The Bankruptcy Act of 1978 (Act) established a United States
bankruptcy court in each judicial district as an adjunct to the
district court for such district. The bankruptcy court judges are
appointed for 14-year terms, subject to removal by the judicial
council of the circuit in which they serve on grounds of
incompetence, misconduct, neglect of duty, or disability. Their
salaries are set by statute, and are subject to adjustment. The Act
grants the bankruptcy courts jurisdiction over "all civil
proceedings arising under title 11 [bankruptcy] [of the United
States Code] or arising in or related to cases under title 11."
See 28 U.S.C. § 1471(b) (1976 ed., Supp. IV). After it had
filed a petition for reorganization in a Bankruptcy Court,
appellant Northern Pipeline Construction Co. (Northern) filed in
that court a suit against appellee Marathon Pipe Line Co.
(Marathon) seeking damages for an alleged breach of contract and
warranty, as well as for misrepresentation, coercion, and duress.
Marathon sought dismissal of the suit on the ground that the Act
unconstitutionally conferred Art. III judicial power upon judges
who lacked life tenure and protection against salary diminution.
The Bankruptcy Court denied the motion to dismiss, but on appeal
the District Court granted the motion.
Held: The judgment is affirmed.
12 B.R.
946, affirmed.
JUSTICE BRENNAN, joined by JUSTICE MARSHALL, JUSTICE BLACKMUN,
and JUSTICE STEVENS, concluded that:
1. Section 1471's broad grant of jurisdiction to bankruptcy
judges violates Art. III. Pp.
458 U. S.
57-87.
(a) The judicial power of the United States must be exercised by
judges who have the attributes of life tenure and protection
against salary diminution specified by Art. III. These attributes
were incorporated into the Constitution to ensure the independence
of the Judiciary from the control of the Executive and Legislative
Branches. There is
Page 458 U. S. 51
no doubt that bankruptcy judges created by the Act are not Art.
III judges. Pp.
458 U. S.
57-62.
(b) Article III bars Congress from establishing under its Art. I
powers legislative courts to exercise jurisdiction over all matters
arising under the bankruptcy laws. The establishment of such courts
does not fall within any of the historically recognized situations
-- non-Art. III courts of the Territories or of the District of
Columbia, courts-martial, and resolution of "public rights" issues
-- in which the principle of independent adjudication commanded by
Art. III does not apply. The bankruptcy courts do not lie
exclusively outside the States, like the courts of the Territories
or of the District of Columbia, or bear any resemblance to
courts-martial, nor can the substantive legal rights at issue in
the present action -- the right to recover contract damages to
augment Northern's estate -- be deemed "public rights." There is no
persuasive reason in logic, history, or the Constitution, why
bankruptcy courts lie beyond the reach of Art. III. Pp.
458 U. S.
63-76.
(c) Section 1471 impermissibly removed most, if not all, of the
essential attributes of the judicial power from the Art. III
district court and vested those attributes in a non-Art. III
adjunct.
Crowell v. Benson, 285 U. S.
22, and
United States v. Raddatz, 447 U.
S. 667, distinguished. Congress does not have the same
power to create adjuncts to adjudicate constitutionally recognized
rights and state-created rights as it does to adjudicate rights
that it creates. The grant of jurisdiction to bankruptcy courts
cannot be sustained as an exercise of Congress' power to create
adjuncts to Art. III courts. Pp.
458 U. S.
76-87.
2. The above holding that the broad grant of jurisdiction in §
1471 is unconstitutional shall not apply retroactively, but only
prospectively. Such grant of jurisdiction presents an unprecedented
question of interpretation of Art. III, and retroactive application
would not further the operation of the holding, but would visit
substantial injustice and hardship upon those litigants who relied
upon the Act's vesting of jurisdiction in the bankruptcy courts.
Pp.
458 U. S.
87-88.
JUSTICE REHNQUIST joined by JUSTICE O'CONNOR, concluded that,
where appellee Marathon Pipe Line Co. has simply been named
defendant in appellant Northern Pipeline Construction Co.'s suit on
a contract claim arising under state law, the constitutionality of
the Bankruptcy Court's exercise of jurisdiction over that kind of
suit is all that need be decided in this case; that resolution of
any objections Marathon might make to the exercise of authority
conferred on bankruptcy courts by the Bankruptcy Act of 1978, on
the ground that the suit must be decided by an Art. III court,
should await the exercise of such authority; that so much of that
Act as enables a Bankruptcy Court to entertain and decide
Page 458 U. S. 52
Northern's suit over Marathon's objection violates Art. III; and
that the Court's judgment should not be applied retroactively. Pp.
458 U. S.
89-92.
BRENNAN, J., announced the judgment of the Court and delivered
an opinion, in which MARSHALL, BLACKMUN, and STEVENS, JJ., joined.
REHNQUIST, J., filed an opinion concurring in the judgment, in
which O'CONNOR, J., joined,
post, p.
458 U. S. 89.
BURGER, C.J., filed a dissenting opinion,
post, p.
458 U. S. 92.
WHITE, J., filed a dissenting opinion, in which BURGER, C.J., and
POWELL, J., joined,
post, p.
458 U. S.
92.
JUSTICE BRENNAN announced the judgment of the Court and
delivered an opinion, in which JUSTICE MARSHALL, JUSTICE BLACKMUN,
and JUSTICE STEVENS joined.
The question presented is whether the assignment by Congress to
bankruptcy judges of the jurisdiction granted in 28 U.S.C. § 1471
(1976 ed., Supp. IV) by § 241(a) of the Bankruptcy Act of 1978
violates Art. III of the Constitution.
I
A
In 1978, after almost 10 years of study and investigation,
Congress enacted a comprehensive revision of the bankruptcy
Page 458 U. S. 53
laws. The Bankruptcy Act of 1978 (Act) [
Footnote 1] made significant changes in both the
substantive and procedural law of bankruptcy. It is the changes in
the latter that are at issue in this case.
Before the Act, federal district courts served as bankruptcy
courts and employed a "referee" system. Bankruptcy proceedings were
generally conducted before referees, [
Footnote 2] except in those instances in which the
district court elected to withdraw a case from a referee.
See Bkrtcy.Rule 102. The referee's final order was
appealable to the district court. Bkrtcy.Rule 801. The bankruptcy
courts were vested with "summary jurisdiction" -- that is, with
jurisdiction over controversies involving property in the actual or
constructive possession of the court. And, with consent, the
bankruptcy court also had jurisdiction over some "plenary" matters
-- such as disputes involving property in the possession of a third
person.
The Act eliminates the referee system and establishes
"in each judicial district, as an adjunct to the district court
for such district, a bankruptcy court which shall be a court of
record known as the United States Bankruptcy Court for the
district."
28 U.S.C. § 151(a) (1976 ed., Supp. IV). The judges of these
courts are appointed to office for 14-year terms by the President,
with the advice and consent of the Senate. §§ 152, 153(a) (1976
ed., Supp IV). They are subject to removal by the "judicial council
of the circuit" on account of "incompetency, misconduct, neglect of
duty or physical or mental disability." § 153(b) (1976 ed., Supp.
IV). In addition, the salaries of the bankruptcy judges are set by
statute, and are subject to adjustment under the Federal Salary
Act, 2 U.S.C. §§ 351-361 (1976 ed. and Supp. IV). 28 U.S.C. § 154
(1976 ed., Supp. IV).
Page 458 U. S. 54
The jurisdiction of the bankruptcy courts created by the Act is
much broader than that exercised under the former referee system.
Eliminating the distinction between "summary" and "plenary"
jurisdiction, the Act grants the new courts jurisdiction over all
"civil proceedings arising under title 11 [the Bankruptcy title] or
arising in or
related to cases under title 11." 28 U.S.C.
§ 1471(b) (1976 ed., Supp. IV) (emphasis added). [
Footnote 3] This jurisdictional grant
empowers bankruptcy courts to entertain a wide variety of cases
involving claims that may affect the property of the estate once a
petition has been filed under Title 11. Included within the
bankruptcy courts' jurisdiction are suits to recover accounts,
controversies involving exempt property, actions to avoid transfers
and payments as preferences or fraudulent conveyances, and causes
of action owned by the debtor at the time of the petition for
bankruptcy. The bankruptcy courts can hear claims based on state
law as well as those based on federal law.
See 1 W.
Collier, Bankruptcy � 3.01, pp. 3-47 to 3-48 (15th ed.1982).
[
Footnote 4]
Page 458 U. S. 55
The judges of the bankruptcy courts are vested with all of the
"powers of a court of equity, law, and admiralty," except that
they
"may not enjoin another court or punish a criminal contempt not
committed in the presence of the judge of the court or warranting a
punishment of imprisonment."
28 U.S.C. § 1481 (1976 ed., Supp. IV). In addition to this broad
grant of power, Congress has allowed bankruptcy judges the power to
hold jury trials, § 1480; to issue declaratory judgments, § 2201;
to issue writs of habeas corpus under certain circumstances, §
2256; to issue all writs necessary in aid of the bankruptcy court's
expanded jurisdiction, § 451 (1976 ed. and Supp. IV);
see
28 U.S.C. § 1651; and to issue any order, process or judgment that
is necessary or appropriate to carry out the provisions of Title
11, 11 U.S.C. § 105(a) (1976 ed., Supp. IV).
The Act also establishes a special procedure for appeals from
orders of bankruptcy courts. The circuit council is empowered to
direct the chief judge of the circuit to designate panels of three
bankruptcy judges to hear appeals. 28 U.S.C. § 160 (1976 ed., Supp.
IV). These panels have jurisdiction of all appeals from final
judgments, orders, and decrees of bankruptcy courts, and, with
leave of the panel, of interlocutory appeals. § 1482. If no such
appeals panel is designated, the district court is empowered to
exercise appellate jurisdiction. § 1334. The court of appeals is
given jurisdiction over appeals from the appellate panels or from
the district court. § 1293. If the parties agree, a direct appeal
to the court of appeals may be taken from a final judgment of a
bankruptcy court. § 1293(b). [
Footnote 5]
Page 458 U. S. 56
The Act provides for a transition period before the new
provisions take full effect in April, 1984. §§ 401-411, 92 Stat.
2682-2688. During the transition period, previously existing
bankruptcy courts continue in existence. § 404(a), 92 Stat. 2683.
Incumbent bankruptcy referees, who served 6-year terms for
compensation subject to adjustment by Congress, are to serve as
bankruptcy judges until March 31, 1984, or until their successors
take office. § 404(b), 92 Stat. 2683. [
Footnote 6] During this period, they are empowered to
exercise essentially all of the jurisdiction and powers discussed
above.
See §§ 404, 405, 92 Stat. 2683-2685.
See
generally 1 Collier,
supra, �� 7.04-7.05, pp. 7-23 to
7-65. The procedure for taking appeals is similar to that provided
after the transition period.
See § 405(c)(1), 92 Stat.
2685. [
Footnote 7]
B
This case arises out of proceedings initiated in the United
States Bankruptcy Court for the District of Minnesota after
appellant Northern Pipeline Construction Co. (Northern) filed a
petition for reorganization in January, 1980. In March, 1980,
Northern, pursuant to the Act, filed in that court a suit against
appellee Marathon Pipe Line Co. (Marathon). Appellant sought
damages for alleged breaches of contract and warranty, as well as
for alleged misrepresentation, coercion, and duress. Marathon
sought dismissal of the suit, on the ground that the Act
unconstitutionally conferred Art. III judicial
Page 458 U. S. 57
power upon judges who lacked life tenure and protection against
salary diminution. The United States intervened to defend the
validity of the statute.
The Bankruptcy Judge denied the motion to dismiss. 6 B.R. 928
(1980). But on appeal, the District Court entered an order granting
the motion, on the ground that
"the delegation of authority in 28 U.S.C. § 1471 to the
Bankruptcy Judges to try cases which are otherwise relegated under
the Constitution to Article III judges"
was unconstitutional. Both the United States and Northern filed
notices of appeal in this Court. [
Footnote 8] We noted probable jurisdiction. 454 U.S. 1029
(1981). [
Footnote 9]
II
A
Basic to the constitutional structure established by the Framers
was their recognition that
"[t]he accumulation of all powers, legislative, executive, and
judiciary, in the same hands, whether of one, a few, or many, and
whether hereditary, self-appointed, or elective, may justly be
pronounced the very definition of tyranny."
The Federalist No. 47, p. 300 (H. Lodge ed. 1888) (J. Madison).
To ensure against such tyranny, the Framers provided that the
Federal Government would consist of three distinct Branches, each
to exercise one of the governmental powers recognized by the
Framers as inherently distinct.
"The Framers regarded the checks and balances that they had
built into the tripartite Federal Government as a self-executing
safeguard against the encroachment or aggrandizement of one branch
at the
Page 458 U. S. 58
expense of the other."
Buckley v. Valeo, 424 U. S. 1,
424 U. S. 122
(1976) (per curiam).
The Federal Judiciary was therefore designed by the Framers to
stand independent of the Executive and Legislature -- to maintain
the checks and balances of the constitutional structure and also to
guarantee that the process of adjudication itself remained
impartial. Hamilton explained the importance of an independent
Judiciary:
"Periodical appointments, however regulated or by whomsoever
made, would, in some way or other, be fatal to [the courts']
necessary independence. If the power of making them was committed
either to the Executive or legislature, there would be danger of an
improper complaisance to the branch which possessed it; if to both,
there would be an unwillingness to hazard the displeasure of
either; if to the people, or to persons chosen by them for the
special purpose, there would be too great a disposition to consult
popularity, to justify a reliance that nothing would be consulted
but the Constitution and the laws."
The Federalist No. 78, p. 489 (H. Lodge ed. 1888). The Court has
only recently reaffirmed the significance of this feature of the
Framers' design:
"A Judiciary free from control by the Executive and Legislature
is essential if there is a right to have claims decided by judges
who are free from potential domination by other branches of
government."
United States v. Will, 449 U.
S. 200,
449 U. S.
217-218 (1980).
As an inseparable element of the constitutional system of checks
and balances, and as a guarantee of judicial impartiality, Art. III
both defines the power and protects the independence of the
Judicial Branch. It provides that
"The judicial Power of the United States, shall be vested in one
supreme Court, and in such inferior Courts as the Congress may from
time to time ordain and establish."
Art. III, § 1. The inexorable command of this provision is clear
and definite:
Page 458 U. S. 59
The judicial power of the United States must be exercised by
courts having the attributes prescribed in Art. III. Those
attributes are also clearly set forth:
"The Judges, both of the supreme and inferior Courts, shall hold
their Offices during good Behaviour, and shall, at stated Times,
receive for their Services, a Compensation, which shall not be
diminished during their Continuance in Office."
Art. III, § 1.
The "good Behaviour" Clause guarantees that Art. III judges
shall enjoy life tenure, subject only to removal by impeachment.
United States ex rel. Toth v. Quarles, 350 U. S.
11,
350 U. S. 16
(1955). The Compensation Clause guarantees Art. III judges a fixed
and irreducible compensation for their services.
United States
v. Will, supra, at
449 U. S.
218-221. Both of these provisions were incorporated into
the Constitution to ensure the independence of the Judiciary from
the control of the Executive and Legislative Branches of
government. [
Footnote 10] As
we have only recently emphasized, "[t]he Compensation Clause has
its roots in the longstanding Anglo-American tradition of an
independent Judiciary," 449 U.S. at
449 U. S. 217,
while the principle of life tenure can be traced back at least as
far as the Act of Settlement in 1701,
id. at
449 U. S. 218.
To be sure, both principles were eroded during the late colonial
period, but that departure did not escape notice and indignant
rejection by the Revolutionary generation. Indeed, the guarantees
eventually included
Page 458 U. S. 60
in Art. III were clearly foreshadowed in the Declaration of
Independence,
"which, among the injuries and usurpations recited against the
King of Great Britain, declared that he had 'made judges dependent
on his will alone, for the tenure of their offices, and the amount
and payment of their salaries.'"
O'Donoghue v. United States, 289 U.
S. 516,
289 U. S. 531
(1933). The Framers thus recognized:
"Next to permanency in office, nothing can contribute more to
the independence of the judges than a fixed provision for their
support. . . . In the general course of human nature,
a power
over a man's subsistence amounts to a power over his
will."
The Federalist No. 79, p. 491 (H. Lodge ed. 1888) (A. Hamilton)
(emphasis in original). [
Footnote 11] In sum, our Constitution unambiguously
enunciates a fundamental principle -- that the "judicial Power of
the United States" must be reposed in an independent Judiciary. It
commands that the independence of the Judiciary be jealously
guarded, and it provides clear institutional protections for that
independence.
B
It is undisputed that the bankruptcy judges whose offices were
created by the Bankruptcy Act of 1978 do not enjoy the protections
constitutionally afforded to Art. III judges. The bankruptcy judges
do not serve for life subject to their continued "good Behaviour."
