Why Bankruptcy Judges Have a 14-Year Term, Instead of Life Tenure (From Justice White in Northern Pipeline v. Marathon)

IMG_0280
Specialization

By Donald L. Swanson

Have you ever wondered why Congress, when it adopted the Bankruptcy Code in 1978, limited the term of service for bankruptcy judges to fourteen years?

–This term limitation, established in 28 U.S.C. Sec. 157(a)(1), assures that bankruptcy judges are serving as Article I judges under the U.S. Constitution. Life tenure would have given them the same protections as Article III judges.

–Lifetime tenure would also have eliminated, in all probability, the limited-jurisdiction struggles that have enveloped bankruptcy courts and their appellate overseers for the past thirty five years (beginning with the Supreme Court’s 1982 Northern Pipeline decision).

I’ve often wondered why Congress did this: and have never received a satisfactory answer — until recently.

What happened recently is that I finally read (from beginning to end) all the plurality, concurring and dissenting opinions in the U.S. Supreme Court’s 1982 bankruptcy case of Northern Pipeline v. Marathon Pipe Line, 458 U.S. 50 (1982).

The four-Justice plurality opinion in Northern Pipeline declares the entire Bankruptcy Code unconstitutional. Fortunately, however, the combined effect of the five other Justices, who write concurring and dissenting opinions, limits the ultimate reach of Northern Pipeline to a narrow jurisdiction issue.

The dissenting opinion in Northern Pipeline, authored by Justice White (joined by Chief Justice Burger and Justice Powell), answers the why-no-lifetime-tenure question. Justice White’s answer escapes notice because it appears in the very-last paragraph of his dissenting opinion, which is the last of four lengthy opinions printed in the case.

Justice White puts the 14-year term limitation question this way:

–“The real question is not whether Congress was justified in establishing a specialized bankruptcy court.” Rather, the question is whether Congress “was justified in failing to create a specialized, Art. III bankruptcy court.”

He then expresses his own view of what Congress had in mind. His view focuses on the specialized nature of bankruptcy courts and the fluctuating nature of their workload, along with an evolution-not-revolution approach. Here’s what he writes.

Specialization

–The “very fact of extreme specialization may be enough, and certainly has been enough in the past, 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”:

(i) “We are, on the whole, a body of generalists”; and
(ii) “The addition of several hundred specialists may substantially change, whether for good or bad, the character of the federal bench.”

Fluctuating Workload

–Congress wanted to “maintain some flexibility” in “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” because:

(i) the “number of bankruptcies may fluctuate, producing a substantially reduced need for bankruptcy judges”; and
(ii) if specialized bankruptcy judges don’t serve in the “countless nonspecialized cases that come before” the district courts, Congress “would then face the prospect of large numbers of idle federal judges.”

[Editorial note: The reduced caseloads, reduced budgets and reduced staff that characterize today’s bankruptcy courts are “Exhibit A” for this “Congress’ future options” point.]

Evolution-Not-Revolution

–Congress “believed that the change [in 1978] 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.”

Conclusion

Justice White’s view on this point is very interesting, indeed!

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