throbber
(Slip Opinion)
`
`
`
` OCTOBER TERM, 2013
`
`
`Syllabus
`
`1
`
` NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
`
`
`
` being done in connection with this case, at the time the opinion is issued.
`
`
`
` The syllabus constitutes no part of the opinion of the Court but has been
`
` prepared by the Reporter of Decisions for the convenience of the reader.
`
` See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
`
`
`SUPREME COURT OF THE UNITED STATES
`
`
`
` Syllabus
`
`EXECUTIVE BENEFITS INSURANCE AGENCY v.
`
`ARKISON, CHAPTER 7 TRUSTEE OF ESTATE OF
`
`BELLINGHAM INSURANCE AGENCY, INC.
`
`
`CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
`
`THE NINTH CIRCUIT
` No. 12–1200. Argued January 14, 2014—Decided June 9, 2014
`
`Bellingham Insurance Agency, Inc. (BIA), filed a voluntary chapter 7
`bankruptcy petition. Respondent Peter Arkison, the bankruptcy
`trustee, filed a complaint in the Bankruptcy Court against petitioner
`Executive Benefits Insurance Agency (EBIA) and others alleging the
`fraudulent conveyance of assets from BIA to EBIA. The Bankruptcy
`
`
` Court granted summary judgment for the trustee. EBIA appealed to
`the District Court, which affirmed the Bankruptcy Court’s decision
`
`
`
` after de novo review and entered judgment for the trustee. While
`EBIA’s appeal to the Ninth Circuit was pending, this Court held that
`Article III did not permit a Bankruptcy Court to enter final judgment
`on a counterclaim for tortious interference, even though final
`
`adjudication of that claim by the Bankruptcy Court was authorized
`by statute. Stern v. Marshall, 564 U. S. ___, ___. In light of Stern,
`
`
`EBIA moved to dismiss its appeal for lack of jurisdiction. The Ninth
`
`
`Circuit rejected EBIA’s motion and affirmed. It acknowledged the
`
`trustee’s claims as “Stern claims,” i.e., claims designated for final
`adjudication in the bankruptcy court as a statutory matter, but
`
`prohibited from proceeding in that way as a constitutional matter.
`The Court of Appeals nevertheless concluded that EBIA had
`
`impliedly consented to jurisdiction. The Court of Appeals also
`observed that the Bankruptcy Court’s judgment could instead be
`treated as proposed findings of fact and conclusions of law, subject to
`de novo review by the District Court.
`Held:
`
`
`
`
`1. Under the Bankruptcy Amendments and Federal Judgeship Act
`
`
`
`
`
`
`
`
`
`

`
`EXECUTIVE BENEFITS INS. AGENCY v. ARKISON
`
`
`Syllabus
`in
`jurisdiction
`of 1984, federal district courts have original
`
`bankruptcy cases and may refer to bankruptcy judges two statutory
`
`“core” proceedings and
`“non-core”
`categories of proceedings:
`proceedings. See generally 28 U. S. C. §157. In core proceedings, a
`
`judge “may hear and determine
`bankruptcy
`. . . and enter
`appropriate orders and judgments,” subject to the district court’s
`traditional appellate review. §157(b)(1). In non-core proceedings—
`those that are “not . . . core” but are “otherwise related to a case
`under title 11,” §157(c)(1)—final judgment must be entered by the
`district court after de novo review of the bankruptcy judge’s proposed
`findings of fact and conclusions of law, ibid., except that the
`bankruptcy judge may enter final judgment if the parties consent,
`
`§157(c)(2).
`
`In Stern, the Court confronted an underlying conflict between the
`
`1984 Act and the requirements of Article III. The Court held that
`Article III prohibits Congress from vesting a bankruptcy court with
`
`
`the authority to finally adjudicate the “core” claim of tortious
`interference. The Court did not, however, address how courts should
`proceed when they encounter a Stern claim. Pp. 4–8.
`2. Stern claims may proceed as non-core within the meaning of
`
`§157(c). Lower courts have described Stern claims as creating a
`statutory “gap,” since bankruptcy judges are not explicitly authorized
`to propose findings of fact and conclusions of law in a core proceeding.
