeal. In fact, there is a widely acceptedrule in attorney discipline cases that "cor e come s from core" -- that is, disciplinary hearings arising out of core proceedings are themselves core proceedings. See, e.g. , Memorial Estates , 950 F.2d at 1370; In re O'Connor , 2001 WL 1335883, at *1 (N.D. Tex. 2 001); In re French Bourekas, Inc. , 183 B.R. 695, 696 (Bankr . S. D.N.Y. 1995) ("[ T]he power to sanction parties for conduct in a core matter is itself core.") , af f'd , 195 B.R. 19 (S.D.N.Y. 1996); In re VIII S. Mich. Assocs. , No. 94C 5593, 1994 WL 698489, at *5 (N.D. Ill. 1994); Fed. Sav. & Loan Ins. Corp. v. Sutherlin , 109 B.R. 700, 703 (E.D. La. 1989); In re Usoskin , 61-63-

B.R. 869, 872 (Bankr. E.D.N.Y. 1986); In re Emergency Beacon Corp. , 52 B.R. 979, 987 (Bank r. S. D.N.Y. 1985), aff'd , 790 F.2d 285 (2d Cir. 1986); see also In re Monarch Capital Corp. , 173 B.R. 31, 35- 39 (D. Mass. 1994) (contempt proceeding against debtor's attorneys was core because the contempt occurred in a core proceeding).

The "core come s from core" rule also makes practical sense. One chief functional difference between a core proceeding

a nda non-core proceeding is the deference accorded to th e bankruptcycourt's findings of fact. Compare Fed. R. Bankr. P. 8013 (review of core proceedings), with Fed. R. Bankr. P. 9033 (d) (review of non-core proceedings); see generally In re Delta Petroleum(P.R.), Ltd. , 193 B.R. 99, 106 (D.P.R. 1996). In a core proceeding, the bankruptcy judge is empowered to make factual findings on the merits and to have those findings reviewed only for clear error. No useful purpose is servedbydenying the bankruptcy court the power to make equally authoritative findings of fact about the conduct of the very attorneys who appear before it . "If the bankruptcy courts are to administer 'the restructuring of debtor-creditor relations, which is at the core of the federal bankru ptc ypower,' they must also have the power to sanction parties that interfere with such administration." In re Emergency Beacon Corp. , 52 B.R. at 987.

Under the "core com es f rom core" principle, the proceeding against Sheridan was plainly a core proceeding. The34 In addition, the court d ete rmined that Sheridan committed

five violations in the disciplinary proceeding itself, bringing the total to 88 violations in 34 cases.

35 The vast majority of Sheridan's infractions involvedfailing to file certificates of service for his clients' Chapter 13 plans (17 times in 16 cases); failing to file documents or motions relatedto his clients' Chapter 13 petitions in a timely manner (39 tim es i n 28 cases); and failing to appear or appearing late at court hearings (8 occ asions ) and § 341 meetings (3 occasions) re latedto Chapter 13 petitions. Matters concerning th e confirmation of a debtor's plan for reorganization, in cluding Chapter 13 plans, are core proceedings. See 28 U .S. C. § 157(b)(2)(L). -64- overwhelming majority of the ethical violations of which Sheridan

was accused occurred in core proceedings. Th e b ankruptcy court found that Sheridan committed at least 83 ethical violations over 33 separate bankruptcy cases. 34 It i s cl ear from the record that at least 80 of those 83 violations, accounting for fully 31 of the 33 cases , occurred in core proceedings (specifically, proceedings to propose, file, modify, andconfirm Chapter 13 plans). 35 Further, there has been no showing that the remaining three instances of misconduct occurred in non-core proceedings; rather, it is simply impossible to tell from the record whether those proceedings were also core. As a result, the only impediment to applying the "core

comes from core" rule in this case is a set of 3 ethical violations in proceedings whose core/non-core status is unknown. Even assuming that those violations (which accounted for less than 1/20th of the ch arge s against Sheridan) occurred in non-core proceedings, there is no reason to th ink th at they materially-65-

