Article III, Section 1 — Congressional Power to Establish Non-Article III Courts

ArtIII.S1.9.1 Overview of Congressional Power to Establish Non-Article III Courts

Article III of the Constitution provides 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.”¹ A literal interpretation of that language might require that every case that falls within the “judicial Power of the United States” must be adjudicated, if at all, in Article III courts staffed by judges with constitutional protections.² Notwithstanding the foregoing text, however, Congress has assigned the authority to adjudicate a large swath of cases that would seemingly fall within the federal judicial power to non-Article III tribunals—forums with judicial officers who do not enjoy Article III protections. Those tribunals are often called “Article I courts” or “legislative courts,” because they are created by Congress pursuant to its general legislative powers. They include specialized stand-alone courts, administrative agencies, and magistrate judges who serve under Article III judges.

Congress has periodically created Article I courts since the early years of the Republic.³ Over the years, the Supreme Court has recognized certain limits on which matters may be heard by Article I courts instead of Article III courts. The case law in this area can be difficult to parse,⁴ but generally identifies four key circumstances in which Congress may authorize non-Article III courts to hear cases: (1) District of Columbia and territorial courts,⁵ (2) military courts,⁶ (3) courts hearing cases involving “public rights,” which often arise between the government and private parties,⁷ and (4) adjuncts to Article III courts.⁸ Additionally, in some instances, non-Article III courts can hear certain matters based on the consent of the litigants.⁹ The following essays first discuss Congress’s authority to structure non-Article III courts and the Supreme Court’s power to review such courts’ decisions.¹⁰ They then survey Supreme Court case law considering the different types of cases that may proceed in Article I courts.

ArtIII.S1.9.2 Congressional Power to Structure Legislative Courts

The issue of what matters Congress can entrust to Article I courts may raise important constitutional questions. The Supreme Court first distinguished between constitutional courts and legislative courts in its 1828 decision in American Ins. Co. v. Canter.¹ Justice Byron White later read Canter as raising the “simple” proposition that “[c]onstitutional courts exercise the judicial power described in Art. III of the Constitution; legislative courts do not and cannot.”² A two-fold difficulty attended that proposition, however. First, the territorial court in Canter had issued a decision in admiralty, a subject specifically included within the grant of federal judicial power in Article III, raising the question of how a non-Article III court could receive and exercise that power.³ Second, if territorial courts could not exercise Article III power, how could their decisions be subject to appellate review in the Supreme Court, or in any Article III court, which could exercise only Article III judicial power? Subsequent Supreme Court cases have clarified that Congress may in some cases allow non-Article III tribunals to hear matters that would fall within the scope of the federal judicial power, subject to appellate review by Article III courts.⁴

While Article I courts’ jurisdiction may raise vexing legal questions, in other ways Congress enjoys ample authority to structure those courts. First, in creating legislative courts, Congress is not limited by the provisions of Article III requiring that federal judges hold their offices during good behavior and prohibiting Congress from reducing their compensation.⁵ Congress may limit tenure on an Article I tribunal to a term of years, as it has done in acts creating magistrate judgeships and the Tax Court.⁶ It may also subject the judges of legislative courts to removal by the President⁷ or reduce judges’ salaries during their terms.⁸

In addition, Congress can vest in Article I courts nonjudicial functions of a legislative or advisory nature, meaning those courts may make rules or issue non-binding decisions.⁹ And, while Congress cannot disturb final judgment of Article III courts, it can deprive legislative court judgments of finality.¹⁰ Thus, in Gordon v. United States, the Court did not object to the power of the Secretary of the Treasury and Congress to revise or suspend the early judgments of the Court of Claims.¹¹ Likewise, in United States v. Ferreira, the Court sustained an act conferring on the Florida territorial court the non-judicial power to examine claims arising under the treaty with Spain and report its findings to the Secretary of the Treasury for subsequent action.¹²

ArtIII.S1.9.3 Supreme Court Review of Legislative Court Decisions

In American Ins. Co. v. Canter, the Supreme Court suggested that constitutional courts exercise the judicial power described in Article III of the Constitution, while legislative courts do not and cannot.¹ That proposition might be understood to mean that the judgments of legislative courts could never be reviewed by the Supreme Court or another Article III court.² However, the Court tacitly rejected that view in De Groot v. United States, taking jurisdiction to review a final judgment of the Court of Claims.³

