Judicial Restraint in the Early Days Following Stern v. Marshall

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Over five months have passed since the United States Supreme Court entered its landmark decision of Stern v. Marshall, 131 S. Ct. 2594 (2011) [2011 BL 165774] the Court’s first key ruling in decades on bankruptcy court jurisdiction. In Stern, the Court ruled, in a 5-4 decision, that a bankruptcy court “lacked the constitutional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim.”

As of the date of this article, over 100 bankruptcy court cases across all circuits have cited to Stern, many grappling with their ability to issue final judgment in cases ranging from proceedings for relief from the automatic stay to fraudulent transfer proceedings. Courts struggle with the implications of the Stern decision, and will continue to do so while the courts of appeal begin to provide needed clarity on the various questions Stern raises.

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