In re Clay

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 94-50507

In re Raymond Clay and Scott Clay, d/b/a The Emporium,

Petitioners.

On Petition for Writ of Mandamus to the
United States District Court for the Western District of Texas

(October 3, 1994)

Before HIGGINBOTHAM, SMITH, and STEWART, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Raymond and Scott Clay want a jury trial, but not in

bankruptcy court. The Clays seek a writ of mandamus to prevent the

bankruptcy court from conducting a jury trial in various core

proceedings. The argument is that Congress cannot constitutionally

empower non-Article III bankruptcy judges to hold jury trials

without the parties' consent. Because the applicable statute may

fairly be read as not granting such authority, we say only that

such a congressional effort would be dubious at best.

The trustee for the bankruptcy estate of Heelco Corporation

filed a complaint in the U.S. Bankruptcy Court for the Western

District of Texas. The complaint sought turnover and avoidance of
preferential and fraudulent transfers and post-petition

transactions with petitioners, the Clays. The Clays filed jury

demands in the bankruptcy court. In the district court, the Clays

filed a motion to withdraw the reference of the case from the

bankruptcy court.

The bankruptcy court found that the Clays had a Seventh

Amendment right to a jury trial and that the claims involved were

core proceedings. The court also held that it had the authority to

conduct a jury trial and had no authority to decline a reference

from the district court.

On June 28, 1994, the district court entered an order denying

the Clays' motion to withdraw the reference from the bankruptcy

court. It concluded that bankruptcy judges have the power to

preside over jury trials in core proceedings. The Clays then filed

this petition for writ of mandamus.

The parties do not dispute the core nature of the proceedings

or the Clays' right to a jury trial. Nor do they contest the

propriety of review via petition for writ of mandamus. Cf. La Buy

v. Howes Leather Co., 352 U.S. 249 (1957) (upholding use of

mandamus to vacate referral of cases to special master). The sole

issue presented is whether the bankruptcy judge has the

constitutional and statutory authority to conduct the jury trial

without the consent of the parties. Because the constitutional

question influences the interpretation of the statute, we first

address the Constitution.

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 I.

A.

The American colonists suffered greatly under judges

controlled by King George III. They listed this grievance in the

Declaration of Independence: "He has made Judges dependent on his

Will alone, for the Tenure of their Offices, and the Amount and

Payment of their Salaries." Declaration of Independence para. 11

(U.S. 1776). The Framers made judicial independence a cornerstone

of our judicial system. The Federalist Papers stressed the need

for lifetime tenure and salary protection for judges. "Periodical

appointments, however regulated, or by whomsoever made, would, in

some way or other, be fatal to [the courts'] necessary

independence." The Federalist No. 78, at 471 (Alexander Hamilton)

(Clinton Rossiter ed., 1961). "Next to permanency in office,

nothing can contribute more to the independence of the judges than

a fixed provision for their support. . . . In the general course

of human nature, a power over a man's subsistence amounts to a

power over his will." The Federalist No. 79, at 472 (Alexander

Hamilton).

The Framers guarded against this danger in Article III of the

Constitution:

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. The Judges, both of the supreme and inferior
Courts, shall hold their Offices during good Behaviour,
and shall, at stated Times, receive for their Services,
a Compensation, which shall not be diminished during
their Continuance in Office.

U.S. Const. art. III, § 1. In other words, only judges who enjoy

3
life tenure and protection against salary cuts can exercise "[t]he

judicial Power of the United States." Northern Pipeline Constr.

Co. v. Marathon Pipe Line Co., 458 U.S. 50, 59 (1982) (Brennan, J.,

plurality opinion).

These guarantees insure independence from legislative and

executive influence, promote public confidence in judicial

integrity, attract well qualified jurists to the bench, and

insulate judges from pressure by other judges. Id. at 57-60 & n.