Rather, they are appointed for
Page 458 U. S. 61
14-year terms, and can be removed by the judicial council of the
circuit in which they serve on grounds of "incompetency,
misconduct, neglect of duty, or physical or mental disability."
Second, the salaries of the bankruptcy judges are not immune from
diminution by Congress.
See supra at
458 U. S. 53. In
short, there is no doubt that the bankruptcy judges created by the
Act are not Art. III judges.
That Congress chose to vest such broad jurisdiction in non-Art.
III bankruptcy courts, after giving substantial consideration to
the constitutionality of the Act, is of course reason to respect
the congressional conclusion.
See Fullilove v. Klutznick,
448 U. S. 448,
448 U. S.
472-473 (1980) (opinion of BURGER, C.J.);
Palmore v.
United States, 411 U. S. 389,
411 U. S. 409
(1973).
See also National Ins. Co. v. Tidewater Co.,
337 U. S. 582,
337 U. S. 655
(1949) (Frankfurter, J., dissenting). [
Footnote 12] But at the same time,
Page 458 U. S. 62
"[d]eciding whether a matter has in any measure been committed
by the Constitution to another branch of government, or whether the
action of that branch exceeds whatever authority has been committed
is itself a delicate exercise in constitutional interpretation, and
is a responsibility of this Court as ultimate interpreter of the
Constitution."
Baker v. Carr, 369 U. S. 186,
362 U. S. 211
(1962). With these principles in mind, we turn to the question
presented for decision; whether the Bankruptcy Act of 1978 violates
the command of Art. III that the judicial power of the United
States must be vested in courts whose judges enjoy the protections
and safeguards specified in that Article.
Appellants suggest two grounds for upholding the Act's conferral
of broad adjudicative powers upon judges unprotected by Art. III.
First, it is urged that
"pursuant to its enumerated Article I powers, Congress may
establish legislative courts that have jurisdiction to decide cases
to which the Article III judicial power of the United States
extends."
Brief for United States 9. Referring to our precedents upholding
the validity of "legislative courts," appellants suggest that
"the plenary grants of power in Article I permit Congress to
establish non-Article III tribunals in 'specialized areas having
particularized needs and warranting distinctive treatment,'"
such as the area of bankruptcy law.
Ibid., quoting
Palmore v. United States, supra, at 408. Second,
appellants contend that even if the Constitution does require that
this bankruptcy-related action be adjudicated in an Art. III court,
the Act in fact satisfies that requirement. "Bankruptcy
Page 458 U. S. 63
jurisdiction was vested in the district court" of the judicial
district in which the bankruptcy court is located, "and the
exercise of that jurisdiction by the adjunct bankruptcy court was
made subject to appeal as of right to an Article III court." Brief
for United States 12. Analogizing the role of the bankruptcy court
to that of a special master, appellants urge us to conclude that
this "adjunct" system established by Congress satisfies the
requirements of Art. III. We consider these arguments in turn.
III
Congress did not constitute the bankruptcy courts as legislative
courts. [
Footnote 13]
Appellants contend, however, that the bankruptcy courts could have
been so constituted, and that, as a result, the "adjunct" system in
fact chosen by Congress does not impermissibly encroach upon the
judicial power. In advancing this argument, appellants rely upon
cases in which we have identified certain matters that "congress
may or may not bring within the cognizance of [Art. III courts], as
it may deem proper."
Murray' Lessee v. Hoboken Land
& Improvement Co., 18 How. 272,
59 U. S. 284
(1856). [
Footnote 14] But
when properly understood, these precedents represent no broad
departure from the constitutional command that the judicial power
of the United States must be vested in Art. III
Page 458 U. S. 64
courts. [
Footnote 15]
Rather, they reduce to three narrow situations not subject to that
command, each recognizing a circumstance in which the grant of
power to the Legislative and Executive Branches was historically
and constitutionally so exceptional that the congressional
assertion of a power to create legislative courts was consistent
with, rather than threatening to, the constitutional mandate of
separation of powers. These precedents simply acknowledge that the
literal command of Art. III, assigning the judicial power of the
United States to courts insulated from Legislative or Executive
interference, must be interpreted in light of the historical
context in which the Constitution was written, and of the
structural imperatives of the Constitution as a whole.
Appellants first rely upon a series of cases in which this Court
has upheld the creation by Congress of non-Art. III "territorial
courts." This exception from the general prescription of Art. III
dates from the earliest days of the Republic, when it was perceived
that the Framers intended that, as to certain geographical areas in
which no State operated as sovereign, Congress was to exercise the
general powers of government. For example, in
American
Ins. Co. v. Canter, 1 Pet. 511 (1828), the Court
observed that Art. IV bestowed upon Congress alone a complete power
of government over
Page 458 U. S. 65
territories not within the States that constituted the United
States. The Court then acknowledged Congress' authority to create
courts for those territories that were not in conformity with Art.
III. Such courts were
"created in virtue of the general right of sovereignty which
exists in the government, or in virtue of that clause which enables
Congress to make all needful rules and regulations, respecting the
territory belonging to the United States. The jurisdiction with
which they are invested . . . is conferred by Congress, in the
execution of those general powers which that body possesses over
the territories of the United States. Although admiralty
jurisdiction can be exercised in the states in those Courts, only,
which are established in pursuance of the third article of the
Constitution; the same limitation does not extend to the
territories. In legislating for them, Congress exercises the
combined powers of the general, and of a state government."
1 Pet. at
26 U. S. 546.
The Court followed the same reasoning when it reviewed Congress'
creation of non-Art. III courts in the District of Columbia. It
noted that there was in the District
"no division of powers between the general and state
governments. Congress has the entire control over the district for
every purpose of government; and it is reasonable to suppose, that
in organizing a judicial department here, all judicial power
necessary for the purposes of government would be vested in the
courts of justice."
Kendall v. United
States, 12 Pet. 524,
37 U. S. 619
(1838). [
Footnote 16]
Page 458 U. S. 66
Appellants next advert to a second class of cases -- those in
which this Court has sustained the exercise by Congress and the
Executive of the power to establish and administer courts-martial.
The situation in these cases strongly resembles the situation with
respect to territorial courts: it too involves a constitutional
grant of power that has been historically understood as giving the
political Branches of Government extraordinary control over the
precise subject matter at issue. Article I, § 8, cls. 13, 14,
confer upon Congress the power "[t]o provide and maintain a Navy,"
and "[t]o make Rules for the Government and Regulation of the land
and naval Forces." The Fifth Amendment, which requires a
presentment or indictment of a grand jury before a person may be
held to answer for a capital or otherwise infamous crime, contains
an express exception for "cases arising in the land or naval
forces." And Art. II, § 2, cl. 1, provides that
"The President shall be Commander in Chief of the Army and Navy
of the United States, and of the Militia of the several States,
when called into the actual Service of the United States."
Noting these constitutional directives, the Court, in
Dynes v.
Hoover, 20 How. 65 (1857), explained:
"These provisions show that Congress has the power to provide
for the trial and punishment of military and naval offences in the
manner then and now practiced by civilized nations; and that the
power to do so is given without any connection between it and the
3d article of the Constitution defining the judicial power of the
United States; indeed, that the two powers are entirely independent
of each other."
Id. at
61 U. S. 79.
[
Footnote 17]
Page 458 U. S. 67
Finally, appellants rely on a third group of cases, in which
this Court has upheld the constitutionality of legislative courts
and administrative agencies created by Congress to adjudicate cases
involving "public rights." [
Footnote 18] The "public rights" doctrine was first set
forth in
Murray's Lessee v. Hoboken
Land & Improvement Co., 18 How. 272 (1856):
"[W]e do not consider congress can either withdraw from judicial
cognizance any matter which, from its nature, is the subject of a
suit at the common law, or in equity, or admiralty; nor, on the
other hand, can it bring under the judicial power a matter which,
from its nature, is not a subject for judicial determination. At
the same time, there are matters,
involving public rights,
which may be presented in such form that the judicial power is
capable of acting on them, and which are susceptible of judicial
determination, but which congress may or may not bring within the
cognizance of the courts of the United States, as it may deem
proper."
Id. at
59 U. S. 284
(emphasis added).
This doctrine may be explained in part by reference to the
traditional principle of sovereign immunity, which recognizes that
the Government may attach conditions to its consent to be sued.
See id. at
59 U. S.
283-285;
see also Ex parte Bakelite Corp.,
279 U. S. 438,
279 U. S. 452
(1929) . But the public rights doctrine also draws upon the
principle of separation of powers, and a historical understanding
that certain prerogatives were reserved to the political Branches
of Government. The doctrine extends only to matters arising
"between the Government
Page 458 U. S. 68
and persons subject to its authority in connection with the
performance of the constitutional functions of the executive or
legislative departments,"
Crowell v. Benson, 285 U. S.
22,
285 U. S. 50
(1932), and only to matters that historically could have been
determined exclusively by those departments,
see Ex parte
Bakelite Corp., supra, at
279 U. S. 458.
The understanding of these cases is that the Framers expected that
Congress would be free to commit such matters completely to
nonjudicial executive determination, and that, as a result, there
can be no constitutional objection to Congress' employing the less
drastic expedient of committing their determination to a
legislative court or an administrative agency.
Crowell v.
Benson, supra, at
285 U. S. 50.
[
Footnote 19]
The public rights doctrine is grounded in a historically
recognized distinction between matters that could be conclusively
determined by the Executive and Legislative Branches and matters
that are "inherently . . . judicial."
Ex parte Bakelite Corp.,
supra, at
279 U. S. 458.
See Murray's Lessee v. Hoboken Land & Improvement Co.,
18 How. at
18 U. S.
280-282. For example, the Court in
Murray's
Lessee looked to the law of England and the States at the time
the Constitution was adopted in order to determine whether the
issue presented was customarily cognizable in the courts.
Ibid. Concluding that the matter had not traditionally
been one for judicial determination, the Court perceived no bar to
Congress' establishment of summary procedures, outside of Art. III
courts, to collect a debt due to the Government from one of its
customs agents. [
Footnote
20] On the same premise, the Court in
Ex
Page 458 U. S. 69
parte Bakelite Corp., supra, held that the Court of
Customs Appeals had been properly constituted by Congress as a
legislative court:
"The
full province of the court under the act creating
it is that of determining matters arising between the Government
and others in the executive administration and application of the
customs laws. . . . The appeals include nothing which inherently or
necessarily requires judicial determination, but only matters the
determination of
which may be, and at times has been, committed
exclusively to executive officers."
279 U.S. at
279 U. S. 458
(emphasis added). [
Footnote
21]
The distinction between public rights and private rights has not
been definitively explained in our precedents. [
Footnote 22] Nor is it necessary to do so
in the present cases, for it suffices to observe that a matter of
public rights must, at a minimum, arise "between the government and
others."
Ex parte Bakelite Corp., supra, at
279 U. S. 451.
[
Footnote 23] In contrast,
"the liability of
Page 458 U. S. 70
one individual to another under the law as defined,"
Crowell
v. Benson, supra, at
285 U. S. 51, is
a matter of private rights. Our precedents clearly establish that
only controversies in the former category may be removed
from Art. III courts and delegated to legislative courts or
administrative agencies for their determination.
See Atlas
Roofing Co. v. Occupational Safety and Health Review Comm'n,
430 U. S. 442,
430 U. S. 450,
n. 7 (1977);
Crowell v. Benson, supra, at
285 U. S. 501.
See also Katz, Federal Legislative Courts, 43 Harv.L.Rev.
894, 917-918 (1930). [
Footnote
24] Private rights disputes, on the other hand, lie at the core
of the historically recognized judicial power.
In sum, this Court has identified three situations in which Art.
III does not bar the creation of legislative courts. In each of
these situations, the Court has recognized certain exceptional
powers bestowed upon Congress by the Constitution or by historical
consensus. Only in the face of such an exceptional grant of power
has the Court declined to hold the authority of Congress subject to
the general prescriptions of Art. III. [
Footnote 25]
Page 458 U. S. 71
We discern no such exceptional grant of power applicable in the
cases before us. The courts created by the Bankruptcy Act of 1978
do not lie exclusively outside the States of the Federal Union,
like those in the District of Columbia and the Territories. Nor do
the bankruptcy courts bear any resemblance to courts-martial, which
are founded upon the Constitution's grant of plenary authority over
the Nation's military forces to the Legislative and Executive
Branches. Finally, the substantive legal rights at issue in the
present action cannot be deemed "public rights." Appellants argue
that a discharge in bankruptcy is indeed a "public right," similar
to such congressionally created benefits as "radio station
licenses, pilot licenses, or certificates for common carriers"
granted by administrative agencies.
See Brief for United
States 34. But the restructuring of debtor-creditor relations,
which is at the core of the federal bankruptcy power, must be
distinguished from the adjudication of state-created private
rights, such as the right to recover contract damages that is at
issue in this case. The former may well be a "public right," but
the latter obviously is not. Appellant Northern's right to recover
contract damages to augment its estate is "one of private right,
that is, of the liability of one
Page 458 U. S. 72
individual to another under the law as defined."
Crowell v.
Benson, 285 U.S. at
285 U. S. 51.
[
Footnote 26]
Recognizing that the present cases may not fall within the scope
of any of our prior cases permitting the establishment of
legislative courts, appellants argue that we should recognize an
additional situation beyond the command of Art. III, sufficiently
broad to sustain the Act. Appellants contend that Congress'
constitutional authority to establish "uniform Laws on the subject
of Bankruptcies throughout the United States," Art. I, § 8, cl. 4,
carries with it an inherent power to establish legislative courts
capable of adjudicating "bankruptcy-related controversies." Brief
for United States 14. In support of this argument, appellants rely
primarily upon a quotation from the opinion in
Palmore v.
United States, 411 U. S. 389
(1973), in which we stated that
"both Congress and this Court have recognized that . . . the
requirements of Art. III, which are applicable where laws of
national applicability and affairs of national concern are at
stake, must, in proper circumstances, give way to accommodate
plenary grants of power to Congress to legislate with respect to
specialized areas having particularized needs and warranting
distinctive treatment."
Id. 411 U. S.
407-408. Appellants cite this language to support their
proposition that a bankruptcy court created by Congress under its
Art. I
Page 458 U. S. 73
powers is constitutional, because the law of bankruptcy is a
"specialized area," and Congress has found a "particularized need"
that warrants "distinctive treatment." Brief for United States
20-33.
Appellants' contention, in essence, is that, pursuant to any of
its Art. I powers, Congress may create courts free of Art. III's
requirements whenever it finds that course expedient. This
contention has been rejected in previous cases.
See, e.g.,
Atlas Roofing Co. v. Occupational Safety and Health Review
Comm'n, 430 U.S. at
430 U. S. 450,
n. 7;
United States ex rel. Toth v. Quarles, 350 U. S.
11 (1955). Although the cases relied upon by appellants
demonstrate that independent courts are not required for all
federal adjudications, those cases also make it clear that where
Art. III does apply, all of the legislative powers specified in
Art. I and elsewhere are subject to it.
See, e.g., Ex parte
Bakelite Corp., 279 U.S. at
279 U. S. 449;
United States ex rel. Toth v. Quarles, supra; American Ins. Co.
v. Canter, 1 Pet. at
26 U. S. 546;
Murray's Lessee, 18 How. at
59 U. S. 284.
Cf. Crowell v. Benson, supra, at
285 U. S.
51.
The flaw in appellants' analysis is that it provides no limiting
principle. It thus threatens to supplant completely our system of
adjudication in independent Art. III tribunals and replace it with
a system of "specialized" legislative courts. True, appellants
argue that, under their analysis, Congress could create legislative
courts pursuant only to some "specific" Art. I power, and "only
when there is a particularized need for distinctive treatment."
Brief for United States 22-23. They therefore assert that their
analysis would not permit Congress to replace the independent Art.
III Judiciary through a "wholesale assignment of federal judicial
business to legislative courts."
Ibid. But these
"limitations" are wholly illusory. For example, Art. I, § 8,
empowers Congress to enact laws,
inter alia, regulating
interstate commerce and punishing certain crimes. Art. I, § 8, cls.
3, 6. On appellants' reasoning Congress could provide for the
adjudication of these and "related" matters by judges and
Page 458 U. S. 74
courts within Congress' exclusive control. [
Footnote 27] The potential for encroachment upon
powers reserved to the Judicial Branch through the device of
"specialized" legislative courts is dramatically evidenced in the
jurisdiction granted to the courts created by the Act before us.
The broad range of questions that can be brought into a bankruptcy
court because they are "related to cases under title 11," 28 U.S.C.
§ 1471(b) (1976 ed., Supp. IV),
see supra at
458 U. S. 54, is
the clearest proof that, even when Congress acts through a
"specialized" court, and pursuant to only one of its many Art. I
powers, appellants' analysis fails to provide any real protection
against the erosion of Art. III jurisdiction by the unilateral
action of the political Branches. In short, to accept appellants'
reasoning, would require that we replace the principles delineated
in our precedents, rooted in history and the Constitution, with a
rule of broad legislative discretion that could effectively
eviscerate the constitutional guarantee of an independent Judicial
Branch of the Federal Government. [
Footnote 28]
Page 458 U. S. 75
Appellants' reliance upon
Palmore for such broad
legislative discretion is misplaced. In the context of the issue
decided in that case, the language quoted from the
Palmore
opinion,
supra, at
458 U. S. 72,
offers no substantial support for appellants' argument.
