Northern Pipeline Co. v. Marathon Pipe Line Co.
(1982)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Congress may not vest Article III judicial power in non-Article III courts, except in a few narrow, historically recognized circumstances. The adjudication of private, state-created rights, such as common-law contract claims, does not fall within these exceptions and must be performed by judges with Article III's constitutional protections of life tenure and salary security.
Facts:
- Northern Pipeline Construction Co. (Northern) was a construction company that entered into contracts with Marathon Pipe Line Co. (Marathon).
- Northern later filed a petition for reorganization under the Bankruptcy Act of 1978 in the United States Bankruptcy Court.
- Subsequent to filing for bankruptcy, Northern initiated a lawsuit against Marathon in that same bankruptcy court.
- Northern's lawsuit sought damages for alleged breaches of contract and warranty, as well as for misrepresentation, coercion, and duress.
- The claims in Northern's lawsuit were based on state common law and concerned a private dispute between two corporations.
Procedural Posture:
- Northern Pipeline Construction Co. filed a petition for reorganization in the United States Bankruptcy Court for the District of Minnesota.
- In that same court, Northern filed a lawsuit against Marathon Pipe Line Co.
- Marathon moved to dismiss the suit, arguing the Bankruptcy Act of 1978 unconstitutionally conferred Article III power on non-Article III judges.
- The Bankruptcy Judge, a court of first instance, denied the motion to dismiss.
- Marathon appealed to the United States District Court for the District of Minnesota.
- The District Court reversed the Bankruptcy Judge and granted the motion to dismiss, holding the jurisdictional grant of the Act unconstitutional.
- Northern and the United States, as an intervenor, appealed the District Court's decision directly to the Supreme Court of the United States.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the broad grant of jurisdiction to non-Article III bankruptcy judges in the Bankruptcy Act of 1978, which empowers them to adjudicate state-law contract claims between private parties, violate Article III of the Constitution?
Opinions:
Majority - Justice Brennan
Yes, the broad grant of jurisdiction to bankruptcy courts under the Bankruptcy Act of 1978 violates Article III of the Constitution. Article III commands that the "judicial Power of the United States" be vested in courts whose judges are granted life tenure and protection against salary diminution. The bankruptcy judges created by the Act lack these protections. The Court recognizes only three narrow, historically justified exceptions where non-Article III "legislative courts" may exercise jurisdiction: territorial courts, courts-martial, and tribunals adjudicating "public rights" (disputes between the government and private citizens). The suit here involves a "private right"—a state-law contract claim between two private parties—which lies at the core of the judicial power that must be exercised by Article III courts. The Act's bankruptcy courts cannot be saved as mere "adjuncts" to the district courts because they exercise all the "essential attributes of the judicial power," including the power to issue final judgments and conduct jury trials, without sufficient oversight by an Article III tribunal.
Concurrence - Justice Rehnquist
Yes, as applied to this specific case, the grant of authority enabling a Bankruptcy Court to entertain and decide Northern's state-law contract lawsuit over Marathon's objection violates Article III. The Court should not decide the broad constitutional question of the entire Act's validity but should limit its holding to the facts presented. This case involves a traditional common-law action based entirely on state law, which is the historical domain of Article III courts. To whatever extent other powers granted by the Act could be sustained under the "public rights" doctrine, the adjudication of this private lawsuit cannot. Because this unconstitutional grant of jurisdiction is not readily severable from the rest of the statute, the judgment is affirmed.
Dissenting - Chief Justice Burger
No, the Court's holding should be interpreted narrowly and does not render the entire bankruptcy system unconstitutional. The holding is limited to the specific proposition that a traditional state common-law action must be heard by an Article III court. This does not preclude bankruptcy courts from adjudicating the vast majority of bankruptcy-related claims. The constitutional problem can be easily resolved by Congress simply by providing that these ancillary common-law actions be routed to the U.S. district court, leaving the new bankruptcy court structure largely intact.
Dissenting - Justice White
No, the jurisdictional grant in the Bankruptcy Act of 1978 is constitutional. The plurality's formalistic distinction between Article I and Article III courts is unworkable and ignores 150 years of precedent. A flexible balancing approach is more appropriate, weighing Article III's structural values against Congress's practical needs under its Article I powers. The bankruptcy system is constitutional under this approach because it provides for ample appellate review by Article III courts, and the bankruptcy courts deal with specialized issues that pose no threat of political aggrandizement. The distinction between state-law and federal-law claims is artificial, as bankruptcy adjudications have always involved state-law issues in the process of resolving creditors' claims.
Analysis:
This decision significantly curtailed Congress's power to create specialized, non-Article III legislative courts to adjudicate matters traditionally within the federal judicial power. It solidified the distinction between "public rights" and "private rights," holding that the latter are at the core of the judicial power that must be reserved for Article III courts to protect the separation of powers. The ruling invalidated the jurisdictional scheme of the 1978 Bankruptcy Act, forcing Congress to restructure the entire system into its modern form, where bankruptcy courts are adjuncts of the district courts with limited authority over "non-core" proceedings. This case remains a foundational precedent in the jurisprudence of federal courts and the separation of powers.
Unlock the full brief for Northern Pipeline Co. v. Marathon Pipe Line Co.