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

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Northern Pipeline Construction Company v. Marathon Pipe Line Company, 458 U.S. 50 (1982), is a United States Supreme Court case in which the Court held that Article III jurisdiction could not be conferred on non-Article III courts (i.e. courts without the independence and protection given to Article III judges).

Contents

• 1 Background

• 2 Opinion of the Court

  • 2.1 Concurrence

  • 2.2 Dissenting opinions

    • 2.2.1 White's dissent

    • 2.2.2 Burger's dissent

• 3 Subsequent developments

• 4 References

• 5 External links

Background

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The Bankruptcy Act of 1978 completely altered bankruptcy law in the United States. It created the Bankruptcy Code (Title 11 of the United States Code ), and created bankruptcy courts , which served as adjuncts to the United States District Courts for each federal judicial district of the United States . Under the previous law, the Bankruptcy Act of 1898 , the federal district courts served as bankruptcy courts and appointed "referees" to conduct proceedings, so long as the district court chose not to withdraw a case from the referee. The new law eliminated the "referee" system and allowed the President to appoint bankruptcy judges for terms of fourteen years (as opposed to the life tenure given to Article III judges), with the advice and consent of the Senate . The judges’ salaries were set by statute and subject to adjustment, and they could be removed by the judicial council of the circuit on grounds of incompetence, misconduct , neglect of duty, or physical or mental disability (as compared with Article III judges, who may only be impeached by Congress and are constitutionally forbidden from having their pay decreased while in office).

The new Bankruptcy Act granted the bankruptcy courts jurisdiction over all "civil proceedings arising under Title 11 or arising in or related to cases under Title 11". Furthermore, the law endowed the bankruptcy courts with all of the "powers of a court of law or equity", except for issuing injunctions against other courts and punishing criminal contempt outside of court (or otherwise punishable by imprisonment ). The law also created a Bankruptcy Appellate Panel for each judicial circuit, which would hear appeals from final orders and judgments of the bankruptcy courts. If no appeals panel was designated, then the district court itself would hear the appeals.

In January 1980, the plaintiff /appellant in this matter, Northern Pipeline Construction Co. (Northern), filed a petition for reorganization under Chapter 11 of the bankruptcy code in the U.S. Bankruptcy Court for the District of Minnesota. Two months later, in March 1980, Northern brought suit in the bankruptcy court against defendant /appellee Marathon Pipe Line Co. (Marathon) for breach of contract and warranty , misrepresentation , coercion , and duress . Marathon moved to dismiss the suit on the grounds that the Bankruptcy Act of 1978 unconstitutionally conferred Article III powers on judges who lacked the career protections and political independence of Article III judges. The United States intervened to protect its own interests.

The bankruptcy judge denied Marathon's motion, but on appeal, the United States District Court for the District of Minnesota reversed, agreeing with Marathon's argument that the law was unconstitutional.

Opinion of the Court

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Justice Brennan wrote for the plurality, joined by Justices Marshall , Blackmun , and Stevens . He stressed the importance of the political independence of the judiciary, which allows judges to decide cases free from domination from the Executive and Legislative branches. The life tenure and protection against diminution of salary helps to ensure this independence, but the bankruptcy judges lacked this protection.

Brennan distinguished the bankruptcy courts from three other categories of non-Article III courts. The first two categories of courts Brennan discusses are the territorial courts , permissible because Congress exercises the general powers of government in these territories; and courts martial , permissible because the Constitution grants the political branches broad powers to control the military.

The third exception discussed by Brennan are tribunals for the adjudication of cases involving public rights, matters which arise "between the government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments". 458 U.S. at 67-68. Public rights exist in contrast to private rights, i.e. disputes between two private parties, which are within the judicial power of Article III courts.

Brennan held that the dispute in question here was an adjudication of private rights, because it involved the restructuring of creditor-debtor relations under the bankruptcy laws. Thus, none of the three exceptions to Article III jurisdiction were applicable. He further held that Congress’ power under the Naturalization and Bankruptcy Clause (Art. I, § 8, cl.4) of the Constitution did not carry with it a power to create specialized tribunals for the adjudication of bankruptcy cases. Brennan feared that reading such a power into Article I would erode the jurisdiction conferred by Article III and displace the judicial branch of the government.

Brennan then turned to Northern's argument that the bankruptcy courts were merely adjuncts to the U.S. District Courts. He framed the Constitutional issue as the determination whether the Bankruptcy Act retained "the essential attributes of judicial power" inherent in Article III tribunals. He began his analysis by examining two prior cases: _Crowell v. Benson _, 285 U.S. 22 (1932), in which the court permitted the United States Employees' Compensation Commission to make factual determinations in the issuance of compensation orders for individual employees; and _United States v. Raddatz

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