Oral argument: Jan. 18, 2011
Appealed from: United States Court of Appeals for the Ninth Circuit (Mar. 19, 2010)
BANKRUPTCY, JURISDICTION, CHAPTER 11, COUNTERCLAIMS
In 1994, J. Howard Marshall II, a very wealthy oil executive, married Vickie Lynn Marshall (“Vickie”), a model and actress who worked under the name Anna Nicole Smith. J. Howard Marshall died shortly thereafter, leaving the bulk of his estate to his son E. Pierce Marshall (“Pierce”). Vickie filed for Chapter 11 bankruptcy protection in 1996, and Pierce brought a defamation claim against her in the bankruptcy court. Vickie made a compulsory counterclaim, alleging that Pierce had tortiously interfered with J. Howard Marshall’s intent to give her part of his estate. The bankruptcy court rendered a judgment in favor of Vickie. Pierce eventually appealed to the Ninth Circuit, which reversed the bankruptcy court’s decision on the grounds that Vickie’s counterclaim was not a “core” proceeding, and therefore was improperly before the bankruptcy court. Vickie’s estate, represented by her executor Howard K. Stern, argues that the Ninth Circuit erroneously applied 28 U.S.C. § 157(b)(2)(C) because the provision categorically establishes compulsory counterclaims as core proceedings. The estate of Pierce Marshall asserts that the counterclaim raised in this case deals with a tort claim that arises under state law, and is therefore not part of the core proceedings. The Supreme Court’s decision in this case will determine whether Congress intended for 28 U.S.C. § 157(b)(2)(C) to categorize all compulsory counterclaims as core proceedings and, if this was Congress’ intent, whether this intent is constitutional.