10; The Federalist No. 78 (Alexander Hamilton). Courts and

commentators focus on the importance of insulating judges from

Congress and the Executive Branch. But as Chief Judge Kaufman

noted, "it is equally essential to protect the independence of the

individual judge, even from incursions by other judges. The heart

of judicial independence, it must be understood, is judicial

individualism," and giving one judge power over another chills

judicial individualism. Irving R. Kaufman, Chilling Judicial

Independence, 88 Yale L.J. 681, 713 (1979). A judge must be free

to decide a case according to the law as he sees it, without fear

of personal repercussion or retaliation from any source.

Despite the absolute language of Article III, the Supreme

Court has carved out three exceptions for so-called Article I

legislative courts, which need not enjoy life tenure or salary

protection. First, Congress may create legislative courts for U.S.

territories and the District of Columbia, because Articles I and IV

of the Constitution give Congress plenary power over these

geographic enclaves. Marathon, 458 U.S. at 64-65 (Brennan, J.,

4
plurality opinion); Palmore v. United States, 411 U.S. 389, 407

(1973) (District of Columbia); American Ins. Co. v. Canter, 26 U.S.

(1 Pet.) 511, 546 (1828) (territories). Second, courts-martial

need not conform to Article III's requirements, because Congress

and the Commander-in-Chief have extraordinary leeway in military

affairs. Marathon, 458 U.S. at 66 (Brennan, J., plurality

opinion); Dynes v. Hoover, 61 U.S. (20 How.) 65, 79 (1857). Third,

Article I courts may hear cases involving "public rights," which

are rights against the government or closely intertwined with a

regulatory scheme. Thomas v. Union Carbide Agric. Prods., 473 U.S.

568, 593-94 (1985); Marathon, 458 U.S. at 67-70 (Brennan, J.,

plurality opinion). The rationale underlying the public rights

exception is that because "Congress [was] free to commit such

matters completely to nonjudicial executive determination, . . .

there can be no constitutional objection to Congress' employing the

less drastic expedient of committing their determination to a

legislative court or an administrative agency." Marathon, 458 U.S.

at 68 (Brennan, J., plurality opinion) (citing Crowell v. Benson,

285 U.S. 22, 50 (1932)); see also Murray's Lessee v. Hoboken Land

& Improvement Co., 59 U.S. (18 How.) 272, 284 (1855).

Regardless of whether a case involves territories, the

military, or public rights, an Article III court may employ non-

Article III adjuncts, such as special masters and magistrates. The

only limitation is that the Article III court must retain "'the

essential attributes of the judicial power.'" Marathon, 458 U.S.

at 77-81 (Brennan, J., plurality opinion) (quoting Crowell, 285

5
U.S. at 51).

In Marathon, the Supreme Court struck down the scheme of

bankruptcy courts set up by the Bankruptcy Act of 1978. Bankruptcy

courts had the power to preside over jury trials, issue declaratory

judgments, issue writs of habeas corpus, and issue orders, process,

and judgments. Their judgments were reviewable under the clearly

erroneous standard. The plurality relied upon these facts in

concluding that district courts had not retained "the essential

attributes of the judicial power." Id. at 87 (internal quotation

marks omitted). The plurality also concluded that the courts were

not public rights courts because they handled noncore proceedings

between private parties. Id. at 71. The concurring Justices

agreed that the bankruptcy courts were not adjuncts because of the

deferential standard of review. Id. at 91 (Rehnquist, J.,

concurring in the judgment). They noted that the exercise of

jurisdiction did not involve public rights, because English common-

law courts heard such claims in the eighteenth century. "No method

of adjudication is hinted, other than the traditional common-law

mode of judge and jury." Id. at 90.

In the wake of Marathon, Congress passed the Bankruptcy

Amendments and Federal Judgeship Act of 1984 (BAFJA). Pub. L. No.

98-353, 98 Stat. 333 (codified as amended in scattered sections of

U.S.C. titles 5, 11, and 28). Even after BAFJA, bankruptcy courts

do not satisfy the requirements of Article III: they serve

fourteen-year terms, are removable for cause, and enjoy no

protection from salary cuts. See 28 U.S.C. § 152(a)(1), (e).

