Northern Pipeline Co. V. Marathon Pipe Line Co. - Opinion of The Court

Opinion of The Court

Justice Brennan wrote for the plurality, joined by Justices Marshall, Blackmun, and Stevens. He stressed the importance of the political independence of the judiciary, which allows judges to decide cases free from domination from the Executive and Legislative branches. The life tenure and protection against diminution of salary helps to ensure this independence, but the bankruptcy judges lacked this protection.

Brennan distinguished the bankruptcy courts from three other categories of non-Article III courts. The first two categories of courts Brennan discusses are the territorial courts, permissible because Congress exercises the general powers of government in these territories; and courts martial, permissible because the Constitution grants the political branches broad powers to control the military.

The third exception discussed by Brennan are tribunals for the adjudication of cases involving public rights, 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”. 458 U.S. at 67-68. Public rights exist in contrast to private rights, i.e. disputes between two private parties, which are within the judicial power of Article III courts.

Brennan held that the dispute in question here was an adjudication of private rights, because it involved the restructuring of creditor-debtor relations under the bankruptcy laws. Thus, none of the three exceptions to Article III jurisdiction were applicable. He further held that Congress’ power under the Naturalization and Bankruptcy Clause (Art. I, § 8, cl.4) of the Constitution did not carry with it a power to create specialized tribunals for the adjudication of bankruptcy cases. Brennan feared that reading such a power into Article I would erode the jurisdiction conferred by Article III and displace the judicial branch of the government.

Brennan then turned to Northern’s argument that the bankruptcy courts were merely adjuncts to the U.S. District Courts. He framed the Constitutional issue as the determination whether the Bankruptcy Act retained “the essential attributes of judicial power” inherent in Article III tribunals. He began his analysis by examining two prior cases: Crowell v. Benson, 285 U.S. 22 (1932), in which the court permitted the United States Employees' Compensation Commission to make factual determinations in the issuance of compensation orders for individual employees; and United States v. Raddatz, 447 U.S. 667 (1980), in which the court upheld the Federal Magistrates Act, which permitted district court judges to refer certain pretrial motions to magistrates for initial determination. These cases provided limits on the extent to which Congress may transfer traditionally judicial functions to non-Article III tribunals. For example, Congress has substantial discretion in prescribing the manner in which rights created by its own statutes may be enforced, but Congress has no such discretion in altering the adjudication of rights it has not created by statute. Furthermore, the functions of the adjunct court must be limited in such a way so as to preserve the parties’ rights to adjudication before an Article III court.

Brennan held that the rights to be determined in a bankruptcy proceeding were not Congressionally created rights, and therefore the Bankruptcy Act encroached upon the powers of Article III courts. The rights Northern claimed against Marathon were contractual in nature, and as such were creatures of state law. Moreover, the jurisdiction granted to the bankruptcy courts under the Act was too broad, vesting them jurisdiction over all civil proceedings arising under Title 11 and in related cases, and granting them the power to issue final judgments. Thus, while Congress did retain the power to assign certain matters to non-Article III tribunals, this power was limited to rights created by federal statute and the powers of the tribunal had to be narrower than what an Article III court could exercise.

Finally, Brennan chose to apply the holding only prospectively, and to stay the judgment of the court until October 4, 1982, to give Congress some time to rewrite the statute.