Palmore was concerned with the courts of the District of
Columbia, a unique federal enclave over which "Congress has . . .
entire control . . . for every purpose of government."
Kendall
v. United States, 12 Pet. at
37 U. S.
619.
Page 458 U. S. 76
The "plenary authority" under the District of Columbia Clause,
Art. I, § 8, cl. 17, was the subject of the quoted passage, and the
powers granted under that Clause are obviously different in kind
from the other broad powers conferred on Congress: Congress' power
over the District of Columbia encompasses the
full
authority of government, and thus, necessarily, the Executive and
Judicial powers as well as the Legislative. This is a power that is
clearly possessed by Congress only in limited geographic areas.
Palmore itself makes this limitation clear. The quoted
passage distinguishes the congressional powers at issue in
Palmore from those in which the Art. III command of an
independent Judiciary must be honored: where "laws of national
applicability and affairs of national concern are at stake." 411
U.S. at
411 U. S. 408.
Laws respecting bankruptcy, like most laws enacted pursuant to the
national powers cataloged in Art. I, § 8, are clearly laws of
national applicability and affairs of national concern. Thus our
reference in
Palmore to "specialized areas having
particularized needs" referred only to
geographic areas,
such as the District of Columbia or territories outside the States
of the Federal Union. In light of the clear commands of Art. III,
nothing held or said in
Palmore can be taken to mean that,
in every area in which Congress may legislate, it may also create
non-Art. III courts with Art. III powers.
In sum, Art. III bars Congress from establishing legislative
courts to exercise jurisdiction over all matters related to those
arising under the bankruptcy laws. The establishment of such courts
does not fall within any of the historically recognized situations
in which the general principle of independent adjudication
commanded by Art. III does not apply. Nor can we discern any
persuasive reason, in logic, history, or the Constitution, why the
bankruptcy courts here established lie beyond the reach of Art.
III.
IV
Appellants advance a second argument for upholding the
constitutionality of the Act: that "viewed within the entire
judicial
Page 458 U. S. 77
framework set up by Congress," the bankruptcy court is merely an
"adjunct" to the district court, and that the delegation of certain
adjudicative functions to the bankruptcy court is accordingly
consistent with the principle that the judicial power of the United
States must be vested in Art. III courts.
See Brief for
United States 11-13, 375. As support for their argument, appellants
rely principally upon
Crowell v. Benson, 285 U. S.
22 (1932), and
United States v. Raddatz,
447 U. S. 667
(1980), cases in which we approved the use of administrative
agencies and magistrates as adjuncts to Art. III courts. Brief for
United States 402. The question to which we turn, therefore, is
whether the Act has retained "the essential attributes of the
judicial power,"
Crowell v. Benson, supra, at
285 U. S. 51, in
Art. III tribunals. [
Footnote
29]
The essential premise underlying appellants' argument is that,
even where the Constitution denies Congress the power to establish
legislative courts, Congress possesses the authority to assign
certain factfinding functions to adjunct tribunals. It is, of
course, true that, while the power to adjudicate "private rights"
must be vested in an Art. III court,
see 458 U.
S. supra,
"this Court has accepted factfinding by an administrative
agency, . . . as an adjunct to the Art. III court, analogizing the
agency to a jury or a special master and permitting it in admiralty
cases to perform the function of the special master.
Crowell v.
Benson, 285 U. S. 22,
285 U. S.
51-65
Page 458 U. S. 78
(1932)."
Atlas Roofing Co. v. Occupational Safety and Health Review
Comm'n, 430 U.S. at
430 U. S. 450,
n. 7.
The use of administrative agencies as adjuncts was first upheld
in
Crowell v. Benson, supra. The congressional scheme
challenged in
Crowell empowered an administrative agency,
the United States Employees' Compensation Commission, to make
initial factual determinations pursuant to a federal statute
requiring employers to compensate their employees for work-related
injuries occurring upon the navigable waters of the United States.
The Court began its analysis by noting that the federal statute
administered by the Compensation Commission provided for
compensation of injured employees "irrespective of fault," and that
the statute also prescribed a fixed and mandatory schedule of
compensation.
Id. at
285 U. S. 38.
The agency was thus left with the limited role of determining
"questions of fact as to the circumstances, nature, extent and
consequences of the injuries sustained by the employee for which
compensation is to be made."
Id. at
285 U. S. 54.
The agency did not possess the power to enforce any of its
compensation orders: on the contrary, every compensation order was
appealable to the appropriate federal district court, which had the
sole power to enforce it or set it aside, depending upon whether
the court determined it to be "in accordance with law" and
supported by evidence in the record.
Id. at
285 U. S. 44-45,
285 U. S. 48.
The Court found that, in view of these limitations upon the
Compensation Commission's functions and powers, its determinations
were "closely analogous to findings of the amount of damages that
are made, according to familiar practice, by commissioners or
assessors."
Id. at
285 U. S. 54.
Observing that
"there is no requirement that, in order to maintain the
essential attributes of the judicial power, all determinations of
fact in constitutional courts shall be made by judges,"
id. at
285 U. S. 51,
the Court held that Art. III imposed no bar to the scheme enacted
by Congress,
id. at
285 U. S.
54.
Crowell involved the adjudication of congressionally
created rights. But this Court has sustained the use of adjunct
factfinders even in the adjudication of constitutional rights
--
Page 458 U. S. 79
so long as those adjuncts were subject to sufficient control by
an Art. III district court. In
United States v. Raddatz,
supra, the Court upheld the 1978 Federal Magistrates Act,
which permitted district court judges to refer certain pretrial
motions, including suppression motions based on alleged violations
of constitutional rights, to a magistrate for initial
determination. The Court observed that the magistrate's proposed
findings and recommendations were subject to
de novo
review by the district court, which was free to rehear the evidence
or to call for additional evidence.
Id. at
447 U. S.
676-677,
447 U. S.
681-683. Moreover, it was noted that the magistrate
considered motions only upon reference from the district court, and
that the magistrates were appointed, and subject to removal, by the
district court.
Id. at
447 U. S. 685
(BLACKMUN, J., concurring). [
Footnote 30] In short, the ultimate decisionmaking
authority respecting all pretrial motions clearly remained with the
district court.
Id. at
447 U. S. 682.
Under these circumstances, the Court held that the Act did not
violate the constraints of Art. III.
Id. at
447 U. S.
683-684. [
Footnote
31]
Page 458 U. S. 80
Together, these cases establish two principles that aid us in
determining the extent to which Congress may constitutionally vest
traditionally judicial functions in non-Art. III officers. First,
it is clear that, when Congress creates a substantive federal
right, it possesses substantial discretion to prescribe the manner
in which that right may be adjudicated -- including the assignment
to an adjunct of some functions historically performed by judges.
[
Footnote 32] Thus,
Crowell recognized
Page 458 U. S. 81
that Art. III does not require "all determinations of fact [to]
be made by judges," 285 U.S. at
285 U. S. 51;
with respect to congressionally created rights, some factual
determinations may be made by a specialized factfinding tribunal
designed by Congress, without constitutional bar,
id. at
285 U. S. 54.
Second, the functions of the adjunct must be limited in such a way
that "the essential attributes" of judicial power are retained in
the Art. III court. Thus, in upholding the adjunct scheme
challenged in
Crowell, the Court emphasized that
"the reservation of full authority to the court to deal with
matters of law provides for the appropriate exercise of the
judicial function in this class of cases."
Ibid. And in refusing to invalidate the Magistrates Act
at issue in
Raddatz, the Court stressed that under the
congressional scheme "
[t]he authority -- and the responsibility
-- to make an informed, final determination . . . remains with the
judge,'" 447 U.S. at 447 U. S. 682,
quoting Mathews v. Weber, 423 U.
S. 261, 423 U. S. 271
(1976); the statute's delegation of power was therefore
permissible, since "the ultimate decision is made by the district
court," 447 U.S. at 447 U. S.
683.
These two principles assist us in evaluating the "adjunct"
scheme presented in these cases. Appellants assume that Congress'
power to create "adjuncts" to consider all cases related to those
arising under Title 11 is as great as it was in the circumstances
of
Crowell. But while
Crowell certainly endorsed
the proposition that Congress possesses broad discretion to assign
factfinding functions to an adjunct created to aid in the
adjudication of congressionally created statutory rights,
Crowell does not support the further proposition necessary
to appellants' argument -- that Congress possesses the same degree
of discretion in assigning traditionally judicial power to adjuncts
engaged in the adjudication of rights
not
Page 458 U. S. 82
created by Congress. Indeed, the validity of this proposition
was expressly denied in
Crowell when the Court
rejected
"the untenable assumption that the constitutional courts may be
deprived in all cases of the determination of facts upon evidence,
even though a
constitutional right may be involved,"
285 U.S. at
285 U. S. 60-61
(emphasis added), [
Footnote
33]33 and stated that
"the essential independence of the exercise of the judicial
power of the United States in the enforcement of
constitutional rights requires that the Federal court
should determine . . . an issue [of agency jurisdiction] upon its
own record and the facts elicited before it."
Id. at
285 U. S. 64
(emphasis added). [
Footnote
34] Appellants' proposition was also implicitly rejected in
Raddatz. Congress' assignment of adjunct functions under
the Federal Magistrates Act was substantially narrower than under
the statute challenged in
Crowell. Yet the Court's
scrutiny of the adjunct scheme in
Raddatz -- which played
a
Page 458 U. S. 83
role in the adjudication of
constitutional rights --
was far stricter than it had been in
Crowell. Critical to
the Court's decision to uphold the Magistrates Act was the fact
that the ultimate decision was made by the district court. 447 U.S.
at
447 U. S.
683.
Although
Crowell and
Raddatz do not explicitly
distinguish between rights created by Congress and other rights,
such a distinction underlies in part
Crowell's and
Raddatz' recognition of a critical difference between
rights created by federal statute and rights recognized by the
Constitution. Moreover, such a distinction seems to us to be
necessary in light of the delicate accommodations required by the
principle of separation of powers reflected in Art. III. The
constitutional system of checks and balances is designed to guard
against "encroachment or aggrandizement" by Congress at the expense
of the other branches of government.
Buckley v. Valeo, 424
U.S. at
424 U. S. 122.
But when Congress creates a statutory right, it clearly has the
discretion, in defining that right, to create presumptions, or
assign burdens of proof, or prescribe remedies; it may also provide
that persons seeking to vindicate that right must do so before
particularized tribunals created to perform the specialized
adjudicative tasks related to that right. [
Footnote 35] Such provisions do, in a sense,
affect the exercise of judicial power, but they are also incidental
to Congress' power to define the right that it has created. No
Page 458 U. S. 84
comparable justification exists, however, when the right being
adjudicated is not of congressional creation. In such a situation,
substantial inroads into functions that have traditionally been
performed by the Judiciary cannot be characterized merely as
incidental extensions of Congress' power to define rights that it
has created. Rather, such inroads suggest unwarranted encroachments
upon the judicial power of the United States, which our
Constitution reserves for Art. III courts.
We hold that the Bankruptcy Act of 1978 carries the possibility
of such an unwarranted encroachment. Many of the rights subject to
adjudication by the Act's bankruptcy courts, like the rights
implicated in
Raddatz, are not of Congress' creation.
Indeed, the cases before us, which center upon appellant Northern's
claim for damages for breach of contract and misrepresentation,
involve a right created by state law, a right independent of and
antecedent to the reorganization petition that conferred
jurisdiction upon the Bankruptcy Court. [
Footnote 36] Accordingly, Congress' authority to
control the manner in which that right is adjudicated, through
assignment of historically judicial functions to a non-Art. III
"adjunct," plainly must be deemed at a minimum. Yet it is equally
plain that Congress has vested the "adjunct" bankruptcy judges with
powers over Northern's state-created right that far exceed the
powers that it has vested in administrative agencies that
adjudicate only rights of Congress' own creation.
Unlike the administrative scheme that we reviewed in
Crowell, the Act vests all "essential attributes" of the
judicial
Page 458 U. S. 85
power of the United States in the "adjunct" bankruptcy court.
First, the agency in
Crowell made only specialized,
narrowly confined factual determinations regarding a particularized
area of law. In contrast, the subject matter jurisdiction of the
bankruptcy courts encompasses not only traditional matters of
bankruptcy, but also "all civil proceedings arising under title 11
or arising in or
related to cases under title 11." 28
U.S.C. § 1471(b) (1976 ed., Supp. IV) (emphasis added). Second,
while the agency in
Crowell engaged in statutorily
channeled factfinding functions, the bankruptcy courts exercise
"
all of the jurisdiction" conferred by the Act on the
district courts, § 1471(c) (emphasis added). Third, the agency in
Crowell possessed only a limited power to issue
compensation orders pursuant to specialized procedures, and its
orders could be enforced only by order of the district court. By
contrast, the bankruptcy courts exercise all ordinary powers of
district courts, including the power to preside over jury trials,
28 U.S.C. § 1480 (1976 ed., Supp. IV), the power to issue
declaratory judgments, § 2201, the power to issue writs of habeas
corpus, § 2256, and the power to issue any order, process, or
judgment appropriate for the enforcement of the provisions of Title
11, 11 U.S.C. § 105(a) (1976 ed., Supp. IV). [
Footnote 37] Fourth, while orders issued by the
agency in
Crowell were to be set aside if "not supported
by the evidence," the judgments of the bankruptcy courts are
apparently subject to review only under the more deferential
"clearly erroneous" standard.
See n 5,
supra. Finally, the agency in
Crowell was required by law to seek enforcement of its
compensation orders in the district court. In contrast, the
bankruptcy courts issue final judgments, which are binding
Page 458 U. S. 86
and enforceable even in the absence of an appeal. [
Footnote 38] In short, the "adjunct"
bankruptcy courts created by the Act exercise jurisdiction behind
the facade of a grant to the district courts, and are exercising
powers far greater than those lodged in the adjuncts approved in
either
Crowell or
Raddatz. [
Footnote 39]
Page 458 U. S. 87
We conclude that 28 U.S.C. § 1471 (1976 ed., Supp. IV), as added
by § 241(a) of the Bankruptcy Act of 1978, has impermissibly
removed most, if not all, of "the essential attributes of the
judicial power" from the Art. III district court, and has vested
those attributes in a non-Art. III adjunct. Such a grant of
jurisdiction cannot be sustained as an exercise of Congress' power
to create adjuncts to Art. III courts.
V
Having concluded that the broad grant of jurisdiction to the
bankruptcy courts contained in 28 U.S.C. § 1471 (1976 ed., Supp.
IV) is unconstitutional, we must now determine whether our holding
should be applied retroactively to the effective date of the Act.
[
Footnote 40] Our decision
in
Chevron
Page 458 U. S. 88
Oil Co. v. Huson, 404 U. S. 97
(1971), sets forth the three considerations recognized by our
precedents as properly bearing upon the issue of retroactivity.
They are, first, whether the holding in question "decid[ed] an
issue of first impression whose resolution was not clearly
foreshadowed" by earlier cases,
id. at
404 U. S. 106;
second, "whether retrospective operation will further or retard
[the] operation" of the holding in question,
id. at
404 U. S. 107;
and third, whether retroactive application "could produce
substantial inequitable results" in individual cases,
ibid. In the present cases, all of these considerations
militate against the retroactive application of our holding today.
It is plain that Congress' broad grant of judicial power to
non-Art. III bankruptcy judges presents an unprecedented question
of interpretation of Art. III. It is equally plain that retroactive
application would not further the operation of our holding, and
would surely visit substantial injustice and hardship upon those
litigants who relied upon the Act's vesting of jurisdiction in the
bankruptcy courts. We hold, therefore, that our decision today
shall apply only prospectively. [
Footnote 41]
The judgment of the District Court is affirmed. However, we stay
our judgment until October 4, 1982. This limited stay will afford
Congress an opportunity to reconstitute the bankruptcy courts or to
adopt other valid means of adjudication, without impairing the
interim administration of the bankruptcy laws.
See Buckley v.
Valeo, 424 U.S. at
424 U. S.
143;
Page 458 U. S. 89
cf. Georgia v. United States, 411 U.
S. 526,
411 U. S. 541
(1973);
Fortson v. Morris, 385 U.
S. 231,
385 U. S. 235
(1966);
Maryland Committee for Fair Representation v.
Tawes, 377 U. S. 656,
377 U. S.
675-676 (1964).
It is so ordered.
* Together with No. 81-546,
United State v. Marathon Pipe
Line Co. et al., also on appeal from the same court.
[
Footnote 1]
Pub.L. 95 598, 92 Stat. 2549. The Act became effective October
1, 1979.
[
Footnote 2]
Bankruptcy referees were redesignated as "judges" in 1973.