6
Marathon suggested that core proceedings "may well be" cases

involving public rights, and BAFJA responded to Article III

concerns by restricting bankruptcy courts to core proceedings. 28

U.S.C. § 157(b); Marathon, 458 U.S. at 71 (Brennan, J., plurality

opinion). Congress also styled bankruptcy courts as adjuncts,

labeling them "a unit of the district court." 28 U.S.C. § 151.

B.

An Article III court may not delegate "'the essential

attributes of the judicial power'" to an adjunct. Marathon, 458

U.S. at 77 (Brennan, J., plurality opinion) (quoting Crowell, 285

U.S. at 51). The authority to conduct a jury trial is an essential

attribute. In noting that bankruptcy courts have all of the usual

powers of district courts, the very first power listed by the

Marathon plurality was the authority to conduct jury trials. Id.

at 85. In Schor, the Court distinguished Marathon on this ground,

upholding the CFTC's authority because the CFTC cannot hold jury

trials or issue writs of habeas corpus. CFTC v. Schor, 478 U.S.

833, 853 (1986). Cf. Gomez v. United States, 490 U.S. 858 (1989)

(construing statute as forbidding magistrates to conduct

nonconsensual voir dire, to avoid serious constitutional questions

under Article III); United States v. Ford, 824 F.2d 1430, 1435 (5th

Cir. 1987) (en banc) (same), cert. denied, 484 U.S. 1034 (1988).

Jury trials are at the heart of "the judicial Power," as shown

by the Framers' focus on juries. Article III itself guarantees

criminal jury trials. Because colonial Americans considered this

7
protection inadequate, they insisted on a Bill of Rights to cure

the deficiency. As a result, the Fifth, Sixth, and Seventh

Amendments enshrine the right to criminal grand juries and criminal

and civil petit juries. Americans considered juries vital to the

judiciary because juries check government overreaching, educate the

citizens who serve on them, keep justice local, and permit popular

participation in the administration of justice. Akhil R. Amar, The

Bill of Rights as a Constitution, 100 Yale L.J. 1131, 1183-89

(1991) (collecting historical sources); Richard S. Arnold, Trial by

Jury: The Constitutional Right to a Jury of Twelve in Civil Trials,

22 Hofstra L. Rev. 1, 15-17 (1993). For example, one colonial

theorist endorsed juries as "the 'lower judicial bench' in a

bicameral judiciary"; another described them as "'the democratic

branch of the judiciary power.'" Amar, supra, at 1189 (quoting

John Taylor of Caroline and the "Maryland Farmer") (emphasis

omitted). In short, the Framers viewed jury trials as an essential

part of judicial power.

The inadequacy of district court review of jury trials is

fatal to delegation to adjuncts. In upholding a magistrate's power

to rule on a pretrial motion, the Court stressed the importance of

de novo review in maintaining sufficient Article III control over

an adjunct. United States v. Raddatz, 447 U.S. 667, 681-82 (1980);

see also Gomez, 490 U.S. at 875 n.29 (suggesting that Raddatz

requires that district court be able to rehear witnesses and decide

for itself de novo). Marathon likewise emphasized the need for

ample review of an adjunct by an Article III court. 458 U.S. at 85

8
(Brennan, J., plurality opinion) (disapproving of clearly erroneous

standard of review of bankruptcy court judgments); id. at 91

(Rehnquist, J., concurring in the judgment) (holding that

bankruptcy courts were not adjuncts because they were subject "only

[to] traditional appellate review").

De novo review is inconsistent with the Seventh Amendment,

which states: "[N]o fact tried by a jury, shall be otherwise

reexamined in any Court of the United States, than according to the

rules of the common law." In other words, the Seventh Amendment

permits only ordinary appellate review; but Marathon held that

ordinary appellate review did not satisfy Article III. This court

has recognized the clash between Article III review of adjunct

proceedings and Seventh Amendment sanctity of jury verdicts: "The

reference [to a magistrate for jury trial] either effectively

denies the right to trial by jury, or impermissibly abrogates the

decisive role of the district judge, or both." Ford v. Estelle,

740 F.2d 374, 380 (5th Cir. 1984).

De novo review by a district court is also impossible in

practice, because a cold record cannot capture the atmosphere, the

expressions, the attitudes that are the marrow of a jury trial.

