Recent Bankruptcy-Related Articles of Interest Available for Downloading from SSRN
Here are some general bankruptcy related articles of interest that are available for downloading from SSRN. Their abstracted summaries follow:
UNLV's Nancy B. Rapoport and Forensics Consulting Solutions' Roland J. Bernier III, "(Almost) Everything We Learned about Pleasing Bankruptcy Judges, We Learned in Kindergarten" (Abstract ID: 1157103)
Stetson University's Michael S. Finch, "Giving Full Faith and Credit to Punitive Damage Awards: Will Florida Rule the Nation?" (Abstract ID: 1143578)
Stetson University's Theresa J. Pulley Radwan, "Trustees in Trouble: Holding Bankruptcy Trustees Personally Liable for Professional Negligence" (Abstract ID: 1138069)
Stetson University's Theresa J. Pulley Radwan, "Limitations on Assumption and Assignment of Executory Contracts by 'Applicable Law'" (Abstract ID: 1138056)
Temple University's S. Todd Brown, "Non-Pecuniary Interests and the Injudicious Limits of Appellate Standing in Bankruptcy" (Abstract ID: 1114917)
Santa Clara University's Alexander J. Field, "Bankruptcy, Debt, and the Macroeconomy, 1919-1946" (Abstract ID: 1109259)
UNLV's Tuan Samahon, "Are Bankruptcy Judges Unconstitutional? An Appointments Clause Challenge" (Abstract ID: 1108694)
Univ. of Chicago's Randall C. Picker, "'Twombly', 'Leegin' and the Reshaping of Antitrust", (Abstract ID: 1091498)
Abstract summaries for each of the foregoing articles follow below:
Nancy B. Rapoport and Roland J. Bernier III: "(Almost) Everything We Learned about Pleasing Bankruptcy Judges, We Learned in Kindergarten" (Abstract ID: 1157103)
In this essay, we demonstrate that most ethics violations (at least the ones that irritate bankruptcy judges) are also violations of simple rules of behavior that people should have learned in kindergarten.
Michael S. Finch: "Giving Full Faith and Credit to Punitive Damage Awards: Will Florida Rule the Nation?" (Abstract ID: 1143578)
This Article considers the constitutional status of state punitive damage judgments and the particular obligation that sister-states have to enforce them. Part I considers the legality of measures recently enacted by the tobacco companies' home states to delay enforcement of the judgment in Engle. This discussion will show that, contrary to the public protestations of many legal scholars, those states properly exercised their authority under the Full Faith and Credit Clause of the Constitution when they acted to defer enforcement of the Engle judgment while it is appealed through the Florida courts.
Part II of this Article considers whether there is any obligation under the Full Faith and Credit Clause to enforce sister-state judgments for punitive damages. According to Supreme Court precedent dating back to the nineteenth century, "penal" judgments are not entitled to full faith and credit. While the penal judgment rule has not seen great service in recent decades, its reexamination is timely. First, there is widespread agreement that modern punitive damages awards no longer serve the compensatory purposes they served at the time the Full Faith and Credit Clause was ratified: Punitive damages now serve the quasi-criminal purposes of deterrence and punishment, and are therefore penal in nature. Second, an increasing number of states have reaffirmed the penal role of punitive damages by appropriating a share of the plaintiff's punitive award. Such shared recovery laws emphasize that punitive awards now vindicate "public wrongs," and so fulfill the historical purpose of penal laws.
This Article contends, however, that the penal judgment rule should not be extended to permit the denial of full faith and credit to judgments for punitive damages. Notwithstanding the linguistic similarity in the epithets penal judgments and punitive damages, the concepts address quite different concerns. Further, application of the penal judgment rule to punitive damages awards would serve no state or litigant interest not already addressed by other constitutional provisions - particularly the Due Process Clause. For these reasons, courts should not revivify the penal judgment rule to address contemporary problems posed by punitive damages awards.
This Article concludes that the Constitution offers defendants who suffer the imposition of catastrophic verdicts like that in Engle a measure of protection. States may, and after Engle should, eliminate appellate bond requirements for punitive awards when there is no reason to suspect that the judgment debtor will intentionally dissipate its assets. This approach will leave intact appellate bond requirements for compensatory damages, and thus secure the judgment creditor's right to be made whole for his losses. At the same time, judgment debtors need not face the prospect of bankruptcy, or exorbitant settlement, simply because they cannot post security for an aberrant, punitive verdict like that in Engle. The Supreme Court has emphasized the critical role of appellate courts in policing unconstitutionally excessive punitive verdicts, and that role can only be fulfilled if the appellate process is affordable.