Since the decision in De Groot, the authority of the Court to exercise appellate jurisdiction over legislative courts has turned not upon the nature or status of such courts but rather upon the nature of the proceeding before the lower court and the finality of its judgment. The Supreme Court has declined to review the administrative proceedings of legislative courts or entertain appeals from the advisory or interlocutory decrees of such a body.⁴ But, in proceedings before a legislative court that are judicial in nature, subject to final judgment, and involve the performance of judicial functions and therefore the exercise of judicial power, the Court has accepted appellate jurisdiction.⁵

ArtIII.S1.9.4 District of Columbia and Territorial Courts

Article IV of the Constitution empowers Congress to “make all needful Rules and Regulations respecting the territory or other Property belonging to the United States.”¹ Congress has periodically invoked that authority to establish courts in U.S. territories. The Supreme Court’s first opportunity to address the use of territorial courts came in the 1828 case Florida in American Insurance Co. v. Canter.² In Canter, the Court assessed the constitutionality of courts established in the territory of Florida. Challengers to the territorial court’s jurisdiction argued that it could not properly hear cases arising under admiralty law, which instead must be heard in Article III courts.³ Chief Justice John Marshall, writing for the Court, disagreed, explaining that territorial courts “are not constitutional courts, in which the judicial power conferred by the constitution on the general government, can be deposited. They are incapable of receiving it.” Instead, the Florida courts were “created in virtue of the general right of sovereignty which exists in the government, or in virtue of that clause which enables Congress to make all needful rules and regulations, respecting the territory belonging to the United States.” Thus, he held, the courts’ jurisdiction “is conferred by Congress, in the execution of those general powers which that body possesses over the territories of the United States.”⁴ The Court noted that while, in the states, admiralty jurisdiction can be exercised only in courts established pursuant to Article III, the same limitation does not apply to the territorial courts, for “[i]n legislating for them Congress exercises the combined powers of the general, and of a state government.”⁵ Florida’s territorial courts were abolished when the territory became a state. Currently, the district courts in the federal territories of Guam,⁶ the Virgin Islands,⁷ and the Northern Mariana Islands⁸ are legislative courts.⁹

A similar constitutional authority allows Congress to establish courts in the District of Columbia. Under Article I, Congress has the authority to “exercise exclusive Legislation in all Cases whatsoever” over the District of Columbia.¹⁰ A series of early Supreme Court decisions treated the District of Columbia courts as legislative courts upon which Congress could impose nonjudicial functions. In Butterworth v. United States ex rel. Hoe, the Court sustained an act of Congress that conferred revisory powers upon the Supreme Court of the District of Columbia in patent appeals and made its decisions binding upon the Commissioner of Patents.¹¹ The Court later sustained the authority of Congress to vest revisory powers in the same court over rates fixed by a public utilities commission¹² and orders of the Federal Radio Commission.¹³ Those rulings were based on the assumption, express or implied, that the courts of the District were legislative courts, created by Congress pursuant to its plenary power to govern the District of Columbia. Similarly, in dictum in Ex parte Bakelite Corp., while reviewing the history and analyzing the nature of the legislative courts, the Court stated that the courts of the District were legislative courts.¹⁴

In the 1933 case O’Donoghue v. United States, the Court departed from its prior statements on the subject and held that the courts of the District of Columbia were constitutional courts exercising the judicial power of the United States.¹⁵ Thus, the Court concluded, a federal law seeking to reduce judicial salaries could not apply to judges on the Supreme Court of the District of Columbia and the District of Columbia Court of Appeals. Having decided that the D.C. courts were Article III courts, the Supreme Court had to reconcile the fact that such courts performed nonjudicial functions with the rule that constitutional courts can exercise only the judicial power of the United States. The Court did so by holding that, in establishing courts for the District, Congress performs dual functions pursuant to two distinct powers: its power to constitute tribunals inferior to the Supreme Court, and its plenary and exclusive power to legislate for the District of Columbia. The Court held that Article III, Section 1, limits the latter power with respect to tenure and compensation but not with respect to vesting legislative and administrative powers in such courts. Subject to the guarantees of personal liberty in the Constitution, the Court concluded, “Congress has as much power to vest courts of the District with a variety of jurisdiction and powers as a state legislature has in conferring jurisdiction on its courts.”¹⁶

