Source: https://mediatbankry.com/2019/04/11/justices-scalia-and-kennedy-their-impact-on-bankruptcy-court-authority/?shared=email&msg=fail
Timestamp: 2019-04-19 01:01:00+00:00

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Justice Anthony Kennedy served from February 18, 1988, until his retirement on July 31, 2018.
Over the same time, Justice Scalia never wavered in asserting that Article III requires a limited role for bankruptcy courts.
In 2015, they parted ways in Wellness International—Kennedy joined the majority, while Scalia joined the dissent.
What follows is a look at their respective positions in these three cases (Granfinanciera, Stern v. Marshall and Wellness International).
Case No. 1: Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989)—Must the government be a party to a “public rights” dispute?
The Granfinanciera question is whether a fraudulent conveyance lawsuit filed in bankruptcy court is subject to the Constitution’s Seventh Amendment jury trial right. The Supreme Court answers this question in the affirmative.
In Part IV of its opinion, however, the Granfinaciera majority discusses its “public rights” exception to the Constitution’s Article III requirements.
Instead, the “crucial question” is whether Congress created “a seemingly ‘private’ right” that is “so closely integrated into a public regulatory scheme” that an agency may resolve it “with limited involvement” of an Article III court.
Case No. 2: Stern v. Marshall, 564 U.S. 462 (2011)—How is the “public rights” exception to be applied?
Vicki Marshall files bankruptcy, where her husband’s son files a proof of claim for defamation. Vicki objects to the son’s claim and also asserts tort counterclaims against him in bankruptcy court.
The Stern v. Marshall question is whether the bankruptcy court has authority to decide the tort counterclaims. The Supreme Court answers this question in the negative on a five-to-four split vote—and both Kennedy and Scalia are in the majority.
Case No. 3: Wellness International Network v. Sharif, Case No. 13-935 (2015)—Jealously guarded doctrine v. practical effect analysis.
The Wellness International question is whether parties can, by consent, authorize a bankruptcy court to decide an alter-ego claim. The Supreme Court answers this question in the affirmative.
Cases in which we found an Article III violation involve a defendant forced to litigate involuntarily before a non-Article III court.
Bankruptcy courts, therefore, have jurisdiction to hear and decide the alter-ego claim in Wellness—even without consent of the parties.
With six decades of service between them, Justices Scalia and Kennedy have left their mark on bankruptcy laws in these United States. A primary impact has been to limit the role and authority of bankruptcy courts, especially in Granfinanciera and Stern v. Marshall.
By the time of Wellness International, Justice Kennedy took a more pragmatic approach, allowing bankruptcy courts to act on consent of the parties. But Justice Scalia stuck very close, throughout the entirety of his three decades of service, to the restrictive viewpoint he announced, back in 1989, in Granfinanciera.
As their replacements step into the picture and address bankruptcy issues, it’s impossible to know what positions they will take on the extent of bankruptcy court authority. Here’s hoping that both replacements will be more favorable than their predecessors to bankruptcy court authority.

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