Opinion ID: 416587
Heading Depth: 1
Heading Rank: 2

Heading: retrospective application

Text: 15 Although the six plurality and concurring justices in Northern Pipeline agree that the decision should be applied prospectively only, the effect of the decision remains open to debate. We interpret the retroactivity part of the decision to mean that the bankruptcy courts cannot operate under the jurisdictional grant contained in Sec. 1471(c) as of December 24, 1982. We do not believe, as White Motor contends, that the Supreme Court wanted a distinction to be made between unadjudicated cases that were commenced prior to the lifting of the stay and those that are filed after December 24, 1982. 16 The Supreme Court cited three cases in a footnote to explain the nature of the prospective-only provision. Northern Pipeline, supra, 102 S.Ct. at 2880 n. 41. The first, Buckley v. Valeo, 424 U.S. 1, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976), involved the constitutionality of the Federal Elections Committee as created by the Federal Election Campaign Act. The Court determined that the Commission could not perform many of its legislative and adjudicatory functions because the method established by Congress for the appointment of its members did not comply with the Appointments Clause of the Constitution, Art. II, Sec. 2, cl. 2. The Court specified on the page cited in the Northern Pipeline footnote, that the past actions of the Commission would remain valid despite the Buckley decision: 17 It is also our view that the Commission's inability to exercise certain powers because of the method by which its members have been selected should not affect the validity of the Commission's administrative actions and determinations to this date, including its administration of those provisions, upheld today, authorizing the public financing of federal elections. The past acts of the Commission are therefore accorded de facto validity, just as we have recognized should be the case with respect to legislative acts performed by legislators held to have been elected in accordance with an unconstitutional apportionment plan. 18 Id. at 142, 96 S.Ct. at 693. (citations omitted) Furthermore, the Court allowed the Commission to keep operating with all of the powers envisioned by the FECA for one month so that Congress would have an opportunity to reconstitute the Commission in a valid manner. 19 We believe that the Buckley decision does not stand, as White Motor suggests, as authority for the continued adjudication by the bankruptcy courts of cases filed prior to the lifting of the stay. In Buckley, the Supreme Court simply refused to create a chaotic situation by overturning all of the prior decisions of the Elections Commission. The Court did not, however, go so far as to permit the Commission to continue to perform any of the unconstitutional powers after the lifting of the stay. Similarly, we find that the Supreme Court did not intend to sanction the continued operation of the bankruptcy courts under Sec. 1471(c) after December 24, 1982, with respect to pending matters. To prevent undue disruption, as in Buckley, the Court, by foreclosing retrospective application of Northern Pipeline, simply refused to permit challenges to past acts or final determinations of the bankruptcy courts. 20 In the second case cited in footnote 41, Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371, 60 S.Ct. 317, 84 L.Ed. 329 (1940), the Supreme Court ruled on the effect of its previous determination that a particular grant of jurisdiction to the district courts was unconstitutional. In Ashton v. Cameron County District, 298 U.S. 513, 56 S.Ct. 892, 80 L.Ed. 1309 (1936), the Court had declared unconstitutional the statute allowing the district courts to adjust municipal debts in a bankruptcy proceeding. The district court in Chicot had approved a debt readjustment two months prior to the Supreme Court's decision that the district courts had no jurisdiction to do so. The creditors failed to raise the constitutional issue on direct review. Instead, they waited until after the plan for readjustment became embodied in a final order and then they sought to attack the readjustment in collateral proceedings. The Supreme Court denied the appeal, declaring that rulings of the district court which had become final could not be attacked collaterally even if the original action was taken under an unconstitutional grant of jurisdiction. 21 In the context of the Northern Pipeline decision, we believe that Chicot merely teaches that final rulings rendered under an unconstitutional grant of jurisdiction may not later be challenged collaterally. Nowhere does Chicot address the issue of what should happen with cases pending when the statute is found unconstitutional. Therefore, we must conclude that the reference to Chicot was included in footnote 41 simply to emphasize that the prospective-only provision in Northern Pipeline simply validates orders and dispositions by the bankruptcy courts which became final in the Bankruptcy Court as of December 24, 1982. 22 Finally, the Supreme Court cites a footnote in Insurance Corp. of Ireland v. Compagnie des Bauxites, --- U.S. ----, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982), which reads as follows: 23 A party that has had an opportunity to litigate the question of subject matter jurisdiction may not, however, reopen that question in a collateral attack upon an adverse judgment. It has long been the rule that principles of res judicata apply to jurisdictional determinations--both subject matter and personal. See Chicot County Drainage Dist. v. Bank, 308 U.S. 371, 60 S.Ct. 317, 84 L.Ed. 329 (1940); Stoll v. Gottleib, 305 U.S. 165, 59 S.Ct. 134, 83 L.Ed. 104 (1938). 24 Id. 102 S.Ct. at 2104, n. 9. In Insurance Corp., the Court was asked to resolve whether the district court could accept without proof that personal jurisdiction had been established in a case in which the defendants refused to comply with a discovery order aimed at producing evidence of the court's in personam jurisdiction. In its explanation for upholding the sanction, the Court reviewed the differences between personal and subject matter jurisdiction. The footnote cited in Northern Pipeline (quoted above) merely restates the general res judicata rule that final orders and decisions may not be challenged in collateral actions on the basis of lack of jurisdiction. As with Chicot, supra, this footnote lends no credence to the argument that a court may continue to adjudicate a matter after its jurisdictional grant has been declared unconstitutional. Both Chicot and Insurance Corp. refer to the finality of final orders which are the only actions of the bankruptcy courts which we believe the Supreme Court intended to protect in its prospective-only directive. 25 Thus, neither the bankruptcy courts nor special masters appointed by bankruptcy courts retain jurisdiction under Sec. 1471(c) of Title 28, the provision invalidated in Northern Pipeline, to decide unadjudicated cases and issues after December 24, 1982. Our holding in this respect disposes of White Motor's first argument, but it does not necessarily mean that the bankruptcy courts lack a more limited derivative or referred jurisdiction as a result of delegation by Article III judges acting pursuant to the authority vested in them by Congress. We, therefore, proceed to examine the other arguments advanced by the parties supporting the derivative jurisdiction of the bankruptcy courts.