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6 Bankruptcy Decisions Continued from Page 5 Respondent admitted the action was a core bank- ruptcy proceeding in his answer. Discovery issues ensued and the Bankruptcy Court eventually found that respondent violated the courts discovery order and entered a default judgment against respondent denying his discharge and finding the trust to be the alter ego of respondent. The Supreme Court entered its decision in Stern six weeks before respondent filed his opening brief with the District Court but respondent failed to cite Stern. Instead after the briefing period ended re- spondent requested authority to file a supplemental brief to discuss Stern. The District Court denied that request and affirmed the Bankruptcy Courts ruling. On appeal the Seventh Circuit Court of Appeals held that a Stern objection cannot be waived be- cause it implicates structural interest considerations between the Bankruptcy Court and the District Court. Further the Seventh Circuit held the alter ego claim alleged against respondentdebtor was a Stern claim and thus the Bankruptcy Court did not have authority to enter final judgment on that claim. Referencing Commodity Futures Trading Commn v. Schor 478 U.S. 833 1986 where the CFTC tried to give itself authority to hear state law counter -claims the Supreme Court held that the right to Ar- ticle III adjudication is a personal constitutional right and as such is subject to waiver. In Schor the Court found no structural concern in allowing the parties to consent to the adjudication of their dis- putes by a non-Article III judge because Congress has made a quasi-judicial mechanism through which willing parties may at their option elect to resolve their differences just as Congress can en- courage parties to settle their disputes outside of court such as through arbitration. Further in Peretz v. United States 501 U.S. 923 1991 the Court previously held that a magistrate judge could super- vise jury selection with the consent of the parties. Based on such precedent the Supreme Court held in Wellness that the parties can waive their personal right to an Article III adjudicator as long as Article III courts retain supervisory authority. The Supreme Court found no threat to the integrity of the judicial branch by allowing litigants to consent to the juris- diction of Article I judges because bankruptcy judg- es like magistrate judges as discussed in Peretz are appointed and subject to removal by Article III judges and hear matters solely on the District Courts reference which may be withdrawn and as such the federal courts still maintain judicial con- trol. The Court went on to say that consent need not be express but rather need only be knowing and voluntary. Referring to Roell v. Withrow 538 U.S. 580 2003 the key inquiry is whether the litigant or counsel was made aware of the need for consent and the right to refuse it and still voluntarily ap- peared to try the case before the non-Article III ad- judicator. The Supreme Court discussed that the Wellness holding is not contradictory to Stern because Stern did not discuss the issue of consent and the Court made clear that the reach of Stern was narrow and did not intend to change the division of labor be- tween district courts and bankruptcy courts. Ulti- mately the case was remanded to the Seventh Cir- cuit to determine if respondent did in fact consent to the Bankruptcy Courts jurisdiction. Justice Alito concurred with the result but stated that consent must be express. Chief Justice Roberts ve- hemently dissented saying that the alter ego claim in Wellness stems from the bankruptcy itself and as such is not a Stern claim. As such Article III poses no barrier to the Bankruptcy Court deciding such a claim and the issue of waiver need not even be considered. Counsel will need to be very careful if they wish to challenge the jurisdiction of the Bankruptcy Court to hear a Stern-related claim. Counsel should raise the issue as soon as possible to ensure the court does not imply their clients consent. Query as to what will be enough to show that the litigant or counsel was made aware of the need for consent and the right to refuse itespecially if the litigant is pro se Continued on Page 9