January 14, 2015

On January 14, 2015, Jenner & Block Partner Catherine L. Steege presented oral argument before the U.S. Supreme Court in the high-profile dispute of Wellness International Network Ltd. v. Sharif.  The Court’s decision could clarify the powers of nearly 1,000 federal bankruptcy court judges, a group whose constitutional authority has come into question since a 2011 Supreme Court decision involving the late Playboy playmate Anna Nicole Smith.  That case, Stern v. Marshall, caused confusion over the authority of bankruptcy judges to issue final orders.  The appeal in Wellness stems from the Chapter 7 bankruptcy of Chicago resident Richard Sharif.  The firm represents Wellness, a company to which Sharif owed a half-million dollars.  Wellness sued Sharif in bankruptcy court, arguing that assets that Mr. Sharif claimed were in a family trust actually were owned by him and should be used to pay off his debts.  The bankruptcy court entered a default judgment denying Sharif’s discharge and finding that the assets in question were a part of the bankruptcy estate and the Northern District of Illinois affirmed the judgment.  The Seventh Circuit, however, sided with Sharif, ruling that the bankruptcy court did not have the constitutional authority to decide whether the property in question belonged to the bankruptcy estate because the dispute involved subsidiary state law issues.  In addition to this question, a second issue before the Court on Wednesday was whether Article III permits the exercise of judicial power by the bankruptcy courts on the basis of litigant consent, and if so, whether implied consent based on a litigant’s conduct is sufficient to satisfy Article III.  Other members of the Wellness team include Partners Barry Levenstam, Matthew S. Hellman and Melissa M. Root and Associates Ishan K. Bhabha and Landon S. Raiford.  Media outlets reporting on Wednesday’s arguments before the Court included Law360 and The Wall Street Journal.