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Welcome to this program on the historical evolution of the bankruptcy courts. My partner in crime is Richard Levin. He is truly my partner in crime because he's one of those who drafted and pushed through the Bankruptcy Act of 1978. The history of the Bankruptcy Act is

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interesting in and of itself, but we hope our presentation also gives you a broader perspective on current issues affecting the bankruptcy courts. So let's get started. The first permanent bankruptcy law was in 1898. There had been a couple before that, but they sunsetted after a relatively

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few number of years. The district court was identified as the court of bankruptcy and the district court could appoint referees so named because cases were referred to them and their duty was to assist the district judges and to cover distant locations of the district judges were

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either weren't present or didn't wish to cover. They were appointed by the district judges to two-year terms, and in 1946, those became six-year terms. They were paid a percent of the assets distributed at least until 1946. Then they began to be paid on a salary basis

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while they were being paid on a percent of the assets, uh, when the economy was bad they did really well, and when the economy was good they did pretty poorly, didn't they? They did indeed, which is probably why they changed over much they're paid actually much

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like trustees are paid today. Uh, the referee, uh, was appointed, sorry, the referee appointed the trustee, uh, but also had a comb combination of a role of both the administrator and judicial officer. Over the years, the role of the referees kept expanding. As it expanded, they

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got more full-time referees than part-time referees and by 1957 it had tilted so the red line shows the number of full-time versus the blue line number of part-time bankruptcy referees. This helped to increase the referee's status. By 1967 referees needed to look like judicial officers, and

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some of the district courts agreed with that. So as you can see here, the uh Senate Northern District of Texas wrote a letter saying that referees should wear robes. Not all district judges agreed because they didn't really want the referees to look like real judges, so

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some suggested that instead of the black robes that judges usually wore that the uh referees should wear gray robes. Other courts did not authorize robes for another 10 years. In 1926, the National Conference of Referes in Bankruptcy was formed, the NCRB. There were more full time

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referees as that came across and then the NCRB continued to gain strength because the referees felt that this was now their profession and therefore they were willing to put in more time, more money, and more of everything to make a professional organization. As the referees became

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more professionals, they realized they needed a direct access to power and the power in the judiciary sits in the judicial conference of the United States, which sets the policy for the federal judiciary. In 1960, the referees started asking to attend judicial conference meetings. They got absolutely

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nowhere. In 1964 it became clear that in order for referees to be more professional, they needed to have better education. Chapter then called 10 and 11 now referred to as chapter X and XI to distinguish them from the current 10 and 11 required more training so

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they set up an initial seminar for newly appointed referees in bankruptcy, and Chief Justice Earl Warren attended that very first seminar which again increased the status of the referees, but there was an interesting side development to this that the judiciary had not expected. And that was

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that in bringing together all of these referees who were really excited about their work, they created a group that was putting together that they call themselves the Young Turks and they took over the NCRB. In 1965, the judicial conference hired the Brookings Institution to study bankruptcy

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law. The last major change had been 1938. Just about this same time, a chapter chapter 10 actually trustee told his friend Senator Quentin Burdick, uh that there were limitations in the bankruptcy law. Senator Burdick, who is a Democrat from North Dakota, sent a letter to all

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referees across the country. Saying tell us about the inadequacies of law. What happens if there's going to be a major financial crisis or depression? Will the law be able to handle this? Well, the referees had never been asked their opinion on anything before. This really energized

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them. And what came back pointed out certain issues. One was there was a perception that there was a bankruptcy ring that the practitioners, the trustees, the referees were too tight, too close to each other, too small a group. Another problem was that there was a close

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relationship with the district judge and the referee because the district judge appointed the referee, but then when there was an appeal from the decision of the referee, it went to the district judge and that was a concern because you felt well this is the district judge

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who thinks this referee is wonderful otherwise why would he have appointed him and of course they were all hymns at this time. And uh therefore I'm not gonna get a fair hearing on an appeal. The same problem existed at the level of the referee and the

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trustee because the referee appointed the trustee and there was a real concern that nobody could get a fair hearing before a referee against his trustee. That's exactly correct as far as the appointment of the referees went, it was even worse because in some districts such as

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in the Southern District of New York. Uh, they didn't advertise an opening for a referee. It wasn't an open pool. The district judges would sit around and they proposed names to their internal committee, and from those names they would appoint a referee in Chicago every referee

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was paired with a district judge, so the relationship became even tighter and that was true of some referees and trustees as well and. This was a serious problem. Uh, in 1969. Warren Burger became the Chief Justice of the United States. He was absolutely opposed to any

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increase in status of referees that might bring them closer to district judges. He felt that bankruptcy was a distasteful area of law that it was handled by low level attorneys, and he would not have any referees on any judicial conference committee, including the committee that oversaw

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the setting of policy for the bankruptcy system. You know, I remember, uh, when I was getting out of law school in 1975, uh, I had picked up an interest in bankruptcy law during law school and when friends asked me what I was going to be doing

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after law school and I said I was gonna be working on bankruptcy law, often the reaction I got was, isn't that one step below ambulance chasing? And that's how bankruptcy was viewed at the time, but not by Senator Burdick. Because when Senator Burdick decided that what

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should happen is that he should propose a commission to study the bankruptcy law. Remember the last major change had been in 1938. He proposed 9 members of the commission. 2 were to be appointed by the president of the Senate. 2 were to be appointed by the

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Speaker of the House, 3 by the President of the United States, but he specified that 2 of those had to be active practitioners in the field of bankruptcy law. There were also to be 2 appointed by the Chief Justice, but he again specified that in this

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case both of them had to be active full-time referees in bankruptcy. Well, the president didn't want to be limited in who he could appoint, and Chief Justice Burger certainly did not want to to appoint referees, so he lim uh he um lobbied Congress and they removed

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the requirement of practitioners in bankruptcy or referees. We'll we'll see this theme of uh the branches protecting their prerogatives reoccur over and over throughout the story even as late as, uh, last year. Yes, and so it continues. Uh Even though the law actually removed the requirement

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of bankruptcy referees on the floor of the Senate, Senator Burdick made it clear that he expected that the Chief Justice would appoint referees. Well, Justice Chief Justice Burger had other ideas and instead he appointed two district court judges. One was Judge Edward Winfeld, uh, from the

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Southern District of New York who was the chair of the Judicial Conference Bankruptcy Committee. And Judge Winfeld also opposed having referees on that committee. The NCRB uh representatives appeared before the commission. They were not on the commission. And they soon realized that the commission bill that

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was being developed would not be ideal because there was no consumer representation on the commission and this was a very serious piece of uh a law that needed to be revised referee Joe Lee wrote to uh Judge Winfeld and said let's meet on this proposed legislation.

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Let's see if we can't work out something from the judicial standpoint. That will really work for the future of the bankruptcy law. Judge Winefield responded and said, sorry, go to Congress. So the referees did. You know, before, uh, uh, the moving on to Congress and the

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referees, uh, it's worth noting that the Brookings Institution had published its report while the commission was working. This was the Brookings Institute study that had been commissioned by the judicial conference, and the Brookings Institute study played a major role in the commission's work and seriously influenced

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the proposal that the commission made. So it all started in some degree with the judicial conference. It did, and I think they were sorry that they started it as things turned out. They may have also been sorry that Judge Weinfeld told them to go told the

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referees to go to Congress. The National Conference of referees and Bankruptcy retitled themselves as the National Conference of Bankruptcy Judges, the NCBJ. Because they felt that the bill coming out of the commission was not adequate they wrote their own bill much of it was the same,

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but some of the consumer was different and a lot of the procedure attaching of the structure was different. Uh, you know, the procedural aspects, especially the, um, the judicial system, as you might imagine. In the judges bill favored the sitting judges and their jobs a lot

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more than the commission's bill did, yes. Um, what happened eventually was that there are two bills, one from the commission. One from the NCBJ were actually introduced side by side and they were somewhat the same but as I noted a little bit different so for example.

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The commission bill had bankruptcy judges appointed for 15 year terms by the president on advice and consent of the Senate. The bankruptcy judges bill had 15 year terms but appointed by their circuit councils, which made sense. It, it does make sense, but also if you're a

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sitting bankruptcy judge. Uh, and worried about what's gonna happen when this new bill passes, where do you think it's more likely you're gonna get reappointed? And that's why it made sense because you've been a referee in bankruptcy for this length of time you had no political

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ties and who's gonna get the job, not you if it's the president of the United States that's appointing. Another difference is that the commission bill had the bankruptcy court clerk would be appointed by the district judges from among the clerks of the district court. Well, the

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bankruptcy judges didn't like that at all. They didn't want the district judges selecting their clerk effectively, so the judge's bill had the bankruptcy court clerk appointed by the bankruptcy judges. Another difference was the commission bill had this US bankruptcy administration in the executive branch. Right, the

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idea was that bankruptcy is largely an administrative proceeding. Um, there's a tremendous amount of it that that that does not require any judicial intervention at all, so the commission proposed that the uh bankruptcy be handled by the United States Bankruptcy Administration, a newly created executive branch

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agency. And that the judges um deal only with disputed matters that arose between parties in interest uh during the course of the case either between parties in interest or between a party in interest and the bankruptcy administration. The administration would take the place of trustees in

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bankruptcy as well, so it really was an entire revamping of the system. And a um lessening of the need for judges and not lessening of their role in fact it enhanced their role because they were no longer to be involved in administrative matters, but when all

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of those administrative matters were moved over to a bankruptcy administration. The number of judges needed would, uh, presumably drop significantly, right? In fact, they were anticipating that it would drop from 220 to 50. This was a real threat to the NCBJ. I, and I think that

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was a, I don't know if I'd call it an overestimate or an under. I, I, I can't imagine 50 would have been enough even, even had the USBA been adopted, but it wasn't. And in the judge's bill, uh, the administration, uh, was maintained in the judiciary

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with all cases filed in the bankruptcy court and all adjudication would be to go into bankruptcy judges. In the commission bill, the appeals will go to the district court, which of course didn't get rid of the problem even though the the the referees were no longer

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appointed by the district judges it did not get rid of the problem of uh of having this rather close relationship uh and of this lesser level of appeal, whereas in the judge's bill, the appeal would go directly to the court of appeals. Uh, yet another change

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was that there would be more substantive provisions, uh, for, um, consumer protection. Right, the, the, the bankruptcy judges, uh, disagreed in in a number of respects uh with the commission's bill, uh, both on the consumer side and, and importantly on the business side. The commission's bill

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had proposed a single consolidated reorganization chapter, and the judges felt that two chapters were still a good idea, old Chapter 10 and old Chapter 11. Ultimately that got worked out, but at the time, uh, this was put in, um, it's hard to know looking back whether

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that was just another negotiating chip that the judges could give up or whether it was something that they believed was important for the soundness of the system. And both bills had mandatory retirement at age 70 with voluntary retirement age 65 after 15 years of service, but

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where did the National Bankruptcy conference come in on this? Well, the National Bankruptcy Conference is a nonprofit voluntary nonpartisan, um, organization. Uh, comprised of about 60 judges, lawyers, and attorneys, um, they have been active in advising Congress on bankruptcy law since the 1930s. Uh, they came

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out somewhat closer to the judge's bill, excuse me, to the uh commission bill, but they did not favor, uh, a bankruptcy administration. They favored a court system more akin to the judge's bill, although on the substantive provisions they were closer to the commission bill. And they

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were a player in all of this. They were a major player in all of this. In fact, uh, uh, in the hearings which I'll talk about in a few minutes, they were, um, a major participant in those hearings. As this was going on and as they

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were becoming more politically active, the referees kept trying to have a voice within the judiciary. They felt they'd been forced out by Judge Winfeld's suggestion and his, uh, failure to meet with them. So they wrote a letter to the uh director of the administrative office of

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the US courts seeking appointment again to the judicial conference Bankruptcy Committee. The reply that they received from Director Kirks clearly said basically we only appoint judges to committees and you're not judges, so therefore they were not put on. Four years later, uh, with Joe Lee, now

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president of the NCBJ again asked for bankruptcy judges to be appointed to the judicial conference Bankruptcy Committee, and it wasn't done. There were two committees, the bankruptcy committee, uh, which is the committee on top, and then a little later we'll discuss that there was a special

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ad hoc committee appointed by the judicial conference to deal with the uh bankruptcy legislation. The blue are the Court of Appeals judges, the red are the district judges. We're gonna mark green for bankruptcy judges, but there weren't any so we just didn't do any, uh, the

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committee had a single representative from the bankruptcy judges. Bankruptcy judges and magistrates were not authorized to attend annual circuit conferences. All Article 3 judges. Attended and that was statutory and depending upon how it worked and I'm not sure if it's all the details, but I think

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each Article III judge was allowed to invite. A non-Article III judge, it varied by circuit, and they'd have an attorney that would come, their attorney representatives, and sometimes referees were invited to come by Article 3 judges. Uh, some circuits actually invited their referees and magistrates, uh,

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but that was subject to the whim of the chief circuit judge. In 1972, the Second Circuit excluded the referees and magistrates because of cost considerations. In the Ninth Circuit, Chief Judge Chambers said, and I quote, If we invite the referees, we may as well invite the

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janitors. That wasn't a cost consideration, was it? I don't think so. OK, let's turn back to, uh, to Congress, uh, and as Judge Munn mentioned, there were two bills introduced, uh, HR 31 and HR 32 in the House, and there S 235 and 236 in the

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Senate in the 94th Congress. Who were the players in the 9 94th Congress on the House side, Chairman Peter Rodino of, uh, Newark, New Jersey chaired the House Judiciary Committee. Bankruptcy legislation was assigned to Judiciary and then referred. To the subcommittee, uh, at the time it

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was called the Subcommittee on Civil and Constitutional Rights, uh, an historical artifact as to why bankruptcy was uh referred to that subcommittee. The chair of that subcommittee was, uh, Don Edwards, a Democrat from San Jose, California, and the ranking minority member was, uh, Caldwell Butler, uh,

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a Republican from Roanoke, Virginia, um, Chairman Edwards had actually. Uh, been one of the members of the bankruptcy commission and, uh, Representative Butler's predecessor in that role as ranking ranking minority member of that subcommittee, uh, Charles Wiggins, who later became 1/9 Circuit Court of Appeals judge,

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uh, he too was a member of the commission. um, on the Senate side, uh, there were entirely new players who had not been, uh, members of the, uh, bankruptcy commission. Uh, Senator Dennis DeConcini from Arizona chaired the, uh, Senate Subcommittee on Improvements of improvements in

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judicial machinery, and Representative Malcolm Wallop was the ranking minority member on that committee, Republican from Wyoming. Um, other players on the outside from the National Conference of Bankruptcy Judges, three, key people, uh, Judge Joe Lee from the Eastern Eastern District of Kentucky, Judge Conrad Sier from

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the District of Maine, and their counsel Murray Drabkin, who had previously been a counsel to the House Judiciary Committee when it was chaired by Representative Emanuel Seller, uh, of Brooklyn. Um, during, during the 94th Congress, which started in January of 1975, uh, the House Subcommittee, uh,

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began a series of hearings on HR 3531 and 32. Uh, they started in September of 1975. They ran over 35 days between September and May of 1976. Uh, there were over 100 witnesses, uh, in those hearings. Um, after those hearings were concluded. Uh, the subcommittee members

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charged the staff with developing, uh, a combined bill that would take the learning from the, uh, hearings that were held, uh, and put them into a new bill that could be introduced in the 95th Congress which commenced in January of 1977. The staff did so, and,

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uh, Congressman Edwards and Butler introduced HR 6 on the first day of the 95th Congress. Uh, it was a combination of ideas from the commission's bill, from the judge's bill, from the National Bankruptcy conference's input, and from input from many other interested players, uh, throughout the,

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the, um, 9 months of hearings and the 6 or 7 months of drafting following the hearings. After that bill was introduced, the House committee subcommittee convened for uh what was called markup. They had 22 days of markup, um, which consumed 42 hours over the period from

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February through, I would say the end of March or early April of 1977. And at the end of the mark, uh, the markup went through a debate with uh line by line analysis. The staff presented the bill, presented memos, uh, in support of the bill. The

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members, uh, really went through section by section, line by line, uh, adopted over 100 amendments to HR 6, and finally reported out the bill on a unanimous vote of 7 to 0. That reported bill was, was, um. Uh, written into a new bill, HR 7330, which

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all of the members of the subcommittee, uh, introduced as a clean bill, and that bill was then taken up by the, uh, House Judiciary Committee. One of the big issues in that bill was the nature of the court system, and that, uh, bill, uh, as adopted

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by the first as proposed uh in HR 6. Uh, and then as adopted by the subcommittee and introduced in HR 7330, contemplated that the bankruptcy courts would be created under Article II of the Constitution and that the bankruptcy judges would be Article 3 judges. Now where

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did Article 3 actually come from? Did it come from the commission? It didn't come from the uh NCBJ. Well, it came from a couple of sources, um, it certainly didn't come from the NCBJ uh for a variety of reasons, one of which we mentioned earlier. Um,

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but, uh, the, uh, the, the young staffers at the time, myself and, and Kenneth Klee, uh, also just out of law school, um, had some concerns about whether an art a non-Article II court would work for the, um, for the bankruptcy courts and all the power

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that they were to be given under the expanded uh jurisdiction that was proposed both by the commission and the judges and the national bankruptcy conference. Um, but then, uh, a tax lawyer from the law firm of Hogan and Hartson in Washington DC who was a very,

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uh, insightful and academic lawyer wrote a series of five very long articles on the tax aspects of the commission's report. One of the articles had to do with tax procedures, and in that article he seriously questioned whether the bankruptcy court could be given the power that

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the bills proposed unless they were created under Article 3 and uh based on that recommendation. The staff contacted a number of constitutional experts, most of whom agreed with Mr. Plumb, and uh the subcommittee members agreed with that as well, and that's why HR 6 contained a

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proposal for Article 3. I think it was felt that if the bill did not contain an Article 3 court, then the court could not be granted the broad jurisdiction that was, uh, desired by everybody, all of the players uh in the bankruptcy system. Uh, so those

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two things went hand in hand, uh, and that's, um. That's uh where it progressed up to HR 7330 in the spring of 1977. Putting Article 3 out in front of the Article 3 judiciary was like a red cape in front of a bull. They, they went

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absolutely ballistic. The judicial conference opposed a separate court no matter whether it was Article 3 or Article 1. Shall we discuss that right now? Yes, but let, let's ask, did the judicial conference make those views known during the 35 days of hearings? I don't believe they

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did because my understanding is that they had not they decided to defer involvement until there was a single bill that came out. That would then be put before them for comment because during the hearings they were still putting together this combination of the two bills. Yes,

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they did say that they wouldn't comment until there was a single bill of course the implication of their comment was a single bill between the House and the Senate, not a combination of HR 31 and HR 32, um, nor did, and that didn't make sense because

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how would Congress. Know how what to write in a single bill without some input from the judiciary, but the judiciary refused to participate. And what happened was that the judicial conference immediately came down and opposed a separate court, be it Article 1 or Article 3, and

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uh they created the ad hoc committee again with no referees on that committee. The committee was to now look at this and do some drafting and legislative proposal. In May of 1977 there was a reception at in the House of Representatives and Chief Justice Burger was

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there and there was a young staffer. Did I ever tell you what the reception was for? No, I think it was Senator for Congressman Rodino, wasn't it? Yes, it was, um, in the House Judiciary Committee hearing room, the main hearing room. There's a portrait of all

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Judiciary Committee chairmans. And it was the um unveiling of uh Chairman Redino's portrait. That's what the reception was for. And so most of the staff was there and of course Chief Justice Burger in respect to the chairman of course House Judiciary attended the reception and and

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Ken, who is not a shrinking violet, went up and introduced himself and uh Ken has told me this and he said, I'm working on uh HR 6. I'm working on the bankruptcy code, and Chief Justice Burger told him. That uh HR 6 had been sneaked through

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without any notice to the judicial conference, which is of course not true as we have been told, um. The, uh, he also said, and again I quote from a memo that Ken wrote contemporaneous to the time, a magistrate is 3 times more important than a bankruptcy

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referee, and he said, quote, elevating the referee's judicial stature is like elevating the clerks of courts. Chief Justice Burger and others never gave up the desire to meld the positions of bankruptcy judges and magistrates. Can you imagine, given what's happened to the bankruptcy system over the

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last 35 years, what, what the system would be like if the position of magistrates and bankruptcy judges were melded now? It, it's unthinkable. It, it truly is, uh, it was more of a control issue. That the district court truly controls who the magistrates are and what

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their work is, whereas the bankruptcy judges are are have a set set of work that's controlled by law and by statute and are supervised in a somewhat different way. I, I also think at the time the um. The judiciary, particularly, uh, Chief Justice Burger really didn't

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have a sense of what bankruptcy judges did, so the idea of of combining with the magistrates was uninformed as to the actual work that was involved some bankruptcy judges. Were magistrates actually referees, part-time referees served also as part-time magistrates. They split their jobs, but it truly

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was a splitting of the job. They wore two separate hats. Uh, it wasn't like they were, uh, doing the same work just in different areas of the law of the law. That's absolutely correct. So the judicial conference came down with its resolution saying we oppose separate

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bankruptcy court, be it Article 1 or Article 3. And many circuits then follow with similar resolutions opposing a separate court. They sent these to their congressional delegations, so the 2nd Circuit did one. The 3rd Circuit The 4th Circuit and the 6th circuits. The 9th and 10th

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Circuits for the 9th Circuit this was a change because in 1975 they passed a resolution supporting presidential appointments of bankruptcy judges, but they were getting some pressure from above and they had a new chief circuit judge, I think. Uh The ad hoc committee that Chief Justice

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Burger appointed again with no bankruptcy judge members eventually produced a series of reports and testified before Congress. This testimony was in the December 1977 hearings that followed the passage of the Danielson Railsback amendment in the House in October of 1977 and the defeat of Article III.

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So this was the hearings that. Uh, Chairman Edwards conducted to relook into the issue. I think the members knew where it was going to come out, but to be able to take it back to the floor and ask for reconsideration, uh, it was politic to be

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able to say we let all sides be heard. We looked into this further we really examined the issue before they came back and said we stand by our our prior position. And this was the first time and we're getting into those hearings in a few minutes

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but that was the first time that the judiciary itself actually appeared but they had done this preliminary report just a few months earlier and in it they created an outline that they later followed in all of their uh reports and their testimony and that was they

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opposed bankruptcy judges on the judicial conference. They opposed bankruptcy judges on the board of the Federal Judicial Center. Uh, they wanted to have the bankruptcy judges appointed by the circuit councils. But only on recommendation of the district courts at that time, the circuit councils were made

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up of all the active judges of the court of appeals in that circuit. But they were an administrative and management body. They weren't sitting as a court and Article 2 of the Constitution authorizes the courts of law to appoint um officers of the United States, but

00:33:35.410 - 00:33:52.270

the judicial councils were not courts of law. So it was questionable whether the judicial councils could have the appointing authority, even though the courts of appeals could. The the difference between the situation then and now is now the circuit councils are made up of a combination

00:33:52.270 - 00:34:07.880

of uh circuit judges and district judges at that time there were only circuit judges so what the district judges wanted to make sure that even though they they weren't gonna do the appointment because they realized appointing bankruptcy judges was no longer a good idea because of

00:34:07.880 - 00:34:22.378

the appeal issue but they want to make sure they had their input. So it was their suggestion that yeah the circuit council, namely the circuit judges could go ahead and make the appointments but only after input from the district judges saying hey we're right there we

00:34:22.378 - 00:34:43.679

know these people. So we should be able to advise you who it is that you should appoint. The, uh, judicial judicial conference of the United States bankruptcy leadership at that point, these are not contemporary uh phonographs were um Judge Weinfeld, who was the chair of the

00:34:43.679 - 00:35:04.179

judicial conference Bankruptcy Committee and had been on the bankruptcy commission. Judge Wesley Brown, uh, who was a former referee in bankruptcy, and then in 1962 he was appointed as a district judge and, uh, he was added to the, um, judicial conference the next year. He passed

00:35:04.179 - 00:35:27.830

away at the age of I believe 102, could be 104, and he was still sitting as a district judge from Kansas. And District Judge Robert Damasio, uh, who was from Michigan, uh, who was vehemently opposed to any elevation of referees or independent court, and Judge Winfeld,

00:35:28.040 - 00:35:46.909

Judge Brown agreed with him on that very much. Let me pick up your point about elevation of the referees. You know there's a lot in how we use language um, the, the bill that was the house uh had passed did not propose the elevation of the

00:35:46.909 - 00:36:06.000

bankruptcy judges it proposed the elevation of the office with no guarantee that the existing bankruptcy judges would be elevated to the new position. And yet everybody talked about it as though everybody except those who were supporting the bill talked about it as though those individuals who

00:36:06.000 - 00:36:21.590

happen to be serving as bankruptcy judges or as referees at the time would be elevated to a higher status position and that um uh was a uh. Kind of stuck in the craw of a lot of the Article 3 judiciary and was a way of describing

00:36:21.590 - 00:36:34.379

it in a in a on the staff we thought many of the judges would in fact be reappointed to the new position, but there was certainly no guarantee of it and it was certainly not what the bill did. And the NCBJ tried very hard to make

00:36:34.379 - 00:37:00.719

that point. But it's sort of never got across, and you're absolutely correct. In 1973, the first national bankruptcy rules used the term bankruptcy judge. Prior to that, the bankruptcy judge had been actually the district judge, and the bankruptcy referee, as we discussed was the one of

00:37:00.719 - 00:37:17.550

the cases were referred to under the law. At this same time is when NCRB National Conference of Referes in Bankruptcy changed his name to the National Conference of Bankruptcy Judges. But we had a note that it was the Supreme Court who's responsible for promulgating the rules

00:37:17.550 - 00:37:37.459

of practice and procedure um approved the bankruptcy rules that. Uh, provided for referring to the referees in bankruptcy as bankruptcy judges, and that was in 1973. In 1974, the judicial conference itself had a joint committee on the codes of conduct that recommended that any reference in

00:37:37.459 - 00:37:56.899

the code of judicial conduct. That was to a referee in bankruptcy be amended to read bankruptcy judge and the judicial conference in the United States passed that and everybody thought that's fine we're now bankruptcy judges and people started using that title. But as we, as I

00:37:56.899 - 00:38:16.010

said a moment ago, how we use language. Uh, things got a little tighter by 1977 this openness had changed as a result of, as a result of the push for the increase of status of bankruptcy judges, yeah, and, and the the legislation going through the house

00:38:16.010 - 00:38:36.899

exactly former district judge, uh, Simon Rifkin. Uh, he was then president of the American College of Trial Lawyers testified before the House subcommittee on the the effect of the reference in the bankruptcy rules to bankruptcy judge instead of bankruptcy referee, and he said, and I quote,

00:38:37.169 - 00:38:56.709

it might just as well have said the word turtle dove means uh bankruptcy referee that wouldn't make a referee a turtle dove, and this doesn't make him a bankruptcy judge in my opinion. In 1974, the Federal Judicial Center started calling the Baby Judges school the orientation

00:38:56.709 - 00:39:18.010

for new uh bankruptcy judges, a seminar for newly appointed bankruptcy judges and identified the uh presenters with the title of bankruptcy judge instead of bankruptcy referee. Things got tight by 1977 as we noted, and the federal judicial seminar for bankruptcy judges material that was supposed to

00:39:18.010 - 00:39:39.760

be put out that year actually had the cover ripped off and replaced by one naming the seminar as a seminar for referees in bankruptcy. The FJC Educational media catalog was rewritten so that the past seminars which had been identified as seminars for bankruptcy judges was now

00:39:39.760 - 00:40:02.790

again named as seminars for bankruptcy referees. In the Eastern District of New York, the district judges were outraged that NCBJ was pushing its own legislation, and they resolved that their bankruptcy judges could only act, number one, after consulting with the chief district judge. And then through

00:40:02.790 - 00:40:17.020

the committees of the judicial conference. Now you have to remember a couple of things. First of all, the referees there were appointed by those district judges. So if they did something the district judges didn't like at the end of their 6 year appointment, they could just

00:40:17.020 - 00:40:38.840

not be reappointed. And the second thing is that the the committees of the judicial conference were simply not interested in hearing from them as we've noticed. So let's return to Congress and what happened in the House of Representatives. Uh, as I mentioned earlier, the subcommittee had

00:40:38.840 - 00:40:55.479

reported out the bill uh in March. A new clean bill was introduced 7330. There was further staff work cleaning up a number of provisions of the bill, and a new clean bill was introduced, uh, in June of 1977, HR 8200, and this was the bill that

00:40:55.479 - 00:41:15.260

was taken to full committee for consideration, uh, the full committee. Uh, considered the bill in July of 1977. The Danielsson Railsback amendment, which I mentioned earlier, was, uh, proposed and defeated uh in full committee, and the committee reported out the bill by a vote of 23

00:41:15.260 - 00:41:33.485

to 8 bipartisan, um, on both sides, uh, the actual committee report. Which runs to several 100 pages, uh, was not completed until early September and at that point the formal reporting out of the bill to the floor, uh, was accomplished. It went to rules committee and

00:41:33.485 - 00:41:53.479

ultimately went to the floor of the House on October 27 and 28 of 1977. The rule for the bill, um, permitted various amendments and one of the amendments that it permitted for consideration was the Danielson Rails Back amendment. Then George Danielson was a uh congressman from

00:41:53.479 - 00:42:15.850

California, a Democrat. Thomas Railsback was a Republican from Illinois. Uh, they were both on the subcommittee that. Um, was more responsible for the management and operation of the judiciary and therefore we're very close to the judicial conference. They vigorously opposed an Article 3, bill, uh, and

00:42:15.850 - 00:42:32.570

they, as I said, had proposed an amendment in the in the full committee. They brought their amendment to the floor, um, Chairman Edwards and, and, uh, who was the floor manager for the Democrats and Representative Butler, the floor manager for the Republicans. We were not fully

00:42:32.570 - 00:42:48.449

prepared for what happened. Uh, there were a lot of members absent at the end of October, uh, from the, uh, from the floor and surprisingly the Danielson Railsback amendment passed, uh, on the floor of the House by a vote of 183 to 158. Uh, Mr. Edwards

00:42:48.449 - 00:43:06.610

and Mr. Butler quickly convened on the floor and decided, uh, to pull the pull the bill from the floor for further consideration. They felt that the Article III status of the new bankruptcy courts was so integral and important to the bill that they were not willing

00:43:06.610 - 00:43:25.270

to proceed uh without uh having another opportunity for that issue to be considered, uh, so they pulled the bill from the floor and they decided to schedule a new series of hearings uh in the house. Uh, they were held in December of 1977. And um uh

00:43:25.679 - 00:43:43.159

the judicial conference testified numerous people were invited to testify. Uh, former Judge Rifkind, whom you mentioned earlier, uh, was invited and, and where he made his turtle dove comment was during those hearings. Um, Judge Hofstadler from the Ninth Circuit testified in opposition to the Article III

00:43:43.159 - 00:43:59.985

courts, and there were, uh, numerous people who testified in favor of it. I think Judge Hofstadler and some others were really more concerned about the. Direct appeal to the circuit. Yes, they were, yes, they were, because, uh, as Article 3 courts, the uh the appeals from,

00:44:00.064 - 00:44:16.574

from, uh, their decisions would go straight to the circuit, but representatives of the National Conference of Bankruptcy Judges testified in support of an Article III court, even though they had not previously supported one. The National Bankruptcy Conference did, and there were some constitutional scholars as well.

00:44:16.745 - 00:44:32.489

There was a real debate within the NCBJ. About whether to to support an Article 3 court or not because most of them knew that they, they had a very hard road to hold to hold if they were gonna be able to be reappointed as under Article

00:44:32.489 - 00:44:47.409

3, but the relationships between them and the house between with you and so on and so forth and Mr. Butler as well that they felt that they really had to support what was there and not worry about their own future. Uh, there, there was more to

00:44:47.409 - 00:45:03.780

it than that though, for one thing. Uh, knowing the support we had from the bankruptcy judges and not wanting to lose that, one of the things we provided was a very long transition to the Article II system. Uh, that transition was about 6 years, which was

00:45:03.780 - 00:45:21.600

the term of a referee in bankruptcy. So in effect we were guaranteeing all of them another term and because there was fear that. The active involvement of some of them might lead to their non reappointment at the expiration of their term. The bill provided that referees

00:45:21.600 - 00:45:37.219

serving on the date of enactment would be extended, continued in office until the end of the transition period, March 31, 1984. Now there was more politics to that date than meets the eye, uh, but I'll come to that in a minute, but one more thing about

00:45:37.219 - 00:45:55.879

the bankruptcy judges. I think most people knew that getting an Article 3 bill through the House could happen, but getting it through the Senate was impossible. The bankruptcy judges may well have supported an Article 3 court bill in the House because it would strengthen the negotiating

00:45:55.879 - 00:46:12.639

hand of the House members when they went to conference with the Senate to elevate the status and prestige of the court more than if the House had started with a lower status lower prestige court. It was all part of the negotiation process planning ahead for that,

00:46:12.719 - 00:46:27.909

and it may be that the bankruptcy judges uh thought of that as well. Now why uh. 1984 for the transition six years. Well, first of all, it was gonna take some time to figure out how many judges were needed and for Congress to authorize that because

00:46:27.909 - 00:46:40.520

with so many changes in the substantive law it might affect the number of judges that were needed. We didn't never thought it would be as few as 50 as proposed under the commission bill, but we didn't know if it would be as many as existed. The

00:46:40.520 - 00:47:00.090

second reason was we're in the 1st term of President Carter's presidency. If there had been an immediate attempt to create an Article 3 court, uh, the Republicans would have been even more opposed because they would have seen perhaps 200 Article 3 judgeships going to a Democratic

00:47:00.090 - 00:47:19.520

president to appoint, so we wanted to push it well into the next presidential term. So that nobody could be sure which party would get those appointments and by that uh take away some of the uh political opposition that might have happened had the appointments tried to

00:47:19.520 - 00:47:36.540

be crammed into President Carter's first term as it turned out, the Republicans won in 1980 and it was a Republican president who would have appointed those judges, uh, had the bill stayed intact. Now back to the hearings, um, the subcommittee conducted the hearings in December of

00:47:36.540 - 00:47:56.709

1977 and, uh, following the hearings, uh, prepared a short report which uh unanimously endorsed by members of the subcommittee, uh, supported reaffirmed the decision to go with an Article 3 court, um. Now, uh, we knew we were gonna have to take that back to the bill

00:47:56.709 - 00:48:13.760

to the floor of the house and reverse the vote on the Danielsson Railsback amendment. That's a tough thing to do, but, um, in preparation for that floor fight, the members of the, uh, subcommittee and certain members of the full committee as well and their staffs, particularly

00:48:13.760 - 00:48:30.110

the staff of the subcommittee, uh, began lobbying all of the members. To tell them the importance of the Article 3 system to the bankruptcy system as a whole and to the bill, uh, and to urge them to support a vote in favor of Article 3 and

00:48:30.110 - 00:48:48.500

against the Danielson Railsback amendment when it came back to the House floor. Um, we had a lengthy, uh, what were called whip sheets, uh, all of the members who voted against, uh, had they been contacted, uh, by the members of the staff, had they been contacted

00:48:48.500 - 00:49:05.540

by people in their districts such as the, the bankruptcy judges or the district judges. Or by practitioners, uh, it was a concerted effort to put pressure from outside the hill and inside the hill onto these members to change their votes and to hold the votes that

00:49:05.540 - 00:49:19.739

we, the 158 votes that we had the first time around and when we thought it was all ready, uh, Mr. Edwards and Mr. Rodino went to the majority leader who schedules floor actions and said we're ready we'd like to bring it back to the House floor.

00:49:20.149 - 00:49:38.580

Uh, it was brought back to the House floor on February 1st of 1978. Uh, the motion for reconsideration of the Danielson Railsback amendment was brought up and the amendment was defeated by a vote of 146 to 262. It was a remarkable turnaround and people at the

00:49:38.580 - 00:49:55.159

time said it was the most extraordinary reversal of a House vote that they had seen in memory. So with the amendment knocked out, the Article 3 bill was intact, a few other minor amendments were passed, and the House adopted the bill and sent it to the

00:49:55.159 - 00:50:19.469

Senate for consideration. Um The uh Senate subcommittee uh on improvements in judicial machinery chaired by Senator DeConcini then began its own series of hearings starting with the House bill as well as the commission bill and the judge's bill. Um, the, um, the Senate held 21 days

00:50:19.469 - 00:50:39.870

of hearings, uh, spanning over a 2 to 3 month period, uh, considering all of these aspects and eventually toward the summer of 1978 reported out its own version of a bankruptcy reform bill which was not an Article II bill. It contained a non-Aticle 3 bankruptcy court

00:50:39.870 - 00:50:58.330

system. Do you know why the Senate was so opposed to an Article 3 bankruptcy court? Well, there were various reasons. Uh, there's a certain amount of, uh, jealousy among the branches, among the three branches, uh, senators who have to run for re-election every 6 years, uh,

00:50:58.439 - 00:51:18.479

uh, did not love the idea of appointing, uh, life tenured, uh, judges, um. Southern senators who were still uh a significant number of the uh Democrats in the Senate, it was a Democratic controlled Senate at the time. Southern senators were still smarting from many civil rights

00:51:18.479 - 00:51:35.689

decisions of district judges in the South in the 1950s and the 1960s, so there was never any great love in the Senate for Article 3 judgeships, uh. They weren't subject to any political control because they were life tenured, uh, they were an independent branch exactly as

00:51:35.689 - 00:51:54.959

the founders, uh, contemplated, uh, and there was tremendous antipathy to increasing, uh, the number of Article 3 judges, especially in what was considered a specialized area less so now, but then, as you remember I said and as uh Chief Justice Burger said it was, um, considered

00:51:54.959 - 00:52:22.209

a very uh. Uh, low level of law that did not merit anything as August as an Article III court. We're gonna take a little detour to uh an interesting topic that was happening at the same time and is still a hot topic today. In 1962, there

00:52:22.209 - 00:52:40.709

was the first consolidation of the clerk's offices of the district court and the bankruptcy court. Within the next 15 years, about 11 districts had consolidated their clerk's offices. Now some were for very sound business reasons as had happened in Illinois Northern, and some were to grab

00:52:40.919 - 00:53:01.229

assets from the bankruptcy court such as happened in certain other districts including my own assets and budget assets means people budget money, uh, and that's what they wanted as well as just general control. Uh, what they found, uh, by the way, uh, was that if the

00:53:01.229 - 00:53:20.189

consolidation was done for sound business reasons, then things worked well and it was done for other reasons they didn't work well at all. Uh, in 1977, the administrative office did a poll of chief district judges to find out whether they were interested in consolidation of clerk's

00:53:20.189 - 00:53:44.780

offices and about 50% said they were and 50% said they weren't. The issue of consolidation came up at the Senate subcommittee hearings in November of 1977. By spring of 1978, there was a separate bill introduced into the Senate uh that would stop and deconsolidate all clerk's

00:53:44.780 - 00:54:01.929

offices and prohibit future consolidation absolutely and it moved very fast. I mean, and this was on a separate track from the major one. This was S03107. It was introduced on May 19th. There were hearings on June 19th, and on July 19th, it passed the Senate. I

00:54:01.929 - 00:54:17.439

things like that just don't happen. Well one of the witnesses was Judge James Moriarty, who was the presiding bankruptcy judge in the Central District of California. Where there had been a consolidation that was not working well at all, the district judges found out about this appearance

00:54:17.439 - 00:54:33.030

before the Senate. He he testified in the hearings. He did testify. Uh, he was subpoenaed to testify. Uh, he had been told by the chief district judge not to testify and he went anyway. And when the district judges found out about it, they demoted him over

00:54:33.030 - 00:54:51.110

Labor Day weekend. Uh, they took away his title as presiding judge. They when he went out to lunch, they had chiseled off his door, the word presiding before the word judge, uh, and he came back and, uh, that created some problems and the first thing that

00:54:51.110 - 00:55:06.090

he did was he called you. And uh I let uh uh we we had the Senate had passed uh S 3107 and sent it over to the House for consideration. Uh, our general attitude was there's major bankruptcy reform going on now. We're not gonna take up

00:55:06.090 - 00:55:24.889

a separate consolidation bill, but when Don Edwards heard. That uh Judge Moriarty had been demoted on account of his testimony before the Senate subcommittee on this bill, uh, he and Mr. Butler decided that they would, uh, bring this bill up right away, uh, and I don't

00:55:24.889 - 00:55:41.909

even think they held hearings on it. They had it had it held at the desk on the House floor. It was never referred to the committee. And they were able to bring it up in early September of 1977 uh 78, excuse me, 1978, and it was

00:55:41.909 - 00:56:03.800

passed by a voice vote on suspension of the rules which requires a 2/3 vote, uh, and it was sent to the president uh and signed into law, uh, pretty promptly after that. This was about the time that the Senate completed its work on its version of

00:56:03.800 - 00:56:24.500

the um of the bankruptcy, the major bankruptcy reform bill, which was in the Senate it was originally S 2266, but the way things work in Congress, um, uh, the Senate had to take up HR 3200. And pass that with an amendment rather than passing S 2266

00:56:24.500 - 00:56:43.090

and sending it over to the house and they did this um in the first week of September 1978, uh, September 7th. Well, in the, um, few weeks before uh this uh bill the Senate uh adopted this bill and sent it to the house, um, the staff

00:56:43.260 - 00:56:59.439

on the House side. Um, started to develop a list of all of the issues uh that were different between the House and the Senate bill. Now since the Senate had started working with HR. 8200. The bills were very much in parallel. The sections were very much,

00:56:59.689 - 00:57:13.290

uh, the same section numbers. There were differences, however, in some of the content of those sections. So the staff made a list of all of the differences, and I don't remember the exact number, but there were at least 100 differences uh in the two bills, and

00:57:13.290 - 00:57:33.189

among them, among the differences, uh, were the the court system. Um, now after the Senate passed the bill, uh, the technical way that Congress deals is, uh, they insisted on their amendments and requested a conference with the House. The House accceeded to the conference, uh, and

00:57:33.189 - 00:57:48.300

a conference committee was appointed, uh, which consisted of, uh, the members of the Senate subcommittee that had handled the bill and the members of the House subcommittee that had handled the bill. Um, before the conference committee actually met, the staff got together to hammer out as

00:57:48.300 - 00:58:04.179

many of the differences in the two bills as they could that were not major policy issues that did not require direct member input. Uh, we had guidance from the members as to what they would accept and what they wouldn't, but for the most part, uh, the

00:58:04.179 - 00:58:19.469

staff was given a lot of discretion to come up with a compromise. Um, and at the end of that process we knew there were half a dozen, uh, issues or so that had to go before the members, uh, for resolution and that's when the conference committee

00:58:19.469 - 00:58:39.330

formally met and at the formal meeting uh the conference committee, um, agreed on the amendments that the uh staffs had negotiated, uh, and then turned to um. Then turned to the big half dozen issues and one of those issues, uh, not surprisingly, was the structure of

00:58:39.330 - 00:58:52.479

the court system, uh, the Article 3 court system. I think we knew at that time that there was, as I said earlier, there was no way that the Senate would agree to an Article 3 court, but we had to make a strong showing so that we

00:58:52.479 - 00:59:10.959

could get as much out of the court system, uh, in elevating its stature and prestige as we could as well as its powers. um, I think the Senate, um, conferees, the subcommittee members were generally in accord with the House members that the status of the court

00:59:10.959 - 00:59:27.560

should be elevated. Uh, they just couldn't support an Article 3 court even though perhaps some of them personally might have, uh, might have favored one. The Senate was never going to go along with it. So ultimately, uh, a deal was struck. Um, where the court would

00:59:27.560 - 00:59:48.560

be a non-Article 3 court with judges appointed by the President with the advice and consent of the Senate, um, and, uh, for 14 year terms, um, was it 15 year terms I think it was 15 year terms, um, and the uh bankruptcy judges would be represented.

00:59:49.439 - 01:00:10.199

Statutorily mandated that they be represented in the judicial conference, 3 bankruptcy judges, and 1 bankruptcy judge with a voting seat on the federal judicial center board. Um, the procedure was, uh, that the, um, bill then went back to the House for consideration. And the House passed

01:00:10.199 - 01:00:29.629

it, uh, on September 28th, 1978, and the bill was then sent over to the Senate for consideration. A question, you know, we shorthand this is an Article One bill as opposed to an Article 3 bill is that you're not using that term and I'm wondering why.

01:00:30.510 - 01:00:49.870

You know, Article 1, look at the Constitution. The three first articles are Article 1 is the legislative branch. Article 2 is the executive branch, and Article 3 is the judicial branch. Article 3 prescribes that the judicial power of the United States be vested in courts whose

01:00:49.870 - 01:01:11.639

judges are appointed to hold office during good behavior and whose salary may not be diminished. We call those Article 3 courts and Article 3 judges. Um In the 19th century, Congress enacted laws for courts for the territories, and Article One authorizes Congress to make all need

01:01:11.639 - 01:01:27.479

for regulations for the um governance of the territories of the United States and so the courts there were referred to as Article One courts. Now you might think if you. Uh, take the division of the articles of the Constitution, literally those would be legislative courts, but

01:01:27.479 - 01:01:44.810

they weren't really legislative courts. They were enacted under a power specifically granted to Congress under Article One, although the power to to. Uh, adopt bankruptcy laws as granted to Congress in Article One. These courts were actually placed within the judiciary, so I don't like to use

01:01:44.810 - 01:02:00.040

the term Article One court because I think it's a misnomer. I simply call them non-Article 3 courts. Uh, one other thing is that the 14, I know at one point it was 15 years and then became 14 year terms, uh, that was derived from a concept

01:02:00.040 - 01:02:16.790

from a from an actually a survey that was done about the um. Median time on the bench of of district judges of Article 3 judges, yeah, yeah, I think it was all and it was felt that their, their, their median time was like 14 years. Well,

01:02:16.830 - 01:02:31.260

they tended to get appointed around age 50. Uh, maybe a little older and by the time 14 years came retirement age 65, they, they were able to retire. Now they of course stayed on the bench because they had life tenure they took senior status, but it

01:02:31.260 - 01:02:48.469

was 14 years and the tax court had judges appointed for. 14 years also a non-Article III court. I had heard that apparently one of the arguments that was made to Congress was, well, 14 years is equivalent to life and therefore that this would allow this Court

01:02:48.469 - 01:03:07.139

to have the kind of jurisdiction that was built into the bill even though it wasn't a lifetime appointment. I never heard that argument. I heard the argument that um the uh article, I'm sorry, that 14 year terms was. In practical effect equivalent to life tenure and

01:03:07.139 - 01:03:24.239

therefore would elevate the status of the bankruptcy courts, not that that made them constitutionally protected. This bill, as I said earlier, went uh went past the House and then it was sent over to the Senate for consideration. But there was a problem. Judge Munn, what was

01:03:24.239 - 01:03:44.439

that? Well, the problem was Chief Justice Burger again he absolutely hit the ceiling and he called Senator DeConcini and he he yelled at him, he threatened him uh he said that he was going to go to the president to seek a veto, uh, and when Senator

01:03:44.439 - 01:04:00.870

Diconcini did not take that well, uh, the Chief Justice went to Senator Strom Thurmond and asked Senator Thurmand to put a hold on the bill, which he did. At this point, and then as now any senator puts a hold on the bill, it does not advance.

01:04:01.139 - 01:04:22.959

Correct. At this point, the Attorney General Griffin Bell intervened and he obtained permission from Chief Justice Burger to negotiate on Justice Burger's behalf, and the deal was that if Attorney General Bell agreed with the result, the Senator Thurman would release his hold on the bill and

01:04:23.320 - 01:04:42.530

and. Chief Justice Burger might have felt comfortable with um Attorney General Bell negotiating because he had previously been a Court of Appeals judge in the in the Fifth Circuit Circuit, right? What what became the 11th but was at the time the 5th Circuit, um, so, uh,

01:04:42.540 - 01:04:56.449

there was a meeting of the House and Senate leaders that took place in the Attorney General's office and they reached a deal. And the deal basically was that the bankruptcy court would be basically independent, but officially it would be an adjunct of the district court. Originally

01:04:56.449 - 01:05:09.469

it was supposed to be an adjunct of the court of appeals. I misspoke earlier when I said an adjunct of the district court. That was the compromise, but the, the bill, HR 8200 that came out of conference committee, uh, was an adjunct of the court of

01:05:09.469 - 01:05:27.199

appeals. But now under the deal would now go to adjunct of the district court. Secondly, uh, the president would still nominate bankruptcy judges for 14 year terms to be confirmed by the Senate, but the president would select his nominees only after giving due consideration to the

01:05:27.199 - 01:05:46.419

recommendations of the circuit councils, and the circuit councils as administrative bodies could certainly do that. They weren't acting in a court capacity there and presumably the district judges would give input to their uh circuit judge colleagues and brethren of suggested nominees. Uh, the bankruptcy judges were

01:05:46.419 - 01:06:01.620

not to be, uh, added to the committees, the judicial conference until the transition was completed in 1984. So the transition was gonna be the same even under this compromise bill. It was gonna be a six year transition, correct, uh, and the number of bankruptcy judges that

01:06:01.620 - 01:06:21.010

were gonna sit on the judicial conference would be reduced from 3 to 20 boy, that was important. And uh there were some retirement provisions for after the transition uh those were stricken from the bill and then a little later for some reason that nobody knows uh

01:06:21.010 - 01:06:40.250

do you know why they were stricken? No, I think it was the bankruptcy judges who were, um, didn't feel that the retirement provisions were adequate and wanted to a chance to revisit. Uh, that issue, uh, come 1984 or thereabouts. That's interesting because, uh, what happened was

01:06:40.250 - 01:06:56.439

once this deal was struck, uh. Uh, Griffin Bell went to, uh, the heads of NCBJ and said should we go ahead with this without these retirement provisions you realize you may never get them and they said, yeah, let's go ahead. Maybe my memory is a little

01:06:56.439 - 01:07:14.780

faulty on that. uh, anyway, a little bit later for for no reason anybody particularly knows, uh. Uh, Mr. Bell, uh, added that the bankruptcy clerk could be appointed, uh, only as an all needed basis. So if the bankruptcy court didn't need a clerk, it wouldn't have

01:07:14.780 - 01:07:30.260

a bankruptcy clerk, and the second was that the chief judge of the circuit could remove bankruptcy judges during the transition period, uh, on the recommendation of the merit screening panel. At that point, uh because the bill continued them in office for, uh, for the full 6

01:07:30.260 - 01:07:49.110

years, uh, and that way if there was any particular reason to remove somebody it could be done otherwise there wouldn't have been any way. At that point, uh, um, General Bell, uh, met with, uh, Senator Thurman and convinced Senator Thurman to release the hold. However, uh,

01:07:49.239 - 01:08:04.399

Chief Justice Burger was not happy with this end result, and he went to the White House anyway. This may be the first time that Chief Justice has ever asked the president to veto a bill, and what he said was to create 215 bankruptcy judgeships that are

01:08:04.399 - 01:08:24.180

not needed. In which the judicial conference has unanimously disapproved is wholly unjustified, to put it bluntly, it stems from the desire of those officers who were initially appointed to office as bankruptcy referees and who serve as adjunct aides to district judges to achieve a higher status

01:08:24.180 - 01:08:43.740

with virtually all the all but the status of life tenure judges, almost like promoting all of the army's sergeants major to captain rank. You know, it's funny he he refers to them as adjunct aides to the district courts. uh, I remember, uh, uh, Los Angeles bankruptcy

01:08:43.740 - 01:09:00.689

practitioner George Treister, a very well known bankruptcy figure, relating the story of a case he was in, uh, involved in before a district judge in Los Angeles, um, uh, it was a Chapter 10 case which did not were not referred to the referees, but, um. Actually

01:09:00.689 - 01:09:18.859

stayed with the district judges except for uh special references uh and at some point early in the case the lawyers uh handling the case uh asked that uh uh the district judge refer the case for processing to the referee and the judge's response was referee, he's

01:09:18.859 - 01:09:37.350

just a court attache. After that they referred to that case as the attache case. There were, there was some testimony in front of Congress during all of this where uh the members of the ad hoc committee uh referred to the to the referees uh bankruptcy judges

01:09:37.350 - 01:09:55.699

as our law clerks. You know they don't need law clerks they're our law clerks that didn't go over very well either. Um, The president received the letter. In fact, it bypassed the normal way, which ticked off the president's staff no end. It should have come in

01:09:55.699 - 01:10:14.779

through the staff, been vetted through them along with their comments before it went to the president, but it was hand delivered to the White House and it went directly to Mr. Carter's desk and. What happened was that they attached to this knowing that the president was

01:10:14.779 - 01:10:36.500

somewhat parsimonious, uh, that the AO would uh appeal to them on monetary grounds. So they included an estimate of the figures to renovate courtrooms to purchase furniture, to upgrade libraries for the bankruptcy judges, but what these actually showed was how shabbily the bankruptcy courts had been

01:10:36.500 - 01:10:58.790

treated through the years. So for example. The proposal from the judicial conference for now making these judges full bankruptcy judges was that each judge would need $27,000 per judge for a library. That year the judiciary budget had proposed $140 per judge for a library needs for

01:10:58.830 - 01:11:19.569

for for bankruptcy judges, um. Referee Connelly Brown from the Eastern District of California had been holding hearings in not not in a courthouse obviously in Chico, California. It was in a hotel mezzanine and his platform was laid on wooden scotch whiskey cases, so the AO came

01:11:19.569 - 01:11:36.790

in with this much inflated figure. The Congressional Budget Office came in with a cost estimate that was much lower. And the actual cost once the bill was passed was much closer to the Congressional Budget Office estimate and less than half that of the administrative office one.

01:11:38.899 - 01:11:52.919

The White House staff was outraged by Chief Justice Burger's letter. They saw it as a power play. They felt that it was due to the desire of a few Article III judges to retain their exalted positions at the expense of the bankruptcy judges. Very interesting because,

01:11:52.930 - 01:12:10.629

as I noted, Chief Justice Burger's letter had said, well, this is all because the bankruptcy judges want to exalt themselves to our level and the White House staff felt it was exactly the opposite backfired, backfired. They saw it as judicial arrogance. They told the president of

01:12:10.629 - 01:12:25.430

this, and on the last night before the bill would have died by pocket veto, the president spoke to Attorney General Bell and the White House staff, and then he signed the bill. We were informed this was as late as 10 or 10:30 at night, so he

01:12:25.430 - 01:12:41.939

had just hours to go before the bill would have been lost. That's that's what I had also heard. The new bill took effect October 1st of 1979, about 11 months later, so it was a transition period to get people used to the new law and to

01:12:41.939 - 01:12:54.569

allow things to get set up even though the court system was not going to change for six years. Exactly. The judges wouldn't change. The judges wouldn't change and the court system would not change, but still there had to be time for people to get, uh, educated,

01:12:54.620 - 01:13:10.430

uh, in the new law and to get used to the uh uh the new uh provisions that were gonna take effect. Um, the new laws, um. Allowed a bankruptcy appellate panel and the 9th Circuit started the first bankruptcy appellate panel as a pilot project for the

01:13:10.430 - 01:13:28.350

District of Arizona and the Central District of California for cases filed on or after October 1st, 1979, and they later expanded this to all districts in the circuit. The First Circuit followed suit, uh, establishing their BAP, uh, in February of 1980 for cases filed after March

01:13:28.350 - 01:13:49.680

1st of 1980. The new law also provided for chief bankruptcy judges in all districts. The 9th Circuit immediately established the conference of Chief Bankruptcy Judges. The new law also included a requirement that bankruptcy judges be included in annual circuit conferences. Under the new law, the number

01:13:49.680 - 01:14:04.299

of personal bankruptcies rose dramatically as you can see on the chart, the red line was the effective date of the new law, and the black graph line, of course, is the number of personal bankruptcy filings and it just soared. Now I, I, I, I don't think

01:14:04.299 - 01:14:21.209

we can attribute all of this to the new law. Uh, first there was a tremendous increase in the amount of consumer credit outstanding. Most of these increases were, uh, that you see were, um. We consumer filings because even at the time consumers were 90% of all

01:14:21.209 - 01:14:39.450

cases um there was a tremendous increase in the amount of credit uh the Supreme Court had uh effectively eliminated state usury laws for credit cards so the interest rates on credit cards went way up, and the Supreme Court had also recently uh abrogated. Uh, restrictions on

01:14:39.450 - 01:14:56.250

attorney advertising, so all of those things contributed to the new law to the increase in cases, but because of the consumer provisions in the new law, uh, it's probably so much more effective for consumers that consumers decided to use it. As a result of the new

01:14:56.250 - 01:15:17.959

law and the increased filings, uh, the percent of the judiciary budget those allocated to bankruptcy rose dramatically after the new law went into effect, so is this the end? Not so fast. Please join us for part 2. Welcome to part two of this program on the

01:15:17.959 - 01:15:41.609

historical evolution of the bankruptcy courts. Richard Levin joins me once again as we go back to the future. In 1978, the bankruptcy law passed and went into effect in October of 1979. There was a transition period until March of 1984 to get the new judges appointed.

01:15:42.319 - 01:16:01.029

But before that could happen, the case of Northern Pipeline versus Marathon pipeline hit the Supreme Court. The real issue there was whether or not the bankruptcy law was constitutional in the broad extent of jurisdiction that it gave to the bankruptcy judges that were created under that

01:16:01.029 - 01:16:19.140

law. Chief Justice Burger waffled on his position. He was unsure whether to affirm the law that he disliked intensely, but he had told Congress would be constitutional as a non-Article III court. Or to find it to find it unconstitutional and thereby take the chance that there

01:16:19.140 - 01:16:37.859

would be an Article II bankruptcy court, which was an even worse outcome from his viewpoint. Chief Justice Burger decided uh to find the bill uh constitutional. And he wrote a dissent telling Congress that they didn't need to make an Article III court, but they could limit

01:16:37.859 - 01:16:56.120

the jurisdiction of the present court and still be able to go forward. Marathon in a split opinion that gives no real guidance, declares the broad jurisdiction of the bankruptcy judge to be unconstitutional as a violation of Article 3. The opinion was stayed until the beginning of

01:16:56.120 - 01:17:20.310

the October 1982 term and then Congress, uh, the Supreme Court reconvened and uh. Chaos resulted. Well, they extended the first until the end of December of 19 Christmas Eve, Christmas Eve, December 4th, 24th, right, very interesting to allow Congress to act. So even though the formal

01:17:20.310 - 01:17:38.399

transition to the new system did not take place until 1984. The transition provisions in the law said that the courts were to operate as though the new system had taken effect, so by declaring the system unconstitutional, and by the way they declared the entire court system

01:17:38.399 - 01:17:59.640

unconstitutional, it wasn't, they did not sever any part of it. They declared the entire system unconstitutional, so it made it very difficult for the courts to act. Once the stay of their decision expired unless Congress had enacted uh corrective legislation, which Congress didn't, the stay ended

01:17:59.640 - 01:18:17.100

on Christmas Eve and the emergency rule took over. The two circuits with BAPS, uh, created procedures in which to wind down the work of those BAPS. The action then shifts back to Congress. Uh, Chairman Rodino, still chair of the House Judiciary Committee in the 98th Congress

01:18:17.100 - 01:18:40.700

that convenes in January of 1983, uh, introduces HR3, 1 of the first bills introduced in that Congress, and it proposes the creation of an Article III bankruptcy court, not only because of what the House had favored of five years prior. But also, uh, because it completely

01:18:40.700 - 01:19:01.950

addressed the Supreme Court's concerns that were expressed in the marathon decision. Not surprisingly, the judicial conference opposed the Article 3 bill. Uh, they wanted the judicial conference wanted the emergency rule now renamed as the model rule adopted as the final law, uh, although the courts were

01:19:01.950 - 01:19:22.350

operating under this as a, um, an interim local rule adopted by each of the 94 judicial districts, um. It could be adopted as final law. Under this there would be no separate bankruptcy court. The bankruptcy judicial officers would simply be working for the district judges and

01:19:22.350 - 01:19:42.399

the district courts. Um, Chairman Rodino, on the other hand, uh, pressing an Article 3 court, hoped that he could, um, push through a single issue bill that would establish a constitutional Article 3 bankruptcy court. Um, there were other bills on substantive bankruptcy law issues, particularly uh

01:19:42.399 - 01:20:03.600

consumer law issues, uh, and others were clamoring for amendments to the '78 Act, but Chairman Rodino held the line on a single issue bill for Article III courts, but that didn't happen. No, it didn't, uh, because something else intervened, uh, in early 1984, the Supreme Court

01:20:03.600 - 01:20:20.810

came down with a decision. In a case called National Labor Relations Board versus Bildisco, the issue in that case was whether a trustee in bankruptcy could reject a collective bargaining agreement under Section 365 of the bankruptcy Code, and if so, what was the standard, uh,

01:20:20.850 - 01:20:42.089

and what happened after rejection? Well, it went badly for the unions in that decision, and of course the unions immediately turned to Congress to adopt corrective legislation once that happened. Uh, Chairman Rodino saw that there could be political impetus for a uh for a for bankruptcy

01:20:42.089 - 01:21:00.689

legislation in a democratically controlled Congress, uh, and he, uh, determined to combine. Uh, the law to overturn Bildisco as well as the law to enact, uh, a new bankruptcy court system in a single bill, it also had some other provisions in it, but those were

01:21:00.689 - 01:21:18.569

the two main provisions, uh, and those are the ones, the provisions, uh, or the bill that he brought to the floor of the house, um. The problem was the transition period under the new under the 78 law ended on March 31st, 1984 uh and once that

01:21:18.569 - 01:21:36.180

ended, all of the sitting bankruptcy judges were out of office. Uh that's the transition period contemplated that the um that new judges a new court system would be in place by that date, but as you can see, uh, it wasn't. And so all of the bankruptcy

01:21:36.180 - 01:21:51.540

judges would have been gone and the bankruptcy system would have come to a grinding halt. The chaos that Judge Mund referred to a few moments ago after the Supreme Court decision would have been nothing by comparison to what happened then. It's interesting that as late as

01:21:51.540 - 01:22:13.069

March 20, 1984, the Reagan administration was urging an Article III court. Yes, uh, and here we get back to, uh, uh, the prerogatives of each branch. Uh, I'm sure the Reagan administration honestly believed that to uh implement the expanded jurisdiction of the bankruptcy court that uh

01:22:13.069 - 01:22:34.520

the 78 law had created. Article II was necessary. On the other hand, it wouldn't be such a bad idea to give the president over 200 new Article III judgeships to appoint. Um So as the March 31 deadline approached, Congress started to work on a series of

01:22:34.520 - 01:22:53.330

extensions to the deadline. Um, the Congress always seems to create a deadline for itself, which it doesn't quite meet. The last extension was set to expire on June 27, 1984, um, and so at midnight on June 28th, the terms of all the sitting bankruptcy judges expired

01:22:53.600 - 01:23:12.149

and yet the bill had not, uh, been enacted. It was very close and so presumably uh they did not give a further extension of the transition period but rather on rather push the bill through both houses and it was adopted passed by both houses on June

01:23:12.149 - 01:23:31.479

29th, the bankruptcy amendments and Federal Judgeship Act of 1984. Uh, it included a transition. So that all the bankruptcy judges who were sitting on March 3184, that is three months prior, would have their terms automatically extended until 1988, but this hadn't been signed yet by the

01:23:31.479 - 01:23:50.240

president. So on June 27th when it expired, when all the terms expired, to fill that gap, there needed to be something and what happened was the district courts appointed their bankruptcy judges as special masters and as consultants, and they empowered them to act as interim magistrates.

01:23:50.339 - 01:24:04.879

Where did they get the money to pay them? Um, that they could do as part of the Magistrates Act, I believe, but this was intended to be a very short term fix. What this ended up doing was it led to what, uh, in my district was

01:24:04.879 - 01:24:26.140

called the Great McDonald's drop. We had divisions in Los Angeles, San Bernardino, and Santa Ana, and there were no district judges sitting in San Bernardino or Santa Ana, only bankruptcy judges. Uh, the orders could under this, this, the interim rule there, uh, for this in this

01:24:26.140 - 01:24:40.020

short period could not be signed as final orders by the bankruptcy judges. Nobody knew what the effect of signature by the bankruptcy judges was, so that everything was being done on report and recommendation to the district court, and the orders were each being signed by the

01:24:40.020 - 01:24:54.959

district court. Our chief judge at the time. Uh, very nicely said just bring them to my courtroom and put them on the council table and I'll take care of it. Well, there were 800 orders a day. They were, it reminded me of the movie, uh, about

01:24:54.959 - 01:25:11.250

Miracle on 34th Street with the letters flowing off the judge's bench of all of these orders, um, so all of these orders, uh, were being stamped after. Very careful review and what would happen is that a clerk who lived in Los Angel near near Los Angeles

01:25:11.250 - 01:25:24.359

division but worked in the Santa Ana division in the morning would meet for breakfast at McDonald's with a clerk that that worked in the Los Angeles division but lived near the Santa Ana division and they would swap orders unsigned orders for orders, and that became known

01:25:24.359 - 01:25:46.759

as the great McDonald's drop. And that's how they got to the district court for signature and back to the division. I'm sure the chief district judge carefully reviewed each one of those 800 orders before he signed, definitely. On July 11, President Reagan signed the uh the

01:25:46.759 - 01:26:04.660

new law, the bankruptcy Amendments and Federal Judgeship Act into law. Now, in doing so, he added a signing statement that he had reservations because the terms of the bankruptcy judge had expired two weeks prior on June 27th before the bill became law with his signature. And

01:26:04.660 - 01:26:27.359

the Congress had effectively, effectively reappointed them under this new law for terms which lasted until 1988. Uh, President Reagan's believed that that was unconstitutional since Congress does not have the appointing authority under Article Two of the Constitution. Um, now what did this new law provide? Uh,

01:26:28.009 - 01:26:47.129

previously, uh, the, uh, 1978 law provided for 14 year appointments by the president, uh, with the advice and consent of the Senate. Uh, the new law provided for 14 year terms with appointment by the Court of Appeals, uh, for each circuit. Now this was a change

01:26:47.129 - 01:27:03.589

from the original idea of the circuit council. At the time, the circuit council was only the active judges of the court of appeals, but by the time this came along, the circuit councils now included district judges. It was very clear they did not want district judges

01:27:03.589 - 01:27:18.629

involved in the appointment of bankruptcy judges because appeals were still going to district judges, so they moved it into the court of appeals itself to make sure there were no district judges involved, right under the 78 Act, the bankruptcy judges were to be an adjunct of

