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Northern Pipeline Co. v. Marathon Pipe Line Co.

United States Supreme Court
458 U.S. 50 (1982)


Congress enacted the Bankruptcy Reform Act of 1978 (Act) to revise the United States bankruptcy system. Prior to the Act, federal district courts functioned as bankruptcy courts and heard bankruptcy cases using a "referee" system. The Act ended the referee system and established a formal United States Bankruptcy Court for each judicial district. The Act provided that bankruptcy judges in these courts would be appointed for 14-year terms and could only be removed from their terms for limited reasons. However, the Act did not protect against salary decreases. The Act granted the bankruptcy courts jurisdiction over all civil proceedings arising under the Bankruptcy Code and all cases arising in or related to cases that arose under the code. This included both federal and state-law claims, including contract disputes. The Act also established procedures for appealing the bankruptcy courts' decisions in the federal district and appellate courts. Northern Pipeline Construction Co. (plaintiff) filed a petition for reorganization in January 1980. In March 1980, Northern brought an action against Marathon Pipe Line Co. (defendant) in the United States Bankruptcy Court for the District of Minnesota seeking damages for breach of contract, breach of warranty, misrepresentation, coercion, and duress. Marathon moved to dismiss the suit, arguing that the Act conferred Article III power on judges without life tenure and protection against salary decreases in violation of the Constitution. The bankruptcy court denied Marathon's motion, but the federal district court heard Marathon's appeal and granted the motion to dismiss. The district court concluded that the Act unconstitutionally delegated authority to bankruptcy judges to try cases that should have been limited to Article III judges. The United States Supreme Court heard the appeal and addressed the constitutionality of the Act.

Rule of Law


Holding and Reasoning (Brennan, J.)

Concurrence (Rehnquist, J.)

Dissent (White, J.)

Dissent (Burger, C.J.)

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