`However, this so-called gap is closed by the Act’s severability
`provision, which instructs that where a “provision of the Act or [its]
`application . . . is held invalid, the remainder of th[e] Act . . . is not
`
`affected thereby.” 98 Stat. 344. As applicable here, when a court
`identifies a Stern claim, it has “held invalid” the “application” of
`§157(b), and the “remainder” not affected includes §157(c), which
`governs non-core proceedings. Accordingly, where a claim otherwise
`satisfies §157(c)(1), the bankruptcy court should simply treat the
`Stern claim as non-core. This conclusion accords with the Court’s
`
`general approach to severability, which is to give effect to the valid
`
`portion of a statute so long as it “remains ‘fully operative as a law,’ ”
`Free Enterprise Fund v. Public Company Accounting Oversight Bd.,
`
`561 U. S. 477, 509, and so long as the statutory text and context do
`not suggest that Congress would have preferred no statute at all,
`ibid. Pp. 8–10.
`
`the
`to
`3. Section 157(c)(1)’s procedures apply
`fraudulent
`
`
`conveyance claims here. This Court assumes without deciding that
`these claims are Stern claims, which Article III does not permit to be
`treated as “core” claims under §157(b). But because the claims assert
`that property of the bankruptcy estate was improperly removed, they
`are self-evidently “related to a case under title 11.” Accordingly, they
`
`
`
`
`
`
`
`
`
`
`
`2
`
`
`
`
`

`
`3
`
`
`Cite as: 573 U. S. ____ (2014)
`
`
`Syllabus
`
`fit comfortably within the category of claims governed by §157(c)(1).
`The Bankruptcy Court would have been permitted to follow that
`provision’s procedures, i.e., to submit proposed findings of fact and
`conclusions of law to the District Court for de novo review. Pp. 11–
`
`12.
`
`
`
`4. Here, the District Court’s de novo review of the Bankruptcy
`Court’s order and entry of its own valid final judgment cured any
`potential error in the Bankruptcy Court’s entry of judgment. EBIA
`contends that it was constitutionally entitled to review by an Article
`III court regardless of whether the parties consented to bankruptcy
`court adjudication. In the alternative, EBIA asserts that even if such
`
`consent were constitutionally permissible, it did not in fact consent.
`Neither contention need be addressed here, because EBIA received
`the same review from the District Court that it would have received
`
`had the Bankruptcy Court treated the claims as non-core proceedings
`
`under §157(c)(1). Pp. 12–13.
`702 F. 3d 553, affirmed.
`THOMAS, J., delivered the opinion for a unanimous Court.
`
`
`
`
`
`
`
`

`
`
`
`
`
` Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`
`1
`
`
` NOTICE: This opinion is subject to formal revision before publication in the
`
`
`
` preliminary print of the United States Reports. Readers are requested to
`
` notify the Reporter of Decisions, Supreme Court of the United States, Wash-
`
` ington, D. C. 20543, of any typographical or other formal errors, in order
`
`
` that corrections may be made before the preliminary print goes to press.
`
`
`
`
`SUPREME COURT OF THE UNITED STATES
`
`_________________
`
` No. 12–1200
`_________________
`EXECUTIVE BENEFITS INSURANCE AGENCY, PETI-
`
`TIONER v. PETER H. ARKISON, CHAPTER 7 TRUSTEE
`
`
` OF THE ESTATE OF BELLINGHAM INSURANCE
`
`
`AGENCY, INC.
`
`
`ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
`
`
`APPEALS FOR THE NINTH CIRCUIT
`
`
`[June 9, 2014]
`
` JUSTICE THOMAS delivered the opinion of the Court.
`In Stern v. Marshall, 564 U. S. ___ (2011), this Court
`
`
`held that even though bankruptcy courts are statutorily
`authorized to enter final judgment on a class of bankruptcy-
`related claims, Article III of the Constitution prohibits
`bankruptcy courts from finally adjudicating certain of
`
`those claims. Stern did not, however, decide how bank-
`ruptcy or district courts should proceed when a “Stern
`claim” is identified. We hold today that when, under
`Stern’s reasoning, the Constitution does not permit a
`bankruptcy court to enter final judgment on a bankruptcy-
`related claim, the relevant statute nevertheless permits a
`bankruptcy court to issue proposed findings of fact and
`conclusions of law to be reviewed de novo by the district
`court. Because the District Court in this case conducted
`the de novo review that petitioner demands, we affirm the
`judgment of the Court of Appeals upholding the District
`Court’s decision.