Bkrtcy.Rule 901(7). For purposes of clarity, however, we refer to
all judges under the old Act as "referees."
[
Footnote 3]
Although the Act initially vests this jurisdiction in district
courts, 28 U.S.C. § 1471(a) (1976 ed., Supp. IV), it subsequently
provides that
"[t]he bankruptcy court for the district in which a case under
title 11 is commenced shall exercise
all of the
jurisdiction conferred by this section on the district courts,"
§ 1471(c) (1976 ed., Supp. IV) (emphasis added). Thus, the
ultimate repository of the Act's broad jurisdictional grant is the
bankruptcy courts.
See 1 W. Collier, Bankruptcy � 3.01,
pp. 3-37, 34 to 3-49 (15th ed.1982).
[
Footnote 4]
With respect to both personal jurisdiction and venue, the scope
of the Act is also expansive. Although the Act does not, in terms,
indicate the extent to which bankruptcy judges may exercise
personal jurisdiction, it has been construed to allow the
constitutional maximum.
See, e.g., In re Whippany Paper Board
Co., 15 B.R. 312, 314-315 (Bkrtcy. NJ 1981). With two
exceptions not relevant here, the venue of "a proceeding arising in
or related to a case under title 11 [is] in the bankruptcy court in
which such case is pending." 28 U.S.C. § 1473(a) (1976 ed., Supp.
IV). Furthermore, the Act permits parties to remove many kinds of
actions to the bankruptcy court. Parties
"may remove any claim or cause of action in a civil action,
other than a proceeding before the United States Tax Court or a
civil action by a Government unit to enforce such governmental
unit's police or regulatory power."
§ 1478(a) (1976 ed., Supp. IV). The bankruptcy court may,
however, remand such actions "on any equitable ground"; the
decision to remand or retain an action is unreviewable. §
1478(b).
[
Footnote 5]
Although no particular standard of review is specified in the
Act, the parties in the present cases seem to agree that the
appropriate one is the clearly erroneous standard, employed in old
Bankruptcy Rule 810 for review of findings of fact made by a
referee.
See Brief for United States 41; Tr. of Oral Arg.
27.
See also In re Rivers, 19 B.R. 438 (Bkrtcy. ED
Tenn.1982); 1 Collier,
supra, n 3, � 3.03, p. 3-316.
[
Footnote 6]
Under the old Bankruptcy Act, referees could be removed by the
district court for "incompetency, misconduct, or neglect of duty,"
11 U.S.C. § 62(b) (repealed); the same grounds for removal apply
during the transition period,
see § 404(d), 92 Stat.
2684.
[
Footnote 7]
It appears, however, that during the transition period, an
appeal of a bankruptcy judge's decision may be taken to the
district court even if an appellate panel of bankruptcy judges has
been established.
[
Footnote 8]
After Northern docketed an appeal in this Court, the District
Court supplemented its order with an opinion.
12 B.R.
946, 947 (1981).
[
Footnote 9]
Two other Bankruptcy Courts have considered the
constitutionality of § 1471: the Bankruptcy Court for the District
of Puerto Rico determined it to be constitutional,
In re
Segarra, 14 B.R. 870 (1981), while the Bankruptcy Court for
the Eastern District of Tennessee reached the opposite conclusion,
In re Rivers, supra.
[
Footnote 10]
These provisions serve other institutional values as well. The
independence from political forces that they guarantee helps to
promote public confidence in judicial determinations.
See
The Federalist No. 78 (A. Hamilton). The security that they provide
to members of the Judicial Branch helps to attract well-qualified
persons to the federal bench.
Ibid. The guarantee of life
tenure insulates the individual judge from improper influences not
only by other branches but by colleagues as well, and thus promotes
judicial individualism.
See Kaufman, Chilling Judicial
Independence, 88 Yale L.J. 681, 713 (1979).
See generally
Note, Article III Limits on Article I Courts: The Constitutionality
of the Bankruptcy Court and the 1979 Magistrate Act, 80
Colum.L.Rev. 560, 583-585 (1980).
[
Footnote 11]
Further evidence of the Framers' concern for assuring the
independence of the Judicial Branch may be found in the fact that
the Constitutional Convention soundly defeated a proposal to allow
the removal of judges by the Executive and Legislative Branches.
See 2 M. Farrand, Records of the Federal Convention of
1787, pp. 428-429 (1911); P. Bator, P. Mishkin, D. Shapiro, &
H. Wechsler, Hart and Wechsler's The Federal Courts and the Federal
System 7 (2d ed.1973). Mr. Wilson, of Pennsylvania, commented that
"[t]he Judges would be in a bad situation if made to depend on
every gust of faction which might prevail in the two branches of
our Govt." 2 Farrand,
supra, at 429.
[
Footnote 12]
It should be noted, however, that the House of Representatives
expressed substantial doubts respecting the constitutionality of
the provisions eventually included in the Act. The House Judiciary
Committee and its Subcommittee on Civil and Constitutional Rights
gave lengthy consideration to the constitutional issues surrounding
the conferral of broad powers upon the new bankruptcy courts. The
Committee, the Subcommittee, and the House as a whole initially
concluded that Art. III courts were constitutionally required for
bankruptcy adjudications.
See H.R. 8200, 95th Cong., 1st
Sess. (1977); Hearings on H.R. 31 and H.R. 32 before the
Subcommittee on Civil and Constitutional Rights of the House
Committee on the Judiciary, 94th Cong., 2d Sess., 2081-2084 (1976);
id. at 2682-2706; H.R.Rep. No. 95-595, p. 39 (1977)
("Article III is the constitutional norm, and the limited
circumstances in which the courts have permitted departure from the
requirements of Article III are not present in the bankruptcy
context");
id. at 21-38; Subcommittee on Civil and
Constitutional Rights of the House Committee on the Judiciary,
Constitutional Bankruptcy Courts, 95th Cong., 1st Sess., 33 (Comm.
Print No. 3, 1977) (concluding that the proposed bankruptcy courts
should be established "under Article III, with all of the
protection that the Framers intended for an independent
judiciary"); Subcommittee on Civil and Constitutional Rights of the
House Committee on the Judiciary, Report on Hearings on the Court
Administrative Structure for Bankruptcy Cases, 95th Cong., 2d
Sess., 5 (Comm. Print No. 13, 1978) (same);
see generally
Klee, Legislative History of the New Bankruptcy Law, 28 De Paul
L.Rev. 941, 945-949, 951 (1979). The Senate bankruptcy bill did not
provide for life tenure or a guaranteed salary, instead adopting
the concept of a bankruptcy court with similarly broad powers but
as an "adjunct" to an Art. III court. S. 2266, 95th Cong., 2d Sess.
(1978). The bill that was finally enacted, denying bankruptcy
judges the tenure and compensation protections of Art. III, was the
result of a series of last-minute conferences and compromises
between the managers of both Houses.
See Klee,
supra, at 952-956.
[
Footnote 13]
The Act designates the bankruptcy court in each district as an
"adjunct" to the district court. 28 U.S.C. § 151(a) (1976 ed.,
Supp. IV). Neither House of Congress concluded that the bankruptcy
courts should be established as independent legislative courts.
See n 12,
supra.
[
Footnote 14]
At one time, this Court suggested a rigid distinction between
those subjects that could be considered only in Art. III courts and
those that could be considered only in legislative courts.
See
Williams v. United States, 289 U. S. 553
(1933). But this suggested dichotomy has not withstood analysis.
See C. Wright, Law of the Federal Courts 335 (3d ed.1976).
Our more recent cases clearly recognize that legislative courts may
be granted jurisdiction over some cases and controversies to which
the Art. III judicial power might also be extended.
E.g.,
Palmore v. United States, 411 U. S. 389
(1973).
See Glidden Co. v. Zdanok, 370 U.
S. 530,
370 U. S.
549-551 (1962) (opinion of Harlan, J.).
[
Footnote 15]
JUSTICE WHITE's dissent finds particular significance in the
fact that Congress could have assigned all bankruptcy matters to
the state courts.
Post at
458 U. S. 116.
But, of course, virtually all matters that might be heard in Art.
III courts could also be left by Congress to state courts. This
fact is simply irrelevant to the question before us. Congress has
no control over state court judges; accordingly the principle of
separation of powers is not threatened by leaving the adjudication
of federal disputes to such judges.
See Krattenmaker,
Article III and Judicial Independence: Why the New Bankruptcy
Courts are Unconstitutional, 70 Geo.L.J. 297, 304-305 (1981). The
Framers chose to leave to Congress the precise role to be played by
the lower federal courts in the administration of justice.
See Hart and Wechsler's The Federal Courts and the Federal
System,
supra, n. 11, at 11. But the Framers did not leave
it to Congress to define the character of those courts -- they were
to be independent of the political branches and presided over by
judges with guaranteed salary and life tenure.
[
Footnote 16]
We recently reaffirmed the principle, expressed in these early
cases, that Art. I, § 8, cl. 17, provides that Congress shall have
power "[t]o exercise exclusive Legislation in all Cases whatsoever,
over" the District of Columbia.
Palmore v. United States,
411 U.S. at
411 U. S. 397.
See also Wallace v. Adams, 204 U.
S. 415,
204 U. S. 423
(1907) (recognizing Congress' authority to establish legislative
courts to determine questions of tribal membership relevant to
property claims within Indian territory);
In re Ross,
140 U. S. 453
(1891) (same, respecting consular courts established by concession
from foreign countries).
See generally 1 J. Moore, J.
Lucas, H. Fink, D. Weckstein, & J. Wicker, Moore's Federal
Practice 46-49, 53-54 (1982).
But see Reid v. Covert,
354 U. S. 1
(1957).
[
Footnote 17]
See also Burns v. Wilson, 346 U.
S. 137,
346 U. S.
139-140 (1953). But this Court has been alert to ensure
that Congress does not exceed the constitutional bounds and bring
within the jurisdiction of the military courts matters beyond that
jurisdiction, and properly within the realm of "judicial power."
See, e.g., Reid v. Covert, supra; United States ex rel. Toth v.
Quarles, 350 U. S. 11
(1955).
[
Footnote 18]
Congress' power to create legislative courts to adjudicate
public rights carries with it the lesser power to create
administrative agencies for the same purpose, and to provide for
review of those agency decisions in Art. III courts.
See, e.g.,
Atlas Roofing Co. v. Occupational Safety and Health Review
Comm'n, 430 U. S. 442,
430 U. S. 450
(1977).
[
Footnote 19]
See Oceanic Steam Navigation Co. v. Stranahan,
214 U. S. 320,
214 U. S. 339
(1909); Katz, Federal Legislative Courts, 43 Harv.L.Rev. 894, 915
(1930).
[
Footnote 20]
Doubtless it could be argued that the need for independent
judicial determination is greatest in cases arising between the
Government and an individual. But the rationale for the public
rights line of cases lies not in political theory, but rather in
Congress' and this Court's understanding of what power was reserved
to the Judiciary by the Constitution as a matter of historical
fact.
[
Footnote 21]
See also Williams v. United States, 289 U.
S. 553 (1933) (holding that Court of Claims was a
legislative court, and that salary of a judge of that court could
therefore be reduced by Congress).
[
Footnote 22]
Crowell v. Benson, 285 U. S. 22
(1932), attempted to catalog some of the matters that fall within
the public rights doctrine:
"Familiar illustrations of administrative agencies created for
the determination of such matters are found in connection with the
exercise of the congressional power as to interstate and foreign
commerce, taxation, immigration, the public lands, public health,
the facilities of the post office, pensions and payments to
veterans."
Id. at
285 U. S. 51
(footnote omitted).
[
Footnote 23]
Congress cannot
"withdraw from [Art. III] judicial cognizance any matter which,
from it nature, is the subject of a suit at the common
law, or in equity, or admiralty."
Murray's Lessee v. Hoboken
Land & Improvement Co., 18 How. 272,
59 U. S. 284
(1856) (emphasis added). It is thus clear that the presence of the
United States as a proper party to the proceeding is a necessary,
but not sufficient, means of distinguishing "private rights" from
"public rights." And it is also clear that, even with respect to
matters that arguably fall within the scope of the "public rights"
doctrine, the presumption is in favor of Art. III courts.
See
Glidden Co. v. Zdanok, 370 U.S. at
370 U. S.
548-549, and n. 21 (opinion of Harlan, J.).
See
also Currie, The Federal Courts and the American Law
Institute, Part 1, 36 U.Chi.L.Rev. 1, 13-14, n. 67 (1968).
Moreover, when Congress assigns these matters to administrative
agencies, or to legislative courts, it has generally provided, and
we have suggested that it may be required to provide, for Art. III
judicial review.
See Atlas Roofing Co. v. Occupational Safety
and Health Review Comm'n, 430 U.S. at
430 U. S. 455,
n. 13.
[
Footnote 24]
Of course, the public rights doctrine does not extend to any
criminal matters, although the Government is a proper party.
See, e.g., United States ex rel. Toth v. Quarles,
350 U. S. 11
(1955).
[
Footnote 25]
The "unifying principle" that JUSTICE WHITE's dissent finds
lacking in al of these cases,
see post at
458 U. S. 105,
is to be found in the exceptional constitutional grants of power to
Congress with respect to certain matters. Although the dissent is
correct that these grants are not explicit in the language of the
Constitution, they are nonetheless firmly established in our
historical understanding of the constitutional structure. When
these three exceptional grants are properly constrained, they do
not threaten the Framers' vision of an independent Federal
Judiciary. What clearly remains subject to Art. III are all private
adjudications in federal courts within the States -- matters from
their nature subject to "a suit at common law or in equity or
admiralty" -- and all criminal matters, with the narrow exception
of military crimes. There is no doubt that, when the Framers
assigned the "judicial Power" to an independent Art. III Branch,
these matters lay at what they perceived to be the protected core
of that power.
Although the dissent recognizes that the Framers had something
important in mind when they assigned the judicial power of the
United States to Art. III courts, it concludes that our cases and
subsequent practice have eroded this conception. Unable to find a
satisfactory theme in our precedents for analyzing these cases, the
dissent rejects all of them, as well as the historical
understanding upon which they were based, in favor of an
ad
hoc balancing approach in which Congress can essentially
determine for itself whether Art. III courts are required.
See
post at
458 U. S.
105-116. But even the dissent recognizes that the notion
that Congress, rather than the Constitution, should determine
whether there is a need for independent federal courts cannot be
what the Framers had in mind.
See post at
458 U. S.
113.
[
Footnote 26]
This claim may be adjudicated in federal court on the basis of
its relationship to the petition for reorganization.
See
Williams v. Austrian, 331 U. S. 642
(1947);
Schumacher v. Beeler, 293 U.
S. 367 (1934).
See also National Ins. Co. v.
Tidewater Co., 337 U. S. 582,
337 U. S.
611-613 (1949) (Rutledge, J., concurring);
Textile
Workers v. Lincoln Mills, 353 U. S. 448,
353 U. S. 472
(1957) (Frankfurter, J., dissenting).
Cf. 22 U.
S. Bank of the United States, 9 Wheat. 738 (1824).
But this relationship does not transform the state-created right
into a matter between the Government and the petitioner for
reorganization. Even in the absence of the federal scheme, the
plaintiff would be able to proceed against the defendant on the
state law contractual claims.
[
Footnote 27]
Nor can appellants' analysis logically be limited to Congress'
Art. I powers. For example, appellants' reasoning relies in part
upon analogy to our approval of territorial courts in
American Ins. Co. v.
Canter, 1 Pet. 511 (1828), and of the use of an
administrative agency in
Crowell v. Benson, 285 U. S.
22 (1932). Brief for United States 15; Brief for
Northern Pipeline Construction Co. 10. In those cases, the Court
recognized the right of Congress to create territorial courts
pursuant to the authority granted under Art. IV, § 3, cl. 2, and to
create administrative tribunals to adjudicate rights in admiralty
pursuant to the federal authority in Art. III, § 2, over admiralty
jurisdiction.
See American Ins. Co. v. Canter, supra, at
26 U. S. 546;
Crowell v. Benson, supra, at
285 U. S. 39.
This reliance underscores the fact that appellants offer no
principled means of distinguishing between Congress' Art. I powers
and any of Congress' other powers -- including, for example, those
conferred by the various amendments to the Constitution,
e.g., U.S.Const., Amdts. 13-16, 19, 23, 24, 26.
[
Footnote 28]
JUSTICE WHITE's suggested "limitations" on Congress' power to
create Art. I courts are even more transparent. JUSTICE WHITE's
dissent suggests that Art. III "should be read as expressing one
value that must be balanced against competing constitutional values
and legislative responsibilities," and that the Court retains the
final word on how the balance is to be struck.
Post at
458 U. S.
113-114. The dissent would find the Art. III "value"
accommodated where appellate review by Art. III courts is provided
and where the Art. I courts are "designed to deal with issues
likely to be of little interest to the political branches."
Post at
458 U. S. 115.
But the dissent's view that appellate review is sufficient to
satisfy either the command or the purpose of Art. III is incorrect.
See n 39,
infra. And the suggestion that we should consider whether
the Art. I courts are designed to deal with issues likely to be of
interest to the political Branches would undermine the validity of
the adjudications performed by most of the administrative agencies,
on which validity the dissent so heavily relies.
In applying its
ad hoc balancing approach to the facts
of this case, the dissent rests on the justification that these
courts differ from standard Art. III courts because of their
"extreme specialization." As noted above, "extreme specialization"
is hardly an accurate description of bankruptcy courts designed to
adjudicate the entire range of federal and state controversies.
See infra at
458 U. S. 84-85.
Moreover, the special nature of bankruptcy adjudications is in no
sense incompatible with performance of such functions in a tribunal
afforded the protection of Art. III. As one witness pointed out to
Congress:
"Relevant to that question of need, it seems worth noting that
Article III itself permits much flexibility; so long as tenure
during good behavior is granted, much room exists as regards other
conditions. Thus it would certainly be possible to create a special
bankruptcy court under Article III, and there is no reason why the
judges of that court would have to be paid the same salary as
district judges or any other existing judges. It would also be
permissible to provide that, when a judge of that court retired
pursuant to statute, a vacancy for a new appointment would not
automatically be created. And it would be entirely valid to specify
that the judges of that court could not be assigned to sit, even
temporarily, on the general district courts or courts of
appeals."
Hearings on H.R. 31 and H.R. 32 before the Subcommittee on Civil
and Constitutional Rights of the House Committee on the Judiciary,
94th Cong., 2d Sess., 2697 (1976) (letter of Paul Mishkin).
[
Footnote 29]
JUSTICE WHITE's dissent fails to distinguish between Congress'
power to create adjuncts to Art. III courts, and Congress' power to
create Art. I courts in limited circumstances.
See post at
458 U. S.
103-104. Congress' power to create adjuncts and assign
them limited adjudicatory functions is in no sense an "exception"
to Art. III. Rather, such an assignment is consistent with Art.
III, so long as "the essential attributes of the judicial power"
are retained in the Art. III court,
Crowell v. Benson, 285
U.S. at
285 U. S. 51,
and so long as Congress' adjustment of the traditional manner of
adjudication can be sufficiently linked to its legislative power to
define substantive rights,
see infra at
458 U. S. 83-84.
Cf. Atlas Roofing Co. v. Occupational Safety and Health Review
Comm'n, 430 U.S. at
430 U. S. 450,
n. 7.
[
Footnote 30]
Thus, in
Raddatz, there was no serious threat that the
exercise of the judicial power would be subject to incursion by
other branches.
"[T]he only conceivable danger of a 'threat' to the
'independence' of the magistrate comes from within, rather than
without the judicial department."
447 U.S. at
447 U. S. 685
(BLACKMUN, J., concurring).
[
Footnote 31]
Appellants and JUSTICE WHITE's dissent also rely on the broad
powers exercised by the bankruptcy referees immediately before the
Bankruptcy Act of 1978.
See post at
458 U. S.
98-103. But those particular adjunct functions, which
represent the culmination of years of gradual expansion of the
power and authority of the bankruptcy referee,
see 1
Collier,
supra, n 3, �
1.02, have never been explicitly endorsed by this Court. In
Katchen v. Landy, 382 U. S. 323
(1966), on which the dissent relies, there was no discussion of the
Art. III issue. Moreover, when
Katchen was decided, the
1973 Bankruptcy Rules had not yet been adopted, and the district
judge, after hearing the report of the referee, was free to "modify
it or . . . reject it in whole or in part or . . . receive further
evidence or . . . recommit it with instructions." General Order in
Bankruptcy No. 47, 305 U.S. 702 (1939).
We note, moreover, that the 1978 Act made at least three
significant changes from the bankruptcy practice that immediately
preceded it. First, of course, the jurisdiction of the bankruptcy
courts was "substantially expanded" by the Act. H.R.Rep. No.
95-595, p. 13 (1977). Before the Act, the referee had no
jurisdiction, except with consent, over controversies beyond those
involving property in the actual or constructive possession of the
court. 11 U.S.C. § 46(b) (repealed).
See MacDonald v. Plymouth
Trust Co., 286 U. S. 263,
286 U. S. 266
(1932). It cannot be doubted that the new bankruptcy judges, unlike
the referees, have jurisdiction far beyond that which can be even
arguably characterized as merely incidental to the discharge in
bankruptcy or a plan for reorganization. Second, the bankruptcy
judges have broader powers than those exercised by the referees.
See infra at
458 U. S. 84-86;
H.R.Rep. No. 95-595,
supra, at 12, and nn. 63-68. Finally,
and perhaps most significantly, the relationship between the
district court and the bankruptcy court was changed under the 1978
Act. Before the Act, bankruptcy referees were "subordinate adjuncts
of the district courts."
Id. at 7. In contrast, the new
bankruptcy courts are "independent of the United States district
courts."
Ibid.; 1 Collier
supra, n. 3, � 1.03, p.
1-9. Before the Act, bankruptcy referees were appointed and
removable only by the district court. 11 U.S.C. § 62 (repealed).
And the district court retained control over the reference by his
power to withdraw the case from the referee. Bkrtcy.Rule 102. Thus,
even at the trial stage, the parties had access to an independent
judicial officer. Although Congress could still lower the salary of
referees, they were not dependent on the political Branches of
Government for their appointment. To paraphrase JUSTICE BLACKMUN's
observation in
Raddatz, supra, the primary "danger of a
threat' to the `independence' of the [adjunct came] from
within, rather than without, the judicial department." 447 U.S. at
447 U. S. 685
(concurring opinion).
[
Footnote 32]
Contrary to JUSTICE WHITE's suggestion, we do not concede
that
"Congress may provide for initial adjudications by Art. I courts
or administrative judges of all rights and duties arising under
otherwise valid federal laws."
See post at
458 U. S. 94.
Rather, we simply reaffirm the holding of
Crowell that
Congress may assign to non-Art. III bodies some adjudicatory
functions.
Crowell itself spoke of "specialized"
functions. These cases do not require us to specify further any
limitations that may exist with respect to Congress' power to
create adjuncts to assist in the adjudication of federal statutory
rights.
[
Footnote 33]
The Court in
Crowell found that the requirement of
de novo review as to certain facts was not "simply the
question of due process in relation to notice and hearing," but was
"rather a question of the appropriate maintenance of the Federal
judicial power." 285 U.S. at
285 U. S. 56.
The dissent agreed that some factual findings cannot be made by
adjuncts, on the ground that, "under certain circumstances, the
constitutional requirement of due process is a requirement of [Art.
III] judicial process."
Id. at
285 U. S. 87
(Brandeis, J., dissenting).
[
Footnote 34]
Crowell's precise holding, with respect to the review
of "jurisdictional" and "constitutional" facts that arise within
ordinary administrative proceedings has been undermined by later
cases.
See St. Joseph Stock Yards Co. v. United States,
298 U. S. 38,
298 U. S. 53
(1936).
See generally 4 K. Davis, Administrative Law
Treatise §§ 29.08, 29.09 (1st ed.1958). But the general principle
of
Crowell -- distinguishing between congressionally
created rights and constitutionally recognized rights -- remains
valid, as evidenced by the Court's recent approval of
Ng Fung
Ho v. White, 259 U. S. 276
(1922), on which
Crowell relied.
See Agosto v.
INS, 436 U. S. 748,
436 U. S. 753
(1978) (
de novo judicial determination required for claims
of American citizenship in deportation proceedings).
See also
United States v. Raddatz, 447 U.S. at
447 U. S.
682-684;
id. at
447 U. S.
707-712 (MARSHALL, J., dissenting).
[
Footnote 35]
Drawing the line between permissible extensions of legislative
power and impermissible incursions into judicial power is a
delicate undertaking, for the powers of the Judicial and
Legislative Branches are often overlapping. As Justice Frankfurter
noted in a similar context:
"To be sure, the content of the three authorities of government
is not to be derived from an abstract analysis. The areas are
partly interacting, not wholly disjointed."
Youngstown Sheet & Tube Co. v. Sawyer, 343 U.
S. 579,
343 U. S. 610
(1952) (concurring opinion). The interaction between the
Legislative and Judicial Branches is at its height where courts are
adjudicating rights wholly of Congress' creation. Thus, where
Congress creates a substantive right, pursuant to one of its broad
powers to make laws, Congress may have something to say about the
proper manner of adjudicating that right.
[
Footnote 36]
Of course, bankruptcy adjudications themselves, as well as the
manner in which the rights of debtors and creditors are adjusted,
are matters of federal law. Appellant Northern's state law contract
claim is now in federal court because of its relationship to
Northern's reorganization petition.
See n 26,
supra. But Congress has not
purported to prescribe a rule of decision for the resolution of
Northern's contractual claims.
[
Footnote 37]
The limitations that the judges
"may not enjoin another court or punish a criminal contempt not
committed in the presence of the judge of the court or warranting a
punishment of imprisonment,"
28 U.S.C. § 1481 (1976 ed., Supp. IV), are also denied to Art.
III judges under certain circumstances.
See 18 U.S.C. §§
401, 402, 3691; 28 U.S.C. § 2283.
[
Footnote 38]
Although the entry of an enforcement order is in some respects
merely formal, it has long been recognized that
"'[t]he award of execution . . . is a part, and an essential
part of every judgment passed by a court exercising judicial power.
It is no judgment in the legal sense of the term, without it.'"
ICC v. Brimson, 154 U. S. 447,
154 U. S. 484
(1894), quoting Chief Justice Taney's memorandum in
Gordon v.
United States, 117 U.S.Appx. 697, 702 (1864).
[
Footnote 39]
Appellants suggest that
Crowell and
Raddatz
stand for the proposition that Art. III is satisfied so long as
some degree of appellate review is provided. But that suggestion is
directly contrary to the text of our Constitution:
"The Judges,
both of the supreme and inferior Courts,
shall hold their Offices during good Behaviour, and shall . . .
receive [undiminished] Compensation."
Art. III, § 1 (emphasis added). Our precedents make it clear
that the constitutional requirements for the exercise of the
judicial power must be met at all stages of adjudication, and not
only on appeal, where the court is restricted to considerations of
law, as well as the nature of the case as it has been shaped at the
trial level. The Court responded to a similar suggestion in
Crowell by stating that to accept such a regime,
"would be to sap the judicial power as it exists under the
Federal Constitution, and to establish a government of bureaucratic
character alien to our system, wherever fundamental rights depend,
as not infrequently they do depend, upon the facts, and finality as
to facts becomes in effect finality in law."
285 U.S. at
285 U. S. 57.
Cf. Ward v. Village of Monroeville, 409 U. S.
57,
409 U. S. 61-62
(1972);
Osborn v. Bank of the United
States, 9 Wheat. 738,
22 U. S. 883
(1824).
JUSTICE WHITE's dissent views the function of the Third Branch
as interpreting the Constitution in order to keep the other two
Branches in check, and would accordingly find the purpose, if not
the language, of Art. III satisfied where there is an appeal to an
Art. III court.
See post at
458 U. S. 115.
But in the Framers' view, Art. III courts would do a great deal
more than, in an abstract way, announce guidelines for the other
two Branches. While "expounding" the Constitution was surely one
vital function of the Art. III courts in the Framers' view, the
tasks of those courts, for which independence was an important
safeguard, included the mundane as well as the glamorous, matters
of common law and statute as well as constitutional law, issues of
fact as well as issues of law. As Hamilton noted,
"it is not with a view to infractions of the Constitution only,
that the independence of the judges may be an essential safeguard
against the effects of occasional ill humors in the society."
The Federalist No. 78, p. 488 (H. Lodge ed. 1888). In order to
promote the independence and improve the quality of federal
judicial decisionmaking in all of these areas, the Framers created
a system of independent federal courts.
See The Federalist
Nos. 78-82.
[
Footnote 40]
It is clear that, at the least, the new bankruptcy judges cannot
constitutionally be vested with jurisdiction to decide this state
law contract claim against Marathon. As part of a comprehensive
restructuring of the bankruptcy laws, Congress has vested
jurisdiction over this and all matters related to cases under Title
11 in a single non-Art. III court, and has done so pursuant to a
single statutory grant of jurisdiction. In these circumstances we
cannot conclude that, if Congress were aware that the grant of
jurisdiction could not constitutionally encompass this and similar
claims, it would simply remove the jurisdiction of the bankruptcy
court over these matters, leaving the jurisdictional provision and
adjudicatory structure intact with respect to other types of
claims, and thus subject to Art. III constitutional challenge on a
claim-by-claim basis. Indeed, we note that one of the express
purposes of the Act was to ensure adjudication of all claims in a
single forum and to avoid the delay and expense of jurisdictional
disputes.
See H.R.Rep. No. 95-595, pp. 448 (1977); S.Rep.
No. 95-989, p. 17 (1978). Nor can we assume, as THE CHIEF JUSTICE
suggests,
post, at
458 U. S. 92, that Congress' choice would be to have
these cases "routed to the United States district court of which
the bankruptcy court is an adjunct." We think that it is for
Congress to determine the proper manner of restructuring the
Bankruptcy Act of 1978 to conform to the requirements of Art. III
in the way that will best effectuate the legislative purpose.
[
Footnote 41]
See also Buckley v. Valeo, 424 U. S.
1,
424 U. S. 142
(1976);
Chicot County Drainage Dist. v. Baxter State Bank,
308 U. S. 371,
308 U. S.
376-377 (1940);
Insurance Corp. of Ireland v.
Compagnie des Bauxites de Guinee, 456 U.
S. 694,
456 U. S. 702,
n. 9 (1982).
JUSTICE REHNQUIST, with whom JUSTICE O'CONNOR joins, concurring
in the judgment.
Were I to agree with the plurality that the question presented
by these cases is "whether the assignment by Congress to bankruptcy
judges of the jurisdiction granted in 28 U.S.C. § 1471 (1976 ed.,
Supp IV) by § 241(a) of the Bankruptcy Act of 1978 violates Art.
III of the Constitution,"
ante at
458 U. S. 52, I
would with considerable reluctance embark on the duty of deciding
this broad question. But appellee Marathon Pipe Line Co. has not
been subjected to the full range of authority granted bankruptcy
courts by § 1471. It was named as a defendant in a suit brought by
appellant Northern Pipeline Construction Co. in a United States
Bankruptcy Court. The suit sought damages for,
inter alia,
breaches of contract and warranty. Marathon moved to dismiss the
action on the grounds that the Bankruptcy Act of 1978, which
authorized the suit, violated Art. III of the Constitution insofar
as it established bankruptcy judges whose tenure and salary
protection do not conform to the requirements of Art. III.
With the cases in this posture, Marathon has simply been named
defendant in a lawsuit about a contract, a lawsuit initiated by
appellant Northern after having previously filed a petition for
reorganization under the Bankruptcy Act. Marathon may object to
proceeding further with this lawsuit on the grounds that, if it is
to be resolved by an agency of the United States, it may be
resolved only by an agency which exercises "[t]he judicial power of
the United States" described by Art. III of the Constitution. But
resolution of
Page 458 U. S. 90
any objections it may make on this ground to the exercise of a
different authority conferred on bankruptcy courts by the 1978 Act,
see ante at
458 U. S. 54-55,
should await the exercise of such authority.
"This Court, as is the case with all federal courts,"
"has no jurisdiction to pronounce any statute, either of a State
or of the United States, void, because irreconcilable with the
Constitution, except as it is called upon to adjudge the legal
rights of litigants in actual controversies. In the exercise of
that jurisdiction, it is bound by two rules, to which it has
rigidly adhered, one, never to anticipate a question of
constitutional law in advance of the necessity of deciding it; the
other, never to formulate a rule of constitutional law broader than
is required by the precise facts to which it is to be applied."
"
Liverpool, New York & Philadelphia S.S. Co. v.
Commissioners of Emigration, 113 U. S. 33,
113 U. S.
39."
United States v. Raines, 362 U. S.
17,
362 U. S. 21
(1960). Particularly in an area of constitutional law such as that
of "Art. III Courts," with its frequently arcane distinctions and
confusing precedents, rigorous adherence to the principle that this
Court should decide no more of a constitutional question than is
absolutely necessary accords with both our decided cases and with
sound judicial policy.
From the record before us, the lawsuit in which Marathon was
named defendant seeks damages for breach of contract,
misrepresentation, and other counts which are the stuff of the
traditional actions at common law tried by the courts at
Westminster in 1789. There is apparently no federal rule of
decision provided for any of the issues in the lawsuit; the claims
of Northern arise entirely under state law. No method of
adjudication is hinted, other than the traditional common law mode
of judge and jury. The lawsuit is before the Bankruptcy Court only
because the plaintiff has previously filed a petition for
reorganization in that court.
Page 458 U. S. 91
The cases dealing with the authority of Congress to create
courts other than by use of its power under Art. III do not admit
of easy synthesis. In the interval of nearly 150 years between
American Insurance Co. v.
