Professionalism: Dealing with Unprofessional Conduct in Bankruptcy

University of Memphis Law Review, The, Spring 2006 by Kennedy, David S, Lantin, Vanessa A, York, Alissa

Generally speaking, a particular proceeding that "arises under" the Code as contemplated under 28 U.S.C. �� 1334(b) and 157(b)(1) is considered core.57 Thus, whether an attorney disciplinary proceeding that arises within a single bankruptcy case is a "core proceeding" under 28 U.S.C. � 157(b)(1) or a "non-core proceeding" under 28 U.S.C. � 157(c)(1) is a matter of statutory construction.58 The term "core proceeding" is not self-defining. Although no explicit statutory reference is made under 28 U.S.C. � 157(b)(2)(A)-(O) to attorney discipline, it is emphasized here that 28 U.S.C. � 157(b)(2) contains only a non-exhaustive list of illustrated core proceedings.59

The discipline of attorneys who practice in the bankruptcy court is a vital and essential function to the proper administration of the case or proceeding; it also is an essential function "concerning the administration of the [� 541 (a)] estate" as contemplated under 28 U.S.C. � 157(b)(2)(A).60 Indeed, an attorney disciplinary action is central or core to the administration of the case.61 A legitimate functional need exists for bankruptcy courts to have "core" jurisdiction over attorney misconduct arising within core proceedings. The 1984 jurisdictional amendments intended that "core proceedings" would be broadly interpreted in light of the open-ended statutory text contained in 28 U.S.C. � 157(b).62 In the absence of relevant constitutional and statutory constraints, it is said that "core comes from core."63

Prior to Northern Pipeline Construction Co. v. Marathon Pipe Line Co.64 and the enactment of the 1984 bankruptcy jurisdictional amendments, the United States Supreme Court recognized that a court's power to regulate the conduct of the bar-including the power to suspend and disbar attorneys-is absolutely essential to the administration of justice and the protection of the public.65 Dissenting in In re Sheridan,66 Circuit Judge Lynch stated:

In fact, there is every reason to believe that Congress wanted and expected bankruptcy judges to enforce the professional responsibilities of bankruptcy attorneys through final and binding orders where the misconduct in question occurred in a core bankruptcy proceeding or proceedings. In 1984, when Congress amended the Bankruptcy Code to create the core/non-core distinction, the case law available to Congress provided no reason to think that bankruptcy courts' status as Article I tribunals would bar them from entering final disciplinary orders. In 1926, the Supreme Court itself held in Goldsmith v. U.S. Bd. of Tax Appeals, 270 U.S. 117, 46 S. Ct. 215, 70 L. Ed. 494 (1926), that the U.S. Board of Tax Appeals, an Article I tribunal, possessed the authority not only to promulgate ethical rules of admitting attorneys to practice, but also to disbar attorneys who failed to meet those standards. see id. at 121-22, 46 S. Ct. 215 (emphasizing, in holding that the Board possessed this power, "the character of the work to be done by the board, the quasi judicial nature of its duties, [and] the magnitude of the interests to be affected by its decisions"). The Court explicitly rejected the contention that such a tribunal cannot disbar or discipline lawyers absent express statutory authority, observing that the power of the Board to do so is "so necessary . . . and so usual" that the statute creating it would be interpreted to include that power. Id. at 122,46 S. Ct. 215.