affectedthe bankruptcy court's choice of sanction. Cf. Sheridan , 2001 WL 1757058, at *23 (declaring that the evidence at trial "clearly establishes" that Sheridan is not professionally competent). 6. Summary The court's constrained readi ng of § 157 contradicts Congress's intent in the 1984 amendments, which was not to shrink the powers of the ba nkruptcy c ourts but to extend them to their jurisdictional limits in the wake of Northern Pipeline . In light of the open-ended statutory text of § 157; the clear congressional intent that courts shoul d in terpret the term "core proceeding" broadly; the binding precedent in our own circuit commanding that we do so; the absence of relevant constitutional constraints; the legitimate functional need for bankruptcy courts to have "core" jurisdiction over attorney misconduct arising in core proceedings; andthe broadly accepted rule that "core comes from core," I think

we would be obliged to hold, were the issue properly presented, that the disciplinary proceeding against Sheridan was a "core proceeding" under § 157. B. The Principal Opinion's Four Distinguishing Factors

The principal opinion rese rves the question of whether attorne y disciplinary proceedings may ever enjoy core status, holding instead that Sheridan's case is distinguishable on four grounds: (1) the disciplinary proceeding against Sheridan didnot-66-

take place in the context of an ongoing bankruptcy case, but rather was an "omnibus" proceeding spanning multiple cases; (2) the rule of decision in Sheridan's disciplinary proceeding came from statelaw ethics rules, rather than federal law; (3) any potential effect

on a closedbankruptcy case is remote andspeculative; and (4) the bankruptcycourt's d isciplinary order was "extreme" relative to Sheridan's misconduct. See Op. at 31-32. Not one of these grounds is valid basis for distinguishing this case. 1. Omnibus vs. individual disciplinary proceedings The principal opinion first argues that Sheridan's case merits different treatment because it was an "omnibus" disciplinary investigation -- that is, because the bankruptcy court consolidated the ethical issues aris ing in multiple, independent bankruptcy cases into a single disciplinary hearing.

This objection is without merit. Nothin g i n § 157 restricts core proceedings to proceedings that concern a single bankruptcy case, and the principal opinion cites no authority for its suggestion tha t § 157(b) should be interpreted so narrowly. Compare Arnold P rint Wo rks , 815 F.2d at 168. There is no functional reason to discourage bankruptcy court s fr om combining disciplinaryissues spa nn ing multiple bankruptcy cases into a single proceeding for expedi tiou s administration. Normally this court encourages and respects the efforts of lower courts to manage their dockets efficiently. In re Atlantic Pipe Corp. , 304 F.3d36 BankruptcyRule 7052 makes Fed. R. Civ. P. 52 applicable to

bankruptcyproceedings. An order entered under Rule 7052 is a final judgment. See Fed. R. Civ. P. 52(a); see also In re Werthen , 329 F.3d 269, 272 (1st Cir. 2003) (findings of fact under Bankruptcy Rule 7052 are reviewed for clear error). -67- 135, 143-45 (1st Cir. 2002); A.M. Capen's Co., Inc. v. Am. Trading & Prod. Corp. , 202 F.3d 469, 472 n.4 (1st Cir. 2000); Rosario-Diaz

v. Gonzalez , 140 F.3d312, 315 (1st Cir. 1998). Moreover, attorney discipline in the federal courts outside of the bankruptcy context is frequently imposed in "omnibus" proceedings. See, e.g. , United States v. Johnson , 327 F.3d 554, 558, 561-62 (7th Cir. 2003); In re Smith , 76 F.3d 335, 33 6 (1 0th Cir. 1996) (per curiam). Surely Congress would not have wanted the bankruptcy judge to hold 30 separate disciplinary hearings before entering a binding sanctions order against Sheridan.

