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Brooklyn Journal of Corporate, Financial & Commercial Law

Abstract

The 2011 Supreme Court case Stern v. Marshall defined which claims bankruptcy courts had the authority to adjudicate, but it’s complicated holding left lower courts perplexed. Specifically, the Stern decision created “Stern claims”—claims that bankruptcy courts have the statutory, but not the constitutional, authority to adjudicate. Subsequent cases, such as Executive Benefits Insurance Agency v. Arkison and Wellness International Network, Ltd. v. Sharif, have grappled with whether Stern claims should be treated as “core” claims, which bankruptcy courts can enter final judgments on, or “non-core” claims, which bankruptcy courts can only enter final judgments on if the litigating parties consent. The Supreme Court in Wellness held that parties could impliedly consent to Stern claim adjudication by bankruptcy courts, but the Court’s test to determine implied consent is ambiguous and has caused further disagreement among lower courts. This Note analyzes the Court’s interpretation of parties’ implied consent to bankruptcy court adjudication of Stern claims in Wellness, explains why the interpretation is too broad, and offers solutions to narrow consent in these cases. Potential solutions include: (1) creating a narrower definition of Stern claims, (2) extending the holding of Executive Benefits and addressing consent, (3) amending Section 157 or Federal Bankruptcy Rule 7012(b) to include Stern claims, and (4) implementing the “balancing test” used in cases decided prior to Stern to determine whether bankruptcy courts have the authority to adjudicate certain claims.