SUPREME COURT OF THE UNITED STATES
_________________
No. 13–935
_________________
WELLNESS INTERNATIONAL NETWORK, LIMITED, et
al, PETITIONERS
v. RICHARD SHARIF
on writ of certiorari to the united states
court of appeals for the seventh circuit
[May 26, 2015]
Chief Justice Roberts, with whom Justice
Scalia joins, and with whom Justice Thomas joins as to Part I,
dissenting.
The Bankruptcy Court in this case granted
judgmentto Wellness on its claim that Sharif’s bankruptcy estate
contained assets he purportedly held in a trust. Provided that no
third party asserted a substantial adverse claim to those assets,
the Bankruptcy Court’s adjudication “stems from the bankruptcy
itself” rather than from “the stuff of the traditional actions at
common law tried by the courts at Westminster in 1789.”
Stern v.
Marshall, 564 U. S. ___, ___ (2011)
(slip op., at 18, 34) (internal quotation marks omitted). Article
III poses no barrier to such a decision. That is enough to resolve
this case.
Unfortunately, the Court brushes aside this
narrow basis for decision and proceeds to the serious
constitutional question whether private parties may consent to an
Article III violation. In my view, they cannot. By reserving the
judicial power to judges with life tenure and salary protection,
Article III constitutes “an inseparable element of the
constitutional system of checks and balances”—a structural
safeguard that must “be jealously guarded.”
Northern Pipeline
Constr. Co. v.
Marathon Pipe Line Co., 458 U. S.
50, 58, 60 (1982) (plurality opinion).
Today the Court lets down its guard. Despite our
precedent directing that “parties cannot by consent cure” an
Article III violation implicating the structural separation of
powers,
Commodity Futures Trading Comm’n v.
Schor,
478 U. S. 833 –851 (1986), the majority authorizes litigants
to do just that. The Court justifies its decision largely on
pragmatic grounds. I would not yield so fully to functionalism. The
Framers adopted the formal protections of Article III for good
reasons, and “the fact that a given law or procedure is efficient,
convenient, and useful in facilitating functions of government,
standing alone, will not save it if it is contrary to the
Constitution.”
INS v.
Chadha, 462 U. S. 919, 944
(1983) .
The impact of today’s decision may seem limited,
but the Court’s acceptance of an Article III violation is not
likely to go unnoticed. The next time Congress takes judicial power
from Article III courts, the encroachment may not be so modest—and
we will no longer hold the high ground of principle. The majority’s
acquiescence in the erosion of our constitutional power sets a
precedent that I fear we will regret. I respectfully dissent.
I
The Court granted certiorari on two questions
in this case. The first is whether the Bankruptcy Court’s entry of
final judgment on Wellness’s claim violated Article III based on
Stern. The second is whether an Article III violation of the
kind recognized in
Stern can be cured by consent. Because
the first question can be resolved on narrower grounds, I would
answer it alone.
A
The Framers of the Constitution “lived among
the ruins of a system of intermingled legislative and judicial
powers.”
Plaut v.
Spendthrift Farm, Inc., 514
U. S. 211, 219 (1995) . Under British rule, the King “made
Judges dependent on his Will alone, for the tenure of their
offices, and the amount and payment of their salaries.” The
Declaration of Independence ¶11. Between the Revolution and the
Constitutional Convention, state legislatures routinely interfered
with judgments of the courts. This history created the “sense of a
sharp necessity to separate the legislative from the judicial
power.”
Plaut, 514 U. S., at 221; see
Perez v.
Mortgage Bankers Assn., 575 U. S. ___, ___–___ (2015)
(Thomas, J., concurring in judgment) (slip op., at 5–8). The result
was Article III, which established a judiciary “truly distinct from
both the legislature and the executive.” The Federalist No. 78, p.
466 (C. Rossiter ed. 1961) (A. Hamilton).
Article III vests the “judicial Power of the
United States” in “one supreme Court, and in such inferior Courts
as the Congress may from time to time ordain and establish.”
Art. III, §1. The judges of those courts are entitled to hold
their offices “during good Behaviour” and to receive compensation
“which shall not be diminished” during their tenure.
Ibid.
The judicial power extends “to all Cases, in Law and Equity,
arising under this Constitution, the Laws of the United States, and
Treaties” and to other enumerated matters. Art. III, §2. Taken
together, these provisions define the constitutional birthright of
Article III judges: to “render dispositive judgments” in cases or
controversies within the bounds of federal jurisdiction.
Plaut, 514 U. S., at 219 (internal quotation marks
omitted).
With narrow exceptions, Congress may not confer
power to decide federal cases and controversies upon judges who do
not comply with the structural safeguards of Article III. Those
narrow exceptions permit Congress to establish non-Article III
courts to exercise general jurisdiction in the territories and the
District of Columbia, to serve as military tribunals, and to
adjudicate disputes over “public rights” such as veterans’
benefits.
Northern Pipeline, 458 U. S., at 64–70
(plurality opinion).
Our precedents have also recognized an exception
to the requirements of Article III for certain bankruptcy
proceedings. When the Framers gathered to draft the Constitution,
English statutes had long empowered nonjudicial bankruptcy
“commissioners” to collect a debtor’s property, resolve claims by
creditors, order the distribution of assets in the estate, and
ultimately discharge the debts. See 2 W. Blackstone, Commentaries
*471–488. This historical practice, combined with Congress’s
constitutional author-ity to enact bankruptcy laws, confirms that
Congress may assign to non-Article III courts adjudications
involving “the restructuring of debtor-creditor relations, which is
at the core of the federal bankruptcy power.”
Northern
Pipeline, 458 U. S., at 71 (plurality opinion).
Although Congress may assign some bankruptcy
proceedings to non-Article III courts, there are limits on that
power. In
Northern Pipeline, the Court invalidated statutory
provisions that permitted a bankruptcy court to enter final
judgment on a creditor’s state law claim for breach of contract.
Because that claim arose not from the bankruptcy but from
independent common law sources, a majorityof the Court determined
that Article III required an adjudicator with life tenure and
salary protection. See
id., at 84;
id., at 90–91
(Rehnquist, J., concurring in judgment).
Congress responded to
Northern Pipeline
by allowing bankruptcy courts to render final judgments only in
“core” bankruptcy proceedings. 28 U. S. C. §157(b). Those
judgments may be appealed to district courts and reviewed under
deferential standards. §158(a). In non-core proceedings, bankruptcy
judges may submit proposed findings of fact and conclusions of law,
which the district court must review
de novo before
entering final judgment. §157(c)(1).
In
Stern, we faced the question whether a
bankruptcy court could enter final judgment on an action defined by
Congress as a “core” proceeding—an estate’s counterclaim against a
creditor based on state tort law. §157(b)(2)(C). We said no.
Because the tort claim neither “stem[med] from the bankruptcy
itself” nor would “necessarily be resolved in the claims allowance
process,” it fell outside the recognized exceptions to Article III.
564 U. S., at ___ (slip op., at 34). Like the contract claim
in
Northern Pipeline, the tort claim in
Stern
involved “the stuff of the traditional actions at common law tried
by the courts at Westminster in 1789.”
Id., at ___ (slip
op., at 18) (quoting
Northern Pipeline, 458 U. S., at 90
(Rehnquist, J., concurring in judgment)). Congress had no power
under the Constitution to assign the resolution of such a claim to
a judge who lacked the structural protections of Article III.
B
The question here is whether the claim
Wellness submitted to the Bankruptcy Court is a “
Stern
claim” that requires final adjudication by an Article III court.
See
Executive Benefits Ins. Agency v.
Arkison, 573
U. S. ___, ___–___ (2014) (slip op., at 8–9) (assuming without
deciding that a fraudulent conveyance action is a “
Stern
claim”). As the Court recounts, Wellness alleged that Sharif had
concealed about $5 million of assets by claiming that they were
owned by a trust. Wellness sought a declaratory judgment that the
trust was in fact Sharif’s alter ego and that its assets should
accordingly be part of his bankruptcy estate. The Bankruptcy Court
granted final judgment (based on Sharif’s default) to Wellness,
declaring that the trust assets were part of Sharif’s estate
because he had treated them as his own property.
Ante, at
5–6.
In my view, Article III likely poses no barrier
to the Bankruptcy Court’s resolution of Wellness’s claim. At its
most basic level, bankruptcy is “an adjudication of interests
claimed in a
res.”
Katchen v.
Landy, 382
U. S. 323, 329 (1966) (internal quotation marks omitted).
Wellness asked the Bankruptcy Court to declare that assets held by
Sharif are part of that res. Defining what constitutes the estate
is the necessary starting point of every bankruptcy; a court cannot
divide up the estate without first knowing what’s in it. See 11
U. S. C. §541(a). As the Solicitor General explains,
“Identifying the property of the estate is therefore inescapably
central to the restructuring of the debtor-creditor relationship.”
