MATTER OF ASSOCIATED GROCERS OF NEBRASKA CO-OP.

Decision Date08 February 1985
Docket NumberBankruptcy No. BK82-1518,Adv. No. A84-311.
Citation46 BR 173
PartiesIn the Matter of ASSOCIATED GROCERS OF NEBRASKA COOPERATIVE, INC., Debtor. ASSOCIATED GROCERS OF NEBRASKA COOPERATIVE, INC., Plaintiff, v. NABISCO BAKERS, Defendant.
CourtU.S. Bankruptcy Court — District of Nebraska

Robert Ginn, Omaha, Neb., for debtor/plaintiff.

Harry D. Dixon, Jr., Omaha, Neb., for defendant.

MEMORANDUM AND ORDER

DAVID L. CRAWFORD, Bankruptcy Judge.

This matter comes before the Court on the motion to dismiss filed by the defendant who seeks dismissal of this adversary proceeding for this Court's lack of jurisdiction to try this preference case under 11 U.S.C. Section 547.

The statute under which we operate, 28 U.S.C. Section 157(b)(2)(F), effective July 10, 1984, expressly confers jurisdiction on the Bankruptcy Courts of the United States ". . . to determine, avoid, or recover preferences." The issue here is whether or not that grant of jurisdiction to a non-Article III Court is constitutional.

I begin with the observation that there is no United States Supreme Court case determining that such a claim can be tried by a non-Article III Court.

Katchen v. Landy, 382 U.S. 323, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966), is not applicable to this case, for Katchen v. Landy ultimately is a case in which jurisdiction for a non-Article III Court to try the preference cause of action was sustained on the theory of consent. In that case consent arose by virtue of the filing of a claim by the defendant, the preference cause of action having arisen by the filing of an objection to that claim. Katchen v. Landy is not applicable to this case where the defendant does not consent and, in fact, objects strenuously to the jurisdiction of this Court over this cause of action.

The pivotal point in my view is Article III of the United States Constitution which says that the judicial power of the United States is to be vested in lifetime-tenured judges who enjoy the benefits of that lifetime tenure and undiminishable salaries, and not, as the defendant suggests, Northern Pipeline Construction v. Marathon Pipeline Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982).

The Marathon case suggests that there are three categories under which non-Article III Courts may litigate matters. Those exceptions arise not from the literal language of Article III but from case law and are (1) territorial courts; (2) cases involving courts-martial; and (3) those courts which deal with public rights, as opposed to private rights.

The cases which are discussed in Marathon are reviewed in an article in 16 Creighton Law Review, No. 2, beginning at page 441, by Professor David P. Currie of the University of Chicago. In that article Professor Currie notes prior cases and their treatment of what is deemed a public right. Currie, "Bankruptcy Judges and the Independent Judiciary," 16 Creighton L.Rev., No. 2, 441 (1982-1983).

Public rights are those in which the government is involved in its sovereign capacity under an otherwise valid statute creating enforceable public rights. The Tax Court is an example as are certain administrative boards and tribunals, such as those of the Federal Trade Commission, the Interstate Commerce Commission, and the Federal Communications Commission, in which certain litigation and fact-finding processes are undertaken by citizens against their government.

That is not, however, the situation we have here. In the instant case the litigation is by the debtor-in-possession against a nonconsenting third party. This is not litigation against the government.

Professor Currie concludes in his article that the vesting of this kind of jurisdiction in a non-Article III Court is unconstitutional, and I agree. It seems to me that for this defendant to be sued by a private party in a non-Article III Court takes away from the defendant the right to have the case decided by a judge who has lifetime tenure and an undiminishable salary, and that is...

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