Granfinanciera, S. A. v. Nordberg

PETITIONER: Granfinanciera, S.A., et al.
RESPONDENT: Paul C. Nordberg
LOCATION: United States District Court for the Southern District of Florida

DOCKET NO.: 87-1716
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Eleventh Circuit

CITATION: 492 US 33 (1989)
ARGUED: Jan 09, 1989
DECIDED: Jun 23, 1989

ADVOCATES:
Adam Lawrence - on behalf of the Petitioners
Laurence Tribe - on behalf of the respondents
Laurence H. Tribe - on behalf of the Respondents

Facts of the case

In 1983, the Chase & Sanborn Company filed for Chapter 11 bankruptcy. The United States Bankruptcy Court for the Southern District of Florida made Paul Nordberg the trustee in bankruptcy. In 1985, Nordberg sued Granfinanciera, S.A. and Medex, Ltda. in district court. Nordberg alleged that they received $1.7 million in fraudulent transfers from Chase & Sanborn’s corporate predecessor a year before the bankruptcy filing. The district court referred the proceedings to bankruptcy court. Five months later, after the Colombian government nationalized Granfinanciera, Granfinanciera and Medex requested a jury trial. The bankruptcy court denied the request because fraudulent transfers were a non-jury issue under English common law. After a bench trial, the bankruptcy court dismissed the actual fraud claim but found in favor of Nordberg on the constructive fraud claim in the amount of $1,500,000 against Granfinanciera and $180,000 against Medex. The district court affirmed the decision.

The U.S. Court of Appeals for the Eleventh Circuit affirmed and held that Granfinanciera and Medex did not have a statutory right to a jury trial, nor did they have a right under the Seventh Amendment.

 

Question

Does a person who has submitted a claim against a bankruptcy estate have a right to a jury trial when sued by the trustee in bankruptcy to recover an allegedly fraudulent money transfer?

Media for Granfinanciera, S. A. v. Nordberg

Audio Transcription for Oral Argument - January 09, 1989 in Granfinanciera, S. A. v. Nordberg

William H. Rehnquist:

We'll hear argument next in No. 87-1716, Granfinanciera v. Nordberg.

You may proceed whenever you're ready.

Adam Lawrence:

Thank you, Mr. Chief Justice.

May it please the Court.

In the 1984 Bankruptcy Act, Congress has neither intended to nor has it in fact abrogated or modified any of the Petitioners' Seventh Amendment rights.

We feel for this reason that this Court need not explore the limits or the margins or the interstices of Congress' power to legislate outside the Seventh Amendment.

This case can be resolved neatly and completely, we submit, with a consideration of just two matters.

The first matter is the unified jurisdictional structure and court organizational system created in the 1984 Bankruptcy Act.

The second consideration is the entirely legal nature of the cause of action asserted by the Trustee in his complaint and the type of relief he asked for.

Turning to the 1984 Act, what's significant, highly significant, about the Act is that it does not create a separate jurisdictional or juridical entity called the bankruptcy court.

What it does create are a group of bankruptcy judges who are denominated a "unit" of the district court invested with the power of judicial officers of that court.

What Congress has not done very specifically in the 1984 Act is create out of these... out of these bankruptcy judges an administrative agency, a specialized court of equity or specialized court, a court of any type, or a legislative tribunal.

Congress has specifically left these judges as dependent, non-autonomous adjuncts or units of the plenary United States district court.

Now, it wasn't always this way, and I think a historical look is instructive here.

Excuse me.

My Constitution says that the judges, both of the Supreme and inferior courts, shall hold their offices during good behavior.

Adam Lawrence:

Yes, sir.

And yet you say these bankruptcy officers who don't hold their offices during good behavior are members of an inferior court of the United States.

Adam Lawrence:

Well, I... the... the intent of Congress was to create these judges obviously not as Article III judges, but as adjuncts to an Article III court.

I'm saying that intent is unconstitutional if that was the intent.

Adam Lawrence:

Well, if that is the... if the Act is unconstitutional, I don't think that necessarily impacts on our right to a jury trial.

Or else it wasn't their intent.

I mean, that's another alternative.

Adam Lawrence:

Well, if the... if the intent of Congress was to do an unconstitutional act, obviously an interpretation must be arrived at that permits a constitutional construction.

It seems to me, though, that the... that the precedent of this Court allows Article III type issues or public rights issues or issues arising out of... out of legislation that Congress enacts to be decided in an adjunct fashion.

By a non-Article III court, correct.

Adam Lawrence:

Yes.

But you're saying it's being decided by an Article III court with non-Article III judges, as I understand your argument.

Adam Lawrence:

Well, my argument is that initially... if I could develop it historically, the argument is... and from the 1984 Act... that Congress is investing jurisdiction initially and in the first instance in the United States district court judges and the United States district court.

Under the 1984 Act, that jurisdiction need not be shared.