Realistic appellate bond requirements, however, are only part of the solution. Engle sounds a grave warning. The current system of tort law increasingly "commits the fate of an entire industry or, indeed, the fate of a class of millions, to a single jury."The constellation of interests affected by mass tort litigation--injured persons, consumers, states, national industries, and local economies - exceeds the competence of a single jury or single state court to resolve. A national solution is needed, and by default the task of devising that solution falls on Congress.
Theresa J. Pulley Radwan: "Trustees in Trouble: Holding Bankruptcy Trustees Personally Liable for Professional Negligence" (Abstract ID: 1138069)
Professional negligence is a fact of life. Insurance companies know this. Professionals know this. The general public knows this. However, not all professionals are responsible for their own negligence. For some professionals, negligence liability may be curbed for policy reasons. However, this article argues that no such policy reasons exist for limiting the personal liability of a negligent bankruptcy trustee.
Courts treat negligent trustees in one of three ways. The first, and most lenient standard for trustees, is that negligence, whether it be "mere negligence" or "gross negligence" will not subject a trustee to liability. In circuits following this standard, a trustee must take an intentional action in order to be personally liable for that action. This standard evolved from decisions in non-bankruptcy cases regarding immunity for judges and other court-appointed employees.
The second possible standard, which has gained popularity as a "middle-ground" alternative, allows trustees to be liable for gross negligence but not for mere negligence. In so doing, these courts have tried to hold a trustee liable for something less than his or her intentional actions without going so far as to hold a trustee liable for simple, garden-variety negligence.
Finally, some courts hold trustees personally liable for any type of negligence, as well as intentional actions. The rationale for this liability stems from the trustee's role as an attorney, subject to standards of reasonableness in light of the circumstances. This article argues that such a standard should be utilized by all courts in order to promote a fair distribution of bankruptcy assets among the creditors and to comply with public expectations of a trustee's performance. Although ideas of immunity evolve from legal ideas, these ideas are outdated and inapplicable in the context of modern bankruptcy cases. And, while gross negligence offers a middle ground, this article argues that defining professional negligence in terms of a similarly situated bankruptcy trustee obviates the need for such a middle ground.
Theresa J. Pulley Radwan: "Limitations on Assumption and Assignment of Executory Contracts by 'Applicable Law'" (Abstract ID: 1138056)
11 U.S.C. section 365 considers the treatment of executory contracts in bankruptcy proceedings. Subsection 365(c)(1) prohibits the assumption or assignment of executory contracts when a contractual or legal provision would applicable law excuses a party from accepting third-party performance, while subsection 365(f) allows assignment of an executory contract under certain circumstances regardless of legal or contractual prohibitions on the assignment. This article considers the balance between these sometimes-contradictory subsections of the Bankruptcy Code, and concludes that Congress intended to allow the assumption of executory contracts even if they are not assignable in order to further the objections of reorganization bankruptcy proceedings.
S. Todd Brown: "Non-Pecuniary Interests and the Injudicious Limits of Appellate Standing in Bankruptcy" (Abstract ID: 1114917)
Standing to appeal bankruptcy court orders today is limited to those with a pecuniary interest. This prudential limitation is based on the person aggrieved requirement of Section 39(c) of the Bankruptcy Act of 1898 - a requirement that was not included in the Bankruptcy Code. This article examines the extensive differences between the Act and the Code, the potential justifications for extending the pecuniary interest test in spite of the omission of the person aggrieved requirement, and the potential ramifications for parties and the integrity of the bankruptcy process. This analysis suggests that standing to appeal bankruptcy orders should be governed by the party in interest standard used to evaluate standing to appear in bankruptcy court.
Alexander J. Field: "Bankruptcy, Debt, and the Macroeconomy, 1919-1946" (Abstract ID: 1109259)
Between 1919 and 1946 bankruptcy rates in the U.S. traced out an inverted U-shaped curve, rising during the 1930s as income levels fell, and then plummeting during the Second World War in the face of both rising income and falling debt levels. This paper explores these relationships econometrically, both at the aggregate level and at the level of a number of individual states. It also discusses the historical evolution, motivation, and macroeconomic consequences of bankruptcy law, concluding that the value of analyses such as those of Joseph Schumpeter and Secretary of the State Andrew Mellon have been too quickly dismissed, at least in their entirety, by scholars such as Ben Bernanke.
