STERN v. MARSHALL

Opinion of the Court

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SUPREME COURT OF THE UNITED STATES
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No. 10–179

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HOWARD K. STERN, EXECUTOR OF THE ESTATE OF

VICKIE LYNN MARSHALL, PETITIONER v.

ELAINE T. MARSHALL, EXECUTRIX OF THE

ESTATE OF E. PIERCE MARSHALL

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[June 23, 2011]

CHIEF JUSTICE ROBERTS delivered the opinion of the Court.

This “suit has, in course of time, become so complicated, that . . . no two . . . lawyers can talk about it for five min ­ utes, without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause: innumerable young people have married into it;” and, sadly, the original parties “have died out of it.” A “long procession of [judges] has come in and gone out” dur ­ ing that time, and still the suit “drags its weary length before the Court.”

Those words were not written about this case, see C. Dickens, Bleak House, in 1 Works of Charles Dickens 4–5 (1891), but they could have been. This is the second time we have had occasion to weigh in on this long ­ running dispute between Vickie Lynn Marshall and E. Pierce Marshall over the fortune of J. Howard Marshall II, a man believed to have been one of the richest people in Texas. The Marshalls’ litigation has worked its way through state and federal courts in Louisiana, Texas, and California, and two of those courts—a Texas state probate court and the Bankruptcy Court for the Central District of California—have reached contrary decisions on its mer ­ its. The Court of Appeals below held that the Texas state decision controlled, after concluding that the Bankruptcy Court lacked the authority to enter final judgment on a counterclaim that Vickie brought against Pierce in her bankruptcy proceeding.1 To determine whether the Court of Appeals was correct in that regard, we must resolve two issues: (1) whether the Bankruptcy Court had the statu ­ tory authority under 28 U. S. C. §157(b) to issue a final judgment on Vickie’s counterclaim; and (2) if so, whether conferring that authority on the Bankruptcy Court is constitutional.

Although the history of this litigation is complicated, its resolution ultimately turns on very basic principles. Arti ­ cle III, §1, of the Constitution commands that “[t]he judi ­ cial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Con ­ gress may from time to time ordain and establish.” That Article further provides that the judges of those courts shall hold their offices during good behavior, without diminution of salary. Ibid. Those requirements of Article III were not honored here. The Bankruptcy Court in this case exercised the judicial power of the United States by entering final judgment on a common law tort claim, even though the judges of such courts enjoy neither tenure during good behavior nor salary protection. We conclude that, although the Bankruptcy Court had the statutory authority to enter judgment on Vickie’s counterclaim, it lacked the constitutional authority to do so. I

Because we have already recounted the facts and proce ­ dural history of this case in detail, see Marshall v. Marshall, 547 U. S. 293, 300–305 (2006), we do not repeat them in full here. Of current relevance are two claims Vickie filed in an attempt to secure half of J. Howard’s fortune. Known to the public as Anna Nicole Smith, Vickie was J. Howard’s third wife and married him about a year before his death. Id., at 300; see In re Marshall, 392 F. 3d 1118, 1122 (CA9 2004). Although J. Howard bestowed on Vickie many monetary and other gifts during their courtship and marriage, he did not include her in his will. 547 U. S., at 300. Before J. Howard passed away, Vickie filed suit in Texas state probate court, asserting that Pierce—J. Howard’s younger son—fraudulently in ­ duced J. Howard to sign a living trust that did not include her, even though J. Howard meant to give her half his property. Pierce denied any fraudulent activity and de ­ fended the validity of J. Howard’s trust and, eventually, his will. 392 F. 3d, at 1122–1123, 1125.

After J. Howard’s death, Vickie filed a petition for bank ­ ruptcy in the Central District of California. Pierce filed a complaint in that bankruptcy proceeding, contending that Vickie had defamed him by inducing her lawyers to tell members of the press that he had engaged in fraud to gain control of his father’s assets. 547 U. S., at 300–301; In re Marshall, 600 F. 3d 1037, 1043–1044 (CA9 2010). The complaint sought a declaration that Pierce’s defamation claim was not dischargeable in the bankruptcy proceed ­ ings. Ibid.; see 11 U. S. C. §523(a). Pierce subsequently filed a proof of claim for the defamation action, meaning that he sought to recover damages for it from Vickie’s bankruptcy estate. See §501(a). Vickie responded to Pierce’s initial complaint by asserting truth as a defense to the alleged defamation and by filing a counterclaim for tortious interference with the gift she expected from J. Howard. As she had in state court, Vickie alleged that Pierce had wrongfully prevented J. Howard from taking the legal steps necessary to provide her with half his property. 547 U. S., at 301.

On November 5, 1999, the Bankruptcy Court issued an order granting Vickie summary judgment on Pierce’s claim for defamation. On September 27, 2000, after a bench trial, the Bankruptcy Court issued a judgment on Vickie’s counterclaim in her favor. The court later awarded Vickie over $400 million in compensatory dam ­ ages and $25 million in punitive damages. 600 F. 3d, at 1045; see 253 B. R. 550, 561–562 (Bkrtcy. Ct. CD Cal. 2000); 257 B. R. 35, 39–40 (Bkrtcy. Ct. CD Cal. 2000).

In post-trial proceedings, Pierce argued that the Bank ­ ruptcy Court lacked jurisdiction over Vickie’s counter ­ claim. In particular, Pierce renewed a claim he had made earlier in the litigation, asserting that the Bankruptcy Court’s authority over the counterclaim was limited be ­ cause Vickie’s counterclaim was not a “core proceeding” under 28 U. S. C. §157(b)(2)(C). See 257 B. R., at 39. As explained below, bankruptcy courts may hear and enter final judgments in “core proceedings” in a bankruptcy case. In non-core proceedings, the bankruptcy courts instead submit proposed findings of fact and conclusions of law to the district court, for that court’s review and issu ­ ance of final judgment. The Bankruptcy Court in this case concluded that Vickie’s counterclaim was “a core proceed ­ ing” under §157(b)(2)(C), and the court therefore had the “power to enter judgment” on the counterclaim under §157(b)(1). Id., at 40.

The District Court disagreed. It recognized that “Vickie’s counterclaim for tortious interference falls within the literal language” of the statute designating certain proceedings as “core,” see §157(b)(2)(C), but understood this Court’s precedent to “suggest[ ] that it would be un ­ constitutional to hold that any and all counterclaims are core.” 264 B. R. 609, 629–630 (CD Cal. 2001) (citing Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U. S. 50, 79, n. 31 (1982) (plurality opinion)). The District Court accordingly concluded that a “counterclaim should not be characterized as core” when it “is only somewhat related to the claim against which it is asserted, and when the unique characteristics and context of the counterclaim place it outside of the normal type of set-off or other counterclaims that customarily arise.” 264 B. R., at 632.

Because the District Court concluded that Vickie’s counterclaim was not core, the court determined that it was required to treat the Bankruptcy Court’s judgment as “proposed[,] rather than final,” and engage in an “inde ­ pendent review” of the record. Id., at 633; see 28 U. S. C. §157(c)(1). Although the Texas state court had by that time conducted a jury trial on the merits of the parties’ dispute and entered a judgment in Pierce’s favor, the District Court declined to give that judgment preclusive effect and went on to decide the matter itself. 271 B. R. 858, 862–867 (CD Cal. 2001); see 275 B. R. 5, 56–58 (CD Cal. 2002). Like the Bankruptcy Court, the District Court found that Pierce had tortiously interfered with Vickie’s expectancy of a gift from J. Howard. The District Court awarded Vickie compensatory and punitive damages, each in the amount of $44,292,767.33. Id., at 58.

The Court of Appeals reversed the District Court on a different ground, 392 F. 3d, at 1137, and we—in the first visit of the case to this Court—reversed the Court of Ap ­ peals on that issue. 547 U. S., at 314–315. On remand from this Court, the Court of Appeals held that §157 man ­ dated “a two-step approach” under which a bankruptcy judge may issue a final judgment in a proceeding only if the matter both “meets Congress’ definition of a core proceeding and arises under or arises in title 11,” the Bankruptcy Code. 600 F. 3d, at 1055. The court also reasoned that allowing a bankruptcy judge to enter final judgments on all counterclaims raised in bankruptcy proceedings “would certainly run afoul” of this Court’s decision in Northern Pipeline. 600 F. 3d, at 1057. With those concerns in mind, the court concluded that “a coun ­ terclaim under §157(b)(2)(C) is properly a ‘core’ proceeding ‘arising in a case under’ the [Bankruptcy] Code only if the counterclaim is so closely related to [a creditor’s] proof of claim that the resolution of the counterclaim is necessary to resolve the allowance or disallowance of the claim it ­ self.” Id., at 1058 (internal quotation marks omitted; second brackets added). The court ruled that Vickie’s counterclaim did not meet that test. Id., at 1059. That holding made “the Texas probate court’s judgment . . . the earliest final judgment entered on matters relevant to this proceeding,” and therefore the Court of Appeals concluded that the District Court should have “afford[ed] preclusive effect” to the Texas “court’s determination of relevant legal and factual issues.” Id., at 1064–1065.2

We again granted certiorari. 561 U. S. __ (2010).

II

A

With certain exceptions not relevant here, the district courts of the United States have “original and exclusive jurisdiction of all cases under title 11.” 28 U. S. C. §1334(a). Congress has divided bankruptcy proceedings into three categories: those that “aris[e] under title 11”; those that “aris[e] in” a Title 11 case; and those that are “related to a case under title 11.” §157(a). District courts may refer any or all such proceedings to the bankruptcy judges of their district, ibid., which is how the Bankruptcy Court in this case came to preside over Vickie’s bank ­ ruptcy proceedings. District courts also may withdraw a case or proceeding referred to the bankruptcy court “for cause shown.” §157(d). Since Congress enacted the Bank­ ruptcy Amendments and Federal Judgeship Act of 1984 (the 1984 Act), bankruptcy judges for each district have been appointed to 14-year terms by the courts of appeals for the circuits is in which their district located. §152(a)(1).

The manner in which a bankruptcy judge may act on a referred matter depends on the type of proceeding in ­ volved. Bankruptcy judges may hear and enter final judgments in “all core proceedings arising under title 11, or arising in a case under title 11.” §157(b)(1). “Core proceedings include, but are not limited to” 16 different types of matters, including “counterclaims by [a debtor’s] estate against persons filing claims against the estate.” §157(b)(2)(C).3 Parties may appeal final judgments of a bankruptcy court in core proceedings to the district court, which reviews them under traditional appellate stan­ dards. See §158(a); Fed. Rule Bkrtcy. Proc. 8013.

When a bankruptcy judge determines that a referred “pro­ ceeding . . . is not a core proceeding but . . . is otherwise related to a case under title 11,” the judge may only “submit proposed findings of fact and conclusions of law to the district court.” §157(c)(1). It is the district court that enters final judgment in such cases after reviewing de novo any matter to which a party objects. Ibid.

B

Vickie’s counterclaim against Pierce for tortious inter ­ ference is a “core proceeding” under the plain text of §157(b)(2)(C). That provision specifies that core proceed ­ ings include “counterclaims by the estate against persons filing claims against the estate.” In past cases, we have suggested that a proceeding’s “core” status alone author ­ izes a bankruptcy judge, as a statutory matter, to enter final judgment in the proceeding. See, e.g., Granfinanciera, S. A. v. Nordberg, 492 U. S. 33, 50 (1989) (explaining that Congress had designated certain actions as “ ‘core proceedings,’ which bankruptcy judges may adjudicate and in which they may issue final judgments, if a district court has referred the matter to them” (citations omitted)). We have not directly addressed the question, however, and Pierce argues that a bankruptcy judge may enter final judgment on a core proceeding only if that proceeding also “aris[es] in” a Title 11 case or “aris[es] under” Title 11 itself. Brief for Respondent 51 (internal quotation marks omitted).

Section 157(b)(1) authorizes bankruptcy courts to “hear and determine all cases under title 11 and all core pro ­ ceedings arising under title 11, or arising in a case under title 11.” As written, §157(b)(1) is ambiguous. The “aris ­ ing under” and “arising in” phrases might, as Pierce sug ­ gests, be read as referring to a limited category of those core proceedings that are addressed in that section. On the other hand, the phrases might be read as simply de ­ scribing what core proceedings are: matters arising under Title 11 or in a Title 11 case. In this case the structure and context of §157 contradict Pierce’s interpretation of §157(b)(1).

As an initial matter, Pierce’s reading of the statute necessarily assumes that there is a category of core pro ­ ceedings that neither arise under Title 11 nor arise in a Title 11 case. The manner in which the statute delineates the bankruptcy courts’ authority, however, makes plain that no such category exists. Section 157(b)(1) authorizes bankruptcy judges to enter final judgments in “core pro ­ ceedings arising under title 11, or arising in a case under title 11.” Section 157(c)(1) instructs bankruptcy judges to instead submit proposed findings in “a proceeding that is not a core proceeding but that is otherwise related to a case under title 11.” Nowhere does §157 specify what bankruptcy courts are to do with respect to the category of matters that Pierce posits—core proceedings that do not arise under Title 11 or in a Title 11 case. To the contrary, §157(b)(3) only instructs a bankruptcy judge to “deter ­ mine, on the judge’s own motion or on timely motion of a party, whether a proceeding is a core proceeding under this subsection or is a proceeding that is otherwise related to a case under title 11.” Two options. The statute does not suggest that any other distinctions need be made.

Under our reading of the statute, core proceedings are those that arise in a bankruptcy case or under Title 11. The detailed list of core proceedings in §157(b)(2) provides courts with ready examples of such matters. Pierce’s reading of §157, in contrast, supposes that some core pro ­ ceedings will arise in a Title 11 case or under Title 11 and some will not. Under that reading, the statute pro ­ vides no guidance on how to tell which are which.

We think it significant that Congress failed to provide any framework for identifying or adjudicating the asserted category of core but not “arising” proceedings, given the otherwise detailed provisions governing bankruptcy court authority. It is hard to believe that Congress would go to the trouble of cataloging 16 different types of proceedings that should receive “core” treatment, but then fail to spec­ ify how to determine whether those matters arise under Title 11 or in a bankruptcy case if—as Pierce asserts—the latter inquiry is determinative of the bankruptcy court’s authority.

Pierce argues that we should treat core matters that arise neither under Title 11 nor in a Title 11 case as pro ­ ceedings “related to” a Title 11 case. Brief for Respondent 60 (internal quotation marks omitted). We think that a contradiction in terms. It does not make sense to describe a “core” bankruptcy proceeding as merely “related to” the bankruptcy case; oxymoron is not a typical feature of congressional drafting. See Northern Pipeline, 458 U. S., at 71 (plurality opinion) (distinguishing “the restructuring of debtor-creditor relations, which is at the core of the federal bankruptcy power, . . . from the adjudication of state-created private rights”); Collier on Bankruptcy ¶3.02[2], p. 3–26, n. 5 (16th ed. 2010) (“The terms ‘non­ core’ and ‘related’ are synonymous”); see also id., at 3–26, (“The phraseology of section 157 leads to the conclusion that there is no such thing as a core matter that is ‘related to’ a case under title 11. Core proceedings are, at most, those that arise in title 11 cases or arise under title 11” (footnote omitted)). And, as already discussed, the statute simply does not provide for a proceeding that is simulta ­ neously core and yet only related to the bankruptcy case. See §157(c)(1) (providing only for “a proceeding that is not a core proceeding but that is otherwise related to a case under title 11”).

As we explain in Part III, we agree with Pierce that designating all counterclaims as “core” proceedings raises serious constitutional concerns. Pierce is also correct that we will, where possible, construe federal statutes so as “to avoid serious doubt of their constitutionality.” Commodity Futures Trading Comm’n v. Schor, 478 U. S. 833, 841 (1986) (internal quotation marks omitted). But that “canon of construction does not give [us] the prerogative to ignore the legislative will in order to avoid constitutional adjudication.” Ibid. In this case, we do not think the plain text of §157(b)(2)(C) leaves any room for the canon of avoidance. We would have to “rewrit[e]” the statute, not interpret it, to bypass the constitutional issue §157(b)(2)(C) presents. Id., at 841 (internal quotation marks omitted). That we may not do. We agree with Vickie that §157(b)(2)(C) permits the bankruptcy court to enter a final judgment on her tortious interference counterclaim. C

Pierce argues, as another alternative to reaching the constitutional question, that the Bankruptcy Court lacked jurisdiction to enter final judgment on his defamation claim. Section 157(b)(5) provides that “[t]he district court shall order that personal injury tort and wrongful death claims shall be tried in the district court in which the bankruptcy case is pending, or in the district court in the district in which the claim arose.” Pierce asserts that his defamation claim is a “personal injury tort,” that the Bankruptcy Court therefore had no jurisdiction over that claim, and that the court therefore necessarily lacked jurisdiction over Vickie’s counterclaim as well. Brief for Respondent 65–66.

Vickie objects to Pierce’s statutory analysis across the board. To begin, Vickie contends that §157(b)(5) does not address subject matter jurisdiction at all, but simply specifies the venue in which “personal injury tort and wrongful death claims” should be tried. See Reply Brief for Petitioner 16–17, 19; see also Tr. of Oral Arg. 23 (Dep­ uty Solicitor General) (Section “157(b)(5) is in [the United States’] view not jurisdictional”). Given the limited scope of that provision, Vickie argues, a party may waive or for ­ feit any objections under §157(b)(5), in the same way that a party may waive or forfeit an objection to the bank ­ ruptcy court finally resolving a non-core claim. Reply Brief for Petitioner 17–20; see §157(c)(2) (authorizing the district court, “with the consent of all the parties to the proceeding,” to refer a “related to” matter to the bank­ ruptcy court for final judgment). Vickie asserts that in this case Pierce consented to the Bankruptcy Court’s adjudication of his defamation claim, and forfeited any argument to the contrary, by failing to seek withdrawal of the claim until he had litigated it before the Bankruptcy Court for 27 months. Id., at 20–23. On the merits, Vickie contends that the statutory phrase “personal injury tort and wrongful death claims” does not include non-physical torts such as defamation. Id., at 25–26.

We need not determine what constitutes a “personal injury tort” in this case because we agree with Vickie that §157(b)(5) is not jurisdictional, and that Pierce consented to the Bankruptcy Court’s resolution of his defamation claim.4 Because “[b]randing a rule as going to a court’s subject-matter jurisdiction alters the normal operation of our adversarial system,” Henderson v. Shinseki, 562 U. S. ___, ___–___ (2011) (slip op., at 4–5), we are not inclined to interpret statutes as creating a jurisdictional bar when they are not framed as such. See generally Arbaugh v. Y & H Corp., 546 U. S. 500, 516 (2006) (“when Congress does not rank a statutory limitation on coverage as juris ­ dictional, courts should treat the restriction as nonjuris ­ dictional in character”). Section 157(b)(5) does not have the hallmarks of a juris ­ dictional decree. To begin, the statutory text does not refer to either district court or bankruptcy court “jurisdic­ tion,” instead addressing only where personal injury tort claims “shall be tried.”