Canter, 1 Pet. 511 (1828), and
Palmore v.
United States, 411 U. S. 389
(1973), the Court addressed the question infrequently. I need not
decide whether these cases in fact support a general proposition
and three tidy exceptions, as the plurality believes, or whether,
instead, they are but landmarks on a judicial "darkling plain"
where ignorant armies have clashed by night, as JUSTICE WHITE
apparently believes them to be. None of the cases has gone so far
as to sanction the type of adjudication to which Marathon will be
subjected against its will under the provisions of the 1978 Act. To
whatever extent different powers granted under that Act might be
sustained under the "public rights" doctrine of
Murray's
Lessee v. Hoboken Land & Improvement Co., 18
How. 272 (1856), and succeeding cases, I am satisfied that the
adjudication of Northern's lawsuit cannot be so sustained.
I am likewise of the opinion that the extent of review by Art.
III courts provided on appeal from a decision of the bankruptcy
court in a case such as Northern's does not save the grant of
authority to the latter under the rule espoused in
Crowell v.
Benson, 285 U. S. 22
(1932). All matters of fact and law in whatever domains of the law
to which the parties' dispute may lead are to be resolved by the
bankruptcy court in the first instance, with only traditional
appellate review by Art. III courts apparently contemplated. Acting
in this manner the bankruptcy court is not an "adjunct" of either
the district court or the court of appeals.
I would, therefore, hold so much of the Bankruptcy Act of 1978
as enables a Bankruptcy Court to entertain and decide Northern's
lawsuit over Marathon's objection to be violative of Art. III of
the United States Constitution. Because I agree with the plurality
that this grant of authority is not readily severable from the
remaining grant of authority to
Page 458 U. S. 92
bankruptcy courts under § 1471,
see ante at
458 U. S. 87-88,
n. 40, I concur in the judgment. I also agree with the discussion
in
458 U. S.
CHIEF JUSTICE BURGER, dissenting.
I join JUSTICE WHITE's dissenting opinion, but I write
separately to emphasize that, notwithstanding the plurality
opinion, the Court does not hold today that Congress' broad grant
of jurisdiction to the new bankruptcy courts is generally
inconsistent with Art. III of the Constitution. Rather, the Court's
holding is limited to the proposition stated by JUSTICE REHNQUIST
in his concurrence in the judgment -- that a "traditional" state
common law action, not made subject to a federal rule of decision,
and related only peripherally to an adjudication of bankruptcy
under federal law, must, absent the consent of the litigants, be
heard by an "Art. III court" if it is to be heard by any court or
agency of the United States. This limited holding, of course, does
not suggest that there is something inherently unconstitutional
about the new bankruptcy courts; nor does it preclude such courts
from adjudicating all but a relatively narrow category of claims
"arising under" or "arising in or related to cases under" the
Bankruptcy Act.
It will not be necessary for Congress, in order to meet the
requirements of the Court's holding, to undertake a radical
restructuring of the present system of bankruptcy adjudication. The
problems arising from today's judgment can be resolved simply by
providing that ancillary common law actions, such as the one
involved in these cases, be routed to the United States district
court of which the bankruptcy court is an adjunct.
JUSTICE WHITE, with whom THE CHIEF JUSTICE and JUSTICE POWELL
join, dissenting.
Article III, § 1, of the Constitution is straightforward and
uncomplicated on its face:
Page 458 U. S. 93
"The judicial Power of the United States, shall be vested in one
supreme Court, and in such inferior Courts as the Congress may from
time to time ordain and establish. The Judges, both of the supreme
and inferior Courts, shall hold their Offices during good
Behaviour, and shall at stated Times, receive for their Services, a
Compensation, which shall not be diminished during their
Continuance in Office."
Any reader could easily take this provision to mean that,
although Congress was free to establish such lower courts as it saw
fit, any court that it did establish would be an "inferior" court
exercising "judicial Power of the United States," and so must be
manned by judges possessing both life tenure and a guaranteed
minimal income. This would be an eminently sensible reading, and
one that, as the plurality shows, is well-founded in both the
documentary sources and the political doctrine of separation of
powers that stands behind much of our constitutional structure.
Ante at
458 U. S.
57-60.
If this simple reading were correct and we were free to
disregard 150 years of history, these would be easy cases, and the
plurality opinion could end with its observation that
"[i]t is undisputed that the bankruptcy judges whose offices
were created by the Bankruptcy Act of 1978 do not enjoy the
protections constitutionally afforded to Art. III judges."
Ante at
458 U. S. 60.
The fact that the plurality must go on to deal with what has been
characterized as one of the most confusing and controversial areas
of constitutional law [
Footnote
2/1] itself indicates the gross oversimplification implicit in
the plurality's claim that
"our Constitution unambiguously enunciates a fundamental
principle -- that the 'judicial Power of the United States' must be
reposed in an independent Judiciary, [and] provides clear
institutional protections for that independence."
Ibid. While this is fine rhetoric, analytically it
serves only to put a distracting and superficial gloss on a
difficult question.
Page 458 U. S. 94
That question is what limits Art. III places on Congress'
ability to create adjudicative institutions designed to carry out
federal policy established pursuant to the substantive authority
given Congress elsewhere in the Constitution. Whether fortunate or
unfortunate, at this point in the history of constitutional law,
that question can no longer be answered by looking only to the
constitutional text. This Court's cases construing that text must
also be considered. In its attempt to pigeonhole these cases, the
plurality does violence to their meaning and creates an artificial
structure that itself lacks coherence.
I
There are, I believe, two separate grounds for today's decision.
First, non-Art. III judges, regardless of whether they are labeled
"adjuncts" to Art. III courts or "Art. I judges," may consider only
controversies arising out of federal law. Because the immediate
controversy in these cases -- Northern Pipeline's claim against
Marathon -- arises out of state law, it may only be adjudicated,
within the federal system, by an Art. III court. [
Footnote 2/2] Second, regardless of the source of
law that governs the controversy, Congress is prohibited by Art.
III from establishing Art. I courts, with three narrow exceptions.
Adjudication of bankruptcy proceedings does not fall within any of
these exceptions. I shall deal with the first of these contentions
in this section.
The plurality concedes that Congress may provide for initial
adjudications by Art. I courts or administrative judges of all
rights and duties arising under otherwise valid federal laws.
Ante at
458 U. S. 80.
There is no apparent reason why this principle should not extend to
matters arising in federal bankruptcy proceedings. The plurality
attempts to escape the reach of prior decisions by contending that
the bankrupt's claim against Marathon arose under state law.
Non-Article III
Page 458 U. S. 95
judges, in its view, cannot be vested with authority to
adjudicate such issues. It then proceeds to strike down 28 U.S.C. §
1471 (1976 ed., Supp. IV) on this ground. For several reasons, the
Court's judgment is unsupportable.
First, clearly this ground alone cannot support the Court's
invalidation of § 1471 on its face. The plurality concedes that, in
adjudications and discharges in bankruptcy, "the restructuring of
debtor-creditor relations, which is at the core of the federal
bankruptcy power,"
ante at
458 U. S. 71,
and "the manner in which the rights of debtors and creditors are
adjusted,"
ante at
458 U. S. 84, n.
36, are matters of federal law. Under the plurality's own
interpretation of the cases, therefore, these matters could be
heard and decided by Art. I judges. But because the bankruptcy
judge is also given authority to hear a case like that of appellant
Northern against Marathon, which the Court says is founded on state
law, the Court holds that the section must be stricken down on its
face. This is a grossly unwarranted emasculation of the scheme
Congress has adopted. Even if the Court is correct that such a
state law claim cannot be heard by a bankruptcy judge, there is no
basis for doing more than declaring the section unconstitutional as
applied to the claim against Marathon, leaving the section
otherwise intact. In that event, cases such as these would have to
be heard by Art. III judges or by state courts -- unless the
defendant consents to suit before the bankruptcy judge -- just as
they were before the 1978 Act was adopted. But this would remove
from the jurisdiction of the bankruptcy judge only a tiny fraction
of the cases he is now empowered to adjudicate, and would not
otherwise limit his jurisdiction. [
Footnote 2/3]
Page 458 U. S. 96
Second, the distinction between claims based on state law and
those based on federal law disregards the real character of
bankruptcy proceedings. The routine in ordinary bankruptcy cases
now, as it was before 1978, is to stay actions against the
bankrupt, collect the bankrupt's assets, require creditors to file
claims or be forever barred, allow or disallow claims that are
filed, adjudicate preferences and fraudulent transfers, and make
pro rata distributions to creditors, who will be barred by
the discharge from taking further actions against the bankrupt. The
crucial point to be made is that, in the ordinary bankruptcy
proceeding, the great bulk of creditor claims are claims that have
accrued under state law prior to bankruptcy -- claims for goods
sold, wages, rent, utilities, and the like.
"[T]he word debt, as used by the Act, is not confined to its
technical common law meaning but . . . extends to liabilities
arising out of breach of contract . . . to torts . . . and to taxes
owing to the United States or state or local governments."
1 W. Collier, Bankruptcy � 1.14, p. 88 (14th ed.1976). Every
such claim must be filed and its validity is subject
Page 458 U. S. 97
to adjudication by the bankruptcy court. The existence and
validity of such claims recurringly depend on state law. Hence, the
bankruptcy judge is constantly enmeshed in state law issues.
The new aspect of the Bankruptcy Act of 1978, in this regard,
therefore, is not the extension of federal jurisdiction to state
law claims, but its extension to particular kinds of state law
claims, such as contract cases against third parties or disputes
involving property in the possession of a third person. [
Footnote 2/4] Prior to 1978, a claim of a
bankrupt against a third party, such as the claim against Marathon
in this case, was no within the jurisdiction of the bankruptcy
judge. The old limits were based, of course, on the restrictions
implicit within the concept of
in rem jurisdiction; the
new extension is based on the concept of
in personam
jurisdiction.
"The bankruptcy court is given
in personam jurisdiction
as well as
in rem jurisdiction to handle everything that
arises in a bankruptcy case."
H.R.Rep. No. 95-695, p. 445 (1977). The difference between the
new and old Acts, therefore, is not to be found in a distinction
between state law and federal law matters; rather, it is in a
distinction between
in rem and
in personam
jurisdiction. The majority at no place explains why this
distinction should have constitutional implications.
Third, all that can be left of the majority's argument in this
regard is that state law claims adjudicated within the federal
system must be heard in the first instance by Art. III judges. I
shall argue below that any such attempt to distinguish Art. I from
Art. III courts by the character of the controversies they may
adjudicate fundamentally misunderstands the historical
Page 458 U. S. 98
and constitutional significance of Art. I courts. Initially,
however, the majority's proposal seems to turn the separation of
powers doctrine, upon which the majority relies, on its head: since
state law claims would ordinarily not be heard by Art. III judges
--
i.e., they would be heard by state judges -- one would
think that there is little danger of a diminution of, or intrusion
upon, the power of Art. III courts, when such claims are assigned
to a non-Art. III court. The plurality misses this obvious point
because it concentrates on explaining how it is that federally
created rights can ever be adjudicated in Art. I courts -- a far
more difficult problem under the separation of powers doctrine. The
plurality fumbles when it assumes that the rationale it develops to
deal with the latter problem must also govern the former problem.
In fact, the two are simply unrelated, and the majority never
really explains the separation of powers problem that would be
created by assigning state law questions to legislative courts or
to adjuncts of Art. III courts.
One need not contemplate the intricacies of the separation of
powers doctrine, however, to realize that the majority's position
on adjudication of state law claims is based on an abstract theory
that has little to do with the reality of bankruptcy proceedings.
Even prior to the present Act, bankruptcy cases were generally
referred to bankruptcy judges, previously called referees.
Bkrtcy.Rule 102(a). Title 11 U.S.C. § 66 described the jurisdiction
of the referees. Their powers included the authority to
"consider all petitions referred to them and make the
adjudications or dismiss the petitions . . . grant, deny or revoke
discharges, determine the dischargeability of debts, and render
judgments thereon [and] perform such of the duties as are by this
title conferred on courts of bankruptcy, including those incidental
to ancillary jurisdiction, and as shall be prescribed by rules or
orders of the courts of bankruptcy of their respective districts,
except as herein otherwise provided. "
Page 458 U. S. 99
The bankruptcy judge possessed "complete jurisdiction of the
proceedings." 1 W. Collier, Bankruptcy � 1.09, p. 65 (14th
ed.1976). The referee would initially hear and decide practically
all matters arising in the proceedings, including the allowance and
disallowance of the claims of creditors. [
Footnote 2/5] If a claim was disallowed by the
bankruptcy judge and the decision was not reversed on appeal, the
creditor was forever barred from further action against the
bankrupt. As pointed out above, all of these matters could and
usually did involve state law issues. Initial adjudication of state
law issues by non-Art. III judges is, then, hardly a new aspect of
the 1978 Act.
Furthermore, I take it that the Court does not condemn as
inconsistent with Art. III the assignment of these functions --
i.e., those within the summary jurisdiction of the old
bankruptcy courts -- to a non-Art. III judge, since, as the
plurality says, they lie at the core of the federal bankruptcy
power.
Ante at
458 U. S. 71.
They also happen to be functions that have been performed by
referees or bankruptcy judges for a very long time, and without
constitutional objection. Indeed, we approved the authority of the
referee to allow or disallow claims in
Katchen v. Landy,
382 U. S. 323
(1966). There, the referee held that a creditor had received a
preference, and that his claim could therefore not be allowed. We
agreed that the referee had the authority not only to adjudicate
the existence of the preference but also to order that the
preference be disgorged. We also recognized that the referee could
adjudicate counterclaims against a creditor who files his claim
against the estate. The 1973 Bankruptcy Rules make similar
provision.
See Rule 306(c), Rule 701, and Advisory
Committee Note to Rule 701, 11 U.S.C. p. 1340. Hence, if Marathon
had filed a claim against the bankrupt in this case, the trustee
could have filed and the bankruptcy judge
Page 458 U. S. 100
could have adjudicated a counterclaim seeking the relief that is
involved in these cases.
Of course, all such adjudications by a bankruptcy judge or
referee were subject to review in the district court, on the
record.
See 11 U.S.C. § 67(c). Bankruptcy Rule 810,
transmitted to Congress by this Court, provided that the district
court "shall accept the referee's findings of fact unless they are
clearly erroneous." As the plurality recognizes,
ante at
458 U. S. 55,
the 1978 Act provides for appellate review in Art. III courts and
presumably under the same "clearly erroneous standard." In other
words, under both the old and new Acts, initial determinations of
state law questions were to be made by non-Art. III judges, subject
to review by Art. III judges. Why the differences in the provisions
for appeal in the two Acts are of unconstitutional dimension
remains entirely unclear.
In theory and fact, therefore, I can find no basis for that part
of the majority's argument that rests on the state law character of
the claim involved here. Even if, prior to 1978, the referee could
not generally participate in cases aimed at collecting the assets
of a bankrupt estate, he nevertheless repeatedly adjudicated issues
controlled by state law. There is very little reason to strike down
§ 1471 on its face on the ground that it extends, in a
comparatively minimal way, the referees' authority to deal with
state law questions. To do so is to lose all sense of
proportion.
II
The plurality unpersuasively attempts to bolster its case for
facial invalidity by asserting that the bankruptcy courts are now
"exercising powers far greater than those lodged in the adjuncts
approved in either
Crowell or
Raddatz."
Ante at
458 U. S. 86. In
support of this proposition, it makes five arguments in addition to
the "state law" issue. Preliminarily, I see no basis for according
standing to Marathon to raise any of these additional points. The
state law objection applies to
Page 458 U. S. 101
the Marathon case. Only that objection should now be
adjudicated. [
Footnote 2/6]
I also believe that the major premise of the plurality's
argument is wholly unsupported: there is no explanation of why
Crowell v. Benson, 285 U. S. 22
(1932), and
United States v. Raddatz, 447 U.
S. 667 (1980), define the outer limits of constitutional
authority. Much more relevant to today's decision are, first, the
practice in bankruptcy prior to 1978, which neither the majority
nor any authoritative case has questioned, and, second, the
practice of today's administrative agencies. Considered from this
perspective, all of the plurality's arguments are unsupportable
abstractions, divorced from the realities of modern practice.
The first three arguments offered by the plurality,
ante at
458 U. S. 85,
focus on the narrowly defined task and authority of the agency
considered in
Crowell: the agency made only "specialized,
narrowly confined factual determinations," and could issue only a
narrow class of orders. Regardless of whether this was true of the
Compensation Board at issue in
Crowell, it certainly was
not true of the old bankruptcy courts, nor does it even vaguely
resemble current administrative practice. As I have already said,
general references to bankruptcy judges, which was the usual
practice prior to 1978, permitted bankruptcy judges to perform
almost all of the functions of a bankruptcy court. Referees or
bankruptcy judges not only exercised summary jurisdiction, but
could also conduct adversary proceedings to
"(1) recover money or property. . . . (2) determine the
validity, priority, or extent of a lien or other interest in
property, (3) sell property free of a lien or other interest for
which the holder can be compelled to make a money satisfaction, (4)
object to or revoke a discharge, (5) obtain an injunction, (6)
obtain relief from a stay . . . (7) determine the dischargeability
of a debt."
