#12416 - Article 1 Adjudicators - Federal Courts Author-1

II. Article I Adjudicators

Public Rights Doctrine

Administrative adjudicators have been employed since the first Congress to resolve public rights disputes that might have been assigned to Article III courts. Murray’s Lessee approved this practice, noting that “there are matters, involving public rights, which may be presented in such form that the judicial power is capable of acting on them … but which Congress may or may not bring within the cognizance of the” federal courts. Under the public rights doctrine, many disputes between the government and private citizens are decided, at least initially, by Article I adjudicators.

Examples of public rights cases include “claims against the United States,” customs disputes, and immigration disputes (subject to St. Cyr’s requirement that federal habeas review be available). Although the Court has sometimes suggested that public rights disputes can be removed from the purview of federal courts altogether, the legal background has always included a range of common law and equitable (and more recently, statutory) remedies that ensure some form of judicial oversight over these proceedings.

Legislative Courts for Private Law Matters

In Murray’s Lessee, the Court stated that Congress could not withdraw from federal jurisdiction “any matter which, from its nature, is subject of a suit at the common law, or in equity.” And in Crowell v. Benson, the Court considered Congress’s ability to employ Article I adjudicators in these “private right cases.” The Court held that, in such a case, an Article I adjudicator could make conclusive findings of non-constitutional and non-jurisdictional fact, without giving rise to any due process or Article III problem. However, the Court held that federal courts must be able to decide de novo all questions of law, constitutional facts, and jurisdictional facts.¹

The “jurisdictional fact” and “constitutional fact” doctrines are infrequently applied and independent judicial fact-finding almost never occurs. Moreover, the requirement of a de novo inquiry into questions of law has been modified by the Chevron regime.

Agency Adjudication in Criminal Cases

It is undisputed that an administrative agency is prohibited from directly imposing criminal penalties. Moreover, “where a determination made in an administrative proceeding is to play a critical role in the subsequent imposition of a criminal sanction,” the enforcement court must be able to review the agency’s jurisdiction (Estep, plurality) and “there must be some meaningful review of the administrative proceeding,” either by the enforcement court on collateral review or on direct appeal after the issuance of the order (Mendoza-Lopez). Where defects in the administrative proceeding “effectively eliminated” the ability to seek judicial review of the administrative order, due process requires that a criminal enforcement court entertain a collateral challenge to the use of that proceeding as a predicate of a criminal offense (Mendoza-Lopez). Falbo held that a criminal defendant could be estopped from challenging a predicate administrative order to criminal enforcement on exhaustion grounds, but it is unclear whether this holding survives Mendoza-Lopez.

Four Situations Where Legislative Courts are Permissible

Historically, non-Article III courts have been employed in the following circumstances:

TERRITORIAL COURTS. Non-Article III courts can be permissibly employed for use as courts of general jurisdiction in territories of the United States (American Ins. Co.). Territorial courts can adjudicate criminal cases (Palmore, concerning District of Columbia courts).

MILITARY COURTS. Non-Article III military tribunals can constitutionally be employed to enforce military discipline and punish service members (Dynes).

PUBLIC RIGHTS. Non-Article III courts can be permissibly employed to adjudicate public rights (i.e., disputes between the government and private citizens the resolution of which could have been constitutionally vested exclusive in the executive).

ADJUNCTS. Legislative courts are permitted to perform certain functions with respect to criminal matters or civil litigation between private parties where the legislative court serves as an adjunct to an article III court that can review the legislative court’s decisions.

POWER OF NON-ARTICLE III COURTS TO ADJUDICATE ARTICLE III MATTERS. It is clear that non-Article I courts can hear cases falling within Article III’s jurisdictional heads in some cases. For example, territorial courts can hear federal question cases, and public rights tribunals (e.g., the Court of Federal Claims or the Tax Court) can hear federal question cases to which the United States is a party.

Stern v. Marshall: The Roberts Court’s View

Holding: Stern held (5-4) that a non-Article III bankruptcy court could not issue a final judgment on a compulsory state-law counterclaim brought by the bankrupt estate against a bankruptcy claimant, because, Article III prohibits a non-Article III court of broad substantive jurisdiction from issuing a final, binding judgment on a common law cause of action, when the action neither derives from nor depends upon any agency regulatory regime.²

Majority Opinion: The Court began by quoting Murray’s Lessee for the proposition that “in general, Congress may not withdraw from [Article III cognizance] any matter which, from its nature, is the subject of a suit at the common law, or in equity.” Although the Court recognized that there were traditional exceptions, including exceptions for public rights disputes and for non-Article III adjuncts, the Court found neither exception to be applicable here.

Public Rights Exception. The Court noted that the traditional definition of “public rights” involved conflicts “between the Government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments,” and that these cases were contrasted with those cases involving the liability of one individual to another.

The Court noted that Thomas and Schor had embraced an expanded notion of the public rights exception, which would include cases “derived form a federal regulatory scheme and completely dependent on the adjudication of a claim created by federal law,” “or in which resolution of the claim by an expert Government agency was deemed essential.”³

Adjuncts. The Court held that the bankruptcy courts could not be deemed adjuncts of the district courts because they had broad jurisdiction not limited by subject matter and had the authority to enter final judgments.

Pre-Stern Cases Considering the Constitutionality of Non-Article III Adjudication of Private Disputes

NORTHERN PIPELINE. In Northern Pipeline, the Court declared unconstitutional Article I bankruptcy courts, which were entrusted with jurisdiction over all “civil proceedings arising under the Bankruptcy Act or arising in or related to cases arising under it.” Justice Brennan’s plurality opinion concluded that, because the bankruptcy court was authorized to hear state common law claims related to bankruptcy, it did not fall within the public right exception (or any other exception to Article III exclusivity that had been historically recognized). The plurality next considered whether the bankruptcy courts could be upheld as “adjuncts” to Article III courts. The plurality concluded that the bankruptcy courts were not mere adjuncts because (a) their jurisdiction was not limited to certain areas of law; (b) they had authority to enforce their own orders; and (c) their rulings would not be set aside unless “clearly erroneous.” More generally, the plurality argued that “the functions of the adjunct must be limited in such a way that the essential attributes of judicial power are retained in an Article III court.” The fact that Article III courts could exercise appellate power over the bankruptcy courts was insufficient to establish that the “essential attributes of judicial power” remained with the Article III courts; the plurality believed that “the requirements” of Article III “must be satisfied at all stages in the adjudication.”

Justice Rehnquist’s concurrence took the position that it was unconstitutional for Congress to vest in the bankruptcy courts broad authority to adjudicate state law claims only tangentially related to the resolution of the bankruptcy dispute. The concurrence agreed that appellate review in an Article III court was insufficient to cure this constitutional defect. In dissent, Justice White argued for a balancing approach, wherein the benefits of a legislative court would be balanced against its effects on separation-of-powers and judicial independence.

ALTERNATIVE APPROACHES. Professor Fallon would treat sufficiently searching appellate review by an Article III court as both necessary and sufficient to legitimate adjudication by a federal legislative court or administrative agency. This approach has the virtue of drawing clear and enforceable lines, accommodating the historical exceptions to Article III while ensuring that Congress is not able to eliminate the essential role of Article III courts in the federal system.

CFTC V. SCHOR. Schor upheld the CFTC’s ability to hear permissive state law counterclaims in its reparation proceedings. The Court began its analysis by noting that Article III serves “both to protect the role of the independent judiciary within the constitutional scheme … and to safeguard the litigants’ right to have claims decided before judges who are free from potential domination by...