Brief for United States as
Amicus Curiae 14.
Identifying property that constitutes the estate
has long been a central feature of bankruptcy adjudication. English
bankruptcy commissioners had authority not only to collect property
in the debtor’s possession, but also to “cause any house or
tenement of the bankrupt to be broken open,” in order to uncover
and seize property the debtor had concealed. 2 W. Blackstone,
Commentaries *485. America’s first bankruptcy statute, enacted by
Congress in 1800, similarly gave commissioners “power to take into
their possession, all the estate, real and personal, of every
nature and description to which the [debtor] may be entitled,
either in law or equity, in any manner whatsoever.” §5, 2Stat. 23.
That is peculiarly a bankruptcy power.
The Bankruptcy Act of 1898 provides further
support for Wellness’s position. Under that Act, bankruptcy
referees had authority to exercise “summary” jurisdiction over
certain claims, while other claims could only be adjudi-cated in
“plenary” proceedings before an Article III district court. See
Arkison, 573 U. S., at ___–___ (slip op., at 4–5). This
Court interpreted the 1898 Act to permit bankruptcy referees to
exercise summary jurisdiction to determine whether property in the
actual or constructive possession of a debtor should come within
the estate, at least when no third party asserted more than a
“merely colorable” claim to the property.
Mueller v.
Nugent, 184 U. S. 1, 15 (1902) . In the legal parlance
of the times, a “merely colorable” claim was one that existed “in
appearance only, and not in reality.” Black’s Law Dictionary 223
(1891). So a bankruptcy referee could exercise summary jurisdiction
over property in the debtor’s possession as long as no third party
asserted a “substantial adverse” claim.
Taubel-Scott-Kitzmiller
Co. v.
Fox, 264 U. S. 426 –433 (1924).
Here, Sharif does not contest that he held legal
title to the assets in the trust. Assuming that no third party
asserted a substantial adverse claim to those assets—an inquiry for
the Bankruptcy Court on remand—Wellness’s alter ego claim fits
comfortably into the category of cases that bankruptcy referees
could have decided by themselves under the 1898 Act.
In
Mueller, for example, this Court held
that a bankruptcy referee could exercise summary jurisdiction over
property in the possession of a third party acting as the debtor’s
agent. 184 U. S., at 14–17; see Black’s Law Dictionary 302
(10th ed. 2014) (example of a merely “color-able” claim is “one
made by a person holding property as an agent or bailee of the
bankrupt”). Similarly, this Court held that a bankruptcy referee
could exercise summary jurisdiction over a creditor’s claim that
the debtor had concealed assets under the veil of a corporate
entity that was “nothing but a sham and a cloak.”
Sampsell
v.
Imperial Paper & Color Corp., 313 U. S. 215 –217
(1941) (internal quotation marks omitted), rev’g 114 F. 2d 49,
52 (CA9 1940) (describing creditor’s claim that corporation was
debtor’s “alter ego”). As the Court explained in
Sampsell,
the “legal existence of the affiliated corporation” did not
automatically require a plenary proceeding, because “[m]ere legal
paraphernalia will not suffice to transform into a substantial
adverse claimant a corporation whose affairs are so closely
assimilated to the affairs of the dominant stockholder that in
substance it is little more than his corporate pocket.” 313
U. S., at 218. Just as the bankruptcy referee in that case had
authority to decide whether assets allegedly concealed behind the
corporate veil belonged to the bankruptcy estate, the Bankruptcy
Court here had authority to decide whether the assets allegedly
concealed in the trust belonged to Sharif’sestate.
Sharif contends that Wellness’s alter ego claim
is more like an allegation of a fraudulent conveyance, which this
Court has implied must be adjudicated by an Article III court. See
Granfinanciera, S. A. v.
Nordberg, 492 U. S. 33,
56 (1989) ;
Arkison, 573 U. S., at ___–___ (slip op.,
at 8–9). Although both actions aim to remedy a debtor’s deception,
they differ in a critical respect. A fraudulent conveyance claim
seeks assets in the hands of a third party, while an alter ego
claim targets only the debtor’s “second self.” Webster’s New
International Dictionary 76 (2d ed. 1954). That distinction is
significant given bankruptcy’s historic domain over property within
the actual or constructive “possession [of] the bankrupt at the
time of the filing of the petition.”
Thompson v.
