Justice Kennedy: Last of Supreme Court’s “Old Bankruptcy Guard”

img_0257
An old guard

By: Donald L. Swanson

Tuesday, July 31, 2018, is the last day of Anthony Kennedy’s three-decades-long service as a Justice of the U.S. Supreme Court (since February 18, 1988).

On bankruptcy issues, Justice Kennedy did not author many opinions of any sort (majority, concurring or dissent). Nevertheless, he has always been a part of what I call the the “old bankruptcy guard” on the Supreme Court.

“Old Guard” Defined

By “old bankruptcy guard,” I mean the Justices that were:

1.  Part of the Supreme Court’s four-Justice plurality in Northern Pipeline v. Marathon Pipe Line (decided 6/28/1982) that wanted to declare unconstitutional Congress’s entire grant of jurisdiction to bankruptcy courts in the 1978 Bankruptcy Code;

and/or

2.  Part of the Supreme Court’s five-Justice majority in Granfinanciera (decided 6/23/1989) that:

• Derided the Bankruptcy Code as instituting “sweeping changes” and “radical reforms” in the bankruptcy system [see Granfinanciera’s Footnote 16];

• Accused Congress of entirely overlooking constitutional issues in enacting 1984 amendments to the Bankruptcy Code [id.]; and

• Expressed concern about the independence of bankruptcy judges, who are appointed to 14-year terms and, therefore, “may be beholden to Congress or Executive officials” [492 U.S. at 63].

“Old Guard” Identified

The “old bankruptcy guard” Justices are Rehnquist (Ret. 1986), Brennan (Ret. 1990), Marshall (Ret.1991), Stevens (Ret. 2010), and Kennedy (Ret. 2018). What makes them distinctive is this:

–They instituted the use of “public rights” doctrine to limit the jurisdiction and authority of bankruptcy courts in Northern Pipeline and/or Granfinanciera.

–Two Exceptions

There are two Justices who might be included in the “old guard”—but aren’t.

 Justice Blackmun

The first is Justice Blackmun (Ret. 1994). He joined the four-Justice plurality opinion in Northern Pipeline. But he subsequently took himself out of the “old guard” by flipping sides and declaring, in a Granfinanciera dissent, that:

Congress must be allowed, “at long last,” to “fashion a modern bankruptcy system” that places its “basic rudiments” into “the hands of an expert equitable tribunal”;

The majority opinion, “throws Congress into still another round of bankruptcy court reform, without compelling reason”; and

“There was no need for us to rock the boat in this case.”

Justice Scalia

The second is Justice Scalia (Died 2016). He is not a part of the “old guard”—he is, instead, his own guard. Justice Scalia may have joined the Granfinanciera majority’s “judgment,” but he did not join its rationale. In a lone Granfinanciera concurring opinion, he explicitly rejected:

“Part IV” of the majority opinion, which contains the Footnote 16 and page 63 language referenced above; and

The “premise” of the majority’s use of “public rights” doctrine, insisting that “the Federal Government” must be a party before a case can “revolve around public rights.”

[Note: Justice Scalia was still insisting, in the 2011 Stern v. Marshall decision (by a lone concurring opinion), that a case involving “public rights” doctrine must “at a minimum arise between the government and others”—citing his Granfinanciera concurring opinion]

“Old Guard” is Gone

Regardless of which Justices might be included in or excluded from the Northern Pipeline and Granfinanciera “old bankruptcy guard,” Kennedy is one of them—and he is the last.

Both Kennedy and Scalia were among the majority in the 5 to 4 Stern v. Marshall decision, that continued imposing constitutional limitations on bankruptcy court authority based on “public rights.” And they were the only justices remaining, in 2011, from the Northern Pipeline and Granfinanciera days.

[Note: Both were appointed to the Supreme Court between those two cases — after Northern Pipeline and before Granfinanciera.]

Both are now gone.

Conclusion

The “old bankruptcy guard” is no more. A new guard will emerge—it will be interesting to see what the upshot will be for bankruptcy court jurisdiction.

** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

Up ↑

%d bloggers like this: