Wellness International Network, Ltd. v. Sharif

Supreme Court of the United States · 2015 · Federal Courts

575 U.S. 665 (2015)

Updated August 1, 2026

Federal Courtsconsent to non-Article III adjudicationArticle IIIbankruptcy courtsStern claimsconsentwaivernon-Article III adjudication

Facts

In Sharif's Chapter 7 bankruptcy, Wellness filed an adversary complaint objecting to discharge and seeking a declaratory judgment that a trust Sharif claimed to administer was really his alter ego and that its assets belonged to his bankruptcy estate. In his answer, Sharif admitted the adversary proceeding was a core proceeding and asked the Bankruptcy Court to rule in his favor, including finding that the trust was not property of the estate. After repeated discovery violations, the Bankruptcy Court entered default judgment against Sharif and declared the trust assets part of the estate. While Sharif's appeal was pending, Stern was decided, but Sharif raised the Stern objection only after briefing had closed in the District Court.

Issue

Whether Article III permits a bankruptcy court to enter final judgment on a Stern claim when the parties consent to adjudication by the bankruptcy judge. If consent is permitted, the Court also asked whether that consent must be express or may instead be implied so long as it is knowing and voluntary.

Rule

Article III is not violated when parties knowingly and voluntarily consent to adjudication of Stern claims by a bankruptcy judge. Consent need not be express; under the standard drawn from Roell, consent may be implied from actions rather than words, but only if the litigant or counsel was made aware of the need for consent and the right to refuse it, and still voluntarily proceeded before the non-Article III adjudicator.

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

In a Chapter 7 case in Phoenix, a trustee sues Dana Mercer in bankruptcy court on a state-law claim that would ordinarily require an Article III adjudicator if contested. At a hearing, the bankruptcy judge tells both sides that they may refuse final adjudication in bankruptcy court and instead require district-court adjudication. Dana's lawyer says nothing, litigates through trial, and asks the bankruptcy judge to enter judgment for Dana on the merits.

If Dana later argues that Article III barred the bankruptcy judge from entering final judgment because Dana never expressly consented, how should a court rule?

Explanation. Article III permits bankruptcy judges to adjudicate Stern claims when the parties knowingly and voluntarily consent. That consent need not be express; it may be implied from actions rather than words, so long as the litigant or counsel was made aware of the need for consent and the right to refuse it, and still voluntarily proceeded before the bankruptcy judge. Dana's litigation conduct after that advisement supports implied consent.