I have an op ed in today’s Washington Times, “Stripper Searches for Loot Loophole.” No, I didn’t think of the title (although I wish I did!). And no, I don’t think there has ever been quite as large of a gap between the titillation of the title of an article and the article itself–which is actually about the proper scope of “core jurisdiction” in bankruptcy. I’m sure that there are going to be plenty of disappointed readers today who expect my article to be about something else.
The op ed is based on my article with Marcus Cole on “Anna Nicole Smith Goes Shopping: The New Forum Shopping Problem in Bankruptcy” which we are submitting to law reviews as we speak. As I note in the column (and we develop in the article), the forum shopping issue triggered by Smith’s case goes to the heart of the modern bankruptcy system. Policing the line between proper use of bankruptcy and improper forum shopping into bankruptcy is the cornerstone of a hybrid bankruptcy system like ours, where state debtor-creditor law and federal bankruptcy law co-exist. The purpose of bankruptcy law is to move debt collection from the individualized “race of diligence” outside bankruptcy to a collective proceeding inside bankruptcy.
What the Marshall case illustrates, by contrast, is a paradigm example of the type of forum shopping that we want to prevent–forum-shopping simply to relitigate state law issues that should be resolved in state courts, both as a matter of state law expertise (state courts have more expertise in applying their law than a bankruptcy court 1000 miles away) and jurisdiction (state law matters should be resolved in state courts where possible). Typically, most bankruptcy courts have appreciated this and the need to discourage rather than promote forum shopping into bankruptcy. We argue in the paper that where this traditional prudential self-restraint breaks down, however, it is imperative for Article III courts to intervene to ensure that Bankruptcy Judges are not overstepping their bounds and chipping away at the wall that polices forum shopping.
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