At the time the Court decided O’Donoghue, the D.C. courts had both local jurisdiction over District matters, similar to that of state courts, and also federal jurisdiction equivalent to that of other inferior federal courts. In 1970, Congress replaced the previous D.C. court system with two sets of courts: federal courts created pursuant to Article III (the U.S. District Court for the District of Columbia and the U.S. Court of Appeals for the District of Columbia), and local courts similar to state and territorial courts, created pursuant to Article I (including the District of Columbia Court of Appeals).¹⁷ In Palmore v. United States, a criminal defendant challenged the constitutionality of the District’s Article I courts, arguing that charges under the D.C. criminal code amounted to a prosecution under federal law, and he was therefore entitled to consideration before an Article III court.¹⁸ The Supreme Court rejected the argument, explaining that it was not necessary that every proceeding involving an act of Congress or a law made under its authority be conducted in an Article III court. State courts, after all, could hear cases involving federal law, as could territorial and military courts. Thus, “the requirements of Art. III, which are applicable where laws of national applicability and affairs of national concern are at stake, must in proper circumstances give way to accommodate plenary grants of power to Congress to legislate with respect to specialized areas having particularized needs and warranting distinctive treatment.”¹⁹

ArtIII.S1.9.5 Non-Article III Military Courts

Article I grants Congress the authority “[t]o make Rules for the Government and Regulation of the land and naval forces.”¹ In the 1858 case Dynes v. Hoover, the Supreme Court upheld the use of this authority to create military courts.² In that case, the Court observed that “Congress has the power to provide for the trial and punishment of the military and naval offences,” and that power “is given without any connection between it and the 3d article of the Constitution defining the judicial power of the United States; indeed, . . . the two powers are entirely independent of each other.”³

Although Congress has broad authority to create and implement military courts, the Supreme Court has set some substantive limits on those courts’ jurisdiction. For instance, military courts cannot be used to try civilians,⁴ including the spouses of military members.⁵ Additionally, the Court has held that military courts have jurisdiction over members of the military only when they are still in service.⁶ However, military courts are able to try non-service related crimes while the defendant is still in the service.⁷ Currently, the U.S. Court of Appeals for the Armed Forces, an Article I court, sits at the apex of the military justice system.⁸ Judges of that court sit for fifteen-year terms and can be removed by the President for neglect of duty, misconduct, or mental or physical disability. Another example of military courts are the military tribunals established by President George W. Bush by Executive Order shortly after the September 11, 2001, attacks.⁹

ArtIII.S1.9.6 Legislative Courts Adjudicating Public Rights

The Supreme Court has held that Article I courts can adjudicate cases involving “public rights”—cases that arise between a private actor and the government. The public rights theory can be traced back to the Court’s 1855 ruling in Murray’s Lessee v. Hoboken Land & Improvement Co.¹ In that case, Justice Joseph Story explained that, although Congress cannot withdraw from federal courts the jurisdiction to hear suits at common law, equity, or admiralty, “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.”² In essence, the Court distinguished between matters that historically had been decided by courts and matters that arose between the government and others and had been historically resolved by executive or legislative acts. Thus, under Murray’s Lessee, certain matters arising between the government and others that might be susceptible to judicial determination may also be referred to Article I courts. Congress does not have sole discretion to determine what matters fall within that class. In subsequent cases, the Court has held that matters susceptible of judicial determination, but not requiring it, include claims against the United States;³ the disposal of public lands and claims arising therefrom;⁴ questions concerning membership in Indian tribes;⁵ and questions arising out of the administration of the customs and internal revenue laws.⁶ Courts such as consular courts and military courts martial may be justified on similar grounds.⁷

The Supreme Court has offered several rationales for why public rights cases can be handled in Article I courts. The first is based on the doctrine of sovereign immunity and postulates that, because Congress need not allow suits against the government at all, the legislature is free to attach conditions to the federal government being sued, including what type of forum the claims can be brought in.⁸ The second major rationale is that, historically, these cases were conclusively determined by the Executive and Legislative Branches, “and that as a result there can be no constitutional objection to Congress’s employing the less drastic expedient of committing their determination to a legislative court or an administrative agency.”⁹

As a general matter, the Court has broadly defined public rights cases as those that arise “between the Government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments.”¹⁰ At the core of the public rights doctrine are cases involving claims for benefits against the government.¹¹ Private rights cases, by contrast, pertain to the “liability of one individual to another under the law as defined.”¹² Beyond these general definitions, the Supreme Court has not articulated the exact parameters of the public rights doctrine. As Chief Justice John Roberts has noted, “our discussion of the public rights exception . . . has not been entirely consistent, and the exception has been the subject of some debate.”¹³ However, a series of Supreme Court cases have attempted to draw the line between public and private rights.

In 1932, in Crowell v. Benson, the Court approved an administrative scheme for evaluating maritime employee compensation claims, subject to judicial review, although the case involved a matter of private right.¹⁴ The scheme was permissible, the Court said, because in cases arising out of congressional statutes, an administrative tribunal could make findings of fact and render an initial decision on legal and constitutional questions, as long as there was adequate review in a constitutional court.¹⁵ The “essential attributes” of decisions must remain in an Article III court, but so long as they do, Congress may use administrative decisionmakers in those private rights cases that arise in the context of a comprehensive federal statutory scheme.¹⁶

In the 1982 case Northern Pipeline Const. Co. v. Marathon Pipeline Co., the Court addressed whether Article I bankruptcy courts could adjudicate common law contract and tort claims.¹⁷ Acknowledging that the “distinction between public and private rights has not been definitely explained” in the Court’s precedents, Justice William J. Brennan, writing for a plurality of the Court, traced three historical exceptions to the literal command of Article III: territorial courts, military courts, and courts and agencies that adjudicate public rights.¹⁸ Disposing of the first two categories as clearly inapplicable, the plurality also rejected the public rights argument as the underlying case did not arise between government and a private party, but involved a state-created claim between two private parties.¹⁹

In two cases following Northern Pipeline, the Court rejected a bright line test for the distinction between public and private rights. It instead focused on substance—that is, on the extent to which a particular grant of jurisdiction to an Article I court threatened judicial integrity and separation of powers principles. First, in Thomas v. Union Carbide Agricultural Products Co., the Court adopted a functional approach for determining when Congress may use non-Article III forums.²⁰ The statute in question created a system of binding arbitration, subject to limited judicial review, for determining the amount of compensation due to pesticide manufacturers whose data had been used by other manufacturers to register their products.²¹ Justice Sandra Day O’Connor, writing for the majority, asserted that “substance rather than doctrinaire reliance on formal categories should inform application of Article III.”²² Because the arbitration scheme (1) was created by federal statute, (2) was a “pragmatic solution to the difficult problem of spreading [ ] costs,” and (3) did not “preclude review of the arbitration proceeding by an Article III court,” the Court found that it “did not threaten the independent role the Judiciary in our constitutional scheme.”²³ Two years later, in Commodity Futures Trading Commission (CFTC) v. Schor, the Court reaffirmed Thomas’s functional approach and held that the CFTC was empowered to hear common law counterclaims related to violations of the Commodities Exchange Act or CFTC regulations.²⁴

In a subsequent case, Granfinanciera, S.A. v. Nordberg, the Court held that the distinction between public and private rights determined both whether a matter could be referred to a non-Article III tribunal and whether Congress could dispense with a civil jury trial.²⁵ Granfinanciera suggests that seemingly private causes of action between private parties will also be deemed public rights when Congress, acting for a valid legislative purpose pursuant to its Article I powers, fashions a cause of action that is analogous to a common law claim and integrates it so closely into a public regulatory scheme that it becomes a matter appropriate for agency resolution with limited involvement by the Article III Judiciary.²⁶

