Professionalism: Dealing with Unprofessional Conduct in Bankruptcy

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

Furthermore, Congress knew that federal courts before 1984 had upheld the power of other Article I tribunals to issue binding disciplinary orders against counsel appearing before them. see, e.g., Kivitz v. SEC, 475 F.2d 956, 962 (D.C. Cir. 1973) (power of SEC to disbar attorney for ethical misconduct); Herman v. Dulles, 205 F.2d 715, 715-16 (D.C. Cir. 1953) (similar, International Claims Commission); Francis v. Virgin Islands, 11 F.2d 860, 864 (3d Cir. 1926) (upholding the contempt powers of the U.S. District Court for the Virgin Islands); Fleming v. United States, 279 F. 613, 616 (9th Cir. 1922) (similar, United States Court for China). Consistent with this line of cases, some courts had by 1984 already upheld the authority of bankruptcy courts to discipline attorneys for unethical conduct in bankruptcy cases. As early as 1979, for example, the second Circuit described as "nothing novel" the proposition that a debtor's counsel could be sanctioned for breaching his ethical responsibilities to the bankruptcy court. see In re Arlan's Dept. Stores, Inc., 615 F.2d 925, 943-44 (2d Cir. 1979). Congress enacted the 1984 bankruptcy amendments against this background. Nothing in the 1984 Act or its legislative history suggests that Congress intended to deny bankruptcy judges the authority to regulate the bankruptcy bar. On the contrary, this court has held that Congress's purpose in the 1984 amendments was to press the jurisdiction of the bankruptcy courts "to its constitutional bounds" in the wake of Northern Pipeline. See In re Arnold Print Works, Inc., 815 F.2d 165, 168 (1st Cir. 1987) (Breyer, J.). The congressional sponsors of the 1984 amendments described non-core proceedings as "Marathon-type" cases, referring to the Northern Pipeline decision, and they understood that category to be "very limited." Id. Accordingly, this court concluded that "Congress intended that 'core proceedings' would be interpreted broadly, close to or congruent with constitutional limits." Id.

Congress had no reason to think that Article III is offended when a bankruptcy court enters a binding order against a bankruptcy attorney for professional misconduct in a core bankruptcy proceeding. Even the principal opinion does not so contend. Indeed, less than a year after its decision in Northern Pipeline, the Supreme Court emphasized the limits of its holding: "The Court's holding in that case establishes only that Congress may not vest in a non-Article IQ court the power to adjudicate, render final judgment, and issue binding orders in a traditional contract action raising under state law, without consent of the litigants, and subject only to ordinary appellate review." Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 584, 105 S. Ct. 3325, 87 L. Ed.2d 409 (1985) (emphasis added) (footnotes omitted).67

In summary, it is fundamental that federal courts have the inherent power to discipline attorneys who appear before them.68 This power is necessary for federal courts to manage their affairs and to achieve orderly and expeditious disposition of cases and proceedings.69 Pursuant to this power, a federal court is vested with the power to require those who appear before it to submit to and follow its rules and mandates.70 The bankruptcy court, as a federal court and as a statutory unit of the United States district court, has the responsibility to take appropriate action to protect the integrity of the court, its bar, and the public from unprofessional conduct or unethical behavior.71