Magnolia
Petroleum Co., 309 U. S. 478, 481 (1940) . Through a
fraudulent conveyance, a dishonest debtor
relinquishes
possession of assets before filing for bankruptcy. Reclaiming those
assets for the estate requires depriving third parties of property
within their otherwise lawful possession and control, an action
that “quintessentially” required a suit at common law.
Granfinanciera, 492 U. S., at 56. By contrast, a
debtor’s possession of property provided “an adequate basis” for a
bankruptcy referee to adjudicate a dispute over title in a summary
proceeding.
Thompson, 309 U. S., at 482; see
Mueller, 184 U. S., at 15–16 (distinguishing claim to
property in possession of debtor’s agent from fraudulent conveyance
claim in determining that bankruptcy referee could exercise summary
jurisdiction).
In sum, unlike the fraudulent conveyance claim
in
Granfinanciera, Wellness’s alter ego claim alleges that
assets within Sharif’s actual or constructive possession belong to
his estate. And unlike the breach of contract and tort claims at
issue in
Northern Pipeline and
Stern, Wellness’s
claim stems not from any independent source of law but “from the
bankruptcy itself.”
Stern, 564 U. S., at ___ (slip op.,
at 34). Provided that no third party asserted a substantial adverse
claim to the trust assets, Wellness’s claim therefore falls within
the narrow historical exception that permits a non-Article III
adjudicator in certain bankruptcy proceedings. I would reverse the
contrary holding by the Court of Appeals and end our inquiry there,
rather than deciding a broader question that may not be necessary
to the disposition of this case.
II
The Court “expresses no view” on whether
Wellness’s claim was a
Stern claim.
Ante, at 8,
n. 7. Instead, the Court concludes that the Bankruptcy Court
had constitutional authority to enter final judgment on Wellness’s
claim either way. The majority rests its decision on Sharif’s
purported consent to the Bankruptcy Court’s adjudication. But
Sharif has no authority to compromise the structural separation of
powers or agree to an exercise of judicial power outside Article
III. His consent therefore cannot cure a constitutional
violation.
A
“[I]f there is a principle in our Constitution
. . . more sacred than another,” James Madison said on
the floor of the First Congress, “it is that which separates the
Legislative, Executive, and Judicial powers.” 1 Annals of Cong. 581
(1789). A strong word, “sacred.” Madison was the principal drafter
of the Constitution, and he knew what he was talking about. By
diffusing federal powers among three different branches, and by
protecting each branch against incursions from the others, the
Framers devised a structure of government that promotes both
liberty and accountability. See
Bond v.
United
States, 564 U. S. ___, ___–___ (2011) (slip op., at
10–11);
Free Enterprise Fund v.
Public Company Accounting
Oversight Bd., 561 U. S.477, 497–501 (2010)
(
PCAOB);
Youngstown Sheet & Tube Co. v.
Sawyer, 343 U. S. 579, 635 (1952) (Jackson, J.,
concurring).
Preserving the separation of powers is one of
this Court’s most weighty responsibilities. In performing that
duty, we have not hesitated to enforce the Constitution’s mandate
“that one branch of the Government may not intrude upon the central
prerogatives of another.”
Loving v.
United States,
517 U. S. 748, 757 (1996) . We have accordingly invalidated
executive actions that encroach upon the power of the Legislature,
see
NLRB v.
Noel Canning, 573 U. S. ___ (2014);
Youngstown, 343 U. S. 579 ; legislative actions that
invade the province of the Executive, see
PCAOB, 561
U. S. 477 ;
Bowsher v.
Synar, 478 U. S. 714
(1986) ;
Chadha, 462 U. S. 919 ;
Myers v.
United States, 272 U. S. 52 (1926) ; and actions by
either branch that trench upon the territory of the Judiciary, see
Stern, 564 U. S. ___;
Plaut, 514 U. S. 211
;
United States v.
Will, 449 U. S. 200 (1980) ;
United States v.
Klein, 13 Wall. 128 (1872);
Hayburn’s Case, 2 Dall. 409 (1792).
In these and other cases, we have emphasized
that the values of liberty and accountability protected by the
separation of powers belong not to any branch of the Government but
to the Nation as a whole. See
Bowsher, 478 U. S., at
722. A branch’s consent to a diminution of its constitutional
powers therefore does not mitigate the harm or cure the wrong.
“Liberty is always at stake when one or more of the branches seek
to transgress the separation of powers.”
Clinton v.