In the 2011 case Stern v. Marshall, the Court shifted away from the functionalism of Thomas and Schor and back towards the formalism of Northern Pipeline.²⁷ In Stern, the issue was whether a bankruptcy court could adjudicate a common law claim for fraudulent interference with a gift. In a 5-4 decision authored by Chief Justice John Roberts, the Court held that Article III prohibited the bankruptcy court’s exercise of jurisdiction because the common law claim did not fall under the public rights exception. The Court acknowledged that Thomas and Schor had declined to limit the public rights exception to actions involving the government as a party, but it concluded that the Court had continued to limit the exception to claims deriving from a “federal regulatory scheme” or in which “an expert Government agency is deemed essential to a limited regulatory objective.”²⁸ In rejecting applying the public rights exception to the fraudulent interference counterclaim, the Court observed that the claim was not one that could be “pursued only by grace of the other branches” or could have been “determined exclusively” by the Executive or Legislative Branches.²⁹ Additionally, the underlying claim did not “flow from a federal regulatory scheme” and was not limited to a “particularized area of law.”³⁰ Because the counterclaim involved the “most prototypical exercise of judicial power,” adjudication of a common law cause of action not created by federal law, the Court rejected the bankruptcy courts’ exercise of jurisdiction over the counterclaim as a breach of Article III.³¹

Subsequently, in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, the Court noted that it has not “definitively explained” the distinction between public and private rights, and its precedents applying the public-rights doctrine have “not been entirely consistent.”³² The Court observed, however, that its “precedents have given Congress significant latitude to assign adjudication of public rights to entities other than Article III courts.”³³ In Oil States, the Court addressed whether inter partes review, a type of patent validity proceeding conducted by the U.S. Patent and Trademark Office (PTO), violates Article III. The Court held that such proceedings “fall[ ] squarely within the public-rights doctrine” and therefore could constitutionally be conducted by a non-Article III tribunal.³⁴ In so holding, the Court described the public-rights doctrine as “cover[ing] matters ‘which arise between the Government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments.’”³⁵

ArtIII.S1.9.7 Article I Adjuncts to Article III Courts

The Supreme Court has held that Congress may create non-Article III forums where “adjuncts” to Article III courts adjudicate federal questions.¹ An “adjunct” is an adjudicator—most commonly an administrative agency or a magistrate judge—that does not function as an independent court but instead acts as a subordinate to the federal courts. Adjuncts have become highly important in the modern era, handling many cases involving public benefits and assisting Article III judges with their heavy caseload.

Support for the adjunct theory can be traced to the 1932 case Crowell v. Benson.² Crowell involved a challenge to the Longshoreman’s and Harbor Workers’ Compensation Act, which required that claims for injuries sustained while working on the navigable waters of the United States be filed with the U.S. Employees’ Compensation Commission.³ That agency was to conduct fact-finding and make initial findings of law.⁴ An employer appealed an award of damages by the Commission, claiming that the grant of jurisdiction to the Commission violated Article III. In upholding the act, the Supreme Court delineated the proper role of the use of adjuncts in relation to Article III courts. The Court observed that “there is no requirement that, in order to maintain the essential attributes of the judicial power, all determinations of fact in constitutional courts shall be made by judges.”⁵ Instead, an adjunct may make findings of fact and initial legal determinations, but questions of law must be subject to de novo review in an Article III court.⁶ Questions of jurisdictional fact—that is, facts that pertain to the jurisdiction of the agency itself—and constitutional fact are also subject to a more searching review by a constitutional court.⁷ In sum, Crowell instructs that for Article III courts to retain the “essential attributes of the judicial power,” adjuncts must act as subordinates to the Article III courts and not as independent adjudicators.

The framework established in Crowell provided the blueprint for the modern administrative state, starting with the New Deal and expanding throughout the twentieth and twenty-first centuries.⁸ Administrative agencies perform a host of functions including making policy, promulgating rules, and adjudicating questions arising under federal law.⁹ Many disputes that come before federal agencies concern public rights cases, with a large share of cases concerning the right to various government entitlements. For instance, the Social Security Administration (SSA), a federal agency that administers various government benefits including old age and disability benefits, has a complex adjudication process for determining who is entitled to these benefits, including several tiers of administrative review and review by both a federal district court and a circuit court of appeal.¹⁰ Judicial review of SSA decisions closely follows the Crowell model: while factual findings made by an administrative law judge are subject to the highly deferential “substantial evidence” standard,¹¹ legal determinations “receive no deference” from either the district court or court of appeals.¹² While administrative law judges do not receive constitutionally protected life tenure or salary protection, there are statutory protections regarding their appointment, tenure, and compensation.