The statutory context also belies Pierce’s jurisdictional claim. Section 157 allocates the authority to enter final judgment between the bankruptcy court and the district court. See §§157(b)(1), (c)(1). That allocation does not implicate questions of subject matter jurisdiction. See §157(c)(2) (parties may consent to entry of final judgment by bankruptcy judge in non-core case). By the same token, §157(b)(5) simply specifies where a particular cate ­ gory of cases should be tried. Pierce does not explain why that statutory limitation may not be similarly waived.

We agree with Vickie that Pierce not only could but did consent to the Bankruptcy Court’s resolution of his defa ­ mation claim. Before the Bankruptcy Court, Vickie ob ­ jected to Pierce’s proof of claim for defamation, arguing that Pierce’s claim was unenforceable and that Pierce should not receive any amount for it. See 29 Court of Appeals Supplemental Excerpts of Record 6031, 6035 (hereinafter Supplemental Record). Vickie also noted that the Bankruptcy Court could defer ruling on her objec ­ tion, given the litigation posture of Pierce’s claim before the Bankruptcy Court. See id., at 6031. Vickie’s filing prompted Pierce to advise the Bankruptcy Court that “[a]ll parties are in agreement that the amount of the contin ­ gent Proof of Claim filed by [Pierce] shall be determined by the adversary proceedings” that had been commenced in the Bankruptcy Court. 31 Supplemental Record 6801. Pierce asserted that Vickie’s objection should be overruled or, alternatively, that any ruling on the objection “should be continued until the resolution of the pending adversary proceeding litigation.” Ibid. Pierce identifies no point in the record where he argued to the Bankruptcy Court that it lacked the authority to adjudicate his proof of claim be­ cause the claim sought recompense for a personal injury tort.

Indeed, Pierce apparently did not object to any court that §157(b)(5) prohibited the Bankruptcy Court from resolving his defamation claim until over two years—and several adverse discovery rulings—after he filed that claim in June 1996. The first filing Pierce cites as raising that objection is his September 22, 1998 motion to the District Court to withdraw the reference of the case to the Bankruptcy Court. See Brief for Respondent 26–27. The District Court did initially withdraw the reference as requested, but it then returned the proceeding to the Bankruptcy Court, observing that Pierce “implicated the jurisdiction of that bankruptcy court. He chose to be a party to that litigation.” App. 129. Although Pierce had objected in July 1996 to the Bankruptcy Court’s exercise of jurisdiction over Vickie’s counterclaim, he advised the court at that time that he was “happy to litigate [his] claim” there. 29 Supplemental Record 6101. Counsel stated that even though Pierce thought it was “probably cheaper for th[e] estate if [Pierce’s claim] were sent back or joined back with the State Court litigation,” Pierce “did choose” the Bankruptcy Court forum and “would be more than pleased to do it [t]here.” Id., at 6101–6102; see also App. to Pet. for Cert. 266, n. 17 (District Court referring to these statements).

Given Pierce’s course of conduct before the Bankruptcy Court, we conclude that he consented to that court’s reso ­ lution of his defamation claim (and forfeited any argument to the contrary). We have recognized “the value of waiver and forfeiture rules” in “complex” cases, Exxon Shipping Co. v. Baker, 554 U. S. 471, 487–488, n. 6 (2008), and this case is no exception. In such cases, as here, the consequences of “a litigant . . . ‘sandbagging’ the court— remaining silent about his objection and belatedly raising the error only if the case does not conclude in his favor,” Puckett v. United States, 556 U. S. ___, ___ (2009) (slip op., at 5) (some internal quotation marks omitted)—can be particularly severe. If Pierce believed that the Bank ­ ruptcy Court lacked the authority to decide his claim for defamation, then he should have said so—and said so promptly. See United States v. Olano, 507 U. S. 725, 731 (1993) (“ ‘No procedural principle is more familiar to this Court than that a constitutional right,’ or a right of any other sort, ‘may be forfeited . . . by the failure to make timely assertion of the right before a tribunal having jurisdiction to determine it’ ” (quoting Yakus v. United States, 321 U. S. 414, 444 (1944))). Instead, Pierce repeat ­ edly stated to the Bankruptcy Court that he was happy to litigate there. We will not consider his claim to the contrary, now that he is sad.

III

Although we conclude that §157(b)(2)(C) permits the Bankruptcy Court to enter final judgment on Vickie’s counterclaim, Article III of the Constitution does not.

A

Article III, §1, of the Constitution mandates that “[t]he judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Con ­ gress may from time to time ordain and establish.” The same section provides that the judges of those constitu ­ tional courts “shall hold their Offices during good Behav ­ iour” and “receive for their Services[ ] a Compensation[ ] [that] shall not be diminished” during their tenure.

As its text and our precedent confirm, Article III is “an inseparable element of the constitutional system of checks and balances” that “both defines the power and protects the independence of the Judicial Branch.” Northern Pipeline, 458 U. S., at 58 (plurality opinion). Under “the basic concept of separation of powers . . . that flow[s] from the scheme of a tripartite government” adopted in the Consti ­ tution, “the ‘judicial Power of the United States’ . . . can no more be shared” with another branch than “the Chief Executive, for example, can share with the Judiciary the veto power, or the Congress share with the Judiciary the power to override a Presidential veto.” United States v. Nixon, 418 U. S. 683, 704 (1974) (quoting U. S. Const., Art. III, §1).

In establishing the system of divided power in the Con ­ stitution, the Framers considered it essential that “the judiciary remain[ ] truly distinct from both the legislature and the executive.” The Federalist No. 78, p. 466 (C. Rossiter ed. 1961) (A. Hamilton). As Hamilton put it, quoting Montesquieu, “ ‘there is no liberty if the power of judging be not separated from the legislative and execu ­ tive powers.’ ” Ibid. (quoting 1 Montesquieu, Spirit of Laws 181).

We have recognized that the three branches are not hermetically sealed from one another, see Nixon v. Administrator of General Services, 433 U. S. 425, 443 (1977), but it remains true that Article III imposes some basic limita ­ tions that the other branches may not transgress. Those limitations serve two related purposes. “Separation-of ­ powers principles are intended, in part, to protect each branch of government from incursion by the others. Yet the dynamic between and among the branches is not the only object of the Constitution’s concern. The structural principles secured by the separation of powers protect the individual as well.” Bond v. United States, 564 U. S. ___, ___ (2011) (slip op., at 10).

Article III protects liberty not only through its role in implementing the separation of powers, but also by speci ­ fying the defining characteristics of Article III judges. The colonists had been subjected to judicial abuses at the hand of the Crown, and the Framers knew the main reasons why: because the King of Great Britain “made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.” The Declaration of Independence ¶11. The Framers undertook in Article III to protect citizens subject to the judicial power of the new Federal Government from a repeat of those abuses. By appointing judges to serve without term limits, and restricting the ability of the other branches to remove judges or diminish their salaries, the Framers sought to ensure that each judicial decision would be rendered, not with an eye toward currying favor with Congress or the Executive, but rather with the “[c]lear heads . . . and honest hearts” deemed “essential to good judges.” 1 Works of James Wilson 363 (J. Andrews ed. 1896).

Article III could neither serve its purpose in the system of checks and balances nor preserve the integrity of judi ­ cial decisionmaking if the other branches of the Federal Government could confer the Government’s “judicial Power” on entities outside Article III. That is why we have long recognized that, in general, Congress may not “withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.” Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272, 284 (1856). When a suit is made of “the stuff of the traditional actions at common law tried by the courts at Westminster in 1789,” Northern Pipeline, 458 U. S., at 90 (Rehnquist, J., concur ­ ring in judgment), and is brought within the bounds of federal jurisdiction, the responsibility for deciding that suit rests with Article III judges in Article III courts. The Constitution assigns that job—resolution of “the mundane as well as the glamorous, matters of common law and statute as well as constitutional law, issues of fact as well as issues of law”—to the Judiciary. Id., at 86–87, n. 39 (plurality opinion). B

This is not the first time we have faced an Article III challenge to a bankruptcy court’s resolution of a debtor’s suit. In Northern Pipeline, we considered whether bank ­ ruptcy judges serving under the Bankruptcy Act of 1978— appointed by the President and confirmed by the Senate, but lacking the tenure and salary guarantees of Article III—could “constitutionally be vested with jurisdiction to decide [a] state-law contract claim” against an entity that was not otherwise part of the bankruptcy proceedings. 458 U. S., at 53, 87, n. 40 (plurality opinion); see id., at 89–92 (Rehnquist, J., concurring in judgment). The Court concluded that assignment of such state law claims for resolution by those judges “violates Art. III of the Con ­ stitution.” Id., at 52, 87 (plurality opinion); id., at 91 (Rehnquist, J., concurring in judgment).

The plurality in Northern Pipeline recognized that there was a category of cases involving “public rights” that Congress could constitutionally assign to “legislative” courts for resolution. That opinion concluded that this “public rights” exception extended “only to matters arising between” individuals and the Government “in connection with the performance of the constitutional functions of the executive or legislative departments . . . that historically could have been determined exclusively by those” branches. Id., at 67–68 (internal quotation marks omit ­ ted). A full majority of the Court, while not agreeing on the scope of the exception, concluded that the doctrine did not encompass adjudication of the state law claim at issue in that case. Id., at 69–72; see id., at 90–91 (Rehnquist, J., concurring in judgment) (“None of the [previous cases addressing Article III power] has gone so far as to sanction the type of adjudication to which Marathon will be sub ­ jected . . . . To whatever extent different powers granted under [the 1978] Act might be sustained under the ‘public rights’ doctrine of Murray’s Lessee . . . and succeeding cases, I am satisfied that the adjudication of Northern’s lawsuit cannot be so sustained”).5

A full majority of Justices in Northern Pipeline also rejected the debtor’s argument that the bankruptcy court’s exercise of jurisdiction was constitutional because the bankruptcy judge was acting merely as an adjunct of the district court or court of appeals. Id., at 71–72, 81–86 (plurality opinion); id., at 91 (Rehnquist, J., concurring in judgment) (“the bankruptcy court is not an ‘adjunct’ of either the district court or the court of appeals”).

After our decision in Northern Pipeline, Congress re ­ vised the statutes governing bankruptcy jurisdiction and bankruptcy judges. In the 1984 Act, Congress provided that the judges of the new bankruptcy courts would be appointed by the courts of appeals for the circuits in which their districts are located. 28 U. S. C. §152(a). And, as we have explained, Congress permitted the newly constituted bankruptcy courts to enter final judgments only in “core” proceedings. See supra, at 7–8.

With respect to such “core” matters, however, the bank ­ ruptcy courts under the 1984 Act exercise the same pow ­ ers they wielded under the Bankruptcy Act of 1978 (1978 Act), 92 Stat. 2549. As in Northern Pipeline, for example, the newly constituted bankruptcy courts are charged under §157(b)(2)(C) with resolving “[a]ll matters of fact and law in whatever domains of the law to which” a coun ­ terclaim may lead. 458 U. S., at 91 (Rehnquist, J., concur ­ ring in judgment); see, e.g., 275 B. R., at 50–51 (noting that Vickie’s counterclaim required the bankruptcy court to determine whether Texas recognized a cause of action for tortious interference with an inter vivos gift— something the Supreme Court of Texas had yet to do). As in Northern Pipeline, the new courts in core proceedings “issue final judgments, which are binding and enforceable even in the absence of an appeal.” 458 U. S., at 85–86 (plurality opinion). And, as in Northern Pipeline, the district courts review the judgments of the bankruptcy courts in core proceedings only under the usual limited appellate standards. That requires marked deference to, among other things, the bankruptcy judges’ findings of fact. See §158(a); Fed. Rule Bkrtcy. Proc. 8013 (findings of fact “shall not be set aside unless clearly erroneous”).

C

Vickie and the dissent argue that the Bankruptcy Court’s entry of final judgment on her state common law counterclaim was constitutional, despite the similarities between the bankruptcy courts under the 1978 Act and those exercising core jurisdiction under the 1984 Act. We disagree. It is clear that the Bankruptcy Court in this case exercised the “judicial Power of the United States” in purporting to resolve and enter final judgment on a state common law claim, just as the court did in Northern Pipeline. No “public right” exception excuses the failure to comply with Article III in doing so, any more than in Northern Pipeline. Vickie argues that this case is different because the defendant is a creditor in the bankruptcy. But the debtors’ claims in the cases on which she relies were themselves federal claims under bankruptcy law, which would be completely resolved in the bankruptcy process of allowing or disallowing claims. Here Vickie’s claim is a state law action independent of the federal bankruptcy law and not necessarily resolvable by a ruling on the creditor’s proof of claim in bankruptcy. Northern Pipeline and our subsequent decision in Granfinanciera, 492 U. S. 33, rejected the application of the “public rights” exception in such cases.

Nor can the bankruptcy courts under the 1984 Act be dismissed as mere adjuncts of Article III courts, any more than could the bankruptcy courts under the 1978 Act. The judicial powers the courts exercise in cases such as this remain the same, and a court exercising such broad pow ­ ers is no mere adjunct of anyone.

1

Vickie’s counterclaim cannot be deemed a matter of “public right” that can be decided outside the Judicial Branch. As explained above, in Northern Pipeline we rejected the argument that the public rights doctrine permitted a bankruptcy court to adjudicate a state law suit brought by a debtor against a company that had not filed a claim against the estate. See 458 U. S., at 69–72 (plurality opinion); id., at 90–91 (Rehnquist, J., concurring in judgment). Although our discussion of the public rights exception since that time has not been entirely consistent, and the exception has been the subject of some debate, this case does not fall within any of the various formula ­ tions of the concept that appear in this Court’s opinions.

We first recognized the category of public rights in Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272 (1856). That case involved the Treasury De ­ partment’s sale of property belonging to a customs collec ­ tor who had failed to transfer payments to the Federal Government that he had collected on its behalf. Id., at 274, 275. The plaintiff, who claimed title to the same land through a different transfer, objected that the Treasury Department’s calculation of the deficiency and sale of the property was void, because it was a judicial act that could not be assigned to the Executive under Article III. Id., at 274–275, 282–283.

“To avoid misconstruction upon so grave a subject,” the Court laid out the principles guiding its analysis. Id., at 284. It confirmed that Congress cannot “withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.” Ibid. The Court also recognized that “[a]t the same time there are matters, involving public rights, which may be presented in such form that the judicial power is capable of acting on them, and which are suscep ­ tible of judicial determination, but which congress may or may not bring within the cognizance of the courts of the United States, as it may deem proper.” Ibid.

As an example of such matters, the Court referred to “[e]quitable claims to land by the inhabitants of ceded territories” and cited cases in which land issues were conclusively resolved by Executive Branch officials. Ibid. (citing Foley v. Harrison, 15 How. 433 (1854); Burgess v. Gray, 16 How. 48 (1854)). In those cases “it depends upon the will of congress whether a remedy in the courts shall be allowed at all,” so Congress could limit the extent to which a judicial forum was available. Murray’s Lessee, 18 How., at 284. The challenge in Murray’s Lessee to the Treasury Department’s sale of the collector’s land likewise fell within the “public rights” category of cases, because it could only be brought if the Federal Government chose to allow it by waiving sovereign immunity. Id., at 283–284. The point of Murray’s Lessee was simply that Congress may set the terms of adjudicating a suit when the suit could not otherwise proceed at all.

Subsequent decisions from this Court contrasted cases within the reach of the public rights exception—those arising “between the Government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments”—and those that were instead matters “of private right, that is, of the liability of one individual to another under the law as defined.” Crowell v. Benson, 285 U. S. 22, 50, 51 (1932).6 See Atlas Roofing Co. v. Occupational Safety and Health Review Comm’n, 430 U. S. 442, 458 (1977) (Exception extends to cases “where the Gov ­ ernment is involved in its sovereign capacity under . . . [a] statute creating enforceable public rights,” while “[w]holly private tort, contract, and property cases, as well as a vast range of other cases . . . are not at all implicated”); Ex parte Bakelite Corp., 279 U. S. 438, 451–452 (1929). See also Northern Pipeline, supra, at 68 (plurality opinion) (citing Ex parte Bakelite Corp. for the proposition that the doctrine extended “only to matters that historically could have been determined exclusively by” the Executive and Legislative Branches).

Shortly after Northern Pipeline, the Court rejected the limitation of the public rights exception to actions involv ­ ing the Government as a party. The Court has continued, however, to limit the exception to cases in which the claim at issue derives from a federal regulatory scheme, or in which resolution of the claim by an expert government agency is deemed essential to a limited regulatory objec ­ tive within the agency’s authority. In other words, it is still the case that what makes a right “public” rather than private is that the right is integrally related to particular federal government action. See United States v. Jicarilla Apache Nation, 564 U. S. ___, ___–___ (2011) (slip op., at 10–11) (“The distinction between ‘public rights’ against the Government and ‘private rights’ between private parties is well established,” citing Murray’s Lessee and Crowell).

Our decision in Thomas v. Union Carbide Agricultural Products Co., for example, involved a data-sharing ar­ rangement between companies under a federal statute pro­ viding that disputes about compensation between the companies would be decided by binding arbitration. 473 U. S. 568, 571–575 (1985). This Court held that the scheme did not violate Article III, explaining that “[a]ny right to compensation . . . results from [the statute] and does not depend on or replace a right to such compensa ­ tion under state law.” Id., at 584.

Commodity Futures Trading Commission v. Schor con ­ cerned a statutory scheme that created a procedure for customers injured by a broker’s violation of the federal commodities law to seek reparations from the broker before the Commodity Futures Trading Commission (CFTC). 478 U. S. 833, 836 (1986). A customer filed such a claim to recover a debit balance in his account, while the broker filed a lawsuit in Federal District Court to recover the same amount as lawfully due from the customer. The broker later submitted its claim to the CFTC, but after that agency ruled against the customer, the customer argued that agency jurisdiction over the broker’s counter ­ claim violated Article III. Id., at 837–838. This Court disagreed, but only after observing that (1) the claim and the counterclaim concerned a “single dispute”—the same account balance; (2) the CFTC’s assertion of authority involved only “a narrow class of common law claims” in a “ ‘particularized area of law’ ”; (3) the area of law in question was governed by “a specific and limited federal regulatory scheme” as to which the agency had “obvious expertise”; (4) the parties had freely elected to resolve their differences before the CFTC; and (5) CFTC orders were “enforceable only by order of the district court.” Id., at 844, 852–855 (quoting Northern Pipeline, 458 U. S., at 85); see 478 U. S., at 843–844; 849–857. Most signifi ­ cantly, given that the customer’s reparations claim before the agency and the broker’s counterclaim were competing claims to the same amount, the Court repeatedly empha ­ sized that it was “necessary” to allow the agency to exer ­ cise jurisdiction over the broker’s claim, or else “the reparations procedure would have been confounded.” Id., at 856.

