Article III grants federal judges life tenure and salary protection. Nonetheless, Congress may assign some business that could be assigned to an Article III court to adjudication by personnel who lack life tenure and salary protection. For example, under the so-called Madisonian Compromise, Congress need not have created any lower federal courts in the first place, and Congress has never granted the lower federal courts the full jurisdiction allowable by Article III. For example, Title 28 generally requires "complete diversity" and a minimum of $75,000 in controversy for diversity jurisdiction, even though Article III would permit jurisdiction based on minimal diversity with no minimum amount in controversy. Likewise, under Title 28 as construed by the SCOTUS, federal district courts only have federal question jurisdiction in cases in which the federal question appears on the face of the plaintiff's well-pleaded complaint, even though Article III would allow federal question jurisdiction in cases in which the federal issue arises by way of defense or counterclaim. All of these cases that could be adjudicated by Article III judges are instead relegated to state courts in which judges lacking life tenure and salary protection preside. In addition, Congress has authorized administrative adjudication over large numbers of cases that could have been assigned to Article III judges. It has also authorized trial by military commission and territorial courts in numerous cases that could have been given to Article III courts.
Despite all of these Article-III-court-adjudicable cases that are adjudicated by non-Article III personnel, the SCOTUS has said that there is a limit. Some Article-III-court-adjudicable cases cannot be assigned to non-Article III federal adjudicators. The limits are set forth in a series of cases that begins with the 1982 ruling in Northern Pipeline v. Marathon Pipe Line. In that case, the Court invalidated the assignment to non-Article III bankruptcy judges of certain traditional common law cases. Justice Brennan's plurality opinion was formalist in the sense of rule-like. He said that unless a case fell within one of three traditional exceptions for military courts, territorial courts, or public rights cases, Congress had to assign adjudication to an Article III judge. The next two cases in what for some time was regarded as a trilogy--Thomas v. Union Carbide and CFTC v. Schor--upheld non-Article III adjudication under a multi-factor balancing test, leading most commentators to conclude that functionalism had replaced formalism in this area. But then, in 2011, the SCOTUS decided a fourth case in the "trilogy." In Stern v. Marshall, the Court invalidated a provision of the revised bankruptcy code, invoking the formalism of Northern Pipeline. Somewhat surprisingly, the Court split on conservative/liberal lines--surprisingly because the liberal Justice Brennan had been the author of the original formalist opinion in this line.
Yesterday came the fifth case in the "trilogy." (Yes, that's a tribute to the late great Douglas Adams.) In Wellness Int'l Network v. Sharif, Justice Sotomayor, writing for the Court, explained that bankruptcy judges could adjudicate cases that could not otherwise be assigned outside of the Art III judiciary (if assigned to federal adjudication at all), so long as the parties consent to such adjudication. Wellness Int'l could be said to mark the return of functionalism. Justice Sotomayor writes:
The question here, then, is whether allowing bankruptcy courts to decide Stern claims by consent would “impermissibly threate[n] the institutional integrity of the Judicial Branch.” And that question must be decided not by “formalistic and unbending rules,” but “with an eye to the practical effect that the” practice “will have on the constitutionally assigned role of the federal judiciary.”And indeed, CJ Roberts, in a dissent joined by Justices Scalia and Thomas, sees the majority opinion as once again displacing formalism. "I would not yield so fully to functionalism. The Framers adopted the formal protections of Article III for good reasons," the Chief Justice warns.
But is the majority opinion really functionalist? It might instead be understood as simply expressing a formal rule that consent vindicates non-Article III adjudication. After all, as Justice Alito notes in a partial concurrence, arbitrators are not Article III judges; yet everyone accepts that parties may consent to binding arbitration of cases that otherwise fall within the jurisdiction of the Article III courts. And in fact, Justice Sotomayor's Wellness Int'l opinion purports to reconcile the holding with Stern in just this way, arguing that the right to an Article III forum, while having structural implications, is ultimately a personal right subject to waiver, just like most other personal rights.
Why, then, do the majority and dissenting Justices all treat the case as reviving functionalism and rejecting formalism? The answer, I think, is that consent as an on/off switch has no logical stopping point.
Consider a hypothetical example. Suppose that Congress phased out the lower federal courts entirely and created a new cadre of non-Article III (i.e., non-tenured, non-salary-protected) adjudicators. Most of the jurisdiction formerly vested in Article III courts is now transferred to the non-Article III courts, but only with the consent of the parties. As a practical matter, this is accomplished by making all of the federal non-Article III courts' jurisdiction concurrent with state court jurisdiction (as it mostly is already for Article III courts) and by giving any defendant a right to remove to state court. Now the non-Article III federal courts would completely replace the Article III lower federal courts but their jurisdiction would be only by consent. Would that be permissible?
I think that any fair attempt to apply the past precedents would have to result in a negative answer. But the only way to get to that negative answer is by recognizing that consent is a factor, but only one factor, in a balancing test that the majority is applying in Wellness Int'l. If consent were really on/off determinative, as it would have to be to reconcile the holding with the formalism of Stern, then my hypothetical law would be valid. To be able to say that the hypothetical law is unconstitutional notwithstanding the role consent plays in validating less extreme laws, one needs the balancing test. Thus, in the end, the majority and the dissent are right to see Wellness Int'l as an important turning point that restores the balancing test of Thomas and Schor. At least until the next sequel.