Stern v. Marshall: How Anna Nicole Smith Almost Stripped Bankruptcy Courts of Jury Trials

AuthorBryce K. Dalton
PositionJ.D. Candidate, The University of Iowa College of Law, 2013
Pages337-363
337
Stern v. Marshall: How Anna Nicole Smith
Almost Stripped Bankruptcy Courts of
Jury Trials
Bryce K. Dalton
ABSTRACT: The United States Supreme Court’s recent decision in Stern v.
Marshall raises significant questions about bankruptcy jurisdiction. Stern
declared that bankruptcy judges lack the constitutional authority to
adjudicate compulsory counterclaims founded on state law in bankruptcy
proceedings. In doing so, the Court deemed 28 U.S.C. § 157(b)(2)(C)
unconstitutional. While Stern does not expressly discuss whether its holding
addresses the right to a jury trial in bankruptcy, the Court’s decision
nonetheless has the potential to do so. This Note proposes that in light of
Stern, if and when a bankruptcy case involving the jury-trial question
reaches the Supreme Court, the Court sh ould adopt an integrated four-part
test for determining whether a bankruptcy judge may grant a jury trial.
I. INTRODUCTION ...................................................................................... 339
II. BEHIND THE CURTAIN OF STERN ............................................................ 340
A. BANKRUPTCYS BACKDROP ................................................................ 340
B. JURY TRIALS IN BANKRUPTCY ............................................................ 342
C. THE SUPREME COURTS VOLLEY WITH CONGRESS REGARDING
BANKRUPTCY-COURT JURISDICTION ................................................... 343
1. Katchen v. Landy and Equitable Questions ........................... 344
2. Northern Pipeline Construction Co. v. Marathon Pipe Line Co.
and the Public Rights Doctrine ............................................. 345
3. Granfinanciera, S.A. v. Nordberg and the Core–Noncore
Distinction .............................................................................. 346
4. Langenkamp v. C.A. Culp and Claims Against the Estate ...... 347
D. STERNS ON-STAGE DEBUT ............................................................... 349
1. 28 U.S.C. § 157 and the Jury-Trial Right .............................. 349
J.D. Candidate, The University of Iowa College of Law, 2013; B. S., Brigham Young
University, 2007. I thank Professor Patrick B. Bauer for his advice and comments on this Note,
as well as the work of the Iowa Law Review Volumes 97 and 98 boards. I especially thank my wife
for her continued support throughout this Note’s publication.
338 IOWA LAW REVIEW [Vol. 98:337
2. Stern and the Court’s Show-Stopping Decision .................... 351
III. IMPLICATIONS OF STERN ON BANKRUPTCY-COURT JURISDICTION
OVER JURY TRIALS .................................................................................. 352
A. THE BREADTH OF STERNS RULING THAT 28 U.S.C.
§ 157(b)(2)(C) IS UNCONSTITUTIONAL ............................................ 353
B. STERNS IMPACT ON BANKRUPTCY COURTS AUTHORITY TO GRANT
JURY TRIALS ..................................................................................... 353
1. The Supreme Court’s Prior Determinations of a
Bankruptcy Court’s Authority To Grant a Jury Trial ........... 354
a. Jury Trial for Actions at Law, Not in Equity ........................ 355
b. Right to Jury Trial if a Public Right .................................... 356
c. Distinguishing Between Core and Noncore Proceedings ........ 356
2. The Right to Jury Trial in Light of Stern ............................... 357
IV. DETERMINATION OF THE JURY-TRIAL RIGHT IN BANKRUPTCY AFTER
STERN ..................................................................................................... 358
A. THE JURY RIGHT REQUIRES A LEGAL REMEDY ................................... 359
1. Claims Against the Estate Are Not of a Legal Nature .......... 360
B. THE JURY RIGHT REQUIRES A SUIT DIRECTLY ARISING FROM AND
RELATED TO THE BANKRUPTCY PROCEEDING ..................................... 361
1. A State-Law Cause of Action Does Not Directly Arise and
Relate to a Bankruptcy Proceeding ...................................... 362
V. CONCLUSION ......................................................................................... 363

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