The most recent case in which we considered application of the public rights exception—and the only case in which we have considered that doctrine in the bankruptcy con ­ text since Northern Pipeline—is Granfinanciera, S. A. v. Nordberg, 492 U. S. 33 (1989). In Granfinanciera we rejected a bankruptcy trustee’s argument that a fraudu ­ lent conveyance action filed on behalf of a bankruptcy estate against a noncreditor in a bankruptcy proceeding fell within the “public rights” exception. We explained that, “[i]f a statutory right is not closely intertwined with a federal regulatory program Congress has power to enact, and if that right neither belongs to nor exists against the Federal Government, then it must be adjudicated by an Article III court.” Id., at 54–55. We reasoned that fraudu ­ lent conveyance suits were “quintessentially suits at com ­ mon law that more nearly resemble state law contract claims brought by a bankrupt corporation to augment the bankruptcy estate than they do creditors’ hierarchically ordered claims to a pro rata share of the bankruptcy res.” Id., at 56. As a consequence, we concluded that fraudulent conveyance actions were “more accurately characterized as a private rather than a public right as we have used those terms in our Article III decisions.” Id., at 55.7

Vickie’s counterclaim—like the fraudulent conveyance claim at issue in Granfinanciera—does not fall within any of the varied formulations of the public rights exception in this Court’s cases. It is not a matter that can be pursued only by grace of the other branches, as in Murray’s Lessee, 18 How., at 284, or one that “historically could have been determined exclusively by” those branches, Northern Pipeline, supra, at 68 (citing Ex parte Bakelite Corp., 279 U. S., at 458). The claim is instead one under state com ­ mon law between two private parties. It does not “de ­ pend[ ] on the will of congress,” Murray’s Lessee, supra, at 284; Congress has nothing to do with it.

In addition, Vickie’s claimed right to relief does not flow from a federal statutory scheme, as in Thomas, 473 U. S., at 584–585, or Atlas Roofing, 430 U. S., at 458. It is not “completely dependent upon” adjudication of a claim cre ­ ated by federal law, as in Schor, 478 U. S., at 856. And in contrast to the objecting party in Schor, id., at 855–856, Pierce did not truly consent to resolution of Vickie’s claim in the bankruptcy court proceedings. He had nowhere else to go if he wished to recover from Vickie’s estate. See Granfinanciera, supra, at 59, n. 14 (noting that “[p]arallel reasoning [to Schor] is unavailable in the context of bank ­ ruptcy proceedings, because creditors lack an alternative forum to the bankruptcy court in which to pursue their claims”).8

Furthermore, the asserted authority to decide Vickie’s claim is not limited to a “particularized area of the law,” as in Crowell, Thomas, and Schor. Northern Pipeline, 458 U. S., at 85 (plurality opinion). We deal here not with an agency but with a court, with substantive jurisdiction reaching any area of the corpus juris. See ibid.; id., at 91 (Rehnquist, J., concurring in judgment). This is not a situation in which Congress devised an “expert and inex ­ pensive method for dealing with a class of questions of fact which are particularly suited to examination and determi ­ nation by an administrative agency specially assigned to that task.” Crowell, 285 U. S., at 46; see Schor, supra, at 855–856. The “experts” in the federal system at resolving common law counterclaims such as Vickie’s are the Article III courts, and it is with those courts that her claim must stay.

The dissent reads our cases differently, and in particu ­ lar contends that more recent cases view Northern Pipeline as “ ‘establish[ing] only that Congress may not vest in a non-Article III court the power to adjudicate, render final judgment, and issue binding orders in a traditional contract action arising under state law, without consent of the litigants, and subject only to ordinary appellate re ­ view.’ ” Post, at 6 (quoting Thomas, supra, at 584). Just so: Substitute “tort” for “contract,” and that statement directly covers this case.

We recognize that there may be instances in which the distinction between public and private rights—at least as framed by some of our recent cases—fails to provide con ­ crete guidance as to whether, for example, a particular agency can adjudicate legal issues under a substantive regulatory scheme. Given the extent to which this case is so markedly distinct from the agency cases discussing the public rights exception in the context of such a regime, however, we do not in this opinion express any view on how the doctrine might apply in that different context.

What is plain here is that this case involves the most prototypical exercise of judicial power: the entry of a final, binding judgment by a court with broad substantive juris ­ diction, on a common law cause of action, when the action neither derives from nor depends upon any agency regula ­ tory regime. If such an exercise of judicial power may nonetheless be taken from the Article III Judiciary simply by deeming it part of some amorphous “public right,” then Article III would be transformed from the guardian of individual liberty and separation of powers we have long recognized into mere wishful thinking.

2

Vickie and the dissent next attempt to distinguish Northern Pipeline and Granfinanciera on the ground that Pierce, unlike the defendants in those cases, had filed a proof of claim in the bankruptcy proceedings. Given Pierce’s participation in those proceedings, Vickie argues, the Bankruptcy Court had the authority to adjudicate her counterclaim under our decisions in Katchen v. Landy, 382 U. S. 323 (1966), and Langenkamp v. Culp, 498 U. S. 42 (1990) (per curiam). We do not agree. As an initial matter, it is hard to see why Pierce’s decision to file a claim should make any difference with respect to the characterization of Vickie’s counterclaim. “ ‘[P]roperty interests are created and de ­ fined by state law,’ and ‘[u]nless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding.” Travelers Casualty & Surety Co. of America v. Pacific Gas & Elec. Co., 549 U. S. 443, 451 (2007) (quoting Butner v. United States, 440 U. S. 48, 55 (1979)). Pierce’s claim for defamation in no way affects the nature of Vickie’s coun ­ terclaim for tortious interference as one at common law that simply attempts to augment the bankruptcy estate— the very type of claim that we held in Northern Pipeline and Granfinanciera must be decided by an Article III court.

Contrary to Vickie’s contention, moreover, our decisions in Katchen and Langenkamp do not suggest a different result. Katchen permitted a bankruptcy referee acting under the Bankruptcy Acts of 1898 and 1938 (akin to a bankruptcy court today) to exercise what was known as “summary jurisdiction” over a voidable preference claim brought by the bankruptcy trustee against a creditor who had filed a proof of claim in the bankruptcy proceeding. See 382 U. S., at 325, 327–328. A voidable preference claim asserts that a debtor made a payment to a particu ­ lar creditor in anticipation of bankruptcy, to in effect increase that creditor’s proportionate share of the estate. The preferred creditor’s claim in bankruptcy can be disal ­ lowed as a result of the preference, and the amounts paid to that creditor can be recovered by the trustee. See id., at 330; see also 11 U. S. C. §§502(d), 547(b).

Although the creditor in Katchen objected that the preference issue should be resolved through a “plenary suit” in an Article III court, this Court concluded that summary adjudication in bankruptcy was appropriate, because it was not possible for the referee to rule on the creditor’s proof of claim without first resolving the void ­ able preference issue. 382 U. S., at 329–330, 332–333, and n. 9, 334. There was no question that the bankruptcy referee could decide whether there had been a voidable preference in determining whether and to what extent to allow the creditor’s claim. Once the referee did that, “nothing remains for adjudication in a plenary suit”; such a suit “would be a meaningless gesture.” Id., at 334. The plenary proceeding the creditor sought could be brought into the bankruptcy court because “the same issue [arose] as part of the process of allowance and disallowance of claims.” Id., at 336.

It was in that sense that the Court stated that “he who invokes the aid of the bankruptcy court by offering a proof of claim and demanding its allowance must abide the consequences of that procedure.” Id., at 333, n. 9. In Katchen one of those consequences was resolution of the preference issue as part of the process of allowing or disal ­ lowing claims, and accordingly there was no basis for the creditor to insist that the issue be resolved in an Article III court. See id., at 334. Indeed, the Katchen Court expressly noted that it “intimate[d] no opinion concerning whether” the bankruptcy referee would have had “sum ­ mary jurisdiction to adjudicate a demand by the [bank ­ ruptcy] trustee for affirmative relief, all of the substantial factual and legal bases for which ha[d] not been disposed of in passing on objections to the [creditor’s proof of] claim.” Id., at 333, n. 9.

Our per curiam opinion in Langenkamp is to the same effect. We explained there that a preferential transfer claim can be heard in bankruptcy when the allegedly favored creditor has filed a claim, because then “the ensu ­ ing preference action by the trustee become[s] integral to the restructuring of the debtor-creditor relationship.” 498 U. S., at 44. If, in contrast, the creditor has not filed a proof of claim, the trustee’s preference action does not “become[ ] part of the claims-allowance process” subject to resolution by the bankruptcy court. Ibid.; see id., at 45.

In ruling on Vickie’s counterclaim, the Bankruptcy Court was required to and did make several factual and legal determinations that were not “disposed of in passing on objections” to Pierce’s proof of claim for defamation, which the court had denied almost a year earlier. Katchen, supra, at 332, n. 9. There was some overlap between Vickie’s counterclaim and Pierce’s defamation claim that led the courts below to conclude that the coun ­ terclaim was compulsory, 600 F. 3d, at 1057, or at least in an “attenuated” sense related to Pierce’s claim, 264 B. R., at 631. But there was never any reason to believe that the process of adjudicating Pierce’s proof of claim would neces ­ sarily resolve Vickie’s counterclaim. See id., at 631, 632 (explaining that “the primary facts at issue on Pierce’s claim were the relationship between Vickie and her attor ­ neys and her knowledge or approval of their statements,” and “the counterclaim raises issues of law entirely dif ­ ferent from those raise[d] on the defamation claim”). The United States acknowledges the point. See Brief for United States as Amicus Curiae, p. (I) (question presented concerns authority of a bankruptcy court to enter final judgment on a compulsory counterclaim “when adjudica ­ tion of the counterclaim requires resolution of issues that are not implicated by the claim against the estate”); id., at 26.

The only overlap between the two claims in this case was the question whether Pierce had in fact tortiously taken control of his father’s estate in the manner alleged by Vickie in her counterclaim and described in the alleg ­ edly defamatory statements. From the outset, it was clear that, even assuming the Bankruptcy Court would (as it did) rule in Vickie’s favor on that question, the court could not enter judgment for Vickie unless the court additionally ruled on the questions whether Texas recognized tortious interference with an expected gift as a valid cause of action, what the elements of that action were, and whether those elements were met in this case. 275 B. R., at 50–53. Assuming Texas accepted the elements adopted by other jurisdictions, that meant Vickie would need to prove, above and beyond Pierce’s tortious interference, (1) the existence of an expectancy of a gift; (2) a reasonable certainty that the expectancy would have been realized but for the interference; and (3) damages. Id., at 51; see 253 B. R., at 558–561. Also, because Vickie sought puni ­ tive damages in connection with her counterclaim, the Bankruptcy Court could not finally dispose of the case in Vickie’s favor without determining whether to subject Pierce to the sort of “retribution,” “punishment[,] and deterrence,” Exxon Shipping Co., 554 U. S., at 492, 504 (internal quotation marks omitted), those damages are designed to impose. There thus was never reason to believe that the process of ruling on Pierce’s proof of claim would necessarily result in the resolution of Vickie’s counterclaim.

In both Katchen and Langenkamp, moreover, the trus ­ tee bringing the preference action was asserting a right of recovery created by federal bankruptcy law. In Langenkamp, we noted that “the trustee instituted adversary proceedings under 11 U. S. C. §547(b) to recover, as avoid ­ able preferences,” payments respondents received from the debtor before the bankruptcy filings. 498 U. S., at 43; see, e.g., §547(b)(1) (“the trustee may avoid any transfer of an interest of the debtor in property—(1) to or for the benefit of a creditor”). In Katchen, “[t]he Trustee . . . [asserted] that the payments made [to the creditor] were preferences inhibited by Section 60a of the Bankruptcy Act.” Memo ­ randum Opinion (Feb. 8, 1963), Tr. of Record in O. T. 1965, No. 28, p. 3; see 382 U. S., at 334 (considering im ­ pact of the claims allowance process on “action by the trustee under §60 to recover the preference”); 11 U. S. C. §96(b) (1964 ed.) (§60(b) of the then-applicable Bankruptcy Act) (“preference may be avoided by the trustee if the creditor receiving it or to be benefited thereby . . . has, at the time when the transfer is made, reasonable cause to believe that the debtor is insolvent”). Vickie’s claim, in contrast, is in no way derived from or dependent upon bankruptcy law; it is a state tort action that exists without regard to any bankruptcy proceeding.

In light of all the foregoing, we disagree with the dissent that there are no “relevant distinction[s]” between Pierce’s claim in this case and the claim at issue in Langenkamp. Post, at 14. We see no reason to treat Vickie’s counter ­ claim any differently from the fraudulent conveyance action in Granfinanciera. 492 U. S., at 56. Granfinanciera’s distinction between actions that seek “to augment the bankruptcy estate” and those that seek “a pro rata share of the bankruptcy res,” ibid., reaffirms that Con ­ gress may not bypass Article III simply because a proceed ­ ing may have some bearing on a bankruptcy case; the question is whether the action at issue stems from the bank­ ruptcy itself or would necessarily be resolved in the claims allowance process. Vickie has failed to demon ­ strate that her counterclaim falls within one of the “lim ­ ited circumstances” covered by the public rights exception, particularly given our conclusion that, “even with respect to matters that arguably fall within the scope of the ‘public rights’ doctrine, the presumption is in favor of Art. III courts.” Northern Pipeline, 458 U. S., at 69, n. 23, 77, n. 29 (plurality opinion).

3

Vickie additionally argues that the Bankruptcy Court’s final judgment was constitutional because bankruptcy courts under the 1984 Act are properly deemed “adjuncts” of the district courts. Brief for Petitioner 61–64. We rejected a similar argument in Northern Pipeline, see 458 U. S., at 84–86 (plurality opinion); id., at 91 (Rehnquist, J., concurring in judgment), and our reasoning there holds true today.

To begin, as explained above, it is still the bankruptcy court itself that exercises the essential attributes of judi ­ cial power over a matter such as Vickie’s counterclaim. See supra, at 20. The new bankruptcy courts, like the old, do not “ma[k]e only specialized, narrowly confined factual determinations regarding a particularized area of law” or engage in “statutorily channeled factfinding functions.” Northern Pipeline, 458 U. S., at 85 (plurality opinion). Instead, bankruptcy courts under the 1984 Act resolve “[a]ll matters of fact and law in whatever domains of the law to which” the parties’ counterclaims might lead. Id., at 91 (Rehnquist, J., concurring in judgment).

In addition, whereas the adjunct agency in Crowell v. Benson “possessed only a limited power to issue compensa ­ tion orders . . . [that] could be enforced only by order of the district court,” Northern Pipeline, supra, at 85, a bank ­ ruptcy court resolving a counterclaim under 28 U. S. C. §157(b)(2)(C) has the power to enter “appropriate orders and judgments”—including final judgments—subject to review only if a party chooses to appeal, see §§157(b)(1), 158(a)–(b). It is thus no less the case here than it was in Northern Pipeline that “[t]he authority—and the respon ­ sibility—to make an informed, final determination . . . remains with” the bankruptcy judge, not the district court. 458 U. S., at 81 (plurality opinion) (internal quotation marks omitted). Given that authority, a bankruptcy court can no more be deemed a mere “adjunct” of the district court than a district court can be deemed such an “ad ­ junct” of the court of appeals. We certainly cannot accept the dissent’s notion that judges who have the power to enter final, binding orders are the “functional[ ]” equiva ­ lent of “law clerks[ ] and the Judiciary’s administrative officials.” Post, at 11. And even were we wrong in this regard, that would only confirm that such judges should not be in the business of entering final judgments in the first place.

It does not affect our analysis that, as Vickie notes, bankruptcy judges under the current Act are appointed by the Article III courts, rather than the President. See Brief for Petitioner 59. If—as we have concluded—the bank ­ ruptcy court itself exercises “the essential attributes of judicial power [that] are reserved to Article III courts,” Schor, 478 U. S., at 851 (internal quotation marks omit ­ ted), it does not matter who appointed the bankruptcy judge or authorized the judge to render final judgments in such proceedings. The constitutional bar remains. See The Federalist No. 78, at 471 (“Periodical appointments, however regulated, or by whomsoever made, would, in some way or other, be fatal to [a judge’s] necessary independence”).

D

Finally, Vickie and her amici predict as a practical matter that restrictions on a bankruptcy court’s ability to hear and finally resolve compulsory counterclaims will create significant delays and impose additional costs on the bankruptcy process. See, e.g., Brief for Petitioner 34– 36, 57–58; Brief for United States as Amicus Curiae 29– 30. It goes without saying that “the fact that a given law or procedure is efficient, convenient, and useful in facili­ tating functions of government, standing alone, will not save it if it is contrary to the Constitution.” INS v. Chadha, 462 U. S. 919, 944 (1983).

In addition, we are not convinced that the practical consequences of such limitations on the authority of bank ­ ruptcy courts to enter final judgments are as significant as Vickie and the dissent suggest. See post, at 16–17. The dissent asserts that it is important that counterclaims such as Vickie’s be resolved “in a bankruptcy court,” and that, “to be effective, a single tribunal must have broad authority to restructure [debtor-creditor] relations.” Post, at 14, 15 (emphasis deleted). But the framework Congress adopted in the 1984 Act already contemplates that certain state law matters in bankruptcy cases will be resolved by judges other than those of the bankruptcy courts. Section 1334(c)(2), for example, requires that bankruptcy courts abstain from hearing specified non-core, state law claims that “can be timely adjudicated[ ] in a State forum of ap ­ propriate jurisdiction.” Section 1334(c)(1) similarly pro ­ vides that bankruptcy courts may abstain from hearing any proceeding, including core matters, “in the interest of comity with State courts or respect for State law.”

