Rene R. Ortiz v. Aurora Health Care
665 F.3d 906
| 7th Cir. | 2011Background
- Aurora Health Care, Inc. filed proofs of claim in about 3,200 Wisconsin bankruptcy cases listing debtors’ medical treatment information.
- The claims were public on the court docket, leading to privacy-related Wisconsin statutes § 146.82–84 lawsuits by debtors.
- Ortiz debtors alleged actual damages and statutory damages for disclosure; Bembenek debtors pursued a Wisconsin state-law subclass action removed to bankruptcy court.
- Bankruptcy judge granted summary judgment to Aurora, dismissing both debtors’ complaints for lack of proof of actual damages.
- The appeals were certified for direct appeal under 28 U.S.C. § 158(d)(2) and consolidated, but Stern v. Marshall later cast doubt on bankruptcy judges’ authority to issue final judgments.
- The Seventh Circuit concluded Stern v. Marshall removed final-judgment authority from the bankruptcy judge, affecting appellate jurisdiction and requiring dismissal/remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bankruptcy judge had constitutional authority to issue final judgments | Ortiz/Lindsey/Jones: judge could adjudicate state-law claims arising in bankruptcy. | Aurora: judge had authority under § 157(b) to decide core matters currently arising; final judgments permissible. | Bankruptcy judge lacked Article III authority to enter final judgments. |
| Whether the orders were interlocutory or final for § 158 review | Orders were final dismissals of complaints. | Orders were final judgments reviewable under § 158(d). | Orders cannot be treated as interlocutory or final under § 158(d); no appellate jurisdiction without final Article III judgment. |
| Whether direct appeal was available under § 158(d)(2)(A) | Direct appeal appropriate since core issues resolved by bankruptcy judge. | Direct appeal requires final Article III judgment; Stern v. Marshall forecloses. | Direct appeal authority lacked; dismissals/remand required. |
| Whether consent or withdrawal reference affected authority | Parties’ conduct could imply consent to non-Article III resolution. | No implied consent given abstention/remand dynamics and opposing withdrawal motions. | Not established; no implied consent to non-Article III resolution. |
Key Cases Cited
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (Article III limits on bankruptcy judges’ final judgments)
- N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982) (limits of Congress over judicial power)
- Crowell v. Benson, 285 U.S. 22 (1932) (core considerations and regulatory regimes)
- Katchen v. Landy, 382 U.S. 323 (1966) (claims allowance process and non-Article III adjudication)
- Langenkamp v. Culp, 498 U.S. 42 (1990) (integral to restructuring of debtor-creditor relationship)
- Travelers Casualty & Sur. Co. v. Pacific Gas & Electric Co., 549 U.S. 443 (2007) (state-law rights and federal jurisdiction interplay)
- In re Repository Technologies, Inc., 601 F.3d 710 (7th Cir. 2010) (arising-in bankruptcy proceedings and core vs. non-core)
- Grausz v. Englander, 321 F.3d 467 (4th Cir. 2003) (state-law counterclaims in bankruptcy context)