`
`
`
`
`
`
`

`
`EXECUTIVE BENEFITS INS. AGENCY v. ARKISON
`
`Opinion of the Court
`
`I
`
`
`Nicolas Paleveda and his wife owned and operated two
`companies—Aegis Retirement
`Income Services,
`Inc.
`(ARIS), and Bellingham Insurance Agency, Inc. (BIA). By
`early 2006, BIA had become insolvent, and on January 31,
`2006, the company ceased operation. The next day,
`Paleveda used BIA funds to incorporate Executive Bene-
`fits Insurance Agency, Inc. (EBIA), petitioner in this case.
`Paleveda and others initiated a scheme to transfer assets
`from BIA to EBIA. The assets were deposited into an
`account held jointly by ARIS and EBIA and ultimately
`credited to EBIA at the end of the year.
`
`On June 1, 2006, BIA filed a voluntary Chapter 7 bank-
`
`ruptcy petition in the United States Bankruptcy Court for
`the Western District of Washington. Peter Arkison, the
`
`bankruptcy trustee and respondent in this case, filed a
`complaint in the same Bankruptcy Court against EBIA
`and others. As relevant here, the complaint alleged that
`Paleveda used various methods to fraudulently convey
`
`BIA assets to EBIA.1 EBIA filed an answer and denied
`
`many of the trustee’s allegations.
`
`After some disagreement as to whether the trustee’s
`claims should continue in the Bankruptcy Court or instead
`proceed before a jury in Federal District Court, the trustee
`filed a motion for summary judgment against EBIA in the
`Bankruptcy Court. The Bankruptcy Court granted sum-
`mary judgment for the trustee on all claims, including the
`fraudulent conveyance claims. EBIA then appealed that
`determination to the District Court. The District Court
`
`
`
`conducted de novo review, affirmed the Bankruptcy
`Court’s decision, and entered judgment for the trustee.
`
`EBIA appealed to the United States Court of Appeals for
`
`the Ninth Circuit. After EBIA filed its opening brief, this
`——————
` 1The trustee asserted claims of fraudulent conveyance under 11
`U. S. C. §544, and under state law, Wash. Rev. Code, ch. 19.40 (2012).
`
`
`
`
`
`
`
`
`
`
`
`2
`
`
`
`
`
`
`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`Court decided Stern, supra. In Stern, we held that Article
`III of the Constitution did not permit a bankruptcy court
`to enter final judgment on a counterclaim for tortious
`interference, id., at ___, even though final adjudication of
`that claim by the Bankruptcy Court was authorized by
`statute, see Part II–B, infra.2 In light of Stern, EBIA
`
`moved to dismiss its appeal in the Ninth Circuit for lack of
`jurisdiction, contending that Article III did not permit
`Congress to vest authority in a bankruptcy court to finally
`decide the trustee’s fraudulent conveyance claims.
`The Ninth Circuit rejected EBIA’s motion and affirmed
`
`the District Court. In re Bellingham Ins. Agency, Inc., 702
`F. 3d 553 (2012). As relevant here, the court held that
`Stern, supra, and Granfinanciera, S. A. v. Nordberg, 492
`U. S. 33 (1989),3 taken together, lead to the conclusion
`that Article III does not permit a bankruptcy court to
`enter final judgment on a fraudulent conveyance claim
`against a noncreditor unless the parties consent. 702
`F. 3d, at 565. The Ninth Circuit concluded that EBIA had
`impliedly consented to the Bankruptcy Court’s jurisdic-
`tion, and that the Bankruptcy Court’s adjudication of the
`
`fraudulent conveyance claim was therefore permissible.
`Id., at 566, 568. The Court of Appeals also observed that
`the Bankruptcy Court’s judgment could instead be treated
`
`as proposed findings of fact and conclusions of law, subject
`to de novo review by the District Court. Id., at 565–566.
`We granted certiorari, 570 U. S. ___ (2013).
`
`
`——————
` 2As we explain below, see Part II–B, infra, the statutory scheme
`
`
`
` at issue both in Stern and in this case grants bankruptcy courts the
`authority to “hear and determine” and “enter appropriate orders and
`judgments” in “core” proceedings. 28 U. S. C. §157(b)(1). The statute
`lists counterclaims like the one brought in Stern as “core” claims.
`
` §157(b)(2)(C).
`3 Granfinanciera held that a fraudulent conveyance claim under Title
`
`11 is not a matter of “public right” for purposes of Article III, 492 U. S.,
`
`
` at 55, and that the defendant to such a claim is entitled to a jury trial
`under the Seventh Amendment, id., at 64.
`
`
`
`3
`
`
`
`
`
`
`
`
`
`

`
`4
`
`
`EXECUTIVE BENEFITS INS. AGENCY v. ARKISON
`
`Opinion of the Court
`
`
` II
`
` In Stern, we held that Article III prohibits Congress
`
`from vesting a bankruptcy court with the authority to
`finally adjudicate certain claims. 564 U. S., at ___. But
`we did not address how courts should proceed when they
`encounter one of these “Stern claims”—a claim designated
`
`for final adjudication in the bankruptcy court as a statu-
`tory matter, but prohibited from proceeding in that way as
`a constitutional matter.4
`
`As we explain in greater detail below, when a bankruptcy
`
`court is presented with such a claim, the proper course
`
`is to issue proposed findings of fact and conclusions of law.
`The district court will then review the claim de novo and
`enter judgment. This approach accords with the bank-
`ruptcy statute and does not implicate the constitutional
`defect identified by Stern.
`
`
`
`A
`We begin with an overview of modern bankruptcy legis-
`
`lation. Prior to 1978, federal district courts could refer
`matters within the traditional “summary jurisdiction” of
`bankruptcy courts to specialized bankruptcy referees.5
`
`See Northern Pipeline Constr. Co. v. Marathon Pipe Line
`Co., 458 U. S. 50, 53 (1982) (plurality opinion). Summary
`jurisdiction covered claims involving “property in the
`actual or constructive possession of the [bankruptcy]
`court,” ibid., i.e., claims regarding the apportionment of
`——————
`4Because we conclude that EBIA received the de novo review and
`entry of judgment to which it claims constitutional entitlement, see
`Part IV–B, infra, this case does not require us to address whether EBIA
`in fact consented to the Bankruptcy Court’s adjudication of a Stern
`claim and whether Article III permits a bankruptcy court, with the
`consent of the parties, to enter final judgment on a Stern claim. We
`
`reserve that question for another day.
`5Bankruptcy referees were designated “judges” in 1973. See North-
` ern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U. S. 50, 53,
`
`
`n. 2 (1982) (plurality opinion).
`
`
`
`
`
`
`
`
`
`
`
`

`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`5
`
`
`
`
`
`
`
`
`
`
`
` Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`the existing bankruptcy estate among creditors. See
`Brubaker, A “Summary” Statutory and Constitutional
`Theory of Bankruptcy Judges’ Core Jurisdiction After
`Stern v. Marshall, 86 Am. Bankr. L. J. 121, 124 (2012).
`
`Proceedings to augment the bankruptcy estate, on the
`other hand, implicated the district court’s plenary jurisdic-
`tion and were not referred to the bankruptcy courts absent
`both parties’ consent. See MacDonald v. Plymouth County
`Trust Co., 286 U. S. 263, 266 (1932); see also Brubaker,
`supra, at 128.
`
`In 1978, Congress enacted sweeping changes to the
`
`federal bankruptcy laws. See 92 Stat. 2549. The Bank-
`ruptcy Reform Act eliminated the historical distinction
`between “‘summary’” jurisdiction belonging to bankruptcy
`courts and “‘plenary’” jurisdiction belonging to either a
`district court or an appropriate state court. Northern
`Pipeline, supra, at 54 (plurality opinion); see also 1 W.
`Norton & W. Norton Bankruptcy Law and Practice §4:12,
`p. 4–44 (3d ed. 2013). Instead, the 1978 Act mandated
`that bankruptcy judges “shall exercise” jurisdiction over
`“all civil proceedings arising under title 11 or arising in or
`related to cases under title 11.” 28 U. S. C. §§1471(b)–(c)
`(1976 ed., Supp. IV). Under the 1978 Act, bankruptcy
`judges were “vested with all of the ‘powers of a court of
`equity, law, and admiralty,’” with only a few limited ex-
`ceptions. Northern Pipeline, 458 U. S., at 55 (plurality
`opinion) (quoting §1481). Notwithstanding their expanded
`jurisdiction and authority, these bankruptcy judges were
`not afforded the protections of Article III—namely, life
`tenure and a salary that may not be diminished.
`Id.,
`at 53.
`In Northern Pipeline, this Court addressed whether
`bankruptcy judges under the 1978 Act could “constitution-
`ally be vested with jurisdiction to decide [a] state-law
`
`
`contract claim” against an entity not otherwise a party to
`the proceeding. Id., at 53, 87, n. 40. The Court concluded
`
`

`
`EXECUTIVE BENEFITS INS. AGENCY v. ARKISON
`
`Opinion of the Court
`that assignment of that claim for resolution by the bank-
`ruptcy judge “violates Art. III of the Constitution.” Id., at
`52, 87 (plurality opinion); see id., at 91 (Rehnquist, J.,
`concurring in judgment). The Court distinguished be-
`tween cases involving so-called “public rights,” which may
`be removed from the jurisdiction of Article III courts, and
`cases involving “private rights,” which may not. See id., at
`69–71 (plurality opinion); id., at 91 (Rehnquist, J., concur-
`ring in judgment). Specifically, the plurality noted that
`“the restructuring of debtor-creditor relations, which is at
`the core of the federal bankruptcy power, must be distin-
`
`guished from the adjudication of state-created private
`rights,” which belong in an Article III court. Id., at 71–72,
`and n. 26.
`
`
`
`6
`
`
`B
`
`
`Against that historical backdrop, Congress enacted the
`Bankruptcy Amendments and Federal Judgeship Act of
`1984—the Act at issue in this case. See 28 U. S. C. §151
`
`et seq. Under the 1984 Act, federal district courts have
`
`“original and exclusive jurisdiction of all cases under title
`11,” §1334(a), and may refer to bankruptcy judges any
`“proceedings arising under title 11 or arising in or related
`to a case under title 11,” §157(a).6 Bankruptcy judges
`
`for cause,
`serve 14-year terms subject to removal
`§§152(a)(1), (e), and their salaries are set by Congress,
`§153(a).
`
`The 1984 Act largely restored the bifurcated jurisdic-
`tional scheme that existed prior to the 1978 Act. The 1984
`Act implements that bifurcated scheme by dividing all
`matters that may be referred to the bankruptcy court
`into two categories: “core” and “non-core” proceedings. See
`generally §157.7 It is the bankruptcy court’s responsibility
`——————
`6In addition, district courts may also withdraw such matters from the
`
` bankruptcy courts for “cause shown.” §157(d).
` 7In using the term “core,” Congress tracked the Northern Pipeline
`
`
`
`
`
`
`
`
`
`
`
`

`
`7
`
`
`Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`to determine whether each claim before it is core or non-
`core. §157(b)(3); cf. Fed. Rule Bkrtcy. Proc. 7012. For core
`proceedings, the statute contains a nonexhaustive list of
`examples, including—as relevant here—“proceedings to
`
`determine, avoid, or recover fraudulent conveyances.”
`§157(b)(2)(H). The statute authorizes bankruptcy judges
`to “hear and determine” such claims and “enter appropri-
`ate orders and judgments” on them. §157(b)(1). A final
`judgment entered in a core proceeding is appealable to the
`
`district court, §158(a)(1), which reviews the judgment
`under traditional appellate standards, Rule 8013.
`
`
`As for “non-core” proceedings—i.e., proceedings that are
`“not . . . core” but are “otherwise related to a case under
`title 11”—the statute authorizes a bankruptcy court to
`“hear [the] proceeding,” and then “submit proposed find-
`
`ings of fact and conclusions of law to the district court.”
`§157(c)(1). The district court must then review those
`proposed findings and conclusions de novo and enter any
`final orders or judgments. Ibid. There is one statutory
`exception to this rule: If all parties “consent,” the statute
`permits the bankruptcy judge “to hear and determine and
`to enter appropriate orders and judgments” as if the pro-
`ceeding were core. §157(c)(2).
`
`Put simply: If a matter is core, the statute empowers the
`bankruptcy judge to enter final judgment on the claim,
`subject to appellate review by the district court. If a mat-
`ter is non-core, and the parties have not consented to final
`adjudication by the bankruptcy court, the bankruptcy
`judge must propose findings of fact and conclusions of law.
`
`Then, the district court must review the proceeding
`
`de novo and enter final judgment.
`——————
`plurality’s use of the same term as a description of those claims that fell
`within the scope of the historical bankruptcy court’s power. See 458
`U. S., at 71 (“[T]he restructuring of debtor-creditor relations, which is
`at the core of the federal bankruptcy power, must be distinguished from
`the adjudication of state-created private rights . . .” (emphasis added)).
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`
`8
`
`
`
`
`EXECUTIVE BENEFITS INS. AGENCY v. ARKISON
`
`Opinion of the Court
`
`C
`
`
` Stern v. Marshall, 564 U. S. ___, confronted an underly-
`
`
`ing conflict between the 1984 Act and the requirements of
`Article III. In particular, Stern considered a constitutional
`challenge to the statutory designation of a particular claim
`as “core.” The bankrupt in that case had filed a common-
`law counterclaim for tortious interference against a credi-
`tor to the estate. Id., at ___. Section 157(b)(2)(C), as
`added by the 1984 Act, lists “counterclaims by the estate
`against persons filing claims against the estate” as a core
`proceeding, thereby authorizing the bankruptcy court to
`adjudicate the claim to final judgment. See supra this
`page. The respondent in Stern objected that Congress had
`violated Article III by vesting the power to adjudicate the
`tortious interference counterclaim in bankruptcy court.
`Stern, 564 U. S., at ___.
`
`We agreed. Id., at ___. In that circumstance, we held,
`Congress had improperly vested the Bankruptcy Court
`
`with the “‘judicial Power of the United States,’” just as in
`Northern Pipeline. 564 U. S., at ___, ___ (slip op., at 21,
`
`
`38). Because “[n]o ‘public right’ exception excuse[d] the
`failure to comply with Article III,” we concluded that
`Congress could not confer on the Bankruptcy Court the
`authority to finally decide the claim. Id., at ___. (slip op.,
`at 21).
`
`
`
`
`
`
`
`
`III
`
`Stern made clear that some claims labeled by Congress
`as “core” may not be adjudicated by a bankruptcy court in
`the manner designated by §157(b). Stern did not, how-
`ever, address how the bankruptcy court should proceed
`under those circumstances. We turn to that question now.
`
`The Ninth Circuit held that the fraudulent conveyance
`claims at issue here are Stern claims—that is, proceedings
`that are defined as “core” under §157(b) but may not, as a
`constitutional matter, be adjudicated as such (at least in
`
`
`
`
`
`
`
`

`
`
`
` Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`the absence of consent, see n. 4, supra. See 702 F. 3d, at
`
`562. Neither party contests that conclusion.
`
`The lower courts, including the Ninth Circuit in this
`case, have described Stern claims as creating a statutory
`
`
`“gap.” See, e.g., 702 F. 3d, at 565. By definition, a Stern
`claim may not be adjudicated to final judgment by the
`bankruptcy court, as in a typical core proceeding. But the
`alternative procedure, whereby the bankruptcy court
`submits proposed findings of fact and conclusions of law,
`applies only to non-core claims. See §157(c)(1). Because
`§157(b) does not explicitly authorize bankruptcy judges to
`submit proposed findings of fact and conclusions of law in
`a core proceeding, the argument goes, Stern created a
`
`“gap” in the bankruptcy statute. See 702 F. 3d, at 565.
`That gap purportedly renders the bankruptcy court power-
`less to act on Stern claims, see Brief for Petitioner 46–48,
`thus requiring the district court to hear all Stern claims in
`the first instance.
`
`We disagree. The statute permits Stern claims to pro-
`ceed as non-core within the meaning of §157(c). In partic-
`
`ular, the statute contains a severability provision that
`accounts for decisions, like Stern, that invalidate certain
`applications of the statute:
`“If any provision of this Act or the application thereof
`to any person or circumstance is held invalid, the re-
`mainder of this Act, or the application of that provi-
`sion to persons or circumstances other than those as
`to which it is held invalid, is not affected thereby.” 98
`
`Stat. 344, note following 28 U. S. C. §151.
`
`The plain text of this severability provision closes the
`
`so-called “gap” created by Stern claims. When a court
`
`identifies a claim as a Stern claim, it has necessarily “held
`invalid” the “application” of §157(b)—i.e., the “core” label
`and its attendant procedures—to the litigant’s claim.
`Note following §151. In that circumstance, the statute
`
`
`
`
`
`
`9
`
`
`
`
`
`

`
`
`10
`
`
`
`
`
`
`
`
`EXECUTIVE BENEFITS INS. AGENCY v. ARKISON
`
`Opinion of the Court
` instructs that “the remainder of th[e] Act . . . is not affected
`
`
`thereby.” Ibid. That remainder includes §157(c), which
`governs non-core proceedings. With the “core” category no
`longer available for the Stern claim at issue, we look to
`§157(c)(1) to determine whether the claim may be adjudi-
`cated as a non-core claim—specifically, whether it is “not a
`core proceeding” but is “otherwise related to a case under
`title 11.” If the claim satisfies the criteria of §157(c)(1),
`the bankruptcy court simply treats the claims as non-core:
`The bankruptcy court should hear the proceeding and
`submit proposed findings of fact and conclusions of law
`to the district court for de novo review and entry of
`judgment.
`
`The conclusion that the remainder of the statute may
`
`continue to apply to Stern claims accords with our general
`approach to severability. We ordinarily give effect to the
`valid portion of a partially unconstitutional statute so long
`as it “remains ‘“fully operative as a law,”’” Free Enterprise
`
`Fund v. Public Company Accounting Oversight Bd., 561
`U. S. 477, 509 (2010) (quoting New York v. United States,
`505 U. S. 144, 186 (1992)), and so long as it is not “‘evi-
`dent’” from the statutory text and context that Congress
`would have preferred no statute at all, 561 U. S., at 509
`(quoting Alaska Airlines, Inc. v. Brock, 480 U. S. 678, 684
`(1987)). Neither of those concerns applies here. Thus,
`
`§157(c) may be applied naturally to Stern claims. And,
`EBIA has identified “nothing in the statute’s text or his-
`
`torical context” that makes it “evident” that Congress
`would prefer to suspend Stern claims in limbo. 561 U. S.,
`
`at 509.8
`——————
` 8To the contrary, we noted in Stern that removal of claims from core
`
`bankruptcy jurisdiction does not “meaningfully chang[e] the division of
`labor in the current statute.” 564 U. S., at ___ (slip op., at 37). Accept-
`ing EBIA’s contention that district courts are required to hear all Stern
`
`
` claims in the first instance, see Brief for Petitioner 46–48, would
` dramatically alter the division of responsibility set by Congress.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`
`
`
` Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`IV
`
`A
`
`Now we must determine whether the procedures set
`
`forth in §157(c)(1) apply to the fraudulent conveyance
`claims at issue in this case. The Court of Appeals held,
`and we assume without deciding, that the fraudulent
`conveyance claims in this case are Stern claims. See Part
`III, supra. For purposes of this opinion, the “application”
`of both the “core” label and the procedures of §157(b) to
`the trustee’s claims has therefore been “held invalid.”
`Note following §151. Accordingly, we must decide whether
`
`the fraudulent conveyance claims brought by the trustee
`are within the scope of §157(c)(1)—that is, “not . . . core”
`proceedings but “otherwise related to a case under title
`
`11.” We hold that this language encompasses the trustee’s
`claims of fraudulent conveyance.