As described above, the current bankruptcy system also requires the district court to review de novo and enter final judgment on any matters that are “related to” the bankruptcy proceedings, §157(c)(1), and permits the dis ­ trict court to withdraw from the bankruptcy court any referred case, proceeding, or part thereof, §157(d). Pierce has not argued that the bankruptcy courts “are barred from ‘hearing’ all counterclaims” or proposing findings of fact and conclusions of law on those matters, but rather that it must be the district court that “finally decide[s]” them. Brief for Respondent 61. We do not think the re ­ moval of counterclaims such as Vickie’s from core bank ­ ruptcy jurisdiction meaningfully changes the division of labor in the current statute; we agree with the United States that the question presented here is a “narrow” one. Brief for United States as Amicus Curiae 23.

If our decision today does not change all that much, then why the fuss? Is there really a threat to the separation of powers where Congress has conferred the judicial power outside Article III only over certain counterclaims in bankruptcy? The short but emphatic answer is yes. A statute may no more lawfully chip away at the authority of the Judicial Branch than it may eliminate it entirely. “Slight encroachments create new boundaries from which legions of power can seek new territory to capture.” Reid v. Covert, 354 U. S. 1, 39 (1957) (plurality opinion). Al ­ though “[i]t may be that it is the obnoxious thing in its mildest and least repulsive form,” we cannot overlook the intrusion: “illegitimate and unconstitutional practices get their first footing in that way, namely, by silent ap ­ proaches and slight deviations from legal modes of proce ­ dure.” Boyd v. United States, 116 U. S. 616, 635 (1886). We cannot compromise the integrity of the system of separated powers and the role of the Judiciary in that system, even with respect to challenges that may seem innocuous at first blush.

* * *

Article III of the Constitution provides that the judicial power of the United States may be vested only in courts whose judges enjoy the protections set forth in that Arti ­ cle. We conclude today that Congress, in one isolated respect, exceeded that limitation in the Bankruptcy Act of 1984. The Bankruptcy Court below lacked the constitu ­ tional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim. Accordingly, the judgment of the Court of Appeals is affirmed. It is so ordered.

1 Because both Vickie and Pierce passed away during this litigation, the parties in this case are Vickie’s estate and Pierce’s estate. We continue to refer to them as “Vickie” and “Pierce.”

2 One judge wrote a separate concurring opinion. He concluded that “Vickie’s counterclaim . . . [wa]s not a core proceeding, so the Texas probate court judgment preceded the district court judgment and controls.” 600 F. 3d, at 1065 (Kleinfeld, J.). The concurring judge also “offer[ed] additional grounds” that he believed required judgment in Pierce’s favor. Ibid. Pierce presses only one of those additional grounds here; it is discussed below, in Part II–C.

3 In full, §§157(b)(1)–(2) provides: “(1) Bankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11, referred under subsection (a) of this section, and may enter appropriate orders and judgments, subject to review under section 158 of this title. “(2) Core proceedings include, but are not limited to— “(A) matters concerning the administration of the estate; “(B) allowance or disallowance of claims against the estate or exemp­ tions from property of the estate, and estimation of claims or interests for the purposes of confirming a plan under chapter 11, 12, or 13 of title 11 but not the liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution in a case under title 11; “(C) counterclaims by the estate against persons filing claims against the estate; “(D) orders in respect to obtaining credit; “(E) orders to turn over property of the estate; “(F) proceedings to determine, avoid, or recover preferences; “(G) motions to terminate, annul, or modify the automatic stay; “(H) proceedings to determine, avoid, or recover fraudulent convey ­ ances; “(I) determinations as to the dischargeability of particular debts; “(J) objections to discharges; “(K) determinations of the validity, extent, or priority of liens; “(L) confirmations of plans; “(M) orders approving the use or lease of property, including the use of cash collateral; “(N) orders approving the sale of property other than property result ­ ing from claims brought by the estate against persons who have not filed claims against the estate; “(O) other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship, except personal injury tort or wrongful death claims; and “(P) recognition of foreign proceedings and other matters under chapter 15 of title 11.”

4 Although Pierce suggests that consideration of “the 157(b)(5) issue” would facilitate an “easy” resolution of the case, Tr. of Oral Arg. 47–48, he is mistaken. Had Pierce preserved his argument under that provi ­ sion, we would have been confronted with several questions on which there is little consensus or precedent. Those issues include: (1) the scope of the phrase “personal injury tort”—a question over which there is at least a three-way divide, see In re Arnold, 407 B. R. 849, 851–853 (Bkrtcy. Ct. MDNC 2009); (2) whether, as Vickie argued in the Court of Appeals, the requirement that a personal injury tort claim be “tried” in the district court nonetheless permits the bankruptcy court to resolve the claim short of trial, see Appellee’s/Cross-Appellant’s Supplemental Brief in No. 02–56002 etc. (CA9), p. 24; see also In re Dow Corning Corp., 215 B. R. 346, 349–351 (Bkrtcy. Ct. ED Mich. 1997) (noting divide over whether, and on what grounds, a bankruptcy court may resolve a claim pretrial); and (3) even if Pierce’s defamation claim could be considered only by the District Court, whether the Bankruptcy Court might retain jurisdiction over the counterclaim, cf. Arbaugh v. Y & H Corp., 546 U. S. 500, 514 (2006) (“when a court grants a motion to dismiss for failure to state a federal claim, the court generally retains discretion to exercise supplemental jurisdiction, pursuant to 28 U. S. C. §1367, over pendent state-law claims”). We express no opinion on any of these issues and simply note that the §157(b)(5) question is not as straightforward as Pierce would have it.

5 The dissent is thus wrong in suggesting that less than a full Court agreed on the points pertinent to this case. Post, at 2 (opinion of BREYER, J.).

6 Although the Court in Crowell went on to decide that the facts of the private dispute before it could be determined by a non-Article III tribunal in the first instance, subject to judicial review, the Court did so only after observing that the administrative adjudicator had only limited authority to make specialized, narrowly confined factual deter ­ minations regarding a particularized area of law and to issue orders that could be enforced only by action of the District Court. 285 U. S., at 38, 44–45, 54; see Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U. S. 50, 78 (1982) (plurality opinion). In other words, the agency in Crowell functioned as a true “adjunct” of the District Court. That is not the case here. See infra, at 34–36. Although the dissent suggests that we understate the import of Crowell in this regard, the dissent itself recognizes—repeatedly—that Crowell by its terms addresses the determination of facts outside Article III. See post, at 4 (Crowell “upheld Congress’ delegation of primary factfinding authority to the agency”); post, at 12 (quoting Crowell, 285 U. S., at 51, for the proposition that “ ‘there is no require ­ ment that, in order to maintain the essential attributes of the judicial power, all determinations of fact in constitutional courts shall be made by judges’ ”). Crowell may well have additional significance in the context of expert administrative agencies that oversee particular substantive federal regimes, but we have no occasion to and do not address those issues today. See infra, at 29. The United States appar ­ ently agrees that any broader significance of Crowell is not pertinent in this case, citing to Crowell in its brief only once, in the last footnote, again for the limited proposition discussed above. Brief for United States as Amicus Curiae 32, n. 5.

7 We noted that we did not mean to “suggest that the restructuring of debtor-creditor relations is in fact a public right.” 492 U. S., at 56, n. 11. Our conclusion was that, “even if one accepts this thesis,” Con­ gress could not constitutionally assign resolution of the fraudulent conveyance action to a non-Article III court. Ibid. Because neither party asks us to reconsider the public rights framework for bankruptcy, we follow the same approach here.

8 Contrary to the claims of the dissent, see post, at 12–13, Pierce did not have another forum in which to pursue his claim to recover from Vickie’s pre-bankruptcy assets, rather than take his chances with whatever funds might remain after the Title 11 proceedings. Creditors who possess claims that do not satisfy the requirements for nondis­ chargeability under 11 U. S. C. §523 have no choice but to file their claims in bankruptcy proceedings if they want to pursue the claims at all. That is why, as we recognized in Granfinanciera, the notion of “consent” does not apply in bankruptcy proceedings as it might in other contexts.

SCALIA, J., concurring

SUPREME COURT OF THE UNITED STATES
_________________

No. 10–179

_________________

HOWARD K. STERN, EXECUTOR OF THE ESTATE OF

VICKIE LYNN MARSHALL, PETITIONER v.

ELAINE T. MARSHALL, EXECUTRIX OF THE

ESTATE OF E. PIERCE MARSHALL

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[June 23, 2011]

JUSTICE SCALIA, concurring.

I agree with the Court’s interpretation of our Article III precedents, and I accordingly join its opinion. I adhere to my view, however, that—our contrary precedents notwithstanding—“a matter of public rights . . . must at a minimum arise between the government and others,” Granfinanciera, S. A. v. Nordberg, 492 U. S. 33, 65 (1989) (SCALIA, J., concurring in part and concurring in judgment) (internal quotation marks omitted).

The sheer surfeit of factors that the Court was required to consider in this case should arouse the suspicion that something is seriously amiss with our jurisprudence in this area. I count at least seven different reasons given in the Court’s opinion for concluding that an Article III judge was required to adjudicate this lawsuit: that it was one “under state common law” which was “not a matter that can be pursued only by grace of the other branches,” ante, at 27; that it was “not ‘completely dependent upon’ adjudication of a claim created by federal law,” ibid.; that “Pierce did not truly consent to resolution of Vickie’s claim in the bankruptcy court proceedings,” ibid.; that “the asserted authority to decide Vickie’s claim is not limited to a ‘particularized area of the law,’ ” ante, at 28; that “there was never any reason to believe that the process of adjudicating Pierce’s proof of claim would necessarily resolve Vickie’s counterclaim,” ante, at 32; that the trustee was not “asserting a right of recovery created by federal bankruptcy law,” ante, at 33; and that the Bankruptcy Judge “ha[d] the power to enter ‘appropriate orders and judgments’—including final judgments—subject to review only if a party chooses to appeal,” ante, at 35.

Apart from their sheer numerosity, the more fundamental flaw in the many tests suggested by our jurisprudence is that they have nothing to do with the text or tradition of Article III. For example, Article III gives no indication that state-law claims have preferential entitlement to an Article III judge; nor does it make pertinent the extent to which the area of the law is “particularized.” The multifactors relied upon today seem to have entered our jurisprudence almost randomly.

Leaving aside certain adjudications by federal administrative agencies, which are governed (for better or worse) by our landmark decision in Crowell v. Benson, 285 U. S. 22 (1932), in my view an Article III judge is required in all federal adjudications, unless there is a firmly established historical practice to the contrary. For that reason—and not because of some intuitive balancing of benefits and harms—I agree that Article III judges are not required in the context of territorial courts, courts-martial, or true “public rights” cases. See Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U. S. 50, 71 (1982) (plurality opinion). Perhaps historical practice permits non-Article III judges to process claims against the bankruptcy estate, see, e.g., Plank, Why Bankruptcy Judges Need Not and Should Not Be Article III Judges, 72 Am. Bankr. L. J. 567, 607–609 (1998); the subject has not been briefed, and so I state no position on the matter. But Vickie points to no historical practice that authorizes a non-Article III judge to adjudicate a counterclaim of the sort at issue here.

BREYER, J., dissenting

SUPREME COURT OF THE UNITED STATES
_________________

No. 10–179

_________________

HOWARD K. STERN, EXECUTOR OF THE ESTATE OF

VICKIE LYNN MARSHALL, PETITIONER v.

ELAINE T. MARSHALL, EXECUTRIX OF THE

ESTATE OF E. PIERCE MARSHALL

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[June 23, 2011]

JUSTICE BREYER, with whom JUSTICE GINSBURG, JUSTICE SOTOMAYOR, and JUSTICE KAGAN, join dissenting.

Pierce Marshall filed a claim in Federal Bankruptcy Court against the estate of Vickie Marshall. His claim asserted that Vickie Marshall had, through her lawyers, accused him of trying to prevent her from obtaining money that his father had wanted her to have; that her accusa ­ tions violated state defamation law; and that she conse­ quently owed Pierce Marshall damages. Vickie Marshall filed a compulsory counterclaim in which she asserted that Pierce Marshall had unlawfully interfered with her hus ­ band’s efforts to grant her an inter vivos gift and that he consequently owed her damages.

The Bankruptcy Court adjudicated the claim and the counterclaim. In doing so, the court followed statutory procedures applicable to “core” bankruptcy proceedings. See 28 U. S. C. §157(b). And ultimately the Bankruptcy Court entered judgment in favor of Vickie Marshall. The question before us is whether the Bankruptcy Court pos ­ sessed jurisdiction to adjudicate Vickie Marshall’s coun ­ terclaim. I agree with the Court that the bankruptcy statute, §157(b)(2)(C), authorizes a bankruptcy court to adjudicate the counterclaim. But I do not agree with the majority about the statute’s constitutionality. I believe the statute is consistent with the Constitution’s delegation of the “judicial Power of the United States” to the Judicial Branch of Government. Art. III, §1. Consequently, it is constitutional.

I

My disagreement with the majority’s conclusion stems in part from my disagreement about the way in which it interprets, or at least emphasizes, certain precedents. In my view, the majority overstates the current relevance of statements this Court made in an 1856 case, Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272 (1856), and it overstates the importance of an analysis that did not command a Court majority in Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U. S. 50 (1982), and that was subsequently disavowed. At the same time, I fear the Court understates the importance of a watershed opinion widely thought to demonstrate the constitutional basis for the current authority of adminis­ trative agencies to adjudicate private disputes, namely, Crowell v. Benson, 285 U. S. 22 (1932). And it fails to follow the analysis that this Court more recently has held applicable to the evaluation of claims of a kind before us here, namely, claims that a congressional delegation of adjudicatory authority violates separation-of-powers principles derived from Article III. See Thomas v. Union Carbide Agricultural Products Co., 473 U. S. 568 (1985); Commodity Futures Trading Comm’n v. Schor, 478 U. S. 833 (1986).

I shall describe these cases in some detail in order to explain why I believe we should put less weight than does the majority upon the statement in Murray’s Lessee and the analysis followed by the Northern Pipeline plurality and instead should apply the approach this Court has applied in Crowell, Thomas, and Schor. A

In Murray’s Lessee, the Court held that the Constitution permitted an executive official, through summary, nonju ­ dicial proceedings, to attach the assets of a customs col ­ lector whose account was deficient. The Court found evidence in common law of “summary method[s] for the recovery of debts due to the crown, and especially those due from receivers of the revenues,” 18 How., at 277, and it analogized the Government’s summary attachment process to the kind of self-help remedies available to pri ­ vate parties, id., at 283. In the course of its opinion, the Court wrote: “[W]e do not consider congress can either withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty; nor, on the other hand, can it bring under the judicial power a matter which, from its nature, is not a subject for judicial determination. At the same time there are matters, involving public rights, which may be presented in such form that the judicial power is capable of acting on them, and which are susceptible of judicial determination, but which congress may or may not bring within the cognizance of the courts of the United States, as it may deem proper.” Id., at 284.

The majority reads the first part of the statement’s first sentence as authoritatively defining the boundaries of Article III. Ante, at 18. I would read the statement in a less absolute way. For one thing, the statement is in effect dictum. For another, it is the remainder of the statement, announcing a distinction between “public rights” and “private rights,” that has had the more lasting impact. Later Courts have seized on that distinction when upholding non-Article III adjudication, not when striking it down. See Ex parte Bakelite Corp., 279 U. S. 438, 451–452 (1929) (Court of Customs Appeals); Williams v. United States, 289 U. S. 553, 579–580 (1933) (Court of Claims). The one exception is Northern Pipeline, where the Court struck down the Bankruptcy Act of 1978. But in that case there was no majority. And a plurality, not a majority, read the statement roughly in the way the Court does today. See 458 U. S., at 67–70.

B

At the same time, I believe the majority places insuf ­ ficient weight on Crowell, a seminal case that clarified the scope of the dictum in Murray’s Lessee. In that case, the Court considered whether Congress could grant to an Article I administrative agency the power to adjudicate an employee’s workers’ compensation claim against his em ­ ployer. The Court assumed that an Article III court would review the agency’s decision de novo in respect to ques­ tions of law but it would conduct a less searching review (looking to see only if the agency’s award was “supported by evidence in the record”) in respect to questions of fact. Crowell, 285 U. S., at 48–50. The Court pointed out that the case involved a dispute between private persons (a matter of “private rights”) and (with one exception not relevant here) it upheld Congress’ delegation of primary factfinding authority to the agency.

Justice Brandeis, dissenting (from a here-irrelvant por ­ tion of the Court’s holding), wrote that the adjudicatory scheme raised only a due process question: When does due process require decision by an Article III judge? He an ­ swered that question by finding constitutional the stat ­ ute’s delegation of adjudicatory authority to an agency. Id., at 87.

Crowell has been hailed as “the greatest of the cases validating administrative adjudication.” Bator, The Con ­ stitution as Architecture: Legislative and Administrative Courts Under Article III, 65 Ind. L. J. 233, 251 (1990). Yet, in a footnote, the majority distinguishes Crowell as a case in which the Court upheld the delegation of adjudica ­ tory authority to an administrative agency simply because the agency’s power to make the “specialized, narrowly confined factual determinations” at issue arising in a “particularized area of law,” made the agency a “true ‘adjunct’ of the District Court.” Ante, at 23, n. 6. Were Crowell’s holding as narrow as the majority suggests, one could question the validity of Congress’ delegation of authority to adjudicate disputes among private parties to other agencies such as the National Labor Relations Board, the Commodity Futures Trading Commission, the Surface Transportation Board, and the Department of Housing and Urban Development, thereby resurrecting important legal questions previously thought to have been decided. See 29 U. S. C. §160; 7 U. S. C. §18; 49 U. S. C. §10704; 42 U. S. C. §3612(b).

C

The majority, in my view, overemphasizes the preceden ­ tial effect of the plurality opinion in Northern Pipeline. Ante, at 19–21. There, the Court held unconstitutional the jurisdictional provisions of the Bankruptcy Act of 1978 granting adjudicatory authority to bankruptcy judges who lack the protections of tenure and compensation that Article III provides. Four Members of the Court wrote that Congress could grant adjudicatory authority to a nonArticle III judge only where (1) the judge sits on a “territo ­ rial cour[t]” (2) the judge conducts a “courts-martial,” or (3) the case involves a “public right,” namely, a “matter” that “at a minimum arise[s] ‘between the government and others.’ ” 458 U. S., at 64–70 (plurality opinion) (quoting Ex parte Bakelite Corp., supra, at 451). Two other Mem ­ bers of the Court, without accepting these limitations, agreed with the result because the case involved a breach ­ of-contract claim brought by the bankruptcy trustee on behalf of the bankruptcy estate against a third party who was not part of the bankruptcy proceeding, and none of the Court’s preceding cases (which, the two Members wrote, “do not admit of easy synthesis”) had “gone so far as to sanction th[is] type of adjudication.” 458 U. S., at 90–91 (Rehnquist, J. concurring in judgment).

