May 21, 1998
Daniel J. Meador
Executive Director
Commission on Structural Alternatives
for the Federal Courts of Appeals
Thurgood Marshall Federal Judiciary Bldg.
One Columbus Circle, N.E.
Washington, D.C. