Northern Pipeline Construction Co. v. Marathon Pipe Line Co.

Supreme Court of the United States · 1982 · Administrative Law

Administrative LawFederal CourtsArticle IIIBankruptcy JurisdictionArticle IIIbankruptcy courtsnon-Article III judgespublic rights

Facts

The Bankruptcy Act of 1978 created bankruptcy courts whose judges served 14-year terms, were removable by the judicial council for cause, and lacked Article III salary protections. The Act granted those courts broad jurisdiction over all civil proceedings arising under title 11 or arising in or related to cases under title 11, and gave them broad judicial powers, including entering final judgments. After filing a petition for reorganization, Northern brought in bankruptcy court a state-law suit against Marathon for breach of contract, breach of warranty, misrepresentation, coercion, and duress. Marathon argued that Congress had unconstitutionally vested Article III judicial power in judges lacking life tenure and salary protection.

Issue

Whether Congress, through 28 U.S.C. § 1471 as enacted by the Bankruptcy Act of 1978, could assign to non-Article III bankruptcy judges jurisdiction to adjudicate this state-law contract action and the broad category of civil proceedings arising under, arising in, or related to bankruptcy cases. More broadly, the question was whether that jurisdictional assignment violated Article III.

Rule

Article III requires that the judicial power of the United States be exercised by courts whose judges enjoy life tenure and undiminishable compensation, except in narrow historically recognized situations: territorial courts, courts-martial, and adjudication of public rights. Congress may use non-Article III adjuncts only if the essential attributes of judicial power remain in an Article III court; private-rights disputes, especially state-created rights between private parties, may not be finally adjudicated by non-Article III tribunals in a manner that strips Article III courts of those essential attributes.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Congress creates the National Insolvency Court, whose judges serve 12-year terms and lack salary protection. A Chapter 11 debtor in Cleveland sues a private equipment vendor for breach of a prepetition supply contract in that court, and the tribunal is authorized to enter final judgment subject only to ordinary appellate review in federal district court.

Is the statutory grant of authority constitutional as applied to this dispute?

Explanation. The majority held that Article III bars Congress from vesting final adjudicatory power over state-created private-rights disputes in judges lacking life tenure and salary protection, unless a recognized exception applies or the tribunal is merely a limited adjunct. A prepetition contract claim against a private vendor is a private-rights dispute, and ordinary appellate review does not preserve the essential attributes of judicial power in an Article III court. The case does not establish that all bankruptcy adjudication is unconstitutional, only that this kind of broad final adjudication by a non-Article III tribunal is.