Wellness Int'l Network, Ltd. v. Sharif

May 26, 2015 · No. 13-935

Plain-language summary

**Question presented** Can a bankruptcy judge – who is not an Article III judge – decide a “Stern” claim (a claim that would add to the bankruptcy estate and would otherwise exist outside the bankruptcy case) if the parties *knowingly and voluntarily* agree to have the case heard by that judge? **Holding** Yes. The Supreme Court held that the Constitution’s Article III requirements are satisfied when the parties give a knowing, voluntary consent to have the bankruptcy judge decide the claim. **Why the Court reached that conclusion** The Court looked back to earlier decisions that say a party can waive the right to an Article III court if it does so knowingly (e.g., *Commodity Futures Trading Comm’n v. Schor*). It said that waiver is not allowed when the core “structural” functions of the federal judiciary are at stake, but a “Stern” claim does not implicate those core functions. Bankruptcy judges are appointed by Article III judges, can be removed by them, and only act on the district court’s reference – they are effectively part of the district court. Because Congress gave them this limited role and did not intend to diminish the Article III courts, letting the parties consent to a bankruptcy‑court hearing does not violate the Constitution. The Court also said that consent does not have to be a formal written agreement; it can be shown by the parties’ conduct, as long as it is truly knowing and voluntary. **Dissenting view** Chief Justice Roberts, joined by Justice Scalia (and in part by Justice Thomas), argued that allowing non‑Article III judges to decide such claims—even with consent—undermines the separation of powers and the constitutional protections that keep the federal judiciary independent. Justice Thomas filed a separate dissent on the first part of the opinion. **Vote breakdown** The majority opinion was written by Justice Sotomayor and joined by Justices Kennedy, Ginsburg, Breyer, and Kagan. Justice Alito joined the majority *in part* (he wrote a partial concurrence). The dissent was authored by Chief Justice Roberts, joined by Justice Scalia; Justice Thomas joined the dissent on Part I and also filed a separate dissent. This makes the decision a 6‑3 split.
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