Three years later, the Court held that Northern Pipeline “establishes only that Congress may not vest in a nonArticle III court the power to adjudicate, render final judgment, and issue binding orders in a traditional contract action arising under state law, without con ­ sent of the litigants, and subject only to ordinary ap ­ pellate review.” Thomas, 473 U. S., at 584.

D

Rather than leaning so heavily on the approach taken by the plurality in Northern Pipeline, I would look to this Court’s more recent Article III cases Thomas and Schor— cases that commanded a clear majority. In both cases the Court took a more pragmatic approach to the constitu ­ tional question. It sought to determine whether, in the particular instance, the challenged delegation of adjudica ­ tory authority posed a genuine and serious threat that one branch of Government sought to aggrandize its own con ­ stitutionally delegated authority by encroaching upon a field of authority that the Constitution assigns exclusively to another branch.

1

In Thomas, the Court focused directly upon the nature of the Article III problem, illustrating how the Court should determine whether a delegation of adjudicatory authority to a non-Article III judge violates the Constitu ­ tion. The statute in question required pesticide manufac ­ turers to submit to binding arbitration claims for compen ­ sation owed for the use by one manufacturer of the data of another to support its federal pesticide registration. After describing Northern Pipeline’s holding in the language I have set forth above, supra, at 6, the Court stated that “practical attention to substance rather than doctrinaire reliance on formal categories should inform application of Article III.” Thomas, 473 U. S., at 587 (emphasis added). It indicated that Article III’s requirements could not be “determined” by “the identity of the parties alone,” ibid., or by the “private rights”/“public rights” distinction, id., at 585–586. And it upheld the arbitration provision of the statute.

The Court pointed out that the right in question was created by a federal statute, it “represent[s] a pragmatic solution to the difficult problem of spreading [certain] costs,” and the statute “does not preclude review of the arbitration proceeding by an Article III court.” Id., at 589–592. The Court concluded: “Given the nature of the right at issue and the con ­ cerns motivating the Legislature, we do not think this system threatens the independent role of the Judici ­ ary in our constitutional scheme.” Id., at 590.

2

Most recently, in Schor, the Court described in greater detail how this Court should analyze this kind of Article III question. The question at issue in Schor involved a delegation of authority to an agency to adjudicate a coun ­ terclaim. A customer brought before the Commodity Futures Trading Commission (CFTC) a claim for repara ­ tions against his commodity futures broker. The customer noted that his brokerage account showed that he owed the broker money, but he said that the broker’s unlawful actions had produced that debit balance, and he sought damages. The broker brought a counterclaim seeking the money that the account showed the customer owed. This Court had to decide whether agency adjudication of such a counterclaim is consistent with Article III.

In doing so, the Court expressly “declined to adopt formalistic and unbending rules.” Schor, 478 U. S., at 851. Rather, it “weighed a number of factors, none of which has been deemed determinative, with an eye to the practical effect that the congressional action will have on the consti ­ tutionally assigned role of the federal judiciary.” Ibid. Those relevant factors include (1) “the origins and im ­ portance of the right to be adjudicated”; (2) “the extent to which the non-Article III forum exercises the range of ju ­ risdiction and powers normally vested only in Article III courts”; (3) the extent to which the delegation nonetheless reserves judicial power for exercise by Article III courts; (4) the presence or “absence of consent to an initial adjudi ­ cation before a non-Article III tribunal”; and (5) “the con ­ cerns that drove Congress to depart from” adjudication in an Article III court. Id., at 849, 851.

The Court added that where “private rights,” rather than “public rights” are involved, the “danger of encroach ­ ing on the judicial powers” is greater. Id., at 853–854 (internal quotation marks omitted). Thus, while nonArticle III adjudication of “private rights” is not necessar ­ ily unconstitutional, the Court’s constitutional “examina ­ tion” of such a scheme must be more “searching.” Ibid.

Applying this analysis, the Court upheld the agency’s authority to adjudicate the counterclaim. The Court con ­ ceded that the adjudication might be of a kind tradi ­ tionally decided by a court and that the rights at issue were “private,” not “public.” Id., at 853. But, the Court said, the CFTC deals only with a “ ‘particularized area of law’ ”; the decision to invoke the CFTC forum is “left en ­ tirely to the parties”; Article III courts can review the agency’s findings of fact under “the same ‘weight of the evidence’ standard sustained in Crowell” and review its “legal determinations . . . de novo”; and the agency’s “coun ­ terclaim jurisdiction” was necessary to make “workable” a “reparations procedure,” which constitutes an important part of a congressionally enacted “regulatory scheme.” Id., at 852–856. The Court concluded that for these and other reasons “the magnitude of any intrusion on the Judicial Branch can only be termed de minimis.” Id., at 856.

II

A

This case law, as applied in Thomas and Schor, requires us to determine pragmatically whether a congressional delegation of adjudicatory authority to a non-Article III judge violates the separation-of-powers principles inherent in Article III. That is to say, we must determine through an examination of certain relevant factors whether that delegation constitutes a significant encroachment by the Legislative or Executive Branches of Government upon the realm of authority that Article III reserves for exercise by the Judicial Branch of Government. Those factors include (1) the nature of the claim to be adjudicated; (2) the nature of the non-Article III tribunal; (3) the extent to which Article III courts exercise control over the proceed ­ ing; (4) the presence or absence of the parties’ consent; and (5) the nature and importance of the legislative purpose served by the grant of adjudicatory authority to a tribunal with judges who lack Article III’s tenure and compensa ­ tion protections. The presence of “private rights” does not automatically determine the outcome of the question but requires a more “searching” examination of the relevant factors. Schor, supra, at 854.

Insofar as the majority would apply more formal stan ­ dards, it simply disregards recent, controlling precedent. Thomas, supra, at 587 (“[P]ractical attention to substance rather than doctrinaire reliance on formal categories should inform application of Article III”); Schor, supra, at 851 (“[T]he Court has declined to adopt formalistic and unbending rules” for deciding Article III cases). B

Applying Schor’s approach here, I conclude that the delegation of adjudicatory authority before us is consti ­ tutional. A grant of authority to a bankruptcy court to adjudicate compulsory counterclaims does not violate any constitutional separation-of-powers principle related to Article III.

First, I concede that the nature of the claim to be adjudicated argues against my conclusion. Vickie Marshall’s counterclaim—a kind of tort suit—resembles “a suit at the common law.” Murray’s Lessee, 18 How., at 284. Although not determinative of the question, see Schor, 478 U. S., at 853, a delegation of authority to a non-Article III judge to adjudicate a claim of that kind poses a heightened risk of encroachment on the Federal Judiciary, id., at 854.

At the same time the significance of this factor is miti ­ gated here by the fact that bankruptcy courts often decide claims that similarly resemble various common-law ac ­ tions. Suppose, for example, that ownership of 40 acres of land in the bankruptcy debtor’s possession is disputed by a creditor. If that creditor brings a claim in the bankruptcy court, resolution of that dispute requires the bankruptcy court to apply the same state property law that would govern in a state court proceeding. This kind of dispute arises with regularity in bankruptcy proceedings.

Of course, in this instance the state-law question is embedded in a debtor’s counterclaim, not a creditor’s claim. But the counterclaim is “compulsory.” It “arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim.” Fed. Rule Civ. Proc. 13(a); Fed. Rule Bkrtcy. Proc. 7013. Thus, resolution of the counterclaim will often turn on facts identical to, or at least related to, those at issue in a creditor’s claim that is undisputedly proper for the bankruptcy court to decide.

Second, the nature of the non-Article III tribunal argues in favor of constitutionality. That is because the tribunal is made up of judges who enjoy considerable protection from improper political influence. Unlike the 1978 Act which provided for the appointment of bankruptcy judges by the President with the advice and consent of the Senate, 28 U. S. C. §152 (1976 ed., Supp. IV), current law provides that the federal courts of appeals appoint fed ­ eral bankruptcy judges, §152(a)(1) (2006 ed.). Bankruptcy judges are removable by the circuit judicial counsel (made up of federal court of appeals and district court judges) and only for cause. §152(e). Their salaries are pegged to those of federal district court judges, §153(a), and the cost of their courthouses and other work-related expenses are paid by the Judiciary, §156. Thus, although Congress technically exercised its Article I power when it created bankruptcy courts, functionally, bankruptcy judges can be compared to magistrate judges, law clerks, and the Judi ­ ciary’s administrative officials, whose lack of Article III tenure and compensation protections do not endanger the independence of the Judicial Branch.

Third, the control exercised by Article III judges over bankruptcy proceedings argues in favor of constitutional ­ ity. Article III judges control and supervise the bank ­ ruptcy court’s determinations—at least to the same degree that Article III judges supervised the agency’s determina ­ tions in Crowell, if not more so. Any party may appeal those determinations to the federal district court, where the federal judge will review all determinations of fact for clear error and will review all determinations of law de novo. Fed. Rule Bkrtcy. Proc. 8013; 10 Collier on Bank ­ ruptcy ¶8013.04 (16th ed. 2011). But for the here ­ irrelevant matter of what Crowell considered to be special “constitutional” facts, the standard of review for factual findings here (“clearly erroneous”) is more stringent than the standard at issue in Crowell (whether the agency’s factfinding was “supported by evidence in the record”). 285 U. S., at 48; see Dickinson v. Zurko, 527 U. S. 150, 152, 153 (1999) (“unsupported by substantial evidence” more deferential than “clearly erroneous” (internal quota­ tion marks omitted)). And, as Crowell noted, “there is no requirement that, in order to maintain the essential at ­ tributes of the judicial power, all determinations of fact in constitutional courts shall be made by judges.” 285 U. S., at 51.

Moreover, in one important respect Article III judges maintain greater control over the bankruptcy court pro ­ ceedings at issue here than they did over the relevant proceedings in any of the previous cases in which this Court has upheld a delegation of adjudicatory power. The District Court here may “withdraw, in whole or in part, any case or proceeding referred [to the Bankruptcy Court] . . . on its own motion or on timely motion of any party, for cause shown.” 28 U. S. C. §157(d); cf. Northern Pipeline, 458 U. S., at 80, n. 31 (plurality opinion) (contrasting pre-1978 law where “power to withdraw the case from the [bankruptcy] referee” gave district courts “control” over case with the unconstitutional 1978 statute, which provided no such district court authority).

Fourth, the fact that the parties have consented to Bank ­ ruptcy Court jurisdiction argues in favor of constitutional ­ ity, and strongly so. Pierce Marshall, the counterclaim defendant, is not a stranger to the litigation, forced to appear in Bankruptcy Court against his will. Cf. id., at 91 (Rehnquist, J., concurring in judgment) (suit was litigated in Bankruptcy Court “over [the defendant’s] objection”). Rather, he appeared voluntarily in Bankruptcy Court as one of Vickie Marshall’s creditors, seeking a favorable resolution of his claim against Vickie Marshall to the detriment of her other creditors. He need not have filed a claim, perhaps not even at the cost of bringing it in the future, for he says his claim is “nondischargeable,” in which case he could have litigated it in a state or federal court after distribution. See 11 U. S. C. §523(a)(6). Thus, Pierce Marshall likely had “an alternative forum to the bankruptcy court in which to pursue [his] clai[m].” Granfinanciera, S. A. v. Nordberg, 492 U. S. 33, 59, n. 14 (1989).

The Court has held, in a highly analogous context, that this type of consent argues strongly in favor of using ordi ­ nary bankruptcy court proceedings. In Granfinanciera, the Court held that when a bankruptcy trustee seeks to void a transfer of assets from the debtor to an individual on the ground that the transfer to that individual consti ­ tutes an unlawful “preference,” the question of whether the individual has a right to a jury trial “depends upon whether the creditor has submitted a claim against the estate.” Id., at 58. The following year, in Langenkamp v. Culp, 498 U. S. 42 (1990) (per curiam), the Court empha ­ sized that when the individual files a claim against the estate, that individual has “trigger[ed] the process of ‘allowance and disallowance of claims,’ thereby subjecting himself to the bank ­ ruptcy court’s equitable power. If the creditor is met, in turn, with a preference action from the trustee, that action becomes part of the claims-allowance proc ­ ess which is triable only in equity. In other words, the creditor’s claim and the ensuing preference action by the trustee become integral to the restructuring of the debtor-creditor relationship through the bankruptcy court’s equity jurisdiction.” Id., at 44 (quoting Granfinanciera, 492 U. S., at 58; citations omitted). As we have recognized, the jury trial question and the Article III question are highly analogous. See id., at 52– 53. And to that extent, Granfinanciera’s and Langenkamp’s basic reasoning and conclusion apply here: Even when private rights are at issue, non-Article III adjudica ­ tion may be appropriate when both parties consent. Cf. Northern Pipeline, supra, at 80, n. 31 (plurality opinion) (noting the importance of consent to bankruptcy juris ­ diction). See also Schor, 478 U. S., at 849 (“[A]bsence of consent to an initial adjudication before a non-Article III tribunal was relied on [in Northern Pipeline] as a signifi ­ cant factor in determining that Article III forbade such adjudication”). The majority argues that Pierce Marshall “did not truly consent” to bankruptcy jurisdiction, ante, at 27–28, but filing a proof of claim was sufficient in Langenkamp and Granfinanciera, and there is no relevant distinction between the claims filed in those cases and the claim filed here.

Fifth, the nature and importance of the legislative purpose served by the grant of adjudicatory authority to bankruptcy tribunals argues strongly in favor of constitu ­ tionality. Congress’ delegation of adjudicatory powers over counterclaims asserted against bankruptcy claimants constitutes an important means of securing a constitu ­ tionally authorized end. Article I, §8, of the Constitution explicitly grants Congress the “Power To . . . establish . . . uniform Laws on the subject of Bankruptcies throughout the United States.” James Madison wrote in the Federal ­ ist Papers that the “power of establishing uniform laws of bankruptcy is so intimately connected with the regulation of com ­ merce, and will prevent so many frauds where the parties or their property may lie or be removed into different States, that the expediency of it seems not likely to be drawn into question.” The Federalist No. 42, p. 271 (C. Rossiter ed. 1961).

Congress established the first Bankruptcy Act in 1800. 2 Stat. 19. From the beginning, the “core” of federal bank ­ ruptcy proceedings has been “the restructuring of debtor ­ creditor relations.” Northern Pipeline, supra, at 71 (plu­ rality opinion). And, to be effective, a single tribunal must have broad authority to restructure those relations, “hav ­ ing jurisdiction of the parties to controversies brought before them,” “decid[ing] all matters in dispute,” and “decree[ing] complete relief.” Katchen v. Landy, 382 U. S. 323, 335 (1966) (internal quotation marks omitted).

The restructuring process requires a creditor to file a proof of claim in the bankruptcy court. 11 U. S. C. §501; Fed. Rule Bkrtcy. Proc. 3002(a). In doing so, the creditor “triggers the process of ‘allowance and disallowance of claims,’ thereby subjecting himself to the bankruptcy court’s equitable power.” Langenkamp, supra, at 44 (quot ­ ing Granfinanciera, supra, at 58). By filing a proof of claim, the creditor agrees to the bankruptcy court’s resolu ­ tion of that claim, and if the creditor wins, the creditor will receive a share of the distribution of the bankruptcy es ­ tate. When the bankruptcy estate has a related claim against that creditor, that counterclaim may offset the creditor’s claim, or even yield additional damages that augment the estate and may be distributed to the other creditors.

The consequent importance to the total bankruptcy scheme of permitting the trustee in bankruptcy to assert counterclaims against claimants, and resolving those counterclaims in a bankruptcy court, is reflected in the fact that Congress included “counterclaims by the estate against persons filing claims against the estate” on its list of “[c]ore proceedings.” 28 U. S. C. §157(b)(2)(C). And it explains the difference, reflected in this Court’s opinions, between a claimant’s and a nonclaimant’s constitutional right to a jury trial. Compare Granfinanciera, supra, at 58–59 (“Because petitioners . . . have not filed claims against the estate” they retain “their Seventh Amendment right to a trial by jury”), with Langenkamp, supra, at 45 (“Respondents filed claims against the bankruptcy estate” and “[c]onsequently, they were not entitled to a jury trial”).

Consequently a bankruptcy court’s determination of such matters has more than “some bearing on a bank ­ ruptcy case.” Ante, at 34 (emphasis deleted). It plays a critical role in Congress’ constitutionally based effort to create an efficient, effective federal bankruptcy system. At the least, that is what Congress concluded. We owe deference to that determination, which shows the absence of any legislative or executive motive, intent, purpose, or desire to encroach upon areas that Article III reserves to judges to whom it grants tenure and compensation protections.

Considering these factors together, I conclude that, as in Schor, “the magnitude of any intrusion on the Judicial Branch can only be termed de minimis.” 478 U. S., at 856. I would similarly find the statute before us constitutional.

III

The majority predicts that as a “practical matter” to ­ day’s decision “does not change all that much.” Ante, at 36–37. But I doubt that is so. Consider a typical case: A tenant files for bankruptcy. The landlord files a claim for unpaid rent. The tenant asserts a counterclaim for damages suffered by the landlord’s (1) failing to fulfill his obligations as lessor, and (2) improperly recovering pos ­ session of the premises by misrepresenting the facts in housing court. (These are close to the facts presented in In re Beugen, 81 B. R. 994 (Bkrtcy. Ct. ND Cal. 1988).) This state-law counterclaim does not “ste[m] from the bankruptcy itself,” ante, at 34, it would not “necessarily be resolved in the claims allowance process,” ibid., and it would require the debtor to prove damages suffered by the lessor’s failures, the extent to which the landlord’s repre ­ sentations to the housing court were untrue, and damages suffered by improper recovery of possession of the prem ­ ises, cf. ante, at 33-33. Thus, under the majority’s holding, the federal district judge, not the bankruptcy judge, would have to hear and resolve the counterclaim. Why is that a problem? Because these types of disputes arise in bankruptcy court with some frequency. See, e.g., In re CBI Holding Co., 529 F. 3d 432 (CA2 2008) (state ­ law claims and counterclaims); In re Winstar Communications, Inc., 348 B. R. 234 (Bkrtcy. Ct. Del. 2005) (same); In re Ascher, 128 B. R. 639 (Bkrtcy. Ct. ND Ill. 1991) (same); In re Sun West Distributors, Inc., 69 B. R. 861 (Bkrtcy. Ct. SD Cal. 1987) (same). Because the volume of bankruptcy cases is staggering, involving almost 1.6 mil ­ lion filings last year, compared to a federal district court docket of around 280,000 civil cases and 78,000 criminal cases. Administrative Office of the United States Courts, J. Duff, Judicial Business of the United States Courts: Annual Report of the Director 14 (2010). Because unlike the “related” non-core state law claims that bankruptcy courts must abstain from hearing, see ante, at 36, compul ­ sory counterclaims involve the same factual disputes as the claims that may be finally adjudicated by the bank ­ ruptcy courts. Because under these circumstances, a constitutionally required game of jurisdictional ping-pong between courts would lead to inefficiency, increased cost, delay, and needless additional suffering among those faced with bankruptcy.

