‘Stern’ Disputes Invoke a Circuit Court’s General Jurisdiction Under 28 U.S.C. § 1291

In a nonprecedential opinion, the Ninth Circuit identified one of the finer points of an appeals court’s jurisdiction over a noncore dispute falling under the ambit of Stern v. Marshall, 564 U.S. 462 (2011).

The Ninth Circuit said it was “visiting an old friend,” because the case involved the deceased Anna Nicole Smith, her similarly deceased husband, J. Howard Marshall II, and E. Pierce Marshall, J. Howard’s son. You guessed it! They are the litigants whose disputes resulted in the Stern decision defining constitutional limits on a bankruptcy court’s power to enter final orders.

Long after the Supreme Court ruled in Stern, Anna Nicole’s estate appealed the denial of a motion in district court for relief from a judgment under Rule 60(b)(5)-(6) of the Federal Rules of Civil Procedure. The district court ruled that it did not have jurisdiction for several reasons. The Ninth Circuit reversed.

For bankruptcy nerds, one aspect of the Ninth Circuit’s January 31 opinion is significant.

The genesis of the dispute, as the Supreme Court said in its landmark Stern decision, was a noncore matter where the bankruptcy court could only issue proposed findings under 28 U.S.C. § 157(c)(1).

The Rule 60(b) motion was therefore made in a noncore dispute, but the district court said it was exercising bankruptcy appellate jurisdiction.

The Ninth Circuit disagreed, saying the district court was not exercising bankruptcy appellate jurisdiction under 28 U.S.C. § 158(a)(1). Rather, the appeals court said the district court “entered judgment pursuant to its original jurisdiction in bankruptcy matters. See 28 U.S.C. § 1334(b).”

Consequently, the Ninth Circuit ruled that it had jurisdiction “under 28 U.S.C. § 1291, our general grant of jurisdiction to hear appeals from ‘final decisions of the district courts of the United States.’”

Appellate jurisdiction therefore did not rest in the circuit court under 28 U.S.C. § 158(d)(1), the Ninth Circuit said, “because that provision only authorizes appeals from district court orders entered under 28 U.S.C. § 158(a).”