Bkrtcy.Rule 701.
Page 458 U. S. 102
Although there were some exceptions to the referees' authority,
which have been removed by the 1978 Act, the additions to the
jurisdiction of the bankruptcy judges were of marginal significance
when examined in the light of the overall functions of those judges
before and after 1978. In my view, those changes are not sufficient
to work a qualitative change in the character of the bankruptcy
judge.
The plurality's fourth argument fails to point to any difference
between the new and old Bankruptcy Acts. While the administrative
orders in
Crowell may have been set aside by a court if
"not supported by the evidence," under both the new and old Acts at
issue here, orders of the bankruptcy judge are reviewed under the
"clearly erroneous standard."
See Bkrtcy.Rule 810. Indeed,
judicial review of the orders of bankruptcy judges is more
stringent than that of many modern administrative agencies.
Generally, courts are not free to set aside the findings of
administrative agencies if supported by substantial evidence. But
more importantly, courts are also admonished to give substantial
deference to the agency's interpretation of the statute it is
enforcing. No such deference is required with respect to decisions
on the law made by bankruptcy judges.
Finally, the plurality suggests that, unlike the agency
considered in
Crowell, the orders of a post-1978
bankruptcy judge are final and binding even though not appealed.
Ante at
458 U. S. 85-86.
To attribute any constitutional significance to this, unless the
plurality intends to throw into question a large body of
administrative law, is strange. More directly, this simply does not
represent any change in bankruptcy practice. It was hornbook law
prior to 1978 that the authorized judgments and orders of referees,
including turnover orders, were final and binding and
res
judicata unless appealed and overturned:
"The practice before the referee should not differ from that
before the judge of the court of bankruptcy and, apart from direct
review within the limitation of § 39(c),
Page 458 U. S. 103
the orders of the referee are entitled to the same presumption
of validity, conclusiveness and recognition in the court of
bankruptcy or other courts."
1 W. Collier, Bankruptcy � 1.09, pp. 65-66 (14th ed.1976).
Even if there are specific powers now vested in bankruptcy
judges that should be performed by Art. III judges, the great bulk
of their functions are unexceptionable, and should be left intact.
Whatever is invalid should be declared to be such; the rest of the
1978 Act should be left alone. I can account for the majority's
inexplicably heavy hand in this case only by assuming that the
Court has once again lost its conceptual bearings when confronted
with the difficult problem of the nature and role of Art. I courts.
To that question I now turn.
III
A
The plurality contends that the precedents upholding Art. I
courts can be reduced to three categories. First, there are
territorial courts, which need not satisfy Art. III constraints
because "the Framers intended that as to certain geographical areas
. . . Congress was to exercise the general powers of government."
[
Footnote 2/7]
Ante at
458 U. S. 64.
Second, there are courts-martial, which are exempt from Art. III
limits because of a constitutional grant of power that has been
"historically understood as giving the political Branches of
Government extraordinary control over the precise subject matter at
issue."
Ante at
458 U. S. 66.
Finally, there are those legislative courts and administrative
agencies that adjudicate cases involving public rights --
controversies between the Government and private parties -- which
are not covered by Art. III because the controversy could have been
resolved by the executive
Page 458 U. S. 104
alone without judicial review.
See ante at
458 U. S. 68.
Despite the plurality's attempt to cabin the domain of Art. I
courts, it is quite unrealistic to consider these to be only three
"narrow,"
ante at
458 U. S. 64, limitations on or exceptions to the reach
of Art. III. In fact, the plurality itself breaks the mold in its
discussion of "adjuncts" in
458 U. S. when
it announces that,
"when Congress creates a substantive federal right, it possesses
substantial discretion to prescribe the manner in which that right
may be adjudicated."
Ante at
458 U. S. 80.
Adjudications of federal rights may, according to the plurality, be
committed to administrative agencies, as long as provision is made
for judicial review.
The first principle introduced by the plurality is geographical:
Art. I courts presumably are not permitted within the States.
[
Footnote 2/8] The problem, of
course, is that both of the other exceptions recognize that Art. I
courts can indeed operate within the States. The second category
relies upon a new principle: Art. I courts are permissible in areas
in which the Constitution grants Congress "extraordinary control
over the precise subject matter."
Ante at
458 U. S. 66.
Preliminarily, I do not know how we are to distinguish those areas
in which Congress' control is "extraordinary" from those in which
it is not. Congress' power over the Armed Forces is established in
Art. I, § 8, cls. 13, 14. There is nothing in those Clauses that
creates congressional authority different in kind from the
authority granted to legislate with respect to bankruptcy. But more
importantly, in its third category, and in its treatment of
"adjuncts," the plurality itself recognizes that Congress can
create Art. I courts in virtually all the areas in which Congress
is authorized to act, regardless of the quality of the
constitutional grant of authority. At the same time,
Page 458 U. S. 105
territorial courts or the courts of the District of Columbia,
which are Art. I courts, adjudicate private, just as much as public
or federal, rights.
Instead of telling us what it is Art. I courts can and cannot
do, the plurality presents us with a list of Art. I courts. When we
try to distinguish those courts from their Art. III counterparts,
we find -- apart from the obvious lack of Art. III judges -- a
series of nondistinctions. By the plurality's own admission, Art. I
courts can operate throughout the country, they can adjudicate both
private and public rights, and they can adjudicate matters arising
from congressional actions in those areas in which congressional
control is "extraordinary." I cannot distinguish this last category
from the general "arising under" jurisdiction of Art. III
courts.
The plurality opinion has the appearance of limiting Art. I
courts only because it fails to add together the sum of its parts.
Rather than limiting each other, the principles relied upon
complement each other; together, they cover virtually the whole
domain of possible areas of adjudication. Without a unifying
principle, the plurality's argument reduces to the proposition
that, because bankruptcy courts are not sufficiently like any of
these three exceptions, they may not be either Art. I courts or
adjuncts to Art. III courts. But we need to know why bankruptcy
courts cannot qualify as Art. I courts in their own right.
B
The plurality opinion is not the first unsuccessful attempt to
articulate a principled ground by which to distinguish Art. I from
Art. III courts. The concept of a legislative, or Art. I, court was
introduced by an opinion authored by Chief Justice Marshall. Not
only did he create the concept, but at the same time he started the
theoretical controversy that has ever since surrounded the
concept:
"The Judges of the Superior Courts of Florida hold their offices
for four years. These Courts, then, are not constitutional Courts,
in which the judicial power conferred
Page 458 U. S. 106
by the Constitution on the general government, can be deposited.
They are incapable of receiving it. They are legislative Courts,
created in virtue of the general right of sovereignty which exists
in the government, or in virtue of that clause which enables
Congress to make all needful rules and regulations, respecting the
territory belonging to the United States. The jurisdiction with
which they are invested is not a part of that judicial power which
is defined in the 3d article of the Constitution, but is conferred
by Congress in the execution of those general powers which that
body possesses over the territories of the United States."
American Insurance Co. v.
Canter, 1 Pet. 511,
26 U. S. 546
(1828). The proposition was simple enough: constitutional courts
exercise the judicial power described in Art. III of the
Constitution; legislative courts do not and cannot.
There were only two problems with this proposition. First,
Canter itself involved a case in admiralty jurisdiction,
which is specifically included within the "judicial power of the
United States" delineated in Art. III. How, then, could the
territorial court not be exercising Art. III judicial power?
Second, and no less troubling, if the territorial courts could not
exercise Art. III power, how could their decisions be subject to
appellate review in Art. III courts, including this one, that can
exercise only Art. III "judicial" power? Yet from early on, this
Court has exercised such appellate jurisdiction.
Benner v.
Porter, 9 How. 235,
50 U. S. 243
(1850);
Clinton v.
Englebrecht, 13 Wall. 434 (1872);
Reynolds v.
United States, 98 U. S. 145,
98 U. S. 154
(1879);
United States v. Coe, 155 U. S.
76,
155 U. S. 86
(1894);
Balzac v. Porto Rico, 258 U.
S. 298,
258 U. S.
312-313 (1922). The attempt to understand the seemingly
unexplainable was bound to generate "confusion and controversy."
This analytic framework, however -- the search for a principled
distinction -- has continued to burden the Court.
The first major elaboration on the
Canter principle was
in
Murray's Lessee v. Hoboken
Land & Improvement Co., 18
Page 458 U. S. 107
How. 272 (1856). The plaintiff in that case argued that a
proceeding against a customs collector for the collection of moneys
claimed to be due to the United States was an exercise of "judicial
power," and therefore had to be carried out by Art. III judges. The
Court accepted this premise:
"It must be admitted that, if the auditing of this account, and
the ascertainment of its balance, and the issuing of this process
was an exercise of the judicial power of the United States, the
proceeding was void; for the officers who performed these acts
could exercise no part of that judicial power."
Id. at
59 U. S. 275.
Having accepted this premise, the Court went on to delineate those
matters which could be determined only by an Art. III court,
i.e., those matters that fall within the nondelegable
"judicial power" of the United States. The Court's response to this
was twofold. First, it suggested that there are certain matters
which are inherently "judicial":
"[W]e do not consider congress can either withdraw from judicial
cognizance any matter which, from its nature, is the subject of a
suit at the common law, or in equity, or admiralty."
Id. at
59 U. S. 284.
Second, it suggested that there is another class of issues that,
depending upon the form in which Congress structures the
decisionmaking process, may or may not fall within "the cognizance
of the courts of the United States."
Ibid. This latter
category consisted of the so-called "public rights." Apparently,
the idea was that Congress was free to structure the adjudication
of "public rights" without regard to Art. III.
Having accepted the plaintiff's premise, it is hard to see how
the Court could have taken too seriously its first contention. The
Court presented no examples of such issues that are judicial "by
nature," and simply failed to acknowledge that Art. I courts
already sanctioned by the Court --
e.g., territorial
courts -- were deciding such issues all the time. The second point,
however, contains implicitly a critical insight; one that, if
openly acknowledged would have undermined the entire structure.
That insight follows from the Court's earlier
Page 458 U. S. 108
recognition that the term "judicial act" is broad enough to
encompass all administrative action involving inquiry into facts
and the application of law to those facts.
Id. at
59 U. S. 280.
If administrative action can be characterized as "judicial" in
nature, then obviously the Court's subsequent attempt to
distinguish administrative from judicial action on the basis of the
manner in which Congress structures the decision cannot succeed.
There need be no Art. III court involvement in any adjudication of
a "public right," which the majority now interprets as any civil
matter arising between the Federal Government and a citizen. In
that area, whether an issue is to be decided by an Art. III court
depends, finally, on congressional intent.
Although
Murray's Lessee implicitly undermined Chief
Justice Marshall's suggestion that there is a difference in kind
between the work of Art. I and that of Art. III courts, it did not
contend that the Court must always defer to congressional desire in
this regard. The Court considered the plaintiff's contention that
removal of the issue from an Art. III court must be justified by
"necessity." Although not entirely clear, the Court seems to have
accepted this proposition: "[I]t seems to us that the just
inference from the entire law is that there was such a necessity
for the warrant."
Id. at
59 U. S. 285.
[
Footnote 2/9]
The Court in
Murray's Lessee was precisely right:
whether an issue can be decided by a non-Art. III court does not
depend upon the judicial or nonjudicial character of the issue, but
on the will of Congress and the reasons Congress offers for not
using an Art. III court. This insight, however, was completely
disavowed in the next major case to consider
Page 458 U. S. 109
the distinction between Art. I and Art. III courts,
Ex parte
Bakelite Corp., 279 U. S. 438
(1929), in which the Court concluded that the Court of Customs
Appeals was a legislative court. The Court there directly embraced
the principle also articulated in
Murray's Lessee that
Art. I courts may not consider any matter "which inherently or
necessarily requires judicial determination," but only such matters
as are "susceptible of legislative or executive determination." 279
U.S. at
279 U. S. 453.
It then went on effectively to bury the critical insight of
Murray's Lessee, labeling as "fallacious" any argument
that
"assumes that whether a court is of one class or the other
depends on the intention of Congress, whereas the true test lies in
the power under which the court was created and in the jurisdiction
conferred."
279 U.S. at
279 U. S. 459.
[
Footnote 2/10]
The distinction between public and private rights as the
principle delineating the proper domains of legislative and
constitutional courts respectively received its death blow, I had
believed, in
Crowell v. Benson, 285 U. S.
22 (1932). In that case, the Court approved an
administrative scheme for the determination, in the first instance,
of maritime employee compensation claims. Although acknowledging
the framework set out in
Murray's Lessee and
Ex parte
Bakelite Corp., the Court specifically distinguished the case
before it:
"The present case does not fall within the categories just
described, but is one of private right, that is, of the liability
of one individual to another under the law as defined. [
Footnote 2/11]"
285 U.S. at
285 U. S. 51.
Nevertheless, the Court approved of the use of an Art. I
adjudication mechanism on the new theory that
"there is no requirement that, in order to maintain the
essential
Page 458 U. S. 110
attributes of the judicial power, all determinations of fact in
constitutional courts shall be made by judges."
Ibid. Article I courts could deal not only with public
rights, but also, to an extent, with private rights. The Court now
established a distinction between questions of fact and law:
"[T]he reservation of full authority to the court to deal with
matters of law provides for the appropriate exercise of the
judicial function in this class of cases. [
Footnote 2/12]"
Id. at
285 U. S.
545.
Whatever sense
Crowell may have seemed to give to this
subject was exceedingly short-lived. One year later, the Court
returned to this subject, abandoning both the public/private and
the fact/law distinction and replacing both with a simple
literalism. In
O'Donoghue v. United States, 289 U.
S. 516 (1933), considering the courts of the District of
Columbia, and in
Williams v. United States, 289 U.
S. 553 (1933), considering the Court of Claims, the
Court adopted the principle that, if a federal court exercises
jurisdiction over cases of the type listed in Art. III, § 2, as
falling within the "judicial power of the United States," then that
court must be an Art. III court:
"The provision of this section of the article is that the
'judicial power shall extend' to the cases enumerated, and it
logically follows that, where jurisdiction over these cases is
conferred upon the courts of the District, the judicial power,
since they are capable of receiving it, is
ipso facto,
vested in such courts as inferior courts of the United States."
O'Donoghue, supra, at
289 U. S. 545.
[
Footnote 2/13]
Page 458 U. S. 111
In order to apply this same principle and yet hold the Court of
Claims to be a legislative court, the Court found it necessary in
Williams, supra, to conclude that the phrase
"Controversies to which the United States shall be a party" in Art.
III must be read as if it said "Controversies to which the United
States shall be a party plaintiff or petitioner." [
Footnote 2/14]
By the time of the
Williams decision, this area of the
law was mystifying, to say the least. What followed helped very
little, if at all. In the next two major cases, the Court could not
agree internally on a majority position. In
National Insurance
Co. v. Tidewater Co., 337 U. S. 582
(1949), the Court upheld a statute giving federal district courts
jurisdiction over suits between citizens of the District of
Columbia and citizens of a State. A majority of the Court, however,
rejected the plurality position that Congress had the authority to
assign Art. I powers to Art. III courts, at least outside of the
District of Columbia. Only Chief Justice Vinson, in dissent,
reflected on the other side of this problem: whether Art. I courts
could be assigned Art. III powers. He entirely disagreed with the
conceptual basis for
Williams and
O'Donoghue,
noting that, to the extent that Art. I courts consider non-Art. III
matters, appellate review by an Art. III court would be precluded.
Or conversely, since appellate review is exercised by this Court
over Art. I courts, Art. I courts must "exercise federal question
jurisdiction." 337 U.S. at
337 U. S. 643. Having gone this far, the Chief Justice
was confronted with the obvious question of whether, in fact, "the
distinction between constitutional and legislative courts is
meaningless."
Id. at
337 U. S. 644.
Although suggesting that outside
Page 458 U. S. 112
of the Territories or the District of Columbia, there may be
some limits on assignment to Art. I courts of matters that fall
within Art. III jurisdiction -- apart from federal question
jurisdiction -- for the most part, the Chief Justice ended up
relying on the good will of Congress:
"[W]e cannot impute to Congress an intent now or in the future
to transfer jurisdiction from constitutional to legislative courts
for the purpose of emasculating the former."
Ibid.
Another chapter in this somewhat dense history of a
constitutional quandary was provided by Justice Harlan's plurality
opinion in
Glidden Co. v. Zdanok, 370 U.
S. 530 (1962), in which the Court, despite
Bakelite and
Williams -- and relying on an Act of
Congress enacted since those decisions -- held the Court of Claims
and the Court of Customs and Patent Appeals to be Art. III courts.