City
of New York, 524 U. S. 417, 450 (1998) (Kennedy, J.,
concurring). When the Executive and the Legislature agreed to
bypass the Article I, §7, requirements of bicameralism and
presentment by creating a Presidential line-item veto—a very
pragmatic proposal—the Court held that the arrangement violated the
Constitution notwithstanding the voluntary participation of both
branches.
Id., at 421 (majority opinion). Likewise, the
Court struck down a one-House “legislative veto” that violated
Article I, §7, even though Presidents and Congresses had agreed to
include similar provisions in hundreds of laws for more than 50
years.
Chadha, 462 U. S., at 944–945.
In neither of these cases did the branches’
willing embrace of a separation of powers violation weaken the
Court’s scrutiny. To the contrary, the branches’ “enthusiasm” for
the offending arrangements “ ‘sharpened rather than blunted’
our review.”
Noel Canning, 573 U. S., at ___ (Scalia,
J., concurring in judgment) (slip op., at 4) (quoting
Chadha, 462 U. S, at 944). In short, because the
structural provisions of the Constitution protect liberty and not
just government entities, “the separation of powers does not depend
on . . . whether ‘the encroached-upon branch approves the
encroachment.’ ”
PCAOB, 561 U. S., at 497 (quoting
New York v.
United States, 505 U. S. 144, 182
(1992) ).
B
If a branch of the Federal Government may not
consent to a violation of the separation of powers, surely a
private litigant may not do so. Just as a branch of Government may
not consent away the individual liberty interest protected by the
separation of powers, so too an individual may not consent away the
institutional interest protected by the separation of powers. To be
sure, a private litigant may consensually relinquish
individual constitutional rights. A federal criminal
defendant, for example, may knowingly and voluntarily waive his
Sixth Amendment right to a jury trial by pleading guilty to a
charged offense. See
Brady v.
United States, 397
U. S. 742, 748 (1970) . But that same defendant may not agree
to stand trial on federal charges before a state court, a foreign
court, or a moot court, because those courts have no constitutional
author-ity to exercise judicial power over his case, and he has no
power to confer it. A “lack of federal jurisdiction cannot be
waived or be overcome by an agreement of the parties.”
Mitchell v.
Maurer, 293 U. S. 237, 244 (1934)
.
As the majority recognizes, the Court’s most
extensive discussion of litigant consent in a separation of powers
case occurred in
Commodity Futures Trading Comm’n v.
Schor, 478 U. S. 833 (1986) . There the Court held that
Article III confers both a “personal right” that can be waived
through consent and a structural component that “safeguards the
role of the Judicial Branch in our tripartite system.”
Id.,
at 848, 850. “To the extent that this structural principle is
implicated in a given case, the parties cannot by consent cure the
constitutional difficulty for the same reason that the parties by
consent cannot confer on federal courts subject-matter jurisdiction
beyond the limitations imposed by Article III.”
Id., at
850–851. Thus, when “Article III limitations are at issue, notions
of consent and waiver cannot be dispositive because the limitations
serve institutional interests that the parties cannot be expected
to protect.”
Id., at 851.
Schor’s holding that a private litigant
can consent to an Article III violation that affects only his
“personal right” has been vigorously contested. See
id., at
867 (Brennan, J., dissenting) (“Because the individual and
structural interests served by Article III are coextensive, I do
not believe that a litigant may ever waive his right to an Article
III tribunal where one is constitutionally required”);
Granfinanciera, 492 U. S., at 70 (Scalia, J.,
concurring in part and concurring in judgment). But whatever the
merits of that position, nobody disputes that
Schor forbids
a litigant from consenting to a constitutional violation when the
structural component of Article III “is implicated.” 478
U. S., at 850–851. Thus, the key inquiry in this case—as the
majority puts it—is “whether allowing bankruptcy courts to decide
Stern claims by consent would ‘impermissibly threaten the
institutional integrity of the Judicial Branch.’ ”
Ante, at 12 (quoting
Schor, 478 U. S., at 851;
alteration omitted).
One need not search far to find the answer. In
Stern, this Court applied the analysis from
Schor to
bankruptcy courts and concluded that they lack Article III
authority to enter final judgments on matters now known as
Stern claims. The Court noted that bankruptcy courts, unlike
the administrative agency in
Schor, were endowed by Congress
with “substantive jurisdiction reaching any area of the
corpus
juris,” power to render final judgments enforceable without any
action by Article III courts, and authority to adjudicate
counterclaims entirely independent of the bankruptcy itself. 564
U. S., at ___–___ (slip op., at 25–29). The Court concluded
that allowing Congress to bestow such authority on non-Article III
courts would “compromise the integrity of the system of separated
powers and the role of the Judiciary in that system.”
Id.,
at ___ (slip op., at 38). If there was any room for doubt about the
basis for its holding, the Court dispelled it by asking a question:
“Is there really a threat to the separation of powers where
Congress has conferred the judicial power outside Article III only
over certain counterclaims in bankruptcy?”
Id., at ___ (slip
op., at 37). “The short but emphatic answer is yes.”
Ibid.
In other words, allowing bankruptcy courts to
decide
Stern claims by consent would “impermissibly threaten
the institutional integrity of the Judicial Branch.”
Ante,
at 12 (internal quotation marks and alteration omitted). It is
little wonder that the Court of Appeals felt itself bound by
Stern and
Schor to hold that Sharif’s consent could
not cure the
Stern violation. 727 F. 3d 751, 771 (CA7
2013). Other Courts of Appeals have adopted the same reading. See
In re BP RE, L. P., 735 F. 3d 279, 287 (CA5 2013);
Waldman v.
Stone, 698 F. 3d 910, 917–918 (CA6
2012).
The majority attempts to avoid this conclusion
through an imaginative reconstruction of
Stern. As the
majority sees it,
Stern “turned on the fact that the
litigant ‘did not truly consent to’ resolution of the claim”
against him in the Bankruptcy Court.
Ante, at 15 (quoting
564 U. S., at ___ (slip op., at 27)). That is not a proper
reading of the decision. The constitutional analysis in
Stern, spanning 22 pages, contained exactly one affirmative
reference to the lack of consent. See
ibid. That reference
came amid a long list of factors distinguishing the proceeding in
Stern from the proceedings in
Schor and other “public
rights” cases. 564 U. S., at ___–___ (slip op., at 27–29).
Stern’s subsequent sentences made clear that the notions of
consent relied upon by the Court in
Schor did not apply in
bankruptcy because “creditors lack an alternative forum to the
bankruptcy court in which to pursue their claims.” 564 U. S.,
at ___ (slip op., at 28) (quoting
Granfinanciera, 492
U. S., at 59, n. 14). Put simply, the litigant in
Stern did not consent because he
could not consent
given the nature of bankruptcy.
There was an opinion in
Stern that turned
heavily on consent: the dissent. 564 U. S., at ___–___
(opinion of Breyer, J.) (slip op., at 12–14). The
Stern
majority responded to the dissent with a counterfactual:
Even
if consent were relevant to the analysis, that factor would not
change the result because the litigant did not truly consent.
Id., at ___–___ (slip op., at 28–29). Moreover,
Stern
held that “it does not matter who” authorizes a bankruptcy judge to
render final judgments on
Stern claims, because the
“constitutional bar remains.”
Id., at ___ (slip op., at 36).
That holding is incompatible with the majority’s conclusion today
that two litigants can authorize a bankruptcy judge to render final
judgments on
Stern claims, despite the constitutional bar
that remains.
The majority also relies heavily on the
supervision and control that Article III courts exercise over
bankruptcy courts.
Ante, at 12–15. As the majority notes,
court of appeals judges appoint bankruptcy judges, and bankruptcy
judges receive cases only on referral from district courts
(although every district court in the country has adopted a
standing rule automatically referring all bankruptcy filings to
bankruptcy judges, see 1 Collier on Bankruptcy ¶3.02[1],
p. 3–26 (16th ed. 2014)). The problem is that Congress has
also given bankruptcy courts authority to enter final judgments
subject only to deferential appellate review, and Article III
precludes those judgments when they involve
Stern claims.
The fact that Article III judges played a role in the Article III
violation does not remedy the constitutional harm. We have already
explained why.
It is a fundamental principle that no branch of
government can delegate its constitutional functions to an actor
who lacks authority to exercise those functions. See
Whitman
v.
American Trucking Assns., Inc., 531 U. S. 457, 472
(2001) ;
Carter v.
Carter Coal Co., 298 U. S.
238, 311 (1936) . Such delegations threaten liberty and thwart
accountability by empowering entities that lack the structural
protections the Framers carefully devised. See
Department of
Transportation v.
Association of American Railroads, 575
U. S. ___, ___–___ (2015) (Alito, J., concurring) (slip op.,
at 6–7);
id., at ___–___ (Thomas, J., concurring in
judgment) (slip op., at 2–3);
Mistretta v.