01:27:18.629 - 01:27:37.879

the district court. Uh, under the 84 Act, they became a unit of the district court, um. Under the under the 78 Act, the bankruptcy judges could give final rulings in all matters that came before them, but under the '84 Act, they could give final rulings only

01:27:37.879 - 01:27:54.310

in core proceedings as had been defined in the marathon case and not in related matters or non-core proceedings, uh, as again set forth in the marathon case. Those had to go to the district court for uh final orders unless the parties consented to the bankruptcy judges,

01:27:54.600 - 01:28:13.729

um. Uh, of, of signing final orders in those matters. Now with that signing statement that raised some issues that probably existed already and what happened was that the general counsel, the administrative office advised the director of the administrative office that the new law was ineffective to

01:28:13.729 - 01:28:29.080

place any person in office of bankruptcy judge after June 27th, so the director of the administrative office, Mr. Foley, sent out a memo to the to that effect saying. That he was not authorized to pay the salary of anyone who claimed to act as a bankruptcy

01:28:29.080 - 01:28:48.569

judge after June twenty-seventh. he addressed this memo to quote former bankruptcy judges. Other districts were bolder in the northern district of Illinois, uh, they immediately referred their cases saying the issue of payment and of jurisdiction are totally separate. Under the new law, the cases were to

01:28:48.569 - 01:29:08.120

be referred by the district court to the bankruptcy judges, and some districts delayed this. Uh, sometimes it was to protect the former bankruptcy judges, and they continued them as magistrates or special masters or consultants, and this is what happened in the central district of California. Congressman

01:29:08.120 - 01:29:24.759

Rodino was absolutely incensed by Director Foley's letter, and he blamed Chief Justice Burger for it. It's not known whether or not the Chief Justice had a hand in it or not. Um, Congressman Rodino demanded an explanation from Chief Justice Burger as to how an administrator had

01:29:24.759 - 01:29:44.640

the gall to declare an act of Congress to be unconstitutional. Well, though I disagree with um the uh director's, uh, decision. Um, there is some justification for the director taking the action he did. If a federal official believes the statute is unconstitutional, he doesn't take action

01:29:44.640 - 01:30:05.870

under that statute, and, uh, the affected party, the aggrieved party, brings an action in court for a decision on that. So I think, uh, although Chairman Rodino's, um, unhappiness was understandable. Uh, the director's action might have been justified, uh, on, on a legal basis. It may

01:30:05.870 - 01:30:21.950

well have been, but it was handled so badly again with that memo that it looked like it was some kind of retaliation against the bankruptcy judges and by 1984, some of the district judges who had not been at all supportive prior to '78 of the status

01:30:21.950 - 01:30:43.149

of bankruptcy judges, they've gotten used to the increased status of bankruptcy judges and they saw them as brethren. Um, and also they were really irritated that there was a bureaucratic interference in their area. Several bankruptcy judges sued director Foley for their salary, which is just what,

01:30:43.270 - 01:30:57.669

as I said, the, the idea that if the director does something that the judges believe is illegal, they bring an action. But in this particular case, this never went to trial or anything because before actually before it was even filed, Director Foley succumbed to the pressure,

01:30:57.750 - 01:31:15.500

he withdrew his decision. Bankruptcy judges could get paid the remaining district courts then referred their cases. The controversy though didn't die down right away, and in November of 1984 the Reagan administration asked the District of Columbia District court to determine that the current bankruptcy judges did

01:31:15.500 - 01:31:33.915

not hold office. Was this uh his signing statement is this more um protection of one branch against the other of what they believe their constitutional. Uh, authority and power is here the appointing authority is supposed to belong in the executive branch, not in the congressional branch

01:31:33.915 - 01:31:50.395

legislative branch. Uh, I suspect that there was some uh desire for precedent here to, uh, not to allow Congress to do this. It is possible it's also just a need for certainty. You have an awful lot of cases and if the decisions were being made by

01:31:50.395 - 01:32:04.129

judicial officers who had no authority to do it, it could make it really terrible mess down the road. So I'm not sure and you may well be correct uh there was also a suit that was going forward in San Francisco where a district judge ruled against

01:32:04.129 - 01:32:21.790

the Reagan administration, so it's coming down on both sides. Uh, during the next few years, all the bankruptcy judges underwent reappointment, and that piece of the controversy died down. Well, it did for a while and the Supreme Court did not touch the constitutionality of the new

01:32:21.790 - 01:32:42.029

law for over 25 years, but in 2011, uh, it ruled in a case called Stern against Marshall. Stern against Marshall, like Marathon, raises more questions and confusion, confusion than it resolves, but what it did was declare that a portion, now not all but a portion of

01:32:42.029 - 01:33:07.060

the bankruptcy judge's authority under the 1980. The act was an unconstitutional delegation of judicial power to non-tenured non-Article III judges. Uh, in this case, it involved a bankruptcy judge's decision on a state law tort counterclaim by a debtor in possession against a creditor who had filed

01:33:07.060 - 01:33:25.270

a proof of claim, and the counterclaim was not directly related to the claim and did not need to be resolved in order to determine. The debtor's liability on the creditor's claim, the Supreme Court said following almost the exact language of Marathon that when a common law

01:33:25.270 - 01:33:42.746

contract or tort matter comes before the federal judiciary, it can be resolved only by an Article III bankruptcy court unless it is an integral part of the. Adjustment of the debtor creditor relationship in the course of the bankruptcy since this was an action to augment the

01:33:42.746 - 01:34:00.452

estate rather than to adjust debtor creditor relationships, it was beyond the bankruptcy judge's authority. Now this has thrown the bankruptcy system into some disarray, not nearly so great as in the early 1980s because the judges. are not about to expire. There will still be judges. There

01:34:00.452 - 01:34:19.651

will still be courts uh handling the bankruptcy cases, but, um, but there is now substantially greater uncertainty over the extent of the bankruptcy judge's authority uh in many matters that arise in bankruptcy cases. Is this a clearer decision than the marathon decision? Uh, it depends who

01:34:19.651 - 01:34:38.549

you ask. I think it clarifies and uh carries out marathon. And it is narrow and focused and and with some definition now the place where it's no clearer than Marathon is the uh uh there is no direction on how the court should actually implement this and

01:34:38.549 - 01:34:56.229

when they deal with uh cases that come before them uh that is left entirely to the to the uh bankruptcy judges and the district judges and there's still a lot of uncertainty and there's a tremendous amount of litigation. Uh, about, um, how stern should be applied

01:34:56.229 - 01:35:21.750

in the current system. Going, going back and forward at the same time, it took until 1988 before Congress passed the retirement system for bankruptcy judges and magistrates was actually, uh, many see as superior to that for Article III judges. Um The issue of consolidation has continued

01:35:21.750 - 01:35:44.080

to come up, although 28 USC Section 156D requires prior approval of the judicial conference and Congress before the clerk's offices could be consolidated, consolidation wasn't quite dead. In March of 1997, district judges and bankruptcy judges in the Southern District of West Virginia entered a general order

01:35:44.080 - 01:36:01.890

consolidating, but they tried to get around the law by calling it uh uh a cooperative association between court units for the efficient utilization of court resources. Two months later they appointed a single clerk for both courts. That created an uproar from the bankruptcy courts and a

01:36:01.890 - 01:36:20.000

year later the judicial conference put in procedures to make sure that any consolidation was truly voluntary as to both courts. However, whenever there's a budget crunch, the issue of court consolidation may be raised, and it's really important for the bankruptcy courts to know its history and

01:36:20.000 - 01:36:39.899

be alert to possible encroachments. Um, in 1995, the judiciary's long range plan called for inclusion of bankruptcy judges and magistrate judges and court governance at the district court level. It hints that there should be more involvement at the national and regional level, but it doesn't specify

01:36:40.189 - 01:37:00.529

what that means, and there's been nothing further on that since 1995, uh, just a little bit, uh, in that, uh, and we'll get to that about the appointment of an observer for the judicial conference no no new policy standards. Um, in 19 since 1979, the bankruptcy

01:37:00.529 - 01:37:16.879

judges have in fact been added to a variety of the judicial conference committees. Uh, by, by 2004 there were 4 bankruptcy judges on the bankruptcy committee and on the bankruptcy rules committee, which at that time was chaired by a bankruptcy judge, and there is at least

01:37:16.879 - 01:37:34.589

one bankruptcy judge on every other committee that has an effect on the bankruptcy court or on bankruptcy judges. Makes sense. It does, um. It took until 2004 before a bankruptcy judge and a magistrate judge were allowed to even attend meetings of the judicial conference, but now

01:37:34.589 - 01:37:52.109

one is appointed in order to be there on a non-voting capacity. So at least and as far as I can tell they don't even talk, but they do sit and they do report back and they participate in the activities of the judicial conference which meets informally

01:37:52.109 - 01:38:09.060

the members meet informally before and after and so on and so forth. And it's very much like going back to the creation of the 1978 Act, and that is that by the NCBJ proposing its own bill, they had a seat at the table. That was critical

01:38:10.430 - 01:38:29.189

Having a bankruptcy judge and a magistrate judge as a participant and present at the judicial conference is critical. It's a seat at the table, not being outside the door, and it creates, um, as you say, social interaction, informal interaction which allows an exchange of views. So

01:38:29.189 - 01:38:46.200

even though they don't formally sit at the judicial conference table, they have input. Absolutely. And it makes a difference. Absolutely. The bankruptcy courts have come a long way since Congress enacted the first permanent bankruptcy law in 1898. As we move forward, it's important to be mindful

01:38:46.200 - 01:38:49.020

of that history. Thank you for joining us.