The second major subcategory of adjuncts is federal magistrate judges. In 1968, Congress enacted the Federal Magistrates Act, seeking to “reform the first echelon of the Federal Judiciary into an effective component of a modern scheme of justice by establishing a system of U.S. magistrates.”¹³ Magistrate judges are not appointed and confirmed like Article III judges and do not enjoy life tenure and salary protection. Instead, they are selected by district court judges and can be removed for good cause or if the Judicial Conference “determines that the services performed by his office are no longer needed.”¹⁴ Initially, magistrate judges were assigned a somewhat circumscribed role but, over the last several decades, Congress has expanded the role of magistrate judges to include the power to decide various motions, hear evidence, and try both criminal and civil cases. With the ever-burgeoning federal docket, magistrate judges have been deemed “nothing less than indispensable” in the federal judicial process.¹⁵

The Supreme Court’s first occasion to consider the Magistrates Act came in Wingo v. Wedding.¹⁶ In that case, the Court addressed whether the act permitted magistrate judges to hold evidentiary hearings in habeas corpus proceedings without the defendant’s consent. The Court construed the statute to avoid potential Article III problems by interpreting the term “additional duties” in the act to not include the authority of a magistrate to hold evidentiary hearings, but instead allowing the magistrate simply to propose to the district court judge whether such a hearing should be held.¹⁷ Two years later in Mathews v. Weber, the Court was tasked with interpreting whether “additional duties” could be read to permit referral of Social Security benefit cases to magistrate judges for preliminary review of the administrative record and preparation of a recommended ruling.¹⁸ While the Court again avoided the potential Article III issues, it echoed the adjunct theory by observing that a district judge is free to follow or wholly reject a magistrate’s recommendation and that the “authority—and the responsibility—to make informed, final determination . . . remains with the judge.”¹⁹ As a statutory matter, because the district judge was still free to follow or wholly ignore the magistrate’s recommendation, the Court upheld the magistrate’s “preliminary-review function” as one of the “additional duties” permitted under the act.²⁰

In the 1980 case United States v. Raddatz, the Court finally addressed head-on the unresolved constitutional questions surrounding the Magistrates Act.²¹ In Raddatz, a defendant challenged magistrates’ statutory and constitutional authority to hear motions to suppress evidence in a criminal proceeding. Under the Act, magistrate judges could “hear and determine” any pretrial matter before the court, except for certain motions including motions to suppress evidence in criminal cases.²² For those excluded motions, the district court judge could “designate a magistrate to conduct hearings, including evidentiary hearings, and to submit to a judge of the court proposed findings of fact and recommendations for the disposition” of the motions.²³ If either party objected to the proposed findings or recommendations, the district court judge was then required to make a “de novo determination” of the issues and could “accept, reject, or modify, in whole or in part, the findings or recommendations of the magistrate.”²⁴ The defendant in Raddatz contended that these provisions required the district court judge to rehear the testimony on which the magistrate based his findings. The Court rejected that argument, holding that the district court need only make a de novo determination of the disputed findings and recommendations and not hold a de novo hearing.²⁵ With respect to the Article III challenge, the Court upheld the act, observing that the “ultimate decision” is reserved for the district court judge and that magistrates “are constantly subject to the court’s control.”²⁶

Congress amended the Magistrates Act in 1979, further enlarging and clarifying magistrates’ authority.²⁷ Under the new statute, upon designation by the district court judge and with consent of the parties, magistrate judges were authorized to preside over and enter final judgments in civil trials, including jury trials and misdemeanor criminal prosecutions.²⁸

In Gomez v. United States, the Court addressed whether overseeing the selection of jurors in a felony criminal prosecution was among the “additional duties” envisioned in the Act.²⁹ The defendant in that case objected to the assignment of a magistrate judge both the before and after the magistrate judge selected the jury.³⁰ The Court agreed, and held that the Magistrates Act did not permit such an assignment. Applying the constitutional avoidance doctrine,³¹ the Court focused on the statutory question of whether Congress would have intended magistrates to oversee this “critical stage of the criminal proceeding.”³² Speaking for a unanimous Court, Justice John Paul Stevens noted that, while a literal reading of the additional duties provision would allow magistrates to oversee felony trials, the “carefully defined grant of authority to conduct trials of civil matters and of minor criminal cases should be construed as an implicit withholding of the authority to preside at a felony trial.”³³ Ultimately, the Court held that the “absence of a specific reference to jury selection in the statute, or, indeed, in the legislative history, persuades us that Congress did not intend the additional duties clause to embrace this function.”³⁴