The case law confirms that "omnibus" disciplinary hearings in the bankruptcy courts are gener all y treated as core proceedings. For example, the Fifth Circuit in 1999 affirmed a four-year suspension imposed by a bankruptcy court in a proceeding that involved evidence of misconduct in three separate bankruptcy

cases. See In re Dragoo , 219 B.R. 460, 465-68 (Bankr. N.D. Tex. 1998), aff'd , 186 F.3d 614 (5th Cir. 1999). The court of appeals did not take issue with the bankruptcy court's express entry of a final order unde r Fed. R. Bankr. P. 7052. 36 See 219 B.R. at 468 n.2. See also In re Melendez , 235 B.R. 173, 181-82, 201-04 (Bankr. D. Mass. 1999) (imposing sanctions in an omnibus disciplinary37 For similar reasons, there is no justification for the

principal opinion's suggestion that the power of a bankruptcy judge to enter binding disciplinary orders should depend on whether the bankruptcy judge personally witnesses the attorney's misconduct. -68- hearing initiated su a sp onte by the bankruptcy court against several debtors' attorneys for inadequate representation of their

re spective clients, and expressly entering its findings under Bankruptcy Rule 7052); In re Nesom , 76 B.R. 101, 102 & n.1 (Bankr. N .D. Te x. 1987) (suspending an attorney for misconduct in two bankruptcycases af ter a sua sponte disciplinary hearing by the court, and expressly terming the proceeding core).

The principal opinion's objection to consolidated disciplinaryproceedings also makes little sense in li ght of the rules of evidence. By the princip al opi nion's reasoning, the bankruptcycourt in Sheridan 's cas e could simply have framed its hearing as an investigation into Sheridan's misconduct in a single bankruptcycase, then admitted evidence of Sheridan's misconduct in other cases under Fed. R. Evid. 404(b) and entered a final order on that basis. See In re Ludwick , 185 B.R. 238, 242-47 (Bankr. W.D. Mich. 1995) (en banc) (following this approach in suspending a bankruptcy attorney from practice for two years); see also id. at 239 (determining that the hearing was a core proceeding). It elevates form over substance to hold that the functionally equivalent approach selected by the bankruptcy court in this case rendered the proceeding non-core. 37-69-

2. Source of law The principal opinion ne x t argues that the proceeding against Sheridan should be characterized as non-core becau se t he underlying substantive ethics rules "derive . . . from state law." Op. at 24-25. That is flatly wrong. The rules of attorney conduct in federal court are federal law, not state law. The Supreme Court

so held in In re Snyder , in which the court of appeals had asserted that an attorney's ethical obligations in federal court are defined by state law. The Supreme Court disagreed: "The state code of professional responsibility does not by its own terms apply to sanctions in the federal courts. Federal courts admit and suspend attorneys as an exercise of their inherent power; the sta nda rds imposedare a matter of federal law ." 472 U.S. at 645 n.6 (emphasis added); see also In re Larry's Apa rtm ent, L.L.C. , 249 F.3d832, 837-38 (9th Cir. 2001) (federal law, not state law, governs the imposition of sanctions in federal bankruptcy cases). This case did not inv olve a "s tate law claim that could exist outs ide o f bankruptcy." In re ACI-HDT Supply Co. , 205 B.R. 231, 236 (B.A.P. 9th Cir. 1997). Rather, it involved a federal bankruptcyjudge's enforceme nt of federal standards of conduct against an attorney who practiced in the federal bankruptcy courts.

In any event, the focus on the source of the applicable law is beside the point. As this court heldin Arnold Print Works , "[i]t is the nature of the proceeding –- its relation to the basic38 Neither the principal opinion nor the concurring opinion

acknowledges that several of the underlying bankruptcy cases were still pending at the time the disciplinary proceeding against Sheridan was instituted in October 2000. Indeed, several of the instances of misconduct proven during the bench trial occurred as late as November 2000, after the disciplinary proceedings had begun. At least in these cases, the disciplinary action against Sheridan was literally a "matter[] concerning the administration of the estate." § 157(b)(2)(A). -70- function of the bankruptcy court –- not the state or federal basis for the claim, that makes the difference here." 815 F.2d at 169 (emphasis added). 3. Closed cases The principal opinion also attempts to disti ngui sh the proceeding against Sheridan on the grounds that much of the charged misconduct occurred in now-closed bankruptcy cases, 38 so that any remedy ordered by the bankruptcy court is unlikely to concern the administration of those clients' estates. Therefore, the principal opinion argues, the procee ding cannot be core because it neither "concern[s] the administration of [an] estate," § 157(b)(2)(A), nor "affect[s] the liquidation of the assets of [an] estate," § 157(b)(2)(O).

