Braniff Airways, Inc. v. Civil Aeronautics Board (In Re Braniff Airways, Inc.)

27 B.R. 231, 8 Collier Bankr. Cas. 2d 135, 1983 U.S. Dist. LEXIS 20330, 10 Bankr. Ct. Dec. (CRR) 30
CourtDistrict Court, N.D. Texas
DecidedJanuary 20, 1983
DocketMiscellaneous No. 4-221-E, Bankruptcy No. 4-82-00369
StatusPublished
Cited by34 cases

This text of 27 B.R. 231 (Braniff Airways, Inc. v. Civil Aeronautics Board (In Re Braniff Airways, Inc.)) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Braniff Airways, Inc. v. Civil Aeronautics Board (In Re Braniff Airways, Inc.), 27 B.R. 231, 8 Collier Bankr. Cas. 2d 135, 1983 U.S. Dist. LEXIS 20330, 10 Bankr. Ct. Dec. (CRR) 30 (N.D. Tex. 1983).

Opinion

MEMORANDUM OPINION

MAHON, District Judge.

A hearing was held on January 13, 1983, concerning a “Motion to Revoke Reference of Adversary Proceedings” filed on January 11, 1983, by American Airlines, Inc., a corporation and an intervenor in the above-captioned proceeding pending before the Fort Worth Bankruptcy Division of this Court. The Court entered an Order on *233 January 14, 1983, holding that the Local Rule of the Northern District of Texas Concerning Bankruptcy Cases and Proceedings adopted by the United States District Court for the Northern District of Texas on December 21,1982, 1 is constitutional and valid, and further holding that the Court has jurisdiction over bankruptcy cases and proceedings, including the one presently before it, pursuant to sections 1331,1332,1334, and 1471 of Title 28 of the United States Code. In support of that Order, the Court will now elaborate on its reasons by addressing: (1) The Court’s Jurisdiction, (2) Marathon’s Effect on the “Structure” of the Bankruptcy System, (3) The Court’s Statutory and Equitable Powers, and (4) The Referral of the Braniff Bankruptcy Proceeding to the Bankruptcy Judge.

I. The Court’s Jurisdiction

A. 28 U.S.C. § 1471.

The United States Supreme Court invalidated at least a portion of 28 U.S.C. § 1471 in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., -.U.S. -, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982) (hereinafter called Marathon). In his plurality opinion, Justice Brennan states:

We conclude that § 241(a) of the Bankruptcy Act of 1978 has impermissibly removed most, if not all, of “the essential attributes of the judicial power” from the Art. Ill district court, and has vested those attributes in a non-Art. Ill adjunct. Such a grant of jurisdiction cannot be sustained as an exercise of Congress’ power to create adjuncts to Art. Ill courts.

Marathon 102 S.Ct. at 2879-80. 2 By stating that the power was “impermissibly removed” from the district court, the Supreme Court clearly indicates that jurisdiction was first vested in the Art. Ill district court pursuant to § 1471(a), and it expresses no disapproval of this grant of jurisdiction to the district court.

The next sentence and footnote of the plurality opinion, however, have led to some confusion over what parts of § 1471 were invalidated. Justice Brennan continues:

Having concluded that the broad grant of jurisdiction to the bankruptcy courts contained in § 241(a) is unconstitutional, we must now determine whether our holding should be applied retroactively to the effective date of the Act.

Marathon 102 S.Ct. at 2880.

In his use of the words “bankruptcy courts” in Marathon, Justice Brennan makes a distinction between bankruptcy courts and district courts. This should not be confused with the bankruptcy laws, which define “courts of bankruptcy” to include the district courts. See Bankruptcy Reform Act of 1978, Pub.L. No. 95-598, § 404(a), 92 Stat. 2549, 2683 (1978). Thus, the “broad grant of jurisdiction to the bankruptcy courts” does not refer to the grant of jurisdiction to the district courts. Furthermore, in footnote 40, he states:

It is clear that, at the least, the new bankruptcy judges cannot constitutionally be vested with jurisdiction to decide this state-law contract claim against Marathon. As part of a comprehensive restructuring of the bankruptcy laws, Congress has vested jurisdiction over this and all matters related to cases under title 11 in a single non-Art. Ill court, and has done so pursuant to a single statutory grant of jurisdiction.

Marathon 102 S.Ct. at 2880 n. 40 (emphasis added). This Court interprets the phrase “single statutory grant of jurisdiction” as referring to the words “all of the jurisdiction” in § 1471(c). This grant of jurisdiction under § 1471(c) encompasses not only bankruptcy “eases” (see § 1471(a)), but also *234 “all civil proceedings arising under title 11 or arising in or related to cases under title 11.” 28 U.S.C. § 1471(b) (emphasis added). The Supreme Court’s conclusion that at least some of the “related to” matters must be heard by an Art. Ill court meant that the words “all of the jurisdiction” contain both constitutional and unconstitutional grants of jurisdiction to the bankruptcy courts. Thus, an attempt to separate and remove the unconstitutional part of the bankruptcy court’s jurisdiction from the constitutional part of its jurisdiction would be no easy feat. Facing such a difficulty, and examining the intent of Congress in § 1471(c), Justice Brennan continues his footnote:

In these circumstances we cannot conclude that if Congress were aware that the grant of jurisdiction could not constitutionally encompass this and similar claims, it would simply remove the jurisdiction of the bankruptcy court over these matters, leaving the jurisdictional provision [in the bankruptcy court] and adjudicatory structure intact with respect to other types of claims, and thus subject to Art. Ill constitutional challenge on a claim-by-claim basis. Indeed, we note that one of the express purposes of the Act was to ensure adjudication of all claims in a single forum and to avoid the delay and expense of jurisdictional disputes.

Marathon 102 S.Ct. at 2880 n. 40 (emphasis added).

Finally, Justice Brennan concludes the footnote:

Nor can we assume, as THE CHIEF JUSTICE suggests, post, at 2, that Congress’ choice would be to have this case “routed to the United States district court of which the bankruptcy court is an adjunct.” We think that it is for Congress to determine the proper manner of restructuring the Bankruptcy Act of 1978 to conform to the requirements of Art. Ill, in the way that will best effectuate the legislative purpose.

Marathon 102 S.Ct. at 2880 n. 40 (emphasis added). The difficulty was not in separating § 1471(c) from § 1471(a) and (b), but in separating jurisdiction over “this case,” i.e. a case like Marathon, requiring an Art. Ill court, from the other appropriate jurisdiction of the bankruptcy court over non-Art. Ill matters, all of which were combined in the words “all of the jurisdiction” in 28 U.S.C. § 1471(c). Therefore, this Court concludes that the Supreme Court never intended to invalidate, nor did it invalidate 28 U.S.C. § 1471

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27 B.R. 231, 8 Collier Bankr. Cas. 2d 135, 1983 U.S. Dist. LEXIS 20330, 10 Bankr. Ct. Dec. (CRR) 30, Counsel Stack Legal Research, https://law.counselstack.com/opinion/braniff-airways-inc-v-civil-aeronautics-board-in-re-braniff-airways-txnd-1983.