Gomez, 490 U.S. at 874-75; United States v. Ford, 824 F.2d at 1435-

36; see also Geras v. Lafayette Display Fixtures, Inc., 742 F.2d

1037, 1049 (7th Cir. 1984) (Posner, J., dissenting) (noting that

appellate review leaves trial judge wide latitude in evidentiary

rulings, instructions, and comments). Only verbal acrobatics could

label the autonomous conduct of a trial as adjunct to anything.

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 C.

There is an argument that while Congress treated bankruptcy

courts as adjuncts of district courts, they are defensible as

legislative courts hearing public rights cases, based on Marathon's

statement that core proceedings in bankruptcy "may well be a

'public right,' but [a noncore proceeding] obviously is not." 458

U.S. at 71 (Brennan, J., plurality opinion). There is a related

argument that core bankruptcy proceedings are closely linked to the

bankruptcy regulatory scheme and qualify as public rights cases for

that reason. See Union Carbide, 473 U.S. at 594. We do not see

bankruptcy law as a "public regulatory scheme" akin to the Federal

Insecticide, Fungicide, and Rodenticide Act discussed in Union

Carbide. It provides process, procedures, and a forum, but does

not (as would a public regulatory scheme) implement policy choices

beyond the confines of cases brought to it. Resolving disputes

over compensation was part of the comprehensive administrative

regime of FIFRA.

The public rights/private rights dichotomy of Crowell and

Murray's Lessee is a deceptively weak decisional tool. Regardless,

it is unpersuasive here. The plurality in Marathon spoke

tentatively because its remarks were dicta; the facts in Marathon

involved a noncore proceeding based on a state-law contract claim.

Moreover, the reasoning of the concurring Justices in Marathon

applies to any case involving a right to a jury trial. They held

that Marathon was not a public rights case because it was "the

stuff of the traditional actions at common law tried by the courts

10
at Westminster in 1789. . . . No method of adjudication is hinted,

other than the traditional common-law mode of judge and jury." 458

U.S. at 90 (Rehnquist, J., concurring in the judgment). Regardless

of whether one characterizes a proceeding as core or noncore, a

case is not a public rights case if a litigant has a Seventh

Amendment right to trial by jury.

The Court's readings of the Seventh Amendment confirm this

reasoning. The test for whether an Article III court is necessary

for an action at law is the same as the test for whether a party

has a Seventh Amendment right to a jury trial. Granfinanciera,

S.A. v. Nordberg, 492 U.S. 33, 53 (1989). Thus, in a suit that

would have been tried at common law in England in 1789, a litigant

has both a Seventh Amendment right to a jury and an Article III

right to an Article III court.

We may sometimes fail to acknowledge the equitable roots of

certain bankruptcy cases and hence find a right to a jury trial

when we should not. Bankruptcy jurisdiction, which is largely

equitable, is nigh mutually exclusive of cases or controversies at

law in which there is a right to trial by jury. Congress, the

Executive Branch, and the courts may choose to resolve legislative,

executive, or equitable judicial disputes by using a "jury" even

though the Seventh Amendment does not require it. When a non-

Article III court uses such an optional "jury," not only does the

Seventh Amendment not forbid de novo review of the "jury's"

findings, see Capital Traction Co. v. Hof, 174 U.S. 1, 38-39

(1899), but the need for supervision by an Article III court may

11
necessitate de novo review. But cf. Peretz v. United States, 501

U.S. 923, 939 (1991) (treating Article III right to de novo review

as waivable). Optional "juries" in non-Article III courts are in

effect advisory juries for Article III courts. But where a case or

controversy gives rise to a Seventh Amendment right to a jury

trial, Congress may not give jurisdiction to a non-Article III

court.

This conclusion jibes with the reasons underlying the public

rights exception. Marathon explained the rationale: because

"Congress [is] free to commit [public rights cases] completely to

nonjudicial executive determination, [it can] employ[] the less

drastic expedient of committing their determination to a

legislative court or an administrative agency." 458 U.S. at 68

(Brennan, J., plurality opinion) (citing Crowell, 285 U.S. at 50);

accord Ex parte Bakelite Corp., 279 U.S. 438, 458 (1929); Murray's

Lessee, 59 U.S. at 284; see Union Carbide, 473 U.S. at 589. But

where the Seventh Amendment applies, Congress is not free to commit

the case "completely to nonjudicial executive determination."

