In a much anticipated decision that could have significantly changed the landscape of our federal courts and agencies, the United States Supreme Court’s recent decision in Executive Benefits Ins. Agency, Inc. v. Arkison left the bankruptcy world in the status quo, leaving many of the larger constitutional issues unanswered.
In its 2011 decision in Stern v. Marshall, the Supreme Court found it unconstitutional for a bankruptcy judge to issue final rulings on certain matters despite statutory authority over such claims. The Stern decision, however, did not provide any guidance as to how such claims were to be handled, if at all, by the bankruptcy courts going forward.
While the decision in Executive Benefits affirmed the process generally utilized by the courts since Stern, the Supreme Court did not tackle the constitutional issue of whether parties to a bankruptcy proceeding can consent, explicitly or impliedly, to the bankruptcy court’s jurisdiction over such matters. The Supreme Court also did not define the scope of such claims. Both issues could have serious implications for the magistrate system as well as many federal agencies, guaranteeing further litigation of these issues to come.