On June 9, 2014, the U.S. Supreme Court issued the latest installment in the jurisdictional saga of bankruptcy courts. As the highly anticipated sequel toStern v. Marshall, which deprived bankruptcy judges of authority to hear certain core proceedings, Executive Benefits Insurance Agency v. Arkison was expected to resolve the oft-litigated issue of whether parties could consent to bankruptcy jurisdiction. Practitioners and scholars eagerly awaited the opinion, anxious to determine exactly how far the Court would go in divesting bankruptcy judges of their authority. However, what the nation received instead was a classic attempt by the Court to dodge the ball on the consent issue.
In a unanimous decision, the Court resolved the Stern gap by allowing litigants to treat Stern claims as noncore proceedings but refused to address the overarching theme of consent. Tucking their reluctance away in a footnote, the Court expressly reserved the question of consent for another time, another case, and another day. This Article, however, argues that a straightforward reading of the plain language in Arkison impliedly resolves the consent issue. In other words, the Supreme Court has lost at its own game of dodge ball. By broadly applying the entire statutory provision of 28 U.S.C. § 157(c)—which includes subsection (c)(2) on consent—to Stern claims, the Court has plainly stated its approval of consent for certain core proceedings. In light of this plain language, this Article proposes two legislative amendments to § 157(b). The first amendment statutorily resolves the Stern gap in accordance with Arkison. The second amendment authorizes consent for core claims related to bankruptcy proceedings. These amendments provide the necessary clarity and uniformity that bankruptcy courts have so desperately sought in the three years leading up toArkison. Finally, provided the Court’s implicit authorization of consent in Arkison, this Article espouses the only logical resolution of Wellness International Network, Ltd. v. Sharif, which poses the same question of consent. The Supreme Court will hear and decide Sharif during its October 2014 term.
Read the complete article, "Losing at Dodge Ball: Understanding the Supreme Court’s Implied Authorization of Consent in Executive Benefits Insurance Agancy v. Arkinson and Why Revision of 28 U.S.C. § 157(b) Is Critical for Clarity."
Republished with permission. This article first appeared in Volume 63, Issue 1, of the Drake Law Review in first quarter of 2015.