Because the litigant has a right to a judicial proceeding including

a jury trial, the public rights doctrine cannot apply.

D.

The trustee makes two counterarguments. First, he claims that

policy considerations such as efficiency support the authority of

bankruptcy courts to hold jury trials. Shifting jury trials to

district courts, he reasons, would interrupt ongoing proceedings

12
and split proceedings between bankruptcy and district courts. The

trustee argues that moving jury trials to district courts would

inundate district courts with core matters in which they lack

expertise. Furthermore, he says, giving litigants the power to

switch courts by demanding jury trials would produce forum-shopping

and delay, as defendants would take advantage of district courts'

crowded dockets to slow cases down. See In re Grabill, 967 F.2d

1152, 1159-60 (7th Cir. 1992) (Posner, J., dissenting); Smith v.

Lynco-Elec. Co. (In re El Paso Refinery, L.P.), 165 B.R. 826, 831

& n.6 (W.D. Tex. 1994). The district court in this case endorsed

El Paso's "practical opinion," suggesting that it too relied on

these policy arguments.

The trustee would trumpet efficiency, but we hear a kazoo, at

best. Reports of strategic manipulation of jury trials have been

greatly exaggerated. In practice, litigants have not begun

demanding more jury trials since 1989, when Granfinanciera

established a right to jury trial in certain bankruptcy

proceedings. Grabill, 967 F.2d at 1157-58; Steinberg v. Mellon

Bank (In re Grabill Corp.), 132 B.R. 725, 727 n.3 (N.D. Ill. 1991);

cf. Granfinanciera, 492 U.S. at 63 n.17 (finding that similar

concerns with jury trials in fraudulent conveyance actions had been

overstated). A district court could avert split proceedings by

withdrawing the reference to the bankruptcy court.

If anything, jury trials in bankruptcy courts would impede

efficiency. These speedy courts were not designed to conduct long

jury trials, and most bankruptcy judges and lawyers are unused to

13
jury procedures. Grabill, 967 F.2d at 1158; Ellenberg v. Bouldin,

125 B.R. 851, 854 (N.D. Ga. 1991); Weeks v. Kramer (In re G. Weeks

Securities, Inc.), 89 B.R. 697, 710 (Bankr. W.D. Tenn. 1988). In

this respect, district courts have far more expertise than

bankruptcy courts do.

Regardless, "the fact that a given law or procedure is

efficient, convenient, and useful in facilitating functions of

government, standing alone, will not save it if it is contrary to

the Constitution." INS v. Chadha, 462 U.S. 919, 944 (1983). The

Framers separated power as a prophylaxis against its abuse. They

chose to sacrifice a measure of efficiency and expediency to insure

that judges would be independent of the President, Congress, and

other judges. See The Federalist No. 79, at 474 (Alexander

Hamilton) (rejecting provision for removal of mentally disabled

judges because that power might be abused). We are not free to

tinker with this carefully crafted choice.

The trustee's second argument is that other non-Article III

federal courts have the authority to conduct jury trials. For

example, local District of Columbia courts can conduct jury trials.

Pernell v. Southall Realty, 416 U.S. 363 (1974) (not discussing

Article III issue). In addition, federal magistrates can conduct

jury trials with the parties' consent. 28 U.S.C. § 636(c)(1);

Collins v. Foreman, 729 F.2d 108 (2d Cir.), cert. denied, 469 U.S.

870 (1984).

This is true, but consent matters. Because one function of

Article III is to protect litigants, courts have accorded

14
significant if not dispositive weight to consent and waiver. In

doing so, these courts may have undervalued the structural

component of Article III--the idea that the location of dispute

resolution is not solely the concern of the litigants in given

cases. Schor, 478 U.S. at 848-51 (upholding CFTC's jurisdiction

and distinguishing Marathon because Schor consented while Marathon

had not); Pacemaker Diagnostic Clinic of America, Inc. v.