`First, the fraudulent conveyance claims in this case are
`
`“not . . . core.” The Ninth Circuit held—and no party
`disputes—that Article III does not permit these claims to
`be treated as “core.” See Part III, supra. Second, the
`fraudulent conveyance claims are self-evidently “related to
`a case under title 11.” At bottom, a fraudulent conveyance
`claim asserts that property that should have been part of
`
`the bankruptcy estate and therefore available for distribu-
`tion to creditors pursuant to Title 11 was improperly
`removed. That sort of claim is “related to a case under
`
`title 11” under any plausible construction of the statutory
`text, and no party contends otherwise. See, e.g., Celotex
`Corp. v. Edwards, 514 U. S. 300, 307, n. 5, 308 (1995)
`(“Proceedings ‘related to’ the bankruptcy include . . . suits
`between third parties which have an effect on the bank-
`ruptcy estate”). Accordingly, because these Stern claims
`fit comfortably within the category of claims governed by
`§157(c)(1), the Bankruptcy Court would have been permit-
`ted to follow the procedures required by that provision,
`i.e., to submit proposed findings of fact and conclusions of
`
`
`
`
`
`
`
`
`
` 11
`
`
`
`
`
`

`
`EXECUTIVE BENEFITS INS. AGENCY v. ARKISON
`
`Opinion of the Court
`law to the District Court to be reviewed de novo.
`B
`Although this case did not proceed in precisely that
`fashion, we affirm nonetheless. A brief procedural history
`of the case helps explain why.
`As noted, §157 permits a bankruptcy court to adjudicate
`a claim to final judgment in two circumstances—in core
`proceedings, see §157(b), and in non-core proceedings
`“with the consent of all the parties,” §157(c)(2). In this
`case, the Bankruptcy Court entered judgment in favor of
`
`the bankruptcy trustee without specifying in its order
`whether it was acting pursuant to §157(b) (core) or
`§157(c)(2) (non-core with consent). EBIA immediately
`appealed to the District Court, see §158, but it did not
`argue that the Bankruptcy Court lacked constitutional
`authority to grant summary judgment. As a result, the
`District Court did not analyze whether there was a Stern
`
`
`problem and did not, as some district courts have done,
`
`relabel the bankruptcy order as mere proposed findings of
`fact and conclusions of law. See, e.g., In re Parco Merged
`Media Corp., 489 B. R. 323, 326 (Me. 2013) (collecting
`cases). The District Court did, however, review de novo
`the Bankruptcy Court’s grant of summary judgment for
`the trustee—a legal question—and issued a reasoned
`opinion affirming the Bankruptcy Court. The District
`Court then separately entered judgment in favor of the
`trustee. See 28 U. S. C. §1334(b) (“[T]he district courts
`shall have original but not exclusive jurisdiction of all civil
`proceedings . . . related to cases under title 11”).
`EBIA now objects on constitutional grounds to the
`
`Bankruptcy Court’s disposition of the fraudulent convey-
`ance claims. EBIA contends that it was constitutionally
`entitled to review of its fraudulent conveyance claims by
`an Article III court regardless of whether the parties
`consented to adjudication by a bankruptcy court. Brief for
`
`
`
`
`
`
`
`
`
`
` 12
`
`
`
`
`
`
`

`
`
`
` 13
`
`
`
`
`
`It is so ordered.
`
`
`
`
`
`
`
` Cite as: 573 U. S. ____ (2014)
`
`Opinion of the Court
`In an alternative argument, EBIA
`Petitioner 25–27.
`asserts that even if the Constitution permitted the Bank-
`ruptcy Court to adjudicate its claim with the consent of
`the parties, it did not in fact consent. Id., at 38.
`
`
`In light of the procedural posture of this case, however,
`
`we need not decide whether EBIA’s contentions are correct
`on either score. At bottom, EBIA argues that it was enti-
`tled to have an Article III court review de novo and enter
`judgment on the fraudulent conveyance claims asserted by
`the trustee. In effect, EBIA received exactly that. The
`
`District Court conducted de novo review of the summary
`judgment claims, concluding in a written opinion that
`there were no disputed issues of material fact and that the
`trustee was entitled to judgment as a matter of law. In
`accordance with its statutory authority over matters
`related to the bankruptcy, see §1334(b), the District Court
`then separately entered judgment in favor of the trustee.
`EBIA thus received the same review from the District
`Court that it would have received if the Bankruptcy Court
`had treated the fraudulent conveyance cla

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket