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N. Pipeline Constr. Co. v. Marathon Pipe Line Co. - 458 U.S. 50, 102 S. Ct. 2858 (1982)

Rule:

When Congress creates a substantive federal right, it possesses substantial discretion to prescribe the manner in which that right may be adjudicated, including the assignment to an adjunct of some functions historically performed by judges. The functions of the adjunct must be limited in such a way that the essential attributes of judicial power are retained in the U.S. Const. art. III court.

Facts:

The Bankruptcy Act of 1978 (92 Stat 2549) established in each federal judicial district, as an adjunct to the Federal District Court for the District, a United States Bankruptcy Court whose judges are appointed to office for 14-year terms by the President, with the advice and consent of the Senate. The judges are subject to removal by the judicial council of the circuit on account of incompetence, misconduct, neglect of duty, or physical or mental disability, and their salaries are set by statute and are subject to adjustment. The Act grants the courts jurisdiction over all "civil proceedings arising under Title 11 or arising in or related to cases under Title 11" (28 USCS 1471(b)). After a corporation filed a petition for reorganization in the United States Bankruptcy Court for the District of Minnesota, it filed in that court a suit against another corporation seeking damages for alleged breaches of contract and warranty, as well as for alleged misrepresentation, coercion, and duress. The defendant corporation sought dismissal of the suit, on the ground that the Act unconstitutionally conferred Article III judicial power upon judges who lacked life tenure and protection against salary diminution, but the bankruptcy judge denied the motion to dismiss. On appeal to the United States District Court for the District of Minnesota, the District Court entered an order granting the motion, on the ground that the delegation of authority in 28 USCS 1471 to the bankruptcy judges to try cases otherwise relegated under the Constitution to Article III judges was unconstitutional (12 BR 946).

Issue:

Did the Bankruptcy Act of 1978 unconstitutionally confer Article III powers on judges who lacked the career protections and political independence of Article III judges?

Answer:

Yes

Conclusion:

The judgment was affirmed on appeal after the Supreme Court of the United States concluded that § 1471 had impermissibly removed most, if not all, of the essential attributes of the judicial power from U.S. Const. art. III district courts, and had vested those attributes in a non-art. III adjunct. Such a grant of jurisdiction could not be sustained as an exercise of Congress's power to create adjuncts to art. III courts. The Court held that its decision was to apply only prospectively because all considerations bearing on the issue of retroactivity militated against retroactive application. The judicial power of the United States must be exercised by judges who have the attributes of life tenure and protection against salary diminution specified by Art. III. These attributes were incorporated into the Constitution to ensure the independence of the Judiciary from the control of the Executive and Legislative Branches.

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