ArtIII.S1.9.8 Bankruptcy Courts as Adjuncts to Article III Courts

In 1978, Congress revised the Bankruptcy Act and created bankruptcy courts as adjuncts of the district courts.¹ The courts were composed of judges vested with practically all the judicial power of the United States; however, the judges served for fourteen-year terms, subject to removal for cause by the judicial councils of the circuits, and with salaries subject to statutory change. The bankruptcy courts were given jurisdiction over not only civil proceedings arising under the bankruptcy code, but also all other proceedings arising in or related to bankruptcy cases. Review was available in Article III courts, but decisions could be reversed only if clearly erroneous.

This broad grant of jurisdiction brought into question what kinds of cases could be heard by an Article I court. In Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., a plurality of the Supreme Court held that the conferral of jurisdiction upon Article I judges to hear state claims regarding traditional common law actions was unconstitutional.² In a narrow holding, a plurality of the Court sought to rationalize and limit the Court’s jurisprudence on Article I courts. According to the plurality, a fundamental principle of separation of powers requires the judicial power of the United States to be exercised by courts having the attributes prescribed in Article III. Congress may not evade the constitutional order by allocating judicial power to courts whose judges lack security of tenure and compensation. Only in three narrowly circumscribed instances may judicial power be distributed outside the Article III framework: in territories and the District of Columbia; courts-martial; and the adjudication of public rights.³ In bankruptcy litigation not involving any of these exceptions, the plurality concluded, the judicial power cases could not be assigned to the tribunals created by the Act.⁴

The lack of a majority in Northern Pipeline left unclear the degree of discretion left in Congress to restructure the bankruptcy courts and placed in question the constitutionality of other legislative efforts to establish non-Article III tribunals. Congress responded to Northern Pipeline by enacting the Bankruptcy Amendments and Federal Judgeship Act of 1984.⁵ Under the Act, bankruptcy courts remained as Article I entities, and overall their powers as courts were not notably diminished. However, Congress established a division between core proceedings, which could be heard and determined by bankruptcy courts, subject to lenient review, and other proceedings, which, though initially heard and decided by bankruptcy courts, could be reviewed de novo in the district court at the behest of any party, unless the parties consented to bankruptcy court jurisdiction. A safety valve was included, permitting the district court to withdraw any proceeding from the bankruptcy court on cause shown.⁶

In Granfinanciera, S.A. v. Nordberg, the Court considered whether a jury trial was required under the Seventh Amendment for a claim by a Chapter 11 bankruptcy trustee to void an allegedly fraudulent money transfer.⁷ The Court found that the cause of action was founded on state law and, although denominated a core proceeding by Congress, was actually a private right.⁸ Similarly, the Court in Stern v. Marshall held that a counterclaim of tortious interference with a gift, although made during a bankruptcy proceeding and statutorily deemed a core proceeding, was a state common law claim that did not fall under any of the public rights exceptions.⁹ By contrast, in Executive Benefits Ins. Agency v. Arkison, the Court held that when the Constitution does not permit a bankruptcy court to enter final judgment on a bankruptcy-related claim, both the statute and the Constitution are satisfied if the bankruptcy court treats the matter as a non-core claim and issues proposed findings of fact and conclusions of law to be reviewed de novo by the district court.¹⁰ And, as the Court later held in Wellness International v. Sharif, a bankruptcy court may adjudicate with finality a so-called Stern claim—that is, a core claim that does not fall within the public rights exception—if the parties have provided knowing and voluntary consent.¹¹

ArtIII.S1.9.9 Consent to Article I Court Jurisdiction

Congress has from time to time enacted legislation allowing non-Article III courts to adjudicate matters that would ordinarily proceed in Article III court based on the parties’ consent.¹ The Supreme Court has upheld some such arrangements, but at times has invalidated them on separation of powers grounds.