This, too, is unpersuasive. The bankruptcy cou rt 's imposition of sanctions on Sheridan did in fact "concern[] the administration of the estate" in each of the underlying bankruptcy

cases within the meaning of § 157(b)(2)(A). Th at section conspicuously does not require tha t th e proceeding in question contemporaneously affect the ongoing administration of the estate;-71-

the matter must simp ly " concern[]" the administration of the estate. Compare § 157 (b)( 2)(O) (core proceedings include "other proceedings affecting . . . the debtor-creditor . . . relationship" (emphasis added)). And the impo sit ion of sanctions against the debtor's attorney necessarily "concern[s]" the administration of the debtor's estate because, in a Chapter 13 case, the debtor's attorneyis paid with funds from the estate in an amount "based on a consideration of the benefit . . . of [the attorney's] services to the debtor." 11 U.S.C. § 330(a)(4)(B); see also id. § 503( b)(2) (authorizing payments to attorneys under § 330(a) as "administrative expenses" of the estate); cf. Delta Petroleum , 193 B.R. at 106 (disputes over the appointment and compensation of atto rneys are core proceedings because they concern t h e administration of the estate).

The majority's rule would require a bankruptcy court even in a single core proceeding to interrupt its adjudication of the debt or's petition to decide, then and there, an attorney disciplinarymatter. It would preclude the court, on penalty of converting t he pro ceeding from core to non-core, from waiting to deal with the attorney until after it had dealt with debtor's and creditors' arguments. That priority is backwards.

Moreover, even in the majority's terms, t he order sanctioning Sheridan "concern[ed]" the administration of the underlying estates because it provideda clear basis for re-opening-72-

those cases, which the bankruptcy court may do whenever it finds "cause." See 11 U.S.C. § 350(b) ("A case may be reopened . . . to administer assets, to accord relief to the debtor, or for other cause."). The principal opinion characterizes the possibility of reopening the underlying cases as "remote and overly speculative." Op. at 31. But at least one bankruptcy court has reopened a case "for cause " due to evidence of ineffective representation by the debtor's counsel. See Bruzzese , 214 B.R. at 449-50. Moreover, there is no warrant in § 157(b)(2) for insisting on proof that a proceeding will alter the administration of the estate; the statute requires only that the proceeding "concern[]" its administration. The narrower reading is contrary to this court's conclusion in ArnoldPrint Works that Congress intende d th e term "core proceeding" to be interpreted expansively.

Lastly, there is no independent prob l em with imposingsanctions on an attorney for misconduct that occurred in a sinceclosedcase. Disciplinary proceedings against attorneys do not depend on the continued pendency of the underlying action and can be imposed long after a judgment on the merits. See Chambers v. NASCO, Inc. , 5 01 U .S. 32, 56 (1991); Cooter & Gell v. Hartmarx Corp. , 496 U.S. 384, 396 (1990). This has been the rule in bankruptcy cases as well. See In re Hasan , 287 B.R. 308, 311-12 (Bankr. D. Conn. 2002) (collecting cases); see also In re Rambo , 209 B.R. 527, 528-29 (B.A.P. 10th Cir. 1997) (dismissa l o f-73-

underlying Chapter 1 3 c ase did not affect BAP's jurisdiction to decide appeal of sanctions order); In re Balboa Improvements, Ltd. , 99 B.R. 966 (B.A.P. 9th Cir. 1989) (similar). 4. "Extreme" nature of the sanction Finally, the principal opinion cites the "extreme" nature of the sanction imposed on Sheridan as a justification for holding that the proceeding against himwas not core. Op. at 31-32. This conflates the core/non-core question with the merits of Sheridan's appeal. Whether the bankruptcy court's chosen sanction was "extreme" has nothing to do with whether it had the statutory authorityto enter a binding order embodying that sanction. Suspensions and disbarments are severe sanctions that merit close review. But that review should have been done here. IV. For the foregoing reasons, I respectfully dissent.