Chief Justice Roberts’ Paean to Article III (and What It Means)

About two thirds of the way through his recent opinion in Stern v. Marshall (pdf), Chief Justice Roberts leaves the following note:

What is plain here is that this case involves the most prototypical exercise of judicial power: the entry of a final, binding judgment by a court with substantive jurisdiction, on a common law cause of action[.] If such an exercise of judicial power may nonetheless be taken from the Article III Judiciary simply . . . then Article III would be transformed from the guardian of individual liberty and separation of powers we have long recognized into mere wishful thinking.

Emphasis mine. What we’re looking at is the juxtaposition of two concepts we rarely see conservative jurists put together: the supremacy of the federal bench, and individual liberty. Stranger still, this exposition comes from a jurist who describes himself as “modest,” but in this decision, functionally invalidates large swaths of the Bankruptcy Act.  I mean none of the foregoing as criticism: rather, I think the Chief Justice is on to something. But first, some exposition.

The case is Stern v. Marshall, but you might know it as the Anna Nicole Smith case. Functionally, the late superstar’s estate won a bankruptcy “adversary proceeding” — litigation conducted before a bankruptcy court — which would have entitled her to nearly $500 million of her late husband’s estate. Her husband’s son took an appeal, arguing that the bankruptcy court was without jurisdiction to issue the award, due to an archaic (but vitally important) point of separation of powers. Chief Justice Roberts agreed, prompting him to throw out critical parts of the Bankruptcy Act.

This actually gets quite complicated: a full explanation of the decision is below the jump, which you should read  before the conclusion if you’re interested. But, feel free to skip right to the conclusion otherwise.

The “Conservative” Case for the Federal Courts

For all his pretensions to judicial modesty, Chief Justice Roberts’ opinion in Stern — which, again, I think is probably right — has a lot in common with the constitutional “activism” of liberal heroes, like the late Justice Brennan, and even some conservative heroes, like the current Justice Thomas. Here is a federal judge exercising his constitutionally-derived independence and implied power of review to throw out a vitally important statute — one that was carefully crafted by Congress, and relied upon by the broader legal system for thirty-plus years — all because it weakens the federal courts’ ability to protect the rights and individual liberties of American citizens.

This comes at a time when, and despite a conservative culture where, the federal bench is largely distrusted. Just recently, Rick Perry proposed the shockingly unconstitutional idea of permitting Congress to override a Supreme Court decision, to  positive reception in some conservative circles. And, conservatives from Jesse Helms to Newt Gingrich have long viewed the Supreme Court as a threat to “liberty” to be circumvented, not applauded.

In a sharp rebuke to that tradition, Chief Justice Roberts has stated a compelling, conservative case for the Supreme Court as a guardian of individual liberty, including a reminder of the value of independent courts in this system of separated powers. Stern should stand with Justice Scalia’s sexier dissent in Hamdi as a reminder that conservative skepticism of the value of the courts, stops at the courts.

Here’s your background on bankruptcy law and the separation of powers.

Legislative” vs. “Article III” Federal Courts

Federal bankruptcy courts are creatures of statute. They exist under “Article I,” the portion of the Constitution creating the Congress. The federal courts, instead, exist under “Article III,” which provides certain unique protections — like the guarantee of lifetime tenure, and protected salaries — to guarantee judicial independence. Though Congress may, under Article I, create “legislative” or “Article I courts,”these bodies lack the protections enjoyed by Article III courts: they are truly “inferior” bodies, subject to the political process in a way that federal courts emphatically are not.

As such, the Supreme Court limits the scope of what can be decided by a “legislative court.”  Typically, although they may determine “public rights,” like immigration status, administrative licenses, welfare rights, etc., they may absolutely not decide common law claims, which form the historic core of federal jurisdiction, and were constitutionally entrusted only to the Article III judiciary.

Until the beginning of this summer, the Bankruptcy Courts existed in a sort of in-between zone. Article III courts took jurisdiction of all initial bankruptcy matters, but automatically “referred” them to the Bankruptcy Court, which could enter final judgment on all issues arising under the federal Bankruptcy Code (a “core”  proceeding, like the reorganization of a bankrupt company), but could only issue a recommendation as to “non-core” proceedings.

Theoretically, this avoids a constitutional problem, since all traditional “Article III matters” are onlypartially litigated in Bankruptcy Court, but still subject to revision by the district court, which must review the Bankruptcy Court’s findings before entering final judgment.

Stern v. Marshall, and the Remaining Problem in the Bankruptcy Code

Ms. Smith’s stepson challenged the premise, and argued that the Bankruptcy Code’s definition of “core” proceedings was too broad, and effectively handed off some portion of Article III jurisdiction to a legislative court. Chief Justice Roberts agreed, with the result that the current Bankruptcy Code is, effectively, unconstitutional. His decision casts significant doubt on whether Bankruptcy Courts can constitutionally enter judgment in most adversary proceedings before them, which typically implicate common law or quasi-common law claims in some way, and strongly reasserts the value, supremacy, and central constitutional role of the Article III federal court system. Which brings us back to our quote, and to our conclusion.



  1. For those interested, Perry’s idea of having 2/3rds of the legislature override the courts was introduced in the legislatures of NJ and MT with respect to their state supreme courts and rejected by both. See

  2. Ah, interesting! Didn’t the Constitutional Convention reject it too, back in 1782 or so? I kind of remember that but couldn’t find it.

  3. Interesting. So if bankruptcy courts are unconstitutional, what’s likely to happen next? Will all bankruptcy cases have to be handled directly by the federal courts going forward? And could this, for instance, open up for challenges to previous decisions by bankruptcy courts? Seems like this could have pretty far-reaching consequences.

    As for that Rick Perry idea, that’s just bizarre. Madison must be getting pretty tired, what with all the spinning in his grave he’s had to do recently.

  4. Right! Madison wanted the Court of Review, too, didn’t he? Which could’ve rendered advisory opinions? That would’ve been neat. Oh well.

    And I think you’re going to see a LOT of “motions to withdraw the reference” filed — which means kicking litigation of quasibankruptcy litigation up to the district courts. Not every bankruptcy adversary proceeding will be affected (and not everyone will file). So we’ll see. And I don’t know how it’ll apply retroactively, if at all.

    But yes, this has VERY far reaching consequences.

  5. Yes, that was part of the original Virginia Plan, and would have been jointly made up of members of the Executive and Judiciary. It was brought up a couple of times, but I think it failed mostly due to separation of powers concerns. So the end result was the President got his own veto power instead, and the courts were left in a bit of a grey area, until Marbury of course cleared that up.

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