Case Against Supplemental Bankruptcy Jurisdiction: A Constitutional, Statutory, and Policy Analysis

In this Article Professor Block-Lieb critically examines the power of a federal district or bankruptcy court to adjudicate jurisdictionally insufficient claims which arise out of a common nucleus of operative fact with a proceeding which “arises under” the Bankruptcy Code, or “arises in” or “relates to” a bankruptcy case. After considering Article III of the United States Constitution, relevant statutory provisions--including the newly enacted supplemental jurisdictional provision (28 U.S.C. § 1367)-- and the conflicting policy objectives of these statutory provisions, the Article concludes that a district court's adjudication of supplemental claims related to a “related to” proceeding may be unconstitutional, unauthorized by statute, and inconsistent with the primary purpose of bankruptcy jurisdiction--the efficient administration of a bankruptcy estate. As to a district court's exercise of jurisdiction over supplemental claims related to an “arising under” or “arising in” proceeding, it proposes that a balancing approach be adopted. It also contends that additional constitutional concerns are raised when a non-Article III bankruptcy court exercises any form of supplemental bankruptcy jurisdiction, and advocates limiting the power of bankruptcy courts accordingly.