For these reasons, with respect, I dissent.

Print this transcript Transcript: 

ORAL ARGUMENT OF KENT L. RICHLAND ON BEHALF OF PETITIONER

Chief Justice John G. Roberts: We will now hear argument in Case 10-179, Stern v. Marshall.

Mr. Richland.

Mr. Richland: Mr. Chief Justice, and may it please the Court:

Pierce Marshall filed a claim in Vickie Marshall's bankruptcy case.

He alleged he was damaged because she falsely accused him of cheating her out of money that her late husband intended to give her.

In order to preserve its claim against him, the bankruptcy estate had no choice but then to file its counterclaim in the Bankruptcy Court, alleging that those statements were in fact true, and that far from Pierce being entitled to money from the estate, he owed money to the bankruptcy estate.

This Court's cases established that the Bankruptcy Court was constitutionally authorized to decide that entire dispute.

Congress drafted the bankruptcy statutes--

Justice Sonia Sotomayor: Can you tell me why?

Mr. Richland: --Excuse me, Your Honor?

I'm sorry.

Justice Sonia Sotomayor: What's the authority at all for a bankruptcy court to adjudicate proof of claims, without violating Article III?

I don't think we have ever had a case that's actually said that.

Mr. Richland: This Court has never approached that issue directly.

Of course--

Justice Sonia Sotomayor: So what's--

Mr. Richland: --Excuse me, Your Honor.

Justice Sonia Sotomayor: --So what's the constitutional basis?

Mr. Richland: Well, of course, it need not reach that in this case, because the court below and the Respondents assume for te purposes of this case that in fact there was authority for the bankruptcy--

Justice Sonia Sotomayor: I'm not sure how that helps.

If there's no jurisdiction for the Bankruptcy Court to adjudicate proof of claims, then how can it adjudicate counterclaims?

Don't both fall if there's an Article III violation?

Mr. Richland: --Well, I don't think so, Your Honor, because Article III of course is not jurisdictional in the sense that we think of basic fundamental jurisdiction, subject matter jurisdiction.

It can be waived, of course.

But beyond that, I think that Marathon, as I said, assumes that there is Article III authority to adjudicate the proof of claim.

Justice Sonia Sotomayor: So -- answer the question.

Don't assume.

Mr. Richland: Okay.

And -- well, the answer is that under -- under the various theories that this Court has put forth, there is a basis for the Bankruptcy Court to adjudicate a proof of claim.

One theory, of course, is the public rights theory, and in Granfinanciera this Court established that the -- the public rights theory was broader than just the kind of situation where the government was a party, and it said that -- that it -- public rights are defined as whether Congress acting under Article I has created a seemingly private right that is so closely integrated into a public regulatory scheme as to be a matter appropriate for agency resolution with limited involvement by the Article III judiciary.

Justice Samuel Alito: The claim here was not one that was created by Congress, though, was it?

Mr. Richland: That's -- that's correct, but this Court has never held that in fact the claim had to be created by -- literally created by Congress.

What this Court has always talked about is, is -- is the claim one that Congress has established as being applicable within the system, but that may be based on a State law claim.

For example, when this Court analyzed the claims which were at issue in Granfinanciera, it looked at the fact that they were fundamental common law claims.

It didn't depend on the fact that they were Federal claims.

The same thing was -- is true in the way that the -- that this Court analyzed the -- the claim in -- in Marathon itself.

It made the determination that because this was, I think the way Justice Rehnquist stated it was: This is the stuff that would have been adjudicated at common law in Westminster in 1789.

So it was not the Federal or State nature of the claim, it was the fact that these were common law claims that made it important.

Justice Elena Kagan: Are there any limits, Mr. Richland?

Suppose that Congress had authorized bankruptcy courts to decide contract disputes between two creditors in a bankruptcy proceeding.

Would that be all right?

Mr. Richland: I think that there are limits, and they must be related to the purpose of bankruptcy.

I think that, that a -- that sort of thing would be related to perhaps, within the "related to" jurisdiction of bankruptcy, and that would fall within the problems identified in Granfinanciera, for example.

That would be beyond the scope of what could be adjudicated in bankruptcy.

But what we are talking about here is claims and counterclaims that are at the essence of what bankruptcy courts do.

The bankruptcy system, of course, is set up in order to adjudicate claims to a limited amount of money, and in order to do that in an efficient manner, in a manner that will not utilize the entire amount of the -- the estate in the adjudication process, it set up the bankruptcy courts.

And so they are set up in order to be efficient, effective, and as soon as, of course, as we get an Article III court involved, that really does place some brakes on the efficiency.

It becomes much more costly.

Justice Sonia Sotomayor: Can the Bankruptcy Court adjudicate permissive counterclaims?

Mr. Richland: Well--

Justice Sonia Sotomayor: And if you posit a no, what's the limiting principle?

Mr. Richland: --Well, certainly the statute -- 157(b)(3)-2 -- does not distinguish between compulsory and permissive counterclaims, and it's also true that this Court's authority in Granfinanciera, in Langenkamp and in Katchen.

The rationale of those cases is broad enough to encompass permissive counterclaims, but this Court need not reach that issue in this case, because here we do have -- what both the court of appeals below and what seems to have been conceded by Respondents is, indeed, a compulsory counterclaim.

Justice Ruth Bader Ginsburg: Mr. Richland, isn't there this difference: Just to take ordinary civil procedure, compulsory counterclaim doesn't have to satisfy any jurisdictional requirements, because it comes in under the wing of the main claim, but a permissive counterclaim has to independently satisfy jurisdictional requirements.

So that could be a reason, even though the Bankruptcy Code just says counterclaim, to distinguish the two.

If there's an authority to deal with the claim, then there's authority to deal with the counterclaim; but if it's a permissive counterclaim, if it's not based on the same transaction or premise, then it would have to be a self-standing claim.

But, as you -- as you have said, this case does present what the parties have agreed is a compulsory counterclaim.

Mr. Richland: Well, I -- I think that -- that is an excellent justification for why one might want to make this a very narrow determination in this case.

In fact, Justice Rehnquist in his concurring opinion in Marathon said that this is an area which is very touchy and difficult and complex, and it is one where we particularly should not, as a court, go beyond the facts of the individual case and what must be decided for this case.

Of course, the other thing about compulsory counterclaims and what makes it more applicable in this kind of situation in an Article III setting is that, according to the Schor analysis, what we are talking about is how much of an intrusion on the Article III process are we talking about.

And if we assume, as appears to have been assumed here, that the claim itself may be determined by the Bankruptcy Court, then the net intrusion by determining a counterclaim, a compulsory counterclaim, is much, much smaller, because there almost inevitably will be overlap between what must be decided by the Bankruptcy Court and what -- on the claim, and what must be on the counterclaim.

Justice Anthony Kennedy: Is there any authority -- this began as a motion for nondischargeability?

Mr. Richland: Yes.

Justice Anthony Kennedy: Is there -- is there -- are there any cases in the Federal courts which tell us that a motion for nondischargeability does or does not require the pleading of a counterclaim?

Mr. Richland: I don't believe so, Justice Kennedy.

But in fact, what happened here was something much, much more than just a motion, a request for determination of nondischargeability, because one month after that was filed, the actual proof of claim itself was filed.

And all the courts below have uniformly concluded that when that additional step is taken, it could have no purpose other than to present the claim -- beyond just the question of dischargeability, present the question of liquidation of the claim to the Bankruptcy Court.

Justice Ruth Bader Ginsburg: And the counterclaim came at what point?

After the proof of claim was filed?

Mr. Richland: That is correct.

Some weeks after the proof of claim was filed, the counterclaim was filed.

The objections and counterclaim was filed.

The -- the statutory structure here is something that -- it has been suggested that this is a question of statutory interpretation and that in fact the statute does not provide for this kind of treatment, that in fact there is a two-step process by which one determines whether a Bankruptcy Court can finally decide a counterclaim.

But I think that really is belied by the plain language of the statute as well as the statutory structure.

Of course, the starting point is 157(b)(2)(C), which very clearly and straightforwardly states that core claims include counterclaims by the estate against persons filing claims against the estate.

Justice Samuel Alito: What do you make of the fact that -- that (b)(2) says core proceedings include, but are not limited to, the matters that are listed after that?

How would a court go about deciding whether something that is not specifically mentioned constitutes a core proceeding except by looking back to (b)(1), which is what the court of appeals did?

Mr. Richland: Well, I think that when -- a court would indeed, if one were looking at something that was outside the scope of the explicitly mentioned categories from (B) to (N) in 157(b)(2), one would in fact look beyond the words of (A) and (O) -- those are the two catch-all provisions -- and one would look to the usual, normal principles of statutory construction to determine what fit within them.

But 152 -- 157(b)(2)(C) is very straightforward.

It does not require any additional interpretation.

There is -- a counterclaim against a person filing a proof of claim is just, on its face, something that is unambiguous.

And the fact that there are more ambiguous categories there would probably require a court to go beyond, you know, the four corners of the statute and look to the normal kinds of principles we use in determining what statutes mean.

We would look at the categories that were actually included.

We would see, is this something that is similar, does it fall within that category, and so on.

Justice Samuel Alito: What do you think is the principle that defines a core proceeding?

Some of these specifically enumerated items are very -- potentially very broad.

(A),

"matters concerning the administration of the estate. "

Mr. Richland: That's right.

The -- (A) and (O) are very broad.

And so what -- that category, what those two categories would have to be informed by and are informed by are the principles of statutory construction that are normally used.

And included among those, we would contend, would be looking at the words of the statute that talk about, does this arise under the Bankruptcy Code or arise in a bankruptcy case.

So for those particular categories, the lower courts have been comfortable with the idea that we look at the language of the statute, apply those words and use those as limitations, but with respect to the specific categories from (B) to (N), the courts have uniformly indicated that those categories do not require further interpretation, that they are straightforward and they constitute core proceedings on their face.

I think the -- with respect to the question that you asked, Justice Sotomayor, and the whole issue of whether a matter is under -- may pass muster under Article III is a very easy one in this case.

And the reason for that is that if we look to Schor and Schor's Article III analysis, we can see that it really divides into two parts.

Part 1 is, was there some -- is the Article III -- to the extent the Article III right is a personal one, that is to the extent that it guarantees someone a -- a decisionmaker who is not going to be affected by the political branches of the government or by the winds of politics, that's something that's waiveable.

And in fact--

Justice Antonin Scalia: But say you waive it when -- when, in order to protect yourself for a debt that is owed to you, you make a claim in a bankruptcy proceeding.

We do have a doctrine that you cannot -- you cannot condition a Federal right upon the waiver of constitutional protections, and that seems to me what you're saying here: If you want to get paid by the bankrupt estate, you have to waive your -- your right to a -- to a jury trial.

Mr. Richland: --Well, Justice Scalia, that is precisely what this Court addressed in footnote 14 in Granfinanciera.

It explained that, yes, waiver under many circumstances and -- under the Schor case, for example, waiver involves a choice between two equal or optional options.

However, I should point out: In this case, there was another option.

There was a dischargeability complaint filed, and in fact, the choice was made not to pursue that but instead to pursue the proof of claim.

There was already a State court suit on file and, instead of requesting a stay, a relief from the bankruptcy stay, the proof of claim was filed.

In general, however, the Alexander v. Hillman principle, which is also discussed in footnote 14, is what applies in this -- in this circumstance.

Justice Antonin Scalia: Would it have been normal for the bankruptcy judge to lift the stay with respect to a claim that could be presented in the bankruptcy proceeding?

Mr. Richland: Well, the -- certainly the -- the principles of -- of permissive abstention, for example, encourage, if in fact comity is to be respected and if there is another suit pending elsewhere, that bankruptcy courts will permit the suit to proceed in that jurisdiction, so that that does in fact occur.

But it was never even tried here, and that's -- that's really would be the point.

I would like to reserve the rest of my time, but I would like to make one final point before I sit down initially, and that is, if this Court should decide to reverse, that as we requested in our -- in our reply brief and as we requested in our relief on our cross-appeal, we would request that -- that this case be sent back to the district court, because it was the district court that in the first instance applied the improper standard, and we think that would be an appropriate way of -- of taking care of this case in this instance.

Chief Justice John G. Roberts: Thank you, counsel.

Mr. Stewart.

ORAL ARGUMENT OF MALCOLM L. STEWART, ON BEHALF OF THE UNITED STATES, AS AMICUS CURIAE, SUPPORTING PETITIONER

Mr. Stewart: Mr. Chief Justice, and may it please the Court:

I -- I would like to begin by addressing Justice Scalia's question about the -- what is sometimes referred to as the unconstitutional conditions doctrine, whether its's appropriate to place a person in a position where he has to make a choice whether to assert one of two constitutional rights.

And although there is in many contexts reluctance to put an individual to that choice, there is not an inflexible rule against it.

And to take one example, a criminal defendant has an absolute constitutional right to testify in his own defense.

He also has an absolute constitutional right to resist compelled testimony in which the prosecution will ask him hostile questions, but he doesn't have a constitutional right to do both.

If he chooses -- chooses to take the stand and testify, he may be cross-examined at trial by the prosecution, and he has no residual Fifth Amendment right to resist the hostile--

Chief Justice John G. Roberts: This is a little -- it's a little different when you're talking about the right to have a -- a decision before an Article III tribunal.

It seems a bit more fundamental than the examples you're giving.

Mr. Stewart: --Well, I don't know that it's more fundamental than the right not to be questioned against one's will in a criminal proceeding--

Chief Justice John G. Roberts: Well, not -- not fundamental in the sense of is it important or not.

I guess that -- "fundamental" is not the right word.

Maybe "structural" or -- or something like that.

It's sort of the whole basis for the decision that's going to be made.

Mr. Stewart: --I guess there are two potential objections to the use of a non-Article III judge, and one of them would be, as you say, structural, that is, one of the objections that is sometimes made to the use of non-Article III adjudicators is that if Congress can parcel out part of the work of the judiciary to other units, the stature of the Judicial Branch will be diminished.

I think this particular statute doesn't create that risk, because the use of bankruptcy judges is entirely under the control of the district judges.

That is, the district court decides whether to refer a bankruptcy case to the bankruptcy judge, the district court can withdraw the referral with respect to particular proceedings.

Chief Justice John G. Roberts: Well, that just means that the district court is acting in concert with Congress to take action that undermines the long-term institutional and constitutional basis of the judiciary, and the districts courts have very different reasons and incentives to do that.

That doesn't mean that all bets are off, and just because they're involved in the process it's not a concern.

Mr. Stewart: Well, to the extent that the concern is with fairness to individual litigants, that is, the idea that the Respondent in this case has a right to an Article III tribunal and should not likely be held to have waived it, I think that a person who seeks affirmative relief from a court doesn't waive all his constitutional rights, to be sure, but should ordinarily be taken to accept the consequences that ordinarily follow from a request for judicial relief.

And as a matter of history and tradition, one of the consequences that follows from the assertion of an affirmative claim is subjection to counterclaims, and especially compulsory counterclaims.

Justice Antonin Scalia: That can't be right.

You -- you -- you can take all sorts of matters that belong in Article III courts, and so long as you place them in some other tribunal where somebody is coerced into coming in, supposedly voluntarily, it's all okay.

I mean, that's -- that's not an adequate protection.

Mr. Stewart: Well, the Court has applied this basic principle in a number of contexts.

That is, in McElrath v. United States, which is cited in the Petitioner's brief, the plaintiff filed suit against the United States in the Court of Claims and the United States then asserted counterclaims against him, and the original plaintiff said that he had a -- a right to jury trial under the Seventh Amendment.

Justice Anthony Kennedy: Well, that's because there's a basic sovereign immunity.

The government doesn't have to be sued at all.

Mr. Stewart: The government doesn't have--

Justice Anthony Kennedy: --so it can -- so it can make conditions, but that's not this case.

Mr. Stewart: --The government can make conditions, but -- but the point was the plaintiff in that situation had no alternative forum to which he could attempt to obtain a recovery from the government.

Justice Anthony Kennedy: But that's because of the limitation of sovereign immunity, and you don't -- and you don't have that analogue here.

Mr. Stewart: Another example would be Adam v. Saenger, which is also cited in the Petitioner's brief, in which I believe it was a Texas plaintiff filed suit in the California State courts, and the California defendant asserted a -- a cross-complaint, basically a counterclaim, against him, and the Texas plaintiff objected to the California court's assertion of personal jurisdiction.

And this Court said: By seeking affirmative relief from the California court, you have subjected yourself to the jurisdiction of that court for all purposes which justice requires.

And it said the State can make that the price it pays for seeking affirmative judicial relief in its courts.

Now, it may have--

Justice Antonin Scalia: A State can do that, but can the Federal Government make it the price that you pay for -- for going into a non-Article III tribunal?

Mr. Stewart: --Look--

Justice Antonin Scalia: It's a different situation, it seems.

Mr. Stewart: --Let me step back a second and address the questions that were posed by Justices Sotomayor and Alito at the -- at the beginning about the initial authority of the bankruptcy judge to adjudicate the claim brought against the estate, because I agree with my colleague's answer that this is a question, and with Justice Sotomayor, that this is a question that this Court hasn't squarely resolved.

Now, it's true that the initial, the State law claim, the defamation claim that was made the basis for the claim against the estate, was a State law cause of action.

But as this Court said in Katchen v. Landy, the effect of the commencement of the bankruptcy case is to convert the claimant's potential legal claim against the defendant into an equitable claim against the estate.

And Respondent's equitable claim against the estate seeking a share of the assets was a claim created by Federal law.

That is, it's true that in the course of deciding whether Respondent was ultimately entitled to a share of the estate, the Bankruptcy Court would have been required to adjudicate State law questions and conduct something like the same proceedings that could have arisen in a State case, but actually obtaining a share of the bankruptcy estate requires more than that there be a valid debt.

The whole point of bankruptcy is to deal with situations in which the debtor doesn't have enough assets to go around, and so the Bankruptcy Court will have to not only determine whether a valid debt exists, but what are the relative priorities of various creditors, what is the appropriate pro rata share for a particular claimant, and all of that is to be resolved under Federal law.

So, when Respondent filed a proof of claim in the bankruptcy case, it was asserting a Federal right cognizable under the Bankruptcy Code.

