Stern v. Marshall
Citation and Court
Stern v. Marshall, 564 U.S. 462 (2011). United States Supreme Court.
Facts
Anna Nicole Smith (Vickie Marshall) filed a claim in bankruptcy court against the estate of her late husband’s son (Pierce Marshall), who had also filed a proof of claim in the bankruptcy proceeding. Vickie asserted a counterclaim for tortious interference with her expectancy of an inter vivos gift — a state-law tort claim. The bankruptcy court entered final judgment on the counterclaim in Vickie’s favor, awarding her hundreds of millions of dollars.
Issue
Whether a bankruptcy court — an Article I tribunal — has constitutional authority to enter final judgment on a state-law counterclaim that is not “integral” to the claims allowance process in bankruptcy.
Holding
The Supreme Court held five-to-four that the bankruptcy court lacked constitutional authority to enter final judgment on Vickie’s state-law counterclaim. Such a claim must be adjudicated by an Article III court, and the parties cannot waive the Article III requirement by consent.
Rule / Doctrine
Under Article III, non-Article III courts may enter final judgment only on matters of “public rights” or matters closely integrated into the federal bankruptcy process. A state-law counterclaim that neither stems from nor is resolved by the bankruptcy proceeding itself falls outside that authority. Crucially, Article III protections belong to the public and cannot be waived by litigant consent.
Significance
Stern v. Marshall is the most important recent Article III case, casting doubt on the scope of bankruptcy court authority and raising questions about the constitutionality of other non-Article III adjudications. It reaffirms and extends Crowell v. Benson’s public/private rights framework and generates ongoing uncertainty about which matters Congress may assign to non-Article III tribunals.