The statutory right of a creditor to have “personal injury tort” claims decided in district court is waivable, according to District Judge Gregory M. Sleet of Delaware.
A former employee of a subsidiary of Tribune Co. filed a claim contending that he had been subjected to a hostile work environment and unlawful termination before the company’s chapter 11 filing. The bankruptcy court granted summary judgment in favor of Tribune, concluding that the former employee had not stated a discrimination or unlawful termination claim.
The former employee appealed, arguing that the bankruptcy court did not have power to enter a final judgment in view of 28 U.S.C. §§ 157(b)(2)(B) and (b)(5). The former provides that allowance of a claim is a core proceeding, but not the estimation or liquidation of “personal injury tort or wrongful death claims.” The latter requires that claims of the sort “be tried” in district court where the bankruptcy is pending or in the district where the claim arose.
In his June 16 opinion, Judge Sleet said courts are divided on the definition of personal injury tort claim. Some take the narrow view by requiring actual physical injury. Others employ a broad definition of civil or private wrongs. Still others use the broad definition but require a financial or property tort claim to be heard in bankruptcy court.
Judge Sleet avoided taking sides by invoking Stern v. Marshall and its progeny. He said that the former employee “impliedly consented” to final resolution in bankruptcy court because he “failed to preserve his objection in any of the numerous ways he could have done so during the pendency of the bankruptcy court’s proceedings.”
Consequently, Judge Sleet said the creditor “consented to the court’s authority to enter final judgment, regardless of whether his claims were personal injury claims.” He pointed out that a similar waiver occurred in Stern.
In Stern, he said, Pierce filed a defamation claim in bankruptcy court. The “Supreme Court found that Pierce consented to the bankruptcy court’s resolution of that claim and forfeited any argument to the contrary,” Judge Sleet said.
Section 157(b)(5) does “not have the hallmarks of a jurisdictional decree,” Judge Sleet said, quoting Stern. Because that section does not implicate the bankruptcy court’s subject matter jurisdiction, “it is possible for creditors to waive or forfeit any objections to the bankruptcy court’s final resolution of the claim.”
Having decided that the bankruptcy court had final adjudicatory power, Judge Sleet proceeded to rule that the bankruptcy court was correct in dismissing the claim.