And again, none of the -- none of the analogues that I have identified are precisely analogous to this one, but I think it's noteworthy that Respondent cites no contrary authority from this Court.

That is, Respondent cites no case in which a claimant has invoked the authority of a particular court and has asked for affirmative relief, and this Court has held that it nevertheless had a constitutional entitlement to be free of counterclaims.

And that seems particularly true of compulsory counterclaims, both because they are counterclaims that our legal system affirmatively encourages to be brought within the same proceeding and for the reason that Justice Ginsburg said, that in an analogous area of the law when we ask whether there is Federal court jurisdiction over a counterclaim to begin with, if the counterclaim is compulsory, there need be no independent basis for jurisdiction.

I would like to address quickly the statutory question, and the relevant provisions begin at page 1A of the government's brief.

Justice Ruth Bader Ginsburg: Will you include in that this 157(b)(5), because this whole thing would be a futile exercise if the tort claim comes -- comes out of the bankruptcy judge's--

Mr. Stewart: I think the 157(b)(5) is in our view not jurisdictional.

It deals with the -- the respective authorities of the bankruptcy judge and the district court within the bankruptcy case, but it doesn't go to the question of what the -- the Federal courts can adjudicate and the limitations on Bankruptcy Court authority are waiveable and subject to consent.

The court of appeals did not address the personal injury aspect of the case.

There is a -- a lively dispute between the parties as to whether that objection to Bankruptcy Court adjudication was properly preserved, and that would be open to the court of appeals on remand if this court were to reverse.

On page 1A--

Justice Elena Kagan: Mr. Stewart, do -- do you think that we should resolve the constitutional question if there's some significant possibility that it wouldn't be necessary because the claims would be found to fit into (b)(5)?

Mr. Stewart: --I think -- yes, I mean, this could have been a prudential factor that might have persuaded the Court not to grant certiorari in the first instance, but the Court has obviously identified this as an issue that warrants the expenditure of its resources; and we think that the -- there is no jurisdictional impediment to a decision in this case.

Justice Ruth Bader Ginsburg: --Does the government have a position on what the answer would be vis a vis -- because that's an open question?

But does the government have a position on whether these kinds of claims would have to be heard by an Article III judge?

Mr. Stewart: Again, we don't have a position with respect to the defamation claim.

That is, defamation claims may be personal injury claims in many contexts, but in this statute it's linked with wrongful death, which seems to -- to cut the other way.

The actual counterclaim was not a defamation claim; it was a tortious interference claim; and we don't think that would be a personal injury claim.

With respect to (b)(1), it says bankruptcy -- I see my time is up.

Thank you.

Chief Justice John G. Roberts: Thank you, counsel.

Mr. Englert.

ORAL ARGUMENT OF ROY T. ENGLERT, JR., ON BEHALF OF RESPONDENT

Roy T Englert Jr: Mr. Chief Justice, and may it please the Court:

There are three possible grounds for affirmance of the Ninth Circuit in this case, one constitutional and two statutory; and the 157(b)(5) ground which was preserved below received some discussion at the very end of Mr. Stewart's argument.

But I would like to start the meat of my argument just the way Mr. Stewart started his argument, which is by addressing Justice Scalia's question; and like Mr. Richland, I would like to talk about footnote 14 of the Granfinanciera opinion.

Now, Granfinanciera had to distinguish Schor, which is the only case in which this Court has ever said a State law claim could be a public right so that it can be adjudicated by a non-Article III forum and not subject to the Seventh Amendment.

And Schor rested on a consent and waiver rationale and on a structural rationale that an alternative Article III forum was made available by Congress for everyone in Mr. Schor's position.

In distinguishing Schor, this Court said in footnote 14:

"Parallel reasoning is unavailable in the context of bankruptcy proceedings because creditors lack an alternative forum to the Bankruptcy Court in which to pursue their claims. "

So with respect, this Court has already answered the question Justice Scalia posed by saying a creditor may not be put to that choice.

Now, the--

Justice Sonia Sotomayor: Counselor, that sort of begs the question, because I think what I haven't unpackaged -- and I want you to unpackage it with me -- you are obviously not deprived of a State or Federal trial forum to decide your claim.

What you're -- what you're deprived of -- you can get your judgment.

No one's telling you, you can't go to those courts and get a declaration of your rights.

What you're being told is you can't get paid on it.

But that happens all of the time, either by the vagrancies of the fact that a debtor goes bankrupt and doesn't file in the Bankruptcy Court or does file and there's been a discharge.

What you haven't said to me is what entitles you, outside of equity, and what stops either a State court or a Federal -- a State legislature or a congressional legislature, from saying when someone is in bankruptcy this is the res and these are the people who are entitled to it.

It's a separate claim.

It's not the State law claim.

It may be measured by State law entitlement, but it's a separate claim.

Why isn't it just a separate claim?

Roy T Englert Jr: --Okay, Justice Sotomayor, in attempting to answer your question I would like to distinguish sharply between a claim of the creditor against the res--

Justice Sonia Sotomayor: But that's what you have to become to make that claim, meaning you would need to adjudicate your State law entitlement.

You get a judgment saying she defamed you.

Then what do you do with that judgment?

Roy T Englert Jr: --That judgment then is covered by the priority scheme of Federal bankruptcy laws which are passed pursuant to congressional authority -- constitutional authority in Article I, Section 8, clause 4, which is why, in answer to the question Your Honor asked first of Mr. Richland, although the Court has never squarely addressed it, it's broadly accepted that there is no problem with adjudicating what would otherwise be State law claims by the creditor against the debtor in bankruptcy.

It's an entirely different subject when the debtor tries to bring a claim against the creditor.

That's what Marathon addressed; that's what Granfinanciera addressed; that's what Katchen v. Landy addressed.

Now, in Katchen v. Landy, the Court said the case turned on or largely turned on the proposition that Congress had prescribed that the counterclaim, the preference avoidance counterclaim created by act of Congress, must be adjudicated before the main claim against the res and against the debtor could or couldn't be disallowed.

And the Court returned to that view in footnote 14 of Granfinanciera saying:

"As Katchen makes clear, however, by submitting a claim against the bankruptcy estate, creditors subject themselves to the court's equitable power to disallow those claims. "

So to the--

Justice Sonia Sotomayor: That's -- that's my problem, which is if Congress could do that, why can't it do what it did here, which is to say if you -- not to make an equitable claim against the estate.

It's not going to be in the amount of your judgment because they're in bankruptcy because they can't pay your judgment.

If you want a piece of this, you have to consent to all claims, all compulsory claims -- let's not try to get into the compulsory/permissive category -- to be adjudicated.

Otherwise, like with preferences, there is an unfairness that makes this unequitable.

You're asking the estate to give you something, but you're not willing to submit in equity to deciding whether there's something you should give the estate back.

Roy T Englert Jr: --And -- and--

Justice Sonia Sotomayor: Compulsorily.

I mean, you know, not -- I'm trying to take the permissive issue out.

Roy T Englert Jr: --Sure.

And the answer, I really do submit, is footnote 14 of Granfinanciera, pointing out that there is nowhere else to go for a creditor in bankruptcy, which distinguishes bankruptcy from Schor in particular, but from all the other settings in which the Court has said that by submitting a claim you subject yourself to the jurisdiction for all purposes.

Justice Sonia Sotomayor: Every -- every bankruptcy priority rule extinguishes someone's entitlement to money.

The security rules mean the people who have secured interests get paid before unsecured people get paid, and there are insider rules.

Equity, as in terms of how the bankruptcy sets up the rest, is at the vagrancies of the legislature.

Roy T Englert Jr: Exactly.

Justice Sonia Sotomayor: They choose what they're going to permit you to take under what circumstances.

So why is it inequitable to -- to force you -- not to -- to force you, we'll use that word -- to say if you want money from the res, what you trade off is letting the debtor sue you for what you owe.

Roy T Englert Jr: Well, I don't know if it's inequitable but it's certainly unconstitutional; and the reason it's unconstitutional is because--

Justice Sonia Sotomayor: You don't have a constitutional right to collect your debt.

You have a constitutional right to have your claim adjudicated by a court.

Roy T Englert Jr: --With respect--

Justice Sonia Sotomayor: You can go to a state -- well, once you get the stay lifted at the end of the discharge, you could sue the estate.

You may not get a judgment that you can collect after that.

Roy T Englert Jr: --With respect to the claim of the creditor against the debtor and against the res, I have no problem with that analysis.

When the debtor, instead of saying the res is limited and it can only be distributed so far, instead says, I get to bring my counterclaim against the creditor in a non-Article III forum and the non-Article III forum gets to hear it and determine it, not just hear as 157(c)(1) says for certain types of claims -- then I suggest there is a constitutional problem, at least with respect to claims that neither, as in Katchen v. Landy, require rejection of the main claim, nor, as in Katchen v. Landy, are governed by Federal statute.

This is a State common law action for a tort, which has importance for 157(b)(5), which has importance for 157(b)(2), and which has extremely high importance for the constitutional question.

In Marathon, as everyone here knows, there was no majority opinion, but one point very much in common between the plurality and the concurrence of Justice -- then-Justice Rehnquist, was that it mattered a great deal that it was a common law claim under State law.

Here we have a common law claim--

Justice Sonia Sotomayor: Without a proof of claim?

Roy T Englert Jr: --Yes.

There was no proof of claim in Marathon, so this case presents a different issue than Marathon does.

But it does present, categorically, the same kinds of issues presented in Katchen, Langenkamp, and Schor.

The only one of those cases that allowed a State common law claim to go forward -- a State common law counterclaim to go forward was Schor.

And the Court, as Mr. Richland correctly said, divided its opinion into a part dealing with the personal rights conferred by Article III, Section 1, and the structural rights protected by Article III, Section 1.

In the part about personal rights, the Court held Mr. Schor had waived his personal right to an Article III forum.

In the part about structural rights at page 855 of that opinion, the Court said that it mattered to the constitutional analysis that Congress had made an Article III forum available for pursuit of that claim.

So it is terribly, terribly important whether an Article III forum is available.

When one is forced into a non-Article III forum, as Pierce Marshall was, if he wanted to have any opportunity to collect from the res, saying that he thereby in some meaningful way consents and saying that the structural purposes of Article III are not implicated is not in line with this Court's cases.

Justice Ruth Bader Ginsburg: I wanted to ask you, Mr. Englert, about something you just said about if he had any opportunity.

I thought his position was this is a nondischargeable debt; that even if it's discharged in bankruptcy, this debt would survive?

Roy T Englert Jr: That's correct.

Justice Ruth Bader Ginsburg: So it wouldn't be wiped out?

I mean, it would--

Roy T Englert Jr: Oh -- Justice Ginsburg, I'm sorry.

Justice Ruth Bader Ginsburg: --He would have another forum.

Roy T Englert Jr: He would have another forum against her post-bankruptcy assets after she had her -- her pre-bankruptcy assets distributed.

So it's a -- it's a different kind of opportunity to recover from a different set of assets.

If he wanted to have any shot at any of her prebankruptcy assets, he did have to file a proof of claim and not just a nondischargeability complaint.

Let me clear up one very minor aspect of the record while I'm talking about the proof of claim and the nondischargeability complaint.

I doubt this ends up mattering to the Court's decision, but Mr. Richland misspoke slightly when he said the counterclaim came weeks after the proof of claim.

The proof of claim was June 12th.

The counterclaim was June 14th, and in its very first paragraph it says it is a counterclaim to the nondischargeability complaint.

It doesn't purport to be a counterclaim to the proof of claim.

I doubt this ends up mattering, but it might be important for this single purpose: It is inconceivable that this was a compulsory counterclaim to the nondischargeability complaint.

It might have been a compulsory counterclaim to the proof of claim, but not to the nondischargeability complaint.

Now, I've explained why I believe--

Justice Ruth Bader Ginsburg: Just one more point about the nondischargeability.

He didn't have to bring that claim, did he?

I mean, if it's -- if it's a nondischargeable debt, he doesn't have to have the bankruptcy judge confirm that it's a nondischargeability debt.

Roy T Englert Jr: --Given -- I haven't studied closely the interaction between the automatic stay of section 362 and the nondischargeability complaint of section 523, so I'm not 100 percent sure my answer to Your Honor is correct.

But I believe that's not correct.

I believe that in order to preserve the argument that something is nondischargeable, one does have to go to the Bankruptcy Court under section 523 and seek the determination of nondischargeability.

Now, the two statutory arguments are before the Court, and I would like to say something briefly about each of those two statutory arguments.

With regard to 157(b)(2), you have heard Mr. Richland say this afternoon that the lower courts limit subparagraphs (A) and (O) with the language "arising in" and "arising under".

You heard Mr. Richland say 157(b)(2)(C), subparagraph (C), doesn't need to be so limited because it's so straightforward, but the point is not how straightforward it is.

The point is how broad and constitutionally dubious it is.

And if the canon of constitutional avoidance means anything in limiting the scope of 157(b)(2), it should have just as much application to (C) as it does to (A) and (O), and the -- it is not as analytically neat as some other cases of statutory interpretation, but the most obvious way one is going to limit the reach of (C), as well as (A) and (O), to do so is to take the words Mr. Richland concedes they are used in limiting (A) and (O).

The alternative is to treat those words as surplusage, and the alternative is to run headlong into the constitutional issues.

Justice Stephen G. Breyer: Can you go back to that for one second?

I understand the due process issue, which is Brandeis's issue in Crowell.

I think I can -- you're not going to say anything that I can't read in the brief on that.

But the other one is worrying me, the structural issue.

So imagine there's no due process concern whatsoever.

Now, when I looked at Crowell, your case would seem to fall right in it.

It is an adjudication under the law as such, you know, between two people -- whatever that famous line is.

You're captured by that one.

So the question is: Can you get out of it with later cases?

And you point to Schor to get out of it.

And Schor, as I read it, is an all-factors case, that when she talks in the structural part of -- about -- when Justice O'Connor is talking about the non-due process part, the structural part, just what you said, that there isn't a hard-and-fast rule, that there are a bunch of factors that we should look at.

At least that's how I read it.

And you were reading it as a hard-and-fast rule, which means you win.

Now -- now, who's -- should I just read this case further and make up my mind about that, or is there something you want to say about it?

Roy T Englert Jr: Well, no, Justice Breyer, I think I can agree with most or all of your premises and still argue that we should win under the proper constitutional analysis.

The point is not that the opinion of the Court in Schor said in so many words that the availability of an alternative Article III forum is dispositive.

The point is, it has to be dispositive, given the larger sweep of this Court's cases, because otherwise it is simply an all-factors test governing a structural provision of the Constitution.

Justice Stephen G. Breyer: Well, that's what she says.

And the -- and what you're interested in there, the key thing is not fairness.

The key thing is maintaining the integrity of the judicial system.

In Crowell, Justice Hughes says you've made that integrity as long as there were review of matters of fact, the independent decision by a court of questions of law, and reservation to the court of constitutional facts which have never been heard of since.

Okay?

So we have this case.

And your issue is, after all, something that for many, many decades or longer has been the subject of a bankruptcy proceeding.

The bankruptcy judge is an adjunct to the court.

It is well-established, this kind of review.

Every part of Crowell is met.

So what is -- what is essential to the integrity of the judicial process that requires you to have a de novo hearing before a district court rather than the kind of review that's given here?

Roy T Englert Jr: Well, those, with respect, Your Honor, I believe are the arguments that were rejected in Marathon.

Justice Stephen G. Breyer: In which case?

Roy T Englert Jr: In Marathon, in Northern Pipeline v. Marathon.

Justice Stephen G. Breyer: Well, Marathon, you know, you had four, four and -- and who knows what it stands for.

And then we have a sentence of what it stands for, and if you read that one sentence, I don't think you can say it's a slam-dunk for you.

Roy T Englert Jr: Well, I'm not saying Marathon makes this case a slam-dunk for me, Justice Breyer.

I am saying Marathon rejects many, if not all, of the premises of your question, starting with--

Justice Stephen G. Breyer: Of the -- of Marathon and saying, with four and four judges, to really reject a decision like Crowell, which is a kind of foundation stone?

Roy T Englert Jr: --No, I'm suggesting that they reject one particular interpretation of Crowell, a very broad interpretation of Crowell.

Justice Antonin Scalia: Of course, Crowell involved public rights in the narrow sense, didn't it?

It was a public suit.

Roy T Englert Jr: Correct.

Justice Stephen G. Breyer: True, but it's also a--

Justice Antonin Scalia: Perhaps there should be different standards.

Even if you do not agree with my separate opinion in Granfinanciera that that should be the only category, there may well be different standards for public suits in the narrow sense that were involved in Crowell and public suits which are -- are governed by some totality of the circumstances test, which--

Roy T Englert Jr: I -- I agree with that -- excuse me, Justice Scalia.

I do agree with that, and I think one doesn't have to adopt the reasoning of the concurrence in the judgment in Granfinanciera to come to that conclusion.

I think part four of Granfinanciera itself supports that proposition.

But I also think -- returning to Justice Breyer's question, I do think that Marathon does stand for certain propositions that this Court has accepted in later cases and that -- and that do suggest that Crowell is not to be read broadly and that some of the limitations on Crowell are the ones suggested in Justice Scalia's questions.

The -- the thing that the concurrence, the two-justice concurrence in Marathon, agreed with the plurality on was that what was fundamental to the disposition of that case was that the claim by the debtor against the creditor was the stuff of common law at Westminster in 1789.

It was a State law claim, not by the creditor against the debtor, but by the debtor against the creditor.

Justice Ruth Bader Ginsburg: Of course, there was no Bankruptcy Court handling it to start with.

There was no claim.

If you're going to go back to equity, equity lays hold of a claim that fits within the equity court, and then, as you know, there were clean-up and clear-up doctrines so they could decide the whole case.

So I think that the one thing one can say about Marathon is that when the debtor has a claim against the creditor and the creditor hasn't made any claim in the bankruptcy, he can't drag that into the Bankruptcy Court.

But once the Bankruptcy Court has authority over the claim, the creditor's claim against the debtor, then the court can clear up the whole matter.

Roy T Englert Jr: If all we were talking about, Justice Ginsburg, were doctrines of equity, then perhaps Alexander v. Hillman would be the governing precedent, a non-constitutional case later cited in a Seventh Amendment case and now attempted to be imported into an Article III case.

But I do respectfully suggest that the Constitution places tighter limits on the authority of non-Article III tribunals to adjudicate counterclaims than just the general and very permissive rules that allowed equity courts to adjudicate counterclaims without -- Alexander v. Hillman was a case about a whole equity Rule 30 and whether it superseded section 51 of the judicial code and its venue provisions and personal jurisdiction provisions.