The Supreme Court has identified two distinct rationales for the constitutional limitations on the creation of non-Article III tribunals. First, the Court has noted that Article III provides a personal right to individual litigants, preserving “their interest in an impartial and independent federal adjudication of claims.”² Second, the Court has held that Article III safeguards structural principles, preserving the “role of the Judicial Branch” in our system of government by preventing Congress from transferring jurisdiction to non-Article III tribunals en-masse.³ The Court has explained that, while individual rights can be waived, “notions of consent and waiver cannot be dispositive” with respect to Article III’s structural protections because those “limitations serve institutional interests that the parties cannot be expected to protect”—separation of powers principles protecting the Judicial Branch from encroachment by the political branches.⁴ When examining the structural component of Article III protections in consent cases, the Court has assessed the constitutionality of different judicial schemes using ad hoc balancing tests that rely on seemingly disparate principles, leaving open questions about when Congress can provide an alternative forum to an Article III court in which consenting parties can resolve their disputes.⁵

For example, in Commodities Futures Trading Commission (CFTC) v. Schor, the Supreme Court, in assessing the structural component of Article III’s constitutional protections, rested its decision primarily on the breadth of matters adjudicated by the non-Article III tribunal at issue in that case.⁶ Specifically, the Court upheld a law that allowed the CFTC to adjudicate common law claims that were “incidental to” and “completely dependent upon adjudication by the Commission of [public rights] claims created by federal law” and arose “out of the same transaction or occurrence” as the federal law claim.⁷ For the Court, allowing an administrative agency to adjudicate such a “narrow class of common law claims” amounted to only a de minimis intrusion on the Judicial Branch.⁸ Nonetheless, in noting the narrow nature of its holding, the Schor Court emphasized that Congress could not “create[ ] a phalanx of non-Article III tribunals equipped to handle the entire business of the Article III courts without any Article III supervision or control and without evidence of valid and specific legislative necessities,” even if parties consented to adjudicate before such a forum.⁹

Five years later, in Peretz v. United States, the Court approached the issue of Article III’s structural protections in a slightly different manner.¹⁰ In Peretz, a criminal defendant who had failed to demand the presence of an Article III judge during the selection of his jury argued that having a magistrate judge oversee voir dire proceedings implicated the structural protections provided by Article III.¹¹ As in Schor, the Court rejected the idea that a judicial scheme granting a legislative court responsibilities traditionally exercised by a constitutional court ran counter to the institutional interests preserved by Article III.¹² But, while the Court in Schor focused on the narrow nature of the claims adjudicated by administrative agency in that case, the Court in Peretz focused on the degree of control exercised by a constitutional court over the non-Article III court’s work. The Court held that, “[b]ecause ‘the entire [jury selection] process takes place under the district court’s total control and jurisdiction,’ there is no danger that use of the magistrate involves a ‘congressional attempt’” to undermine the power of constitutional courts.¹³

In Stern v, Marshall, the Supreme Court held that the Bankruptcy Court lacked authority to enter judgment on a common law tort counterclaim.¹⁴ The Court held that the parties had consented to having the Bankruptcy Court hear the counterclaim, but while such consent satisfied the requirements of the relevant statute, it could not overcome applicable constitutional limits.¹⁵ In the wake of Stern, questions arose about the constitutionality of allowing consenting parties to proceed before a non-Article III court. In the 2015 case Wellness International v. Sharif, the Court held that Article III permits bankruptcy courts to adjudicate with finality Stern claims—claims designated for final adjudication in the bankruptcy court as a statutory matter, but prohibited from proceeding in that way as a constitutional matter—if the parties have provided knowing and voluntary consent.¹⁶ In so holding, the Court used the ad hoc balancing test from Schor and Peretz to conclude that allowing bankruptcy courts to decide Stern claims by consent would not “impermissibly threaten the institutional integrity of the Judicial Branch.”¹⁷ Following Wellness International, questions remain about the exact scope of Congress’s power to authorize non-Article III adjudication by litigant consent, but it appears that legislation that allows a relatively narrow class of claims to be adjudicated before a non-Article III tribunal with the parties’ consent and provides Article III courts with some oversight of the legislative court’s activities is likely to pass constitutional muster.