United
States, 488 U. S. 361 –422 (1989) (Scalia, J.,
dissenting). Article III judges have no constitutional authority to
delegate the judicial power—the power to “render dispositive
judgments”—to non-Article III judges, no matter how closely they
control or supervise theirwork.
Plaut, 514 U. S., at
219 (internal quotation marks omitted).
In any event, the majority’s arguments about
supervision and control are not new. They were considered and
rejected in
Stern. See 564 U. S., at ___ (slip op., at
36) (“it does not matter who appointed the bankruptcy judge or
authorized the judge to render final judgments”); see also
Northern Pipeline, 458 U. S., at 84–86 (plurality
opinion);
id., at 91 (Rehnquist, J., concurring in
judgment). The majority points to no differences between the
bankruptcy proceeding in
Stern and the bankruptcy proceeding
here, except for Sharif’s purported consent. The majority thus
treats consent as “dispositive” in curing the structural separation
of powers violation—precisely what
Schor said consent could
not do. 478 U. S., at 851.
C
Eager to change the subject from
Stern,
the majority devotes considerable attention to defending the
authority of magistrate judges, who may conduct certain proceedings
with the consent of the parties under 28 U. S. C. §636.
No one here challenges the constitutionality of magistrate judges
or disputes that they, like bankruptcy judges, may issue reports
and recommendations that are reviewed
de novo by
Article III judges. The cases about magistrate judges cited by the
majority therefore have little bearing on this case, because none
of them involved a constitutional challenge to the entry of final
judgment by a non-Article III actor. See
Roell v.
Withrow, 538 U. S. 580 (2003) (statutory challenge
only);
Peretz v.
United States, 501 U. S. 923
(1991) (challenge to a magistrate judge’s conduct of
voir dire in a felony trial);
Gomez v.
United
States, 490 U. S. 858 (1989) (same).
The majority also points to 19th-century cases
in which courts referred disputes to non-Article III referees,
masters, or arbitrators.
Ante, at 8. In those cases,
however, it was the Article III court that ultimately entered final
judgment.
E.g., Thornton v.
Carson, 7 Cranch 596, 600
(1813) (“the Court was right in entering the judgment for the sums
awarded”). Article III courts do refer matters to non-Article III
actors for assistance from time to time. This Court does so
regularly in original jurisdiction cases. See,
e.g., Kansas
v.
Nebraska, 574 U. S. ___, ___ (2015) (slip op., at
1). But under the Constitution, the “ultimate responsibility for
deciding” the case must remain with the Article III court.
Id., at ___ (slip op., at 6) (quoting
Colorado v.
New Mexico, 467 U. S. 310, 317 (1984) ).
The concurrence’s comparison of bankruptcy
judges to arbitrators is similarly inapt.
Ante, at 1
(opinion of Alito, J.). Arbitration is “a matter of contract” by
which parties agree to resolve their disputes in a private forum.
Rent-A-Center, West, Inc. v.
Jackson, 561 U. S.
63, 67 (2010) . Such an arrangement does not implicate Article III
any more than does an agreement between two business partners to
submit a difference of opinion to a mutually trusted friend.
Arbitration agreements, like most private contracts, can be
enforced in court. And Congress, pursuant to its Commerce Clause
power, has authorized district courts to enter judgments enforcing
arbitration awards under certain circumstances. See 9
U. S. C. §9. But this ordinary scheme of contract
enforcement creates no constitutional concern. As the concurrence
acknowledges, only Article III judges—not arbitrators—may enter
final judgments enforcing arbitration awards.
Ante, at
1.
The discussion of magistrate judges, masters,
arbitrators, and the like fits with the majority’s focus on the
supposedly dire consequences that would follow a decision that
parties cannot consent to the final adjudication of
Stern
claims in bankruptcy courts. Of course, it “goes without saying”
that practical considerations of efficiency and convenience cannot
trump the structural protections of the Constitution.
Stern,
564 U. S., at ___ (slip op., at 36); see
Perez, 575
U. S., at ___ (Thomas, J., concurring in judgment) (slip op.,
at 20) (“Even in the face of perceived necessity, the Constitution
protects us from ourselves.”). And I find it hard to believe that
the Framers in Philadelphia, who took great care to ensure that the
Judiciary was “truly distinct” from the Legislature, would have
been comforted to know that Congress’s incursion here could “only
be termed
de minimis.”
Ante, at 13 (quoting
Schor, 478 U. S., at 856).