If all we were talking about would be equity, that would be a fine analysis.

But I do read the collection of this Court's cases, including the crucial decisions in Katchen and Langenkamp which involved Federal counterclaims that by statute defeated the main claim, and Schor, which I do believe relied heavily on the consent theory and on the availability of an Article III forum.

I do read that collection of cases to suggest that there are tighter limits on assigning State law claims and State law counterclaims to non-Article III tribunal--

Justice Sonia Sotomayor: Counsel, by your theory, you're basically saying that Congress cannot delegate any State law-based claim to which a jury is entitled to the bankruptcy counterclaim at all.

So if you have a claim by lawyers for their fees in a defense of malpractice, maybe they can adjudicate that, but they can't adjudicate the malpractice claim.

It would be a counterclaim.

Correct?

Roy T Englert Jr: --I am saying that, Your Honor, but let me say for a moment why that's not inefficient, why that's not such a surprising proposition.

Remember, the Bankruptcy Court can hear all of these claims unless they're covered by 157(b)(5).

It just can't determine them.

So, the only thing we're talking about is the standard of review.

And with respect to -- it's not a surprising proposition that the requirement of an Article III forum does require that the district court, the Article III court, decide those claims.

So -- so the -- my position is as broad as Your Honor's question suggests, but the implications are not quite as broad as Mr. Richland suggested when he said that an Article III forum always brings in inefficiency.

Justice Elena Kagan: Mr. Englert, one real difference between Marathon and this case is that Congress passed legislation in between which brought the bankruptcy judges under the control of the district courts and made them entirely Article III entities.

So you can look at a case like Marathon, I mean not -- supervised by Article III entities, not by the president, not by Congress.

So one can look at a case like Marathon and say the problem there was that the president appointed the bankruptcy judges in a way that the president no longer does and that the district courts did not have the supervisory control over the bankruptcy judges in the way that they do now, and that that makes a constitutional difference.

Roy T Englert Jr: I -- I would respectfully subject -- suggest not, Justice Kagan, because there remains a difference between a non-Article III court and an Article III court, and the degree of supervision does not convert the non-Article III court into an Article III court.

It simply means that we've gotten to this non-Article III forum in a way that gives slightly tighter control to the judiciary.

But as a whole line of cases, including Crowell v. Benson, suggests, the degree of substantive review of individual decisions by non-Article III tribunals matters.

It's not just the front end at which the judges or commissioners or whatever they are of the non-Article III tribunal are selected.

It's also the back end at which the Article III forum is either really making the Article III decisions or giving deferential review to the decisions of a non-Article I court.

So I do think the problem is not solved simply by a different method of appointment of -- of bankruptcy courts.

Now, if I may, I would like to spend a few minutes on section 157(b)(5).

It was interesting to me that Mr. Stewart said the government had no--

Justice Ruth Bader Ginsburg: Just clarify one point, Mr. Englert.

As I understand it, before the code was amended, when the Federal courts were operating under the interim rule, it was standard that the bankruptcy judges, given a claim against the estate, routinely dealt with counterclaims.

Isn't that what the practice was when the interim rule was in effect?

Roy T Englert Jr: --I -- I believe the answer is yes, Justice Ginsburg.

I can concede that point.

But there was, I believe, de novo review in district court.

And in any event, the interim rules were in effect for a very short time as the arc of constitutional decision-making goes.

Marathon was decided in 1982, Congress passed new legislation in 1984, and it took quite sometime for the interim rules to be put into effect.

Justice Antonin Scalia: --But did all of those court of appeals cases involve Article III claims?

Did they pass upon the Article III contention?

If not, it's -- it's our clear law that the questions -- jurisdictional questions that aren't raised and discussed are not decided for precedential purposes.

How -- how many of those cases grappled with the Article III question?

Roy T Englert Jr: I -- I don't have a case count for you, Justice Scalia.

Some did, I must concede that some did, but certainly not all did.

Justice Antonin Scalia: But not most, I don't think.

Roy T Englert Jr: Not most, and they were only decisions of the lower courts, not of this Court.

Now, on the personal injury tort provision in section 157(b)(5), which, by the way, is also repeated in 157(b)(2)(B) and in 157(b)(2)(O) to give emphasis to the fact that Congress really did not want bankruptcy judges trying personal injury tort claims.

The -- the greatest dispute before this Court is not whether we are right about 157(b)(5).

Mr. Richland in his -- in his reply brief says we're not right, but I leave the Court to assess those arguments; and Mr. Stewart takes no position.

The greatest dispute is whether that issue was preserved for review.

And I want to suggest to this Court that it was clearly preserved for review.

In the proof of claim filed on June 12th, 1996, Mr. Marshall, Pierce Marshall, checked the box indicating that he was filing a personal injury tort claim, so from literally the first document that potentially brought this issue before the Bankruptcy Court, it was noted that it was a personal injury tort claim.

Twenty-seven months passed before he moved to withdraw the reference, that's true.

What's not true is that anything had happened on the defamation claim during those 27 months; and what's not true is that any court below held that delay against Pierce Marshall.

If you look at pages 109 to 112 of the Joint Appendix filed in this Court, you will see that the timeliness of the motion to withdraw the reference was actually discussed in the motion itself.

That's a matter easily accessible to this Court.

Judge Keller granted the motion to withdraw the reference.

He said: Pierce Marshall, you're right.

Then he reversed himself.

And you can find his ruling reversing himself at pages 138 to 139 of the Joint Appendix filed in this Court, but he did not reverse himself on timeliness grounds.

Our respectful submission is that by granting the motion and then reversing on other grounds he clearly accepted its timeliness.

In any event, the issue was clearly raised in the Bankruptcy Court and in the district court--

Justice Anthony Kennedy: Excuse me, I just couldn't hear.

On what grounds did he reverse himself, do you think?

Roy T Englert Jr: --He concluded that the Bankruptcy Court actually did have authority to hear the claim and the counterclaim on the merits.

Justice Stephen G. Breyer: --If -- if we were to decide this case, and suppose we decide every other question and suppose you lost, then wouldn't we send it back for you -- if you're right on that, for the Ninth Circuit to decide about that as an independent basis for no jurisdiction?

Roy T Englert Jr: Given the premise that I've lost every other issue, the Court could either--

[Laughter]

Justice Stephen G. Breyer: I had to make that premise in order to--

Roy T Englert Jr: No, no, I understand.

I understand.

But given the premise, the Court could then either then reach an alternative ground for affirmance, which is well within the ordinary operation of this Court's rules or send it back.

But let me suggest that there is a reason, and I believe a -- a -- a question from a member of the bench earlier suggested that there might be a reason to reach the 157(b)(5) issue, and to put it colloquially and directly, the 157(b)(5) issue is easy.

The constitutional question--

Justice Anthony Kennedy: Is -- is?

Roy T Englert Jr: --Is easy.

The constitutional question is hard.

Justice Stephen G. Breyer: --If it's that hard why don't we just DIG the case?

I guess--

[Laughter]

Roy T Englert Jr: No, but really, the 157(b)(5) question is -- is easy, but the strongest argument Mr. Richland makes on the merits of the 157(b)(5) claim is that Congress meant only bodily injury when it referred to personal injury.

But section 522(d)(11) of the code uses the term "bodily injury", so we know that when Congress means bodily injury, it says bodily injury.

It's also been suggested that the phrase "personal injury or wrongful death" is a phrase to which the canons of interpretation "noscitur a sociis" and "ejusdem generis" somehow apply.

That's not why Congress used personal injury or wrongful death.

Until 1846 with Lord Campbell's Act, the common law of England was that a wrongful death claim didn't survive, couldn't be brought by the -- by the heirs, because the victim of the tort was dead.

It is quite common all around the country to use the phrase "personal injury or wrongful death" to make clear that the tort being covered is a tort that resulted in injury to someone who survived or is a tort that resulted in death.

So there's nothing surprising about the use of that phrase.

It doesn't mean bodily injury.

And for those who look at legislative history, there is legislative history indicating quite emphatically that the members of Congress who were responsible for adding 157(b)(5), amending 157(b)(2)(B), amending 157(b)B-O -- and putting the abstention provisions in section 1334(c) really meant for bankruptcy judges to keep their hands off personal injury claims.

The main claim in this case that conceivably could have given the Bankruptcy Court jurisdiction, if I lose on the other issues, was Pierce's defamation claim, not Vickie's intentional interference claim.

We would respectfully suggest they're both personal injury tort claims, but it's particularly clear that Pierce's defamation claim is an injury to his personal interest in reputation.

So either by resolving the constitutional issue or through the canon of constitutional avoidance, or simply because it is the best reading of 157(b)(2), this Court should affirm the Ninth Circuit.

Thank you.

Chief Justice John G. Roberts: Thank you, counsel.

Mr. Richland, you have 3 minutes remaining.

REBUTTAL ARGUMENT OF KENT L. RICHLAND ON BEHALF OF PETITIONER

Mr. Richland: Thank you, Mr. Chief Justice.

Let me address immediately this question of whether Judge Keller effectively denied this withdrawal motion on timeliness grounds or not, because that truly is the easy way of resolving this personal injury question.

The substantive question whether these particular torts fall within the personal injury exception is a most difficult one, and it is one that this Court really shouldn't take on unless there's a substantial amount more of briefing and input from -- from others.

But the waiver issue is an easy one, and the reason it's an easy one is the record is undisputed that it was 27 months between the time that this claim -- counterclaim was -- the claim was filed and between the time that this personal injury issue was raised in a withdrawal motion.

During that period of time there were numerous sanctions motions, and numerous sanctions, discovery sanctions imposed upon Pierce Marshall; and in fact what happened was Judge Keller, before considering the initial withdrawal motion on the merits -- before having a hearing on it, he initially granted the withdrawal.

He then had a hearing, and at the hearing what he said was -- he may not have used the word "timeliness", but what he said is you've chosen this forum, the Bankruptcy Court is immersed in this case, and he used the colorful phrase what you are experiencing here is the spawn of what you have begot.

And I think that that clearly imports the nature that you are too late, you have not brought this in a timely fashion; everything that has happened in the Bankruptcy Court has made it too late for you to come to this court with this--

Justice Antonin Scalia: Well, I would take that to mean you -- you brought it in here, and, you know, the same kind of argument that you were making.

Mr. Richland: --And that--

Justice Antonin Scalia: --you've chosen to come into the Court, and this is the spawn of your coming in.

Mr. Richland: --And the Bankruptcy Court is so immersed in this because of what has gone on during the bankruptcy proceedings that it is not appropriate for me to withdraw it.

That seems to connote clearly the notion that it is not timely.

Justice Antonin Scalia: I would -- well, I would rather say 27 months is too long.

That's--

Mr. Richland: And that.

Justice Antonin Scalia: --That's timely.

Mr. Richland: Well, 27 months is a long time in bankruptcy.

Let me clear up this issue of whether the counterclaim was to the proof of claim or to the dischargeability.

On the appendix to the petition, page 379, it is quite clearly stated that it was in response to 170 -- 157(b)(2)(C), that is a counterclaim to a person who has filed a claim.

On -- with respect to this issue of State law having some great significance here as opposed to Federal law, that issue has been rejected by this Court.

In the Schor case, the majority opinion states very clearly that in fact there is no significance to the fact that -- that something is a State law claim as opposed to a Federal claim.

Justice Stephen G. Breyer: Well, but his basic argument I think is that in Marathon--

Mr. Richland: There is--

Justice Stephen G. Breyer: --Make it totally fair.

Nobody is being treated unfairly.

Structurally it does injure the -- the prestige or something or the structure or the integrity of the Federal Government -- judiciary, Federal judiciary -- to allow the bankruptcy judge to adjudicate a direct claim; why is a counterclaim different?

Mr. Richland: --Well, I understand that argument but the majority opinion in Schor states that the State law character of a claim, quote,

"has no talismanic power in Article III inquiries. "

That's 478 at 853.

Chief Justice John G. Roberts: Thank you, counsel; counsel.

The case is submitted.

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Argument of Mr. Chief Justice Roberts, Jr.

Mr. Chief Justice Roberts, Jr.: I have the opinion of the court in Case Number 10-179.

The very caption of the case gives you an idea of what is in store, the case of Stern, Executor of the Estate of Marshall, versus Marshall, Executrix of the Estate of Marshall.

The facts of the case are like something out of a 19th Century Dickens novel.

The litigation has been going on for over 15 years.

The original parties have each died and have been replaced by their executors.

To avoid confusion, I'll refer to the original parties rather than their executors and by their first names since everyone in the case is named Marshall.

The case has worked its way through state and federal courts in Louisiana, Texas and California.

It has even been to this case before we sent it back to the Court of Appeals after argument and decision on an unrelated question only to find it before us again.

The underlying facts have a fascination of their own.

Petitioner Vickie Lynn Marshall, better known perhaps as Anna Nicole Smith was 26 when she married the 89-year old Jay Howard Marshall II.

Jay Howard had a fortune estimated to be worth as much as $2 billion.

He died a little more than a year after his marriage to Vickie but did not provide for her in his will.

Vickie claimed that Pierce Marshall, Jay Howard's son from a prior marriage had fraudulently prevented Jay Howard from leaving her roughly half of his fortune which Vickie said is what Jay Howard wanted to do.

Shortly after Jay Howard died, Vickie filed for bankruptcy in federal court.

Pierce filed a claim in that bankruptcy proceeding asserting that Vickie owed him money for defamation because of statements by her attorneys about his alleged fraud.

Vickie responded with a counterclaim against Pierce arguing that those statements were true and that he was liable to her under Texas state law prohibiting interference with an intended gift.

The bankruptcy court held a trial and eventually entered a final judgment awarding Vickie hundreds of millions of dollars on her counterclaim.

Shortly after that however, a Texas State probate court that was considering the same issues in the context of a suit over Jay Howard's will, ruled in Pierce's favor.

Now which of those conflicting judgments controls and whether Vickie, her estate of course, gets to keep those hundreds of millions of dollars depends on whether the bankruptcy court have the authority to enter a final judgment on Vickie's counterclaim.

There are two parts to that question.

First, does the bankruptcy code authorize a bankruptcy judge to enter a final judgment on that sort of claim?

The answer turns out to depend on resolving several arcane issues of statutory interpretation.

After doing that, we conclude that yes, the bankruptcy code does authorize the bankruptcy courts to do what the Court did hear.

That brings us to the second part of the question.

Does the Constitution allow a bankruptcy judge to enter a final judgment on a claim such as Vickie's?

Although the history of this litigation is complicated, the answer to that question turns on very basic and very important Constitutional principles.

We go back to the beginning.

Article III of the United States Constitution commands that, “the judicial power of the United States shall be vested in one Supreme Court and in such inferior courts as the Congress may from time to time ordain and establish.”

That same Article provides that the judges of the federal courts, the ones who exercise that judicial power, shall hold their offices during good behavior without any decrease in their salaries.

Now, Article III plays an important role in the system of checks and balances that the framers adopted in the Constitution.

Ms. Hamilton explained in the Federalist papers quoting Montesquieu, “There is no liberty if the power of judging be not separated from the legislative and executive powers.”

The single most original feature of the Constitution was this taking of judicial power away from the executive and legislative authorities and placing it in a separate judiciary.

Article III then goes on to ensure the independence of that judiciary through lifetime tenure and protection against diminution of salary.

One of the charges against King George III in the Declaration of Independence was that he had, “May judges dependent on his will alone for the tenure of their offices and the amount and payment of their salaries.”

Article III was designed to ensure that nothing like that would happen under the new government.

Now, all this would be meaningless if the other branches were allowed to take judicial power away from the Article III courts.Just as the President would object if we purported the veto bills that Congress sent to him or Congress would protest if we claimed the right to rule on confirmation of the President's nominees for office, we must object if the other branches take away -- away the work that is assigned to us under the Constitution.

That work, what we have described as resolution of the mundane as well as the glamorous, matters of common law and statute as well as Constitutional law, issues of fact as well as issues of law belong to the Article III judiciary.

Bankruptcy judges are very capable and dedicated jurists who perform a vital legal function but they are not Article III judges.

They do not have the constitutionally required protections.

The question is the narrow but important one of whether they may nonetheless decide and in their final judgment on claims such as Vickie's.

It seems clear to us that the bankruptcy court exercised Article III judicial power in this case.

Vickie's claim was a bread and butter legal claim based on state tort law.

The facts were a bit exotic but resolution of the claim clearly called for the normal exercise of judicial power and if the case is in the federal system, that means by an Article III court.

Certain exceptions to this rule have developed over the years.

One that Vickie relied on in this case is the so-called public rights exception.

There's been a lot of debate over the exact reach of that exception but generally speaking it utmost may allow decisions by non-Article III bodies where a party's claim is closely related to actions taken by the Federal Government or tied up in a federal regulatory scheme.

Vickie's counterclaim, which was based on state law and existed outside of her bankruptcy is not such a claim.

Vickie also point out that in past cases we have upheld adjudication by entities outside Article III when those entities were functioning as what we call an adjunct to the Article III courts.

But the bankruptcy courts are not adjuncts, quite the opposite.

Under the current statute, bankruptcy courts may rule on any issue that a party's counterclaim might present and for counterclaims like Vickie's, they issue what purport to be final binding orders.

We conclude today that the bankruptcy court exceeded Article III.

It did so only in one small particular.

Our ruling is accordingly very narrow and we think will not have a great impact on the bankruptcy system.

We're not talking about bankruptcy jurisdiction generally.

We address only counterclaims such as Vickie's which do not arise out of federal bankruptcy law and are not resolved by a ruling on a creditor's claim.

The bankruptcy law already provides that State and Federal District Courts will hear and resolve other types of state law claims connected to bankruptcy proceedings.

And we do not think it meaningfully changes the division of labor under that statute to require the same in this case.

Bankruptcy courts may still issue decisions in such cases.

They simply may not be final judgments.

That authority rests with the Article III District Courts reviewing the bankruptcy court recommended decisions.

Now, this is not a case where we are concerned that Congress and the Executive are maliciously trying to strip us of power, not at all.

But a statute however innocent may no more chip away at the authority of the judicial branch then it may eliminate it entirely.

We cannot compromise the integrity of the system of separated powers and the role of the judiciary in that system even with respect to challenges that at first may seem harmless.

We conclude that the bankruptcy court did not have the constitutional authority to enter final judgment on Vickie's counterclaim.That means that we affirm the judgment of the United States Court of Appeals for the Ninth Circuit which reversed the award of damages to Vickie.

Justice Scalia has filed a concurring opinion.

Justice Breyer has filed a dissenting opinion in which Justices Ginsburg, Sotomayor and Kagan joined.