Supreme Court Allows Parties to Consent to Entry of Final Judgment

By Wanda Borges

Borges and Associates, LLC

Syosset, NY

In Stern v. Marshall, the Supreme Court held that a Bankruptcy Court (an Article I Court) did not have the power to enter a final judgment in a case involving a state law counterclaim asserted by a debtor in bankruptcy.  Since the Stern v. Marshall decision, the courts have been split on the issue of whether or not consent between the parties can permit the Bankruptcy Courts to hear a matter which would normally be relegated only to Article III Courts (i.e. the U.S. District Courts).  The Fifth, Sixth and Seventh Circuits said that consent was not enough to permit the Bankruptcy Court to finally decide issues reserved for the Article III Courts.  The Ninth Circuit ruled that consent was sufficient to enable the Bankruptcy Court to issue a final ruling on any matter.

The Supreme Court itself had wrestled with this issue of consent in the past.  In the matter of Commodity Futures Trading Comm’n v. Schor, the Court held that the right to have a matter heard before an Article III court was “personal” and “subject to waiver”.  In the matter of Gomez v. United States, the Supreme Court held that a Magistrate Judge was not permitted to supervise voir dire in felony trials without the consent of the defendant.  In the matter of Peretz v. United States, although, the Court held that “allowing a Magistrate Judge to supervise jury selection,” with consent “does not violate Article III”.