Justice Harlan continued the process of intellectual repudiation
begun by Chief Justice Vinson in
Tidewater. First, it was
clear to him that Chief Justice Marshall could not have meant what
he said in
Canter on the inability of Art. I courts to
consider issues within the jurisdiction of Art. III courts:
"Far from being 'incapable of receiving' federal question
jurisdiction, the territorial courts have long exercised a
jurisdiction commensurate in this regard with that of the regular
federal courts, and have been subjected to the appellate
jurisdiction of this Court precisely because they do so."
370 U.S. at
370 U. S. 546,
n. 13. Second, exceptions to the requirements of Art. III, he
thought, have not been founded on any principled distinction
between Art. I issues and Art. III issues; rather, a "confluence of
practical considerations,"
id. at
370 U. S. 547,
accounts for this Court's sanctioning of Art. I courts:
"The touchstone of decision in all these cases has been the need
to exercise the jurisdiction then and there and for a transitory
period. Whether constitutional limitations on the exercise of
judicial power have been held inapplicable has depended on the
particular local setting, the practical necessities, and the
possible alternatives."
Id. at
370 U. S.
547-548.
Page 458 U. S. 113
Finally, recognizing that there is frequently no way to
distinguish between Art. I and Art. III courts on the basis of the
work they do, Justice Harlan suggested that the only way to tell
them apart is to examine the "establishing legislation" to see if
it complies with the requirements of Art. III. This, however, comes
dangerously close to saying that Art. III courts are those with
Art. III judges; Art. I courts are those without such judges. One
hundred and fifty years of constitutional history, in other words,
had led to a simple tautology.
IV
The complicated and contradictory history of the issue before us
leads me to conclude that Chief Justice Vinson and Justice Harlan
reached the correct conclusion: there is no difference in principle
between the work that Congress may assign to an Art. I court and
that which the Constitution assigns to Art. III courts. Unless we
want to overrule a large number of our precedents upholding a
variety of Art. I courts -- not to speak of those Art. I courts
that go by the contemporary name of "administrative agencies" --
this conclusion is inevitable. It is too late to go back that far;
too late to return to the simplicity of the principle pronounced in
Art. III and defended so vigorously and persuasively by Hamilton in
The Federalist Nos. 78 82.
To say that the Court has failed to articulate a principle by
which we can test the constitutionality of a putative Art. I court,
or that there is no such abstract principle, is not to say that
this Court must always defer to the legislative decision to create
Art. I, rather than Art. III, courts. Article III is not to be read
out of the Constitution; rather, it should be read as expressing
one value that must be balanced against competing constitutional
values and legislative responsibilities. This Court retains the
final word on how that balance is to be struck.
Despite the principled, although largely mistaken, rhetoric
expanded by the Court in this area over the years, such a balancing
approach stands behind many of the decisions upholding
Page 458 U. S. 114
Art. I courts. Justice Harlan suggested as much in
Glidden, although he needlessly limited his consideration
to the "temporary" courts that Congress has had to set up on a
variety of occasions. In each of these instances, this Court has
implicitly concluded that the legislative interest in creating an
adjudicative institution of temporary duration outweighed the
values furthered by a strict adherence to Art. III. Besides the
territorial courts approved in
American Insurance Co. v.
Canter, 1 Pet. 511 (1828), these courts have
included the Court of Private Land Claims,
United States v.
Coe, 155 U. S. 76
(1894), the Choctaw and Chickasaw Citizenship Court,
Stephens
v. Cherokee Nation, 174 U. S. 445
(1899), and consular courts established in foreign countries,
In re Ross, 140 U. S. 453
(1891). This same sort of "practical" judgment was voiced, even if
not relied upon, in
Crowell with respect to the Employees'
Compensation Claims Commission, which was not meant to be of
limited duration:
"[W]e are unable to find any constitutional obstacle to the
action of the Congress in availing itself of a method shown by
experience to be essential in order to apply its standards to the
thousands of cases involved."
285 U.S. at
285 U. S. 54.
And even in
Murray's Lessee, there was a discussion of the
"necessity" of Congress' adopting an approach that avoided
adjudication in an Art. III court. 18 How. at
59 U. S.
285.
This was precisely the approach taken to this problem in
Palmore v. United States, 411 U.
S. 389 (1973), which, contrary to the suggestion of the
plurality, did not rest on any theory of territorial or
geographical control.
Ante at
458 U. S. 75-76.
Rather, it rested on an evaluation of the strength of the
legislative interest in pursuing in this manner one of its
constitutionally assigned responsibilities -- a responsibility not
different in kind from numerous other legislative responsibilities.
Thus,
Palmore referred to the wide variety of Art. I
courts, not just territorial courts. It is in this light that the
critical statement of the case must be understood:
Page 458 U. S. 115
"[T]he requirements of Art. III, which are applicable where laws
of national applicability and affairs of national concern are at
stake, must, in proper circumstances, give way to accommodate
plenary grants of power to Congress to legislate with respect to
specialized areas having particularized needs and warranting
distinctive treatment."
411 U.S. at
411 U. S.
407-408.
I do not suggest that the Court should simply look to the
strength of the legislative interest and ask itself if that
interest is more compelling than the values furthered by Art. III.
The inquiry should, rather, focus equally on those Art. III values
and ask whether and to what extent the legislative scheme
accommodates them or, conversely, substantially undermines them.
The burden on Art. III values should then be measured against the
values Congress hopes to serve through the use of Art. I
courts.
To be more concrete:
Crowell, supra, suggests that the
presence of appellate review by an Art. III court will go a long
way toward insuring a proper separation of powers. Appellate review
of the decisions of legislative courts, like appellate review of
state court decisions, provides a firm check on the ability of the
political institutions of government to ignore or transgress
constitutional limits on their own authority. Obviously, therefore,
a scheme of Art. I courts that provides for appellate review by
Art. III courts should be substantially less controversial than a
legislative attempt entirely to avoid judicial review in a
constitutional court.
Similarly, as long as the proposed Art. I courts are designed to
deal with issues likely to be of little interest to the political
branches, there is less reason to fear that such courts represent a
dangerous accumulation of power in one of the political branches of
government. Chief Justice Vinson suggested as much when he stated
that the Court should guard against any congressional attempt "to
transfer jurisdiction
Page 458 U. S. 116
. . . for the purpose of emasculating" constitutional courts.
National Insurance Co. v. Tidewater Co., 337 U.S. at
337 U. S.
644.
V
I believe that the new bankruptcy courts established by the
Bankruptcy Act of 1978, 28 U.S.C. § 1471 (1976 ed., Supp. IV),
satisfy this standard.
First, ample provision is made for appellate review by Art. III
courts. Appeals may in some circumstances be brought directly to
the district courts. 28 U.S.C. § 1334 (1976 ed., Supp. IV).
Decisions of the district courts are further appealable to the
court of appeals. § 1293. In other circumstances, appeals go first
to a panel of bankruptcy judges, § 1482, and then to the court of
appeals. § 1293. In still other circumstances -- when the parties
agree -- appeals may go directly to the court of appeals. In sum,
there is in every instance a right of appeal to at least one Art.
III court. Had Congress decided to assign all bankruptcy matters to
the state courts, a power it clearly possesses, no greater review
in an Art. III court would exist. Although I do not suggest that
this analogy means that Congress may establish an Art. I court
wherever it could have chosen to rely upon the state courts, it
does suggest that the critical function of judicial review is being
met in a manner that the Constitution suggests is sufficient.
Second, no one seriously argues that the Bankruptcy Act of 1978
represents an attempt by the political branches of government to
aggrandize themselves at the expense of the third branch or an
attempt to undermine the authority of constitutional courts in
general. Indeed, the congressional perception of a lack of judicial
interest in bankruptcy matters was one of the factors that led to
the establishment of the bankruptcy courts: Congress feared that
this lack of interest would lead to a failure by federal district
courts to deal with bankruptcy matters in an expeditious manner.
H.R.Rep. No. 95-595, p. 14 (1977). Bankruptcy matters are, for the
most part, private adjudications of little political
significance.
Page 458 U. S. 117
Although some bankruptcies may indeed present politically
controversial circumstances or issues, Congress has far more direct
ways to involve itself in such matters than through some sort of
subtle, or not so subtle, influence on bankruptcy judges.
Furthermore, were such circumstances to arise, the Due Process
Clause might very well require that the matter be considered by an
Art. III judge: bankruptcy proceedings remain, after all, subject
to all of the strictures of that constitutional provision.
[
Footnote 2/15]
Finally, I have no doubt that the ends that Congress sought to
accomplish by creating a system of non-Art. III bankruptcy courts
were at least as compelling as the ends found to be satisfactory in
Palmore v. United States, 411 U.
S. 389 (1973), or the ends that have traditionally
justified the creation of legislative courts. The stresses placed
upon the old bankruptcy system by the tremendous increase in
bankruptcy cases were well documented, and were clearly a matter to
which Congress could respond. [
Footnote 2/16] I do not believe it is possible to
challenge Congress' further determination that it was necessary to
create a specialized court to deal with bankruptcy matters. This
was the nearly uniform conclusion of all those that testified
before Congress on the question of reform of the bankruptcy system,
as well as the conclusion of the Commission on Bankruptcy Laws
established by Congress in 1970 to explore possible improvements in
the system. [
Footnote 2/17]
The real question is not whether Congress was justified
Page 458 U. S. 118
in establishing a specialized bankruptcy court, but rather
whether it was justified in failing to create a specialized, Art.
III bankruptcy court. My own view is that the very fact of extreme
specialization may be enough, and certainly has been enough in the
past, [
Footnote 2/18] to justify
the creation of a legislative court. Congress may legitimately
consider the effect on the federal judiciary of the addition of
several hundred specialized judges: we are, on the whole, a body of
generalists. [
Footnote 2/19] The
addition of several hundred specialists may substantially change,
whether for good or bad, the character of the federal bench.
Moreover, Congress may have desired to maintain some flexibility in
its possible future responses to the general problem of bankruptcy.
There is no question that the existence of several hundred
bankruptcy judges with life tenure would have severely limited
Congress' future options. Furthermore, the number of bankruptcies
may fluctuate, producing a substantially reduced need for
bankruptcy judges. Congress may have thought that, in that event, a
bankruptcy specialist should not, as a general matter, serve as a
judge in the countless nonspecialized cases that come before the
federal district courts. It would then face the prospect of large
numbers of idle federal judges. Finally, Congress may have believed
that the change from bankruptcy referees to Art. I judges was far
less dramatic, and so less disruptive of the existing bankruptcy
and constitutional court systems, than would be a change to Art.
III judges.
For all of these reasons, I would defer to the congressional
judgment. Accordingly, I dissent.
[
Footnote 2/1]
Glidden Co. v. Zdanok, 370 U.
S. 530,
370 U. S. 534
(1962) (plurality opinion of Harlan, J.).
[
Footnote 2/2]
Because this is the sole ground relied upon by the Justices
concurring in the judgment, this is the effective basis for today's
decision.
[
Footnote 2/3]
The plurality attempts to justify its sweeping invalidation of §
1471, because of its inclusion of state law claims, by suggesting
that this statutory provision is nonseverable.
Ante at
458 U. S. 87-88,
n. 40. The Justices concurring in the judgment specifically adopt
this argument as the reason for their decision to join the judgment
of the Court. The basis for the conclusion of nonseverability,
however, is nothing more than a presumption:
"Congress has vested jurisdiction over this and all matters
related to cases under Title 11 in a single non-Art. III court, and
has done so pursuant to a single statutory grant of jurisdiction.
In these circumstances, we cannot conclude that, if Congress were
aware that the grant of jurisdiction could not constitutionally
encompass this and similar claims, it would simply remove the
jurisdiction of the bankruptcy court over these matters."
Ante at
458 U. S. 87, n.
40. Although it is possible, as a historical matter, to find cases
of this Court supporting this presumption,
see, e.g., William
v. Standard Oil Co., 278 U. S. 235,
278 U. S. 242
(1929), I had not thought this to be the contemporary approach to
the problem of severability, particularly when dealing with federal
statutes. I would follow the approach taken by the Court in
Buckley v. Valeo, 424 U. S. 1,
424 U. S. 108
(1976):
"'Unless it is evident that the Legislature would not have
enacted those provisions which are within its power, independently
of that which is not, the invalid part may be dropped if what is
left is fully operative as a law.'"
Quoting
Champlin Refining Co. v. Corporation Comm'n,
286 U. S. 210,
286 U. S. 234
(1932). This presumption seems particularly strong when Congress
has already "enacted those provisions which are within its power,
independently of that which is not" --
i.e., in the old
Bankruptcy Act.
[
Footnote 2/4]
Even this is not entirely new. Under the old Act, in certain
circumstances, the referee could actually adjudicate and order the
payment of a claim of the bankrupt estate against another. In
Katchen v. Land, 382 U. S. 323
(1966), for example, we recognized that, when a creditor files a
claim, the referee is empowered to hear and decide a counterclaim
against that creditor arising out of the same transaction. A
similar situation could arise in adjudicating setoffs under former
§ 68 of the Bankruptcy Act.
[
Footnote 2/5]
"The judicial act of allowance or disallowance is one, of
course, that is performed by the referee where the proceedings have
been generally referred."
3 W. Collier, Bankruptcy � 57.14, p. 229, n. 3 (14th
ed.1977).
[
Footnote 2/6]
On this point I am in agreement with the Justices concurring in
the judgment.
[
Footnote 2/7]
The majority does not explain why the constitutional grant of
power over the Territories to Congress is sufficient to overcome
the strictures of Art. III, but presumably not sufficient to
overcome the strictures of the Presentment Clause or other
executive limits on congressional authority.
[
Footnote 2/8]
Had the plurality cited only the territorial courts, the
principle relied on perhaps could have been the fact that power
over the Territories is provided Congress in Art. IV. However,
Congress' power over the District of Columbia is an Art. I power.
As such, it does not seem to have any greater status than any of
the other powers enumerated in Art. I, § 8.
[
Footnote 2/9]
By stating that "of this necessity congress alone is the judge,"
18 How. at
59 U. S. 285,
the Court added some serious ambiguity to the standard it applied.
Because this statement ends the Court's analysis of the merits of
the claim, it does not seem to mean that the Court will simply
defer to congressional judgment. Rather, it appears to mean that
the Court will review the legislative record to determine whether
there appeared to Congress to be compelling reasons for not
establishing an Art. III court.
[
Footnote 2/10]
The Court did not, however, entirely follow this principle, for
it stated elsewhere that "there is propriety in mentioning the fact
that Congress always has treated [the Court of Claims as an Art. I
court]. 279 U.S. at
279 U. S.
454.
[
Footnote 2/11]
The plurality is clearly wrong in citing
Crowell in
support of the proposition that matters involving private, as
opposed to public, rights may not be considered in a non-Art. III
court.
Ante at
458 U. S.
70.
[
Footnote 2/12]
Crowell also suggests that certain facts --
constitutional or jurisdictional -- must also be subject to
de
novo review in an Art. III court. I agree with the plurality
that this aspect of
Crowell has been "undermined by later
cases,"
ante at
458 U. S. 82, n.
34. As a matter of historical interest, however, I would contend
that
Crowell's holding with respect to these "facts"
turned more on the questions of law that were inseparably tied to
them than on some notion of the inadequacy of a non-Art. III
factfinder.
[
Footnote 2/13]
O'Donoghue does not apply this principle wholly
consistently: it still recognizes a territorial court exception to
Art. III's requirements. It now bases this exception, however, not
on any theoretical difference in principle, but simply on the
"transitory character of the territorial governments." 289 U.S. at
289 U. S.
536.
[
Footnote 2/14]
See P. Bator, P. Mishkin, D. Shapiro, & H.
Wechsler, Hart and Wechsler's The Federal Courts and The Federal
System 399 (2d ed.1973) (reviewing the problems of the
Williams case and characterizing it as an "intellectual
disaster").
[
Footnote 2/15]
See Crowell v. Benson, 285 U. S.
22,
285 U. S. 87
(1932) (Brandeis, J., dissenting) ("If there be any controversy to
which the judicial power extends that may not be subjected to the
conclusive determination of administrative bodies or federal
legislative courts, it is not because of any prohibition against
the diminution of the jurisdiction of the federal district courts
as such, but because, under the circumstances, the constitutional
requirement of due process is a requirement of judicial
process").
[
Footnote 2/16]
"During the past 30 years, the number of bankruptcy cases filed
annually has increased steadily from 10,000 to over 254,000."
H.R.Rep. No. 95-595, P. 21 (1977).
[
Footnote 2/17]
See H.R. Doc. No. 93-137, pt. 1, pp. 85-96 (1973).
[
Footnote 2/18]
Consider, for example, the Court of Customs Appeals involved in
Ex parte Bakelite Corp., 279 U. S. 438
(1929), or the variety of specialized administrative agencies that
engage in some form of adjudication.
[
Footnote 2/19]
In 1977, there were approximately 190 full-time and 30 part-time
bankruptcy judges throughout the country. H.R.Rep. No. 95-595, at
9.