Bankruptcy courts should be allowed to hear Article III matters with litigant consent, ABA urges

19 Nov, 2013

Permitting the bankruptcy courts, with litigant consent, to continue to hear and decide matters that are outside their constitutional power to adjudicate results in no constitutional harm and has real, practical benefits for the federal court system and litigants, the American Bar Association argues in its Supreme Court amicus brief for Executive Benefits Insurance Agency v. Arkison.

In its brief, the ABA contends that the civil caseloads of federal district courts, which are already beset with personnel and funding shortfalls, would increase significantly if bankruptcy judges, with litigant consent, were no longer allowed to handle fraudulent transfer, preference, state-law and similar claims. Based on data compiled by the ABA, the “real consequences” of shifting such cases to the U.S. district courts would be “stark,” the brief states.

According to the ABA’s conservative estimates, over the period from 2009 to 2012, the civil docket for the District of Delaware would have more than doubled, while the civil docket for the Southern District of New York would have seen a nearly 18 percent increase. Civil dockets for district courts representing the remaining judicial circuits—in California, Colorado, Florida, Illinois, Massachusetts, Minnesota, Mississippi, Texas and Virginia—would have seen caseload increases ranging from at least 4.4 percent to 11 percent.

The brief concludes that when judicial economy and practicality do not conflict with constitutional principles, bankruptcy litigants should be able to consent to having a bankruptcy judge handle matters that the Constitution otherwise reserves for the Article III courts.

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