Tuan Samahon: "Are Bankruptcy Judges Unconstitutional? An Appointments Clause Challenge" (Abstract ID: 1108694)
The Appointments Clause permits Congress to opt out of the Article II procedure of presidential nomination and Senate advice and consent by vesting the appointment of inferior officers in the President alone, in the Courts of Law, or in the Heads of Departments. Congress exercised this option when it vested the power to appoint bankruptcy judges in the U.S. Courts of Appeals, implicitly categorizing these judges as inferior officers and thereby exposing a potential Achilles heel. Although the Courts of Law have appointed bankruptcy adjudicators since the earliest bankruptcy laws, this Article advances the position that bankruptcy judges have gradually and over time accrued tenure, safeguards against removal, expansive jurisdiction and duties that are incompatible with inferior officer status under the balancing approach of Morrison v. Olson. Accordingly, they are not amenable to being opted out of advice and consent and they must be appointed pursuant to the Article II procedure. The appointments of present bankruptcy judges are consequently suspect and their judgments and orders are of questionable validity.
An Article II challenge has escaped the attention of academic commentators and (largely) that of the courts. Resolution of the challenge will require the Supreme Court to clarify its Appointments Clause jurisprudence. This Article argues that the Court's pronouncements on inferior officers in Morrison and Edmond v. United States are irreconcilable. Which authority controls likely would dictate the outcome of any challenge. Accordingly, the Court must either acknowledge that Justice Scalia's majority opinion in Edmond has overruled its landmark decision in Morrison or declare unconstitutional the present method of appointing bankruptcy judges. Thus, the challenge could be potentially similar in scale to the Court's 1982 Marathon decision, which struck down on separation-of-powers grounds the bankruptcy courts' key jurisdictional provision.
Beyond charting a roadmap to the challenge, the Article suggests legislative remedies that could save bankruptcy judges from an Appointments Clause challenge. But, were the Court to resolve the challenge by abandoning Morrison in favor of Edmond, the Article suggests two policy implications: bankruptcy judges could be granted Article III tenure while retaining their present methods of appointment and all inferior court Article III judges could be appointed in the same manner.
Randall C. Picker: "'Twombly', 'Leegin' and the Reshaping of Antitrust", (Abstract ID: 1091498)
This paper considers the four antitrust decisions in the Supreme Court's 2006 Term.
It offers brief discussions of Weyerhaeuser and Credit Suisse. Weyerhaeuser is a small, modest decision. The Court isn't likely to see another predatory bidding case soon and the Court chose to minimize doctrinal complexity by bringing predatory bidding analysis in sync with the Court's prior treatment of predatory pricing in Brooke Group. Credit Suisse too is minimally incremental. In concluding that federal securities law implicitly precluded claims asserting antitrust violations in the sale of new securities, the Court followed its prior decision in Gordon as well as the Court's more recent preference for regulatory schemes over antitrust as seen in Trinko. Pushing antitrust authority toward specialized regulators like the Securities and Exchange Commission broadens the trade-offs that can be made between antitrust concerns and other values and almost certainly expands the circumstances under which industry actors can act collectively. That matters, so Credit Suisse covers more of the economic landscape than Weyerhaeuser, but the decision itself is a small step from prior doctrine.
Twombly and Leegin are each, in their own ways, blockbusters. Twombly will appear in case after case, as antitrust defendants try to rely on its new tougher rules for FRCP 12(b)(6) motions. Twombly represents a preference for blunt instruments over sharp edges. The central problem confronted by Twombly is discovery run amok. The Court has the tools in its hands to control that by rewriting the discovery rules and overturning lower court decisions implementing those rules. Twombly suggests that the Court believes that refinement of those rules will fail in controlling discovery and it is willing to pay the price that private plaintiffs will have no good way to get at the best-hidden antitrust conspiracies.
Finally, Leegin brings to a close - for now or forever? - the 100-year saga of contractual minimum resale price maintenance. Since its decision in 1911 in Dr. Miles, the Court has confronted this issue again and again in the slightly-refined versions that make up the art of institutional design. Over time, the Court has chipped away at Dr. Miles, first in not finding a violation of Section 1 of the Sherman Act for the unilateral minimum RPM in Colgate in 1919 and in then broadly subjecting nonprice vertical restraints to rule-of-reason treatment in Sylvania in 1977. Given that, on what basis would Dr. Miles survive?
That is a question of stare decisis and Leegin ends up in an all-out fight over stare decisis in antitrust. That is new: the Court has been overturning old decisions in antitrust for some time and has done so with little stare decisis fanfare. That suggests that the dispute over stare decisis in Leegin is just a convenient forum for the larger dispute over stare decisis that is percolating through a divided Court. I don't have a full-blown theory of stare decisis but I do suggest why the Court has been mistaken to treat stare decisis in statutory cases differently from that in constitutional cases. The Court has made too little of one of its critical tools in shaping statutes, namely, the power to set a default point for subsequent congressional action. Once we treat the Court's decisions as inputs in subsequent lawmaking, there is greater reason to think that the Court should have a uniform approach to stare decisis across the Constitution and statutes.
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© Steve Jakubowski 2008