In any event, the majority overstates the
consequences of enforcing the requirements of Article III in this
case. As explained in Part I, Wellness’s claim may not be a
Stern claim, in which case the bankruptcy statute would
apply precisely as Congress wrote it. Even if Wellness’s claim were
a
Stern claim, the District Court would not need to start
from scratch. As this Court held in
Arkison, the District
Court could treat the bankruptcy judge’s decision as a
recommendation and enter judgment after performing
de novo review. 573 U. S., at ___ (slip op., at
4).
In
Stern, the Court cautioned that
Congress “may no more lawfully chip away at the authority of the
Judicial Branch than it may eliminate it entirely.” 564 U. S.,
at ___ (slip op., at 37). The majority sees no reason to fret,
however, so long as two private parties consent.
Ante, at
14, n. 10. But such parties are unlikely to carefully weigh
the long-term structural independence of the Article III judiciary
against their own short-term priorities. Perhaps the majority’s
acquiescence in this diminution of constitutional authority will
escape notice. Far more likely, however, it will amount to the kind
of “blueprint for extensive expansion of the legislative power”
that we have resisted in the past.
PCAOB, 561 U. S., at
500 (quoting
Metropolitan Washington Airports Authority v.
Citizens for Abatement of Aircraft Noise, Inc., 501
U. S. 252, 277 (1991) ).
The encroachment at issue here may seem benign
enough. Bankruptcy judges are devoted professionals who strive to
be fair to all sides, and litigants can be trusted to protect their
own interests when deciding whether to consent. But the fact
remains that Congress controls the salary and tenure of bankruptcy
judges, and the Legislature’s present solicitude provides no
guarantee of its future restraint. See
Glidden Co. v.
Zdanok, 370 U. S. 530, 534 (1962) (plurality opinion).
Once Congress knows that it can assign federal claims to judges
outside Article III with the parties’ consent, nothing would limit
its exercise of that power to bankruptcy. Congress may consider it
advantageous to allow claims to be heard before judges subject to
greater legislative control in any number of areas of federal
concern. As for the requirement of consent, Congress can find ways
to “encourage” consent, say by requiring it as a condition of
federal benefits. That has worked to expand Congress’s power
before. See,
e.g.,
College Savings Bank v.
Florida
Prepaid Postsecondary Ed. Expense Bd., 527 U. S. 666, 686
(1999) (“Congress may, in the exercise of its spending power,
condition its grant of funds to the States upon their taking
certain actions that Congress could not require them to take”);
South Dakota v.
Dole, 483 U. S. 203, 207 (1987)
(same).
Legislative designs of this kind would not
displace the Article III judiciary overnight. But steady erosion of
Article III authority, no less than a brazen usurpation, violates
the constitutional separation of powers. In a Federal Government of
limited powers, one branch’s loss is another branch’s gain, see
PCAOB, 561 U. S., at 500, so whether a branch aims to
“arrogate power to itself” or to “impair another in the performance
of its constitutional duties,” the Constitution forbids the
transgression all the same.
Loving, 517 U. S., at 757.
As we have cautioned, “[s]light encroachments create new boundaries
from which legions of power can seek new territory to capture.”
Stern, 564 U. S., at ___ (slip op., at 38) (internal
quotation marks omitted).
The Framers understood this danger. They warned
that the Legislature would inevitably seek to draw greater power
into its “impetuous vortex,” The Federalist No. 48, at 309 (J.
Madison), and that “power over a man’s subsistence amounts to a
power over his will,”
id., No. 79, at 472 (A. Hamilton)
(emphasis deleted). In response, the Framers adopted the structural
protections of Article III, “establishing high walls and clear
distinctions because low walls and vague distinctions will not be
judicially defensible in the heat of interbranch conflict.”
Plaut, 514 U. S., at 239. As this Court once put it,
invoking Frost, “Good fences make good neighbors.”
Id., at
240.
Ultimately, however, the structural protections
of Article III are only as strong as this Court’s will to enforce
them. In Madison’s words, the “great security against a gradual
concentration of the several powers in the same department consists
in giving to those who administer each department the necessary
constitutional means and personal motives to resist encroachments
of the others.” The Federalist No. 51, at 321–322 (J. Madison). The
Court today declines to resist encroachment by the Legislature.
Instead it holds that a single federal judge, for reasons adequate
to him, may assign away our hard-won constitutional birthright so
long as two private parties agree. I hope I will be wrong about the
consequences of this decision for the independence of the Judicial
Branch. But for now, another literary passage comes to mind: It
profits the Court nothing to give its soul for the whole world . .
. but to avoid
Stern claims?
I respectfully dissent.