CRS Annotated Constitution
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Status of Courts of the District of Columbia.—Through a long course of decisions, the courts of the District of Columbia were regarded as legislative courts upon which Congress could impose nonjudicial functions. In Butterworth v. United States ex rel. Hoe,91 the Court sustained an act of Congress which conferred revisory powers upon the Supreme Court of the District in patent appeals and made its decisions binding only upon the Commissioner of Patents. Similarly, the Court later sustained the authority of Congress to vest revisory powers in the same court over rates fixed by a public utilities commission.92 Not long after this, the same rule was applied to the revisory powers of the District Supreme Court over orders of the Federal Radio Commission.93 These rulings were based on the assumption, express or implied, that the courts of the District were legislative courts, created by Congress in pursuance of its plenary power to govern the District of Columbia. In dictum in Ex parte Bakelite Corp.,94 while reviewing the history and ana[p.612]lyzing the nature of the legislative courts, the Court stated that the courts of the District were legislative courts.
In 1933, nevertheless, the Court, abandoning all previous dicta on the subject, found the courts of the District of Columbia to be constitutional courts exercising judicial power of the United States,95 with the result that it assumed the task of reconciling the performance of nonjudicial functions by such courts with the rule that constitutional courts can exercise only the judicial power of the United States. This task was accomplished by the argument that in establishing courts for the District, Congress is performing dual functions in pursuance of two distinct powers, the power to constitute tribunals inferior to the Supreme Court, and its plenary and exclusive power to legislate for the District of Columbia. However, Article III, Sec. 1, limits this latter power with respect to tenure and compensation, but not with regard to vesting legislative and administrative powers in such courts. Subject to the guarantees of personal liberty in the Constitution, “Congress has as much power to vest courts of the District with a variety of jurisdiction and powers as a State legislature has in conferring jurisdiction on its courts.”96
In 1970, Congress formally recognized two sets of courts in the District, federal courts, district courts and a Court of Appeals for the District of Columbia, created pursuant to Article III, and courts equivalent to state and territorial courts, created pursuant to Article I.97 Congress’ action was sustained in Palmore v. United States.98 When legislating for the District, the Court held, Congress has the power of a local legislature and may, pursuant to Article I, Sec. 8, cl. 17, vest jurisdiction to hear matters of local law and local concerns in courts not having Article III characteristics. The defendant’s claim that he was denied his constitutional right to be tried before an Article III judge was denied on the basis that it was not absolutely necessary that every proceeding in which a charge, claim, or defense based on an act of Congress or a law made under its authority need be conducted in an Article III court. State courts, after all, could hear cases involving federal law as could territorial and military courts. “[T]he requirements of Article III, which are applicable where laws of national applicability and affairs of na[p.613]tional concern are at stake, must in proper circumstances give way to accommodate plenary grants of power to Congress to legislate with respect to specialized areas having particularized needs and warranting distinctive treatment.”99
Bankruptcy Courts.—After extended and lengthy debate, Congress in 1978 revised the bankruptcy act and created as an “adjunct” of the district courts a bankruptcy court composed of judges, vested with practically all the judicial power of the United States, serving for 14 year terms, subject to removal for cause by the judicial councils of the circuits, and with salaries subject to statutory change.100 The bankruptcy courts were given jurisdiction over all civil proceedings arising under the bankruptcy code or arising in or related to bankruptcy cases, with review in Article III courts under a clearly erroneous standard. In a case in which a claim was made against a company for breaches of contract and warranty, purely state law claims, the Court held unconstitutional the conferral upon judges not having the Article III security of tenure and compensation of jurisdiction to hear state law claims of traditional common law actions of the kind existing at the time of the drafting of the Constitution.101 While the holding was extremely narrow, a plurality of the Court sought to rationalize and limit the Court’s jurisprudence of Article I courts. According to the plurality, as a fundamental principle of separation of powers, the judicial power of the United States must be exercised by courts having the attributes prescribed in Article III. Congress may not evade the constitutional order by allocating this judicial power to courts whose judges lack security of tenure and compensation. Only in three narrowly circumscribed instances may judicial power be distributed outside the Article III framework: in territories and the District of Columbia, that is, geographical areas in which no State operated as sovereign and Congress exercised the general powers of government; courts martial, that is, the establishment of courts under a constitutional grant of power historically understood as giving the[p.614]political branches extraordinary control over the precise subject matter; and the adjudication of “public rights,” that is, the litigation of certain matters that historically were reserved to the political branches of government and that were between the government and the individual.102 In bankruptcy legislation and litigation not involving any of these exceptions, the plurality would have held, the judicial power to process bankruptcy cases could not be assigned to the tribunals created by the act.103
The dissent argued that, while on its face Article III provided for exclusivity in assigning judicial power to Article III entities, the history since Canter belied that simplicity. Rather, the precedents clearly indicated that there is no difference in principle between the work that Congress may assign to an Article I court and that which must be given to an Article III court. Despite this, the dissent contended that Congress did not possess plenary discretion in choosing between the two systems; rather, in evaluating whether jurisdiction was properly reposed in an Article I court, the Supreme Court must balance the values of Article III against both the strength of the interest Congress sought to further by its Article I investiture and the extent to which Article III values were undermined by the congressional action. This balancing would afford the Court, the dissent believed, the power to prevent Congress, were it moved to do so, from transferring jurisdiction in order to emasculate the constitutional courts of the United States.104
Again, no majority could be marshaled behind a principled discussion of the reasons for and the limitation upon the creation of legislative courts, not that a majority opinion, or even a unanimous one, would necessarily presage the settling of the law.105 But the breadth of the various opinions left unclear not only the degree of discretion left in Congress to restructure the bankruptcy courts, but placed in issue the constitutionality of other legislative efforts[p.615]to establish adjudicative systems outside a scheme involving the creation of life–tenured judges.106
Congress responded to Marathon by enactment of the Bankruptcy Amendments and Federal Judgeship Act of 1984.107 Bankruptcy courts were maintained as Article I entities, and overall their powers as courts were not notably diminished. However, Congress did establish a division between “core proceedings,” which bankruptcy courts could hear and determine, subject to lenient review, and other proceedings, which, though the bankruptcy courts could initially hear and decide, any party could have de novo review in the district court, unless the parties consented to bankruptcy–court jurisdiction in the same manner as core proceedings. A safety valve was included, permitting the district court to withdraw any proceeding from the bankruptcy court on cause shown.108 Notice that in Granfinanciera, S.A. v. Nordberg,109 the Court found that a cause of action founded on state law, though denominated a core proceeding, was a private right.
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