Most people, happily, don't have to give much thought to the bankruptcy courts, because as long as they and their employer remain solvent, what is there to worry about?
The fact is, however, that bankruptcy procedures involve billions of dollars and have a real impact on the economy--which is to say they touch the lives and livelihoods of a great many people.
Just the other day, another bankruptcy judge left the bench because of congressional inaction on the bankruptcy court bill (HR 3 in the House). Roger M. Whelan, the District of Columbia's only bankruptcy judge, resigned because the Supreme Court's June 28, 1982, decision in Northern Pipeline Construction Co. v. Marathon has left him and his colleagues in judicial limbo, reduced to a secondary status beneath that of their colleagues on the federal district court. His departure raised the number of bankruptcy judges who have retired during this fiscal year alone to 16. Since the Marathon decision, approximately 17 percent of the entire bankruptcy bench has left office.
In Marathon, the court held that powers bestowed on bankruptcy judges pursuant to the 1978 Bankruptcy Reform Act exceeded those that could constitutionally be exercised by judges created under Article I, or the legislative article of the Constitution. All federal district and circuit judges, including those on the Supreme Court, are created under Article III, the judicial article of the Constitution.
To substitute for the now constitutionally invalidated bankruptcy court, the Administrative Office of the U.S. Courts has implemented an "interim" rule, effectively reinstating the status quo ante and reducing bankruptcy judges to the status of magistrates. Since then, the Supreme Court has refused three times to review its action, thus avoiding a determination on whether a rule promulgated by the executive body of the courts and not by Congress can survive constitutional scrutiny.
To its credit, the Senate has acted to fulfill its legislative responsibility to respond to the court's decision in Marathon. On May 4 of this year, it adopted a new, albeit Article I, bankruptcy court bill (S1013). Questions have been raised about its likely constitutionality, questions that were given recent emphasis by an Aug. 5 decision of the 9th Circuit Court of Appeals suggesting that Congress may not vest certain traditional judicial functions in non-Article III judges, even though the parties involved may consent. Such consent to confer jurisdiction over the subject matter of the litigation is presently a feature of the Senate bill. In fact, this kind of constitutional reservation was the principal factor in convincing me to abstain from sponsorship of an Article I bankruptcy court bill and instead endorse the Article III alternative represented by HR 3.
Unfortunately, in the House, partisan politics too often prevails over substance. From the very beginning, the House Judiciary Committee leadership proclaimed the necessity of immediate action on a new bankruptcy court. In fact, by Feb. 15, the full committee had reported its Article III alternative, and on March 18, Chairman Peter Rodino, citing the "urgency of the constitutional problem," requested that the Rules Committee issue an open rule and schedule a hearing "at the earliest convenient date." Since then, nothing has happened. The probable reason: partisan politics.
You see, the Senate bill contains not only a new Article I court, about which reasonable men and women may dissagree, but it also includes additional Article III judges, together with some necessary changes to the substantive bankruptcy code which are advocated by the consumer finance industry, but which are opposed by the Democratic leadership. Somehow, the Senate, notwithstanding objections to some of these same provisions in S1013, was able to adopt the bill under unanimous consent.
In the House, the Democratic leadership will not even schedule a hearing in the Rules Committee, even though a majority of that committee supports these substantial changes. The Democratic leadership, both on the Rules Committee and on the Judiciary Committee, is therefore reluctant to either subtract from the liberal language of the present 1978 Act or grant President Reagan any judicial appointments before next fall's election. Never mind that this same Democratic leadership created 152 lifetime judicial appointments during the Carter administration.
But for the stubborn intransigence of the Democratic leadership, Congress might by now have carried out its legislative responsibility to cure the bankruptcy court problem caused by Marathon. The Senate, whether or not we agree with its position, has acted; the House has not.
It seems clear to me that an over whelming majority of the House
wants substantive amendments to
HR 3 and would adopt both those
amendments and a bankruptcy
courts bill without hesitation. Un fortunately, the Democratic lead ership has thur far chosen to ig nore wishes of a majority with
which it disagrees, and the bank ruptcy courts and the judicial sys tem which oversees them continue
to suffer in limbo. The bankruptcy
courts will continue to approach chaos until the House leaders decide to let the bill reach the floor for amendment and final passage.
Judge Whelan properly blames Congress for the condition of the bankruptcy courts, while Chairman Rodino laments the difficulty of "replacing . . . fine people under the present uncertain, unconstitutional condition."
But what is the chairman doing to alter these conditions? From all accounts, absolutely nothing. In the meantime, we are losing valuable bankruptcy talent because the present status of the job has lost much of its appeal and private practice can offer a much more lucrative and predictable future. HR 3 is now, and has been since last March, within easy reach of the House floor, should Rodino and Speaker Thomas P. O'Neill decide to move it there. If they do not, and the present growing bankruptcy caseload ultimately affects the economic recovery, they should be prepared to accept the blame. The stability of our courts and the predictability of our laws is important to each of us, both as consumers and as citizens. Can a democracy respond when a serious problem arises? I guess we'll just have to wait and see.