Instromedix, Inc., 725 F.2d 537, 541-44 (9th Cir.) (en banc)

(Kennedy, J.) (upholding magistrate's power to hold bench trial

because litigants consented), cert. denied, 469 U.S. 824 (1984).

However, a litigant may waive his Seventh Amendment right to jury

trial. Bank of Columbia v. Okely, 17 U.S. (4 Wheat.) 235, 244

(1819). Likewise, a litigant may choose to submit his case to a

magistrate, arbitrator, or other non-Article III tribunal. A

litigant may even choose to settle or not to bring suit at all.

Consent is a key factor empowering magistrates to conduct jury

proceedings. Compare Gomez, 490 U.S. at 870 (construing statute as

not permitting federal magistrate to conduct nonconsensual voir

dire, to avoid serious constitutional question, and noting that

"[a] critical limitation on [magistrates'] expanded jurisdiction is

consent") with Peretz, 501 U.S. at 932 (allowing consensual voir

dire by magistrate and distinguishing Gomez because "the

defendant's consent significantly changes the constitutional

analysis"). Thus, the magistrate analogy is weak.

The comparison to territorial courts is stronger but still

inapposite. In Marathon, the Supreme Court distinguished

15
territorial courts from bankruptcy courts. The plurality reasoned

that the District of Columbia is "a unique federal enclave over

which Congress has . . . entire control"; it can exercise such

power "only in limited geographic areas." 458 U.S. at 75-76

(Brennan, J., plurality opinion) (internal quotation marks

omitted). The Court refused to expand this narrow, historic

category to authorize similar powers for bankruptcy courts. So do

we.

II.

We need not and should not rest on these constitutional

grounds. A court must not interpret a statute in a way that raises

constitutional questions if a reasonable alternative construction

poses no such problems. Gomez, 490 U.S. at 864; Crowell, 285 U.S.

at 62; NLRB v. Catholic Bishop, 440 U.S. 490, 507 (1979) (declining

to reach constitutional question in absence of clear statement of

congressional intent). Unless BAFJA contains a clear statement

empowering bankruptcy judges to conduct jury trials, we must

construe the statute as not granting that power. This

interpretative principle of restraint is important, but can

perversely expand the bite of constitutional rules so carefully not

invoked. We are careful to take a hard look at the constitutional

issues avoided--to insure that we not flee rabbits. This said, the

constitutional concerns here are concrete and large.

Six circuits have considered this issue, and five have decided

that bankruptcy courts lack the statutory authority to conduct jury

16
trials. Official Committee v. Schwartzman (In re Stansbury Poplar

Place, Inc.), 13 F.3d 122, 127-28 (4th Cir. 1993) (construing BAFJA

as not empowering bankruptcy judges to hold jury trials, to avoid

constitutional issue); In re United Missouri Bank, N.A., 901 F.2d

1449, 1456-57 (8th Cir. 1990) (same); Grabill, 967 F.2d at 1153-55

(same); Rafoth v. National Union Fire Ins. Co. (In re Baker & Getty

Financial Servs., Inc.), 954 F.2d 1169, 1173 (6th Cir. 1992)

(resting only on statutory argument); Kaiser Steel Corp. v. Frates

(In re Kaiser Steel Corp.), 911 F.2d 380, 391-92 (10th Cir. 1990)

(same). Contra Ben Cooper, Inc. v. Insurance Co. (In re Ben

Cooper, Inc.), 896 F.2d 1394 (2d Cir.), cert. granted, 497 U.S.

1023, vacated and remanded, 498 U.S. 964 (1990), previous op.

reinstated, 924 F.2d 36 (2d Cir.), and cert. denied, 500 U.S. 928

(1991).

We agree with the Fourth, Sixth, Seventh, Eighth, and Tenth

Circuits. The statute need not be read as attempting a run at this

mountain. Indeed, BAFJA is silent on the subject. Only one

section mentions juries, stating: "[T]his chapter and title 11 do

not affect any right to trial by jury . . . [for] a personal injury

or wrongful death tort claim," except that a district court may

order a bench trial for issues under 11 U.S.C. § 303. 28 U.S.C.

§ 1411. As the Second Circuit has noted, § 1411 "offers almost no

guidance." Ben Cooper, 896 F.2d at 1402; accord Granfinanciera,

492 U.S. at 40 n.3 (finding § 1411 to be "notoriously ambiguous").

Section 157(b) offers little light. It requires that either

the district court in the district where the claim arose or the

17
district court in which the bankruptcy case is pending try personal

injury and wrongful death claims. 28 U.S.C. § 157(b)(5). Some

courts reason that because sections 157(b) and 1411 single out

personal injury and wrongful death cases for jury trials in

district courts, bankruptcy courts may hold all other jury trials.

Perino v. Cohen (In re Cohen), 107 B.R. 453, 455 (S.D.N.Y. 1989);

Wolfe v. First Fed. Sav. & Loan Ass'n (In re Wolfe), 68 B.R. 80,

87-88 (Bankr. N.D. Tex.), appeal denied sub nom. M & E Contractors,

Inc. v. Kugler-Morris Gen. Contractors, Inc., 67 B.R. 260 (N.D.

Tex. 1986). Others read § 1411's express preservation of a right

to jury trial in personal injury cases as implying that Congress

did not foresee jury trials in other types of cases. E.g.,

Grabill, 967 F.2d at 1153. Both readings are reasonable; neither

is compelling. In short, sections 157(b) and 1411 are ambiguous.

The same is true of the more general provisions of BAFJA.

Section 151 provides: "Each bankruptcy judge, as a judicial officer

of the district court, may exercise the authority conferred under

this chapter with respect to any action, suit, or proceeding and

may preside alone and hold a regular or special session of the

court . . . ." 28 U.S.C. § 151. Section 157(b)(1) states:

"Bankruptcy judges may hear and determine all cases under title 11

and all core proceedings arising under title 11 . . . and may enter

appropriate orders and judgments . . . ." 28 U.S.C. § 157(b)(1).

The trustee argues that this language empowers bankruptcy judges in

strong and unqualified terms, drawing no distinction between bench

and jury trials. Other courts, however, have read these sections

18
as personally empowering bankruptcy judges to "hear and determine

all cases," rather than empowering them to delegate fact-finding to

juries. Grabill, 967 F.2d at 1155; Kaiser, 911 F.2d at 391.

Kaiser also noted that Congress repealed § 1481, which had given

bankruptcy judges "'the powers of a court of equity, law and

admiralty.'" Id. (quoting 28 U.S.C. § 1481 (repealed)). Neither

§ 151 nor § 157(b)(1) says anything about juries and procedures.

The trustee's final argument notes that the Emergency Rules

adopted in the wake of Marathon prohibited bankruptcy judges from

holding jury trials, but BAFJA was silent on the issue. One could

read this silence as either perpetuating or repudiating the ban on

jury trials in bankruptcy court. Grabill, 967 F.2d at 1154. This

argument is too weak to be of much help.

Congress passed BAFJA in 1984, before Granfinanciera

recognized the Seventh Amendment rights of litigants in bankruptcy

cases. As the Supreme Court has noted, BAFJA's "denial of the

right to a jury trial in preference and fraudulent conveyance

actions can hardly be said to represent Congress' considered

judgment of the constitutionality of this change." Granfinanciera,

492 U.S. at 61 n.16. Since Congress did not consider whether it

could deny jury trials, it would be difficult to conclude that it

considered a bankruptcy court's power to preside over jury trials.

United Missouri Bank, 901 F.2d at 1456; see Kaiser Steel, 911 F.2d

at 392.

The statute contains no clear statement proscribing or

prescribing jury trials in bankruptcy court. We are not persuaded

19
that Congress would have challenged such formidable constitutional

principles by innuendo. We GRANT the writ of mandamus and instruct

the district court to withdraw the reference to the bankruptcy

court and honor the Clays' demand for trial by jury before an

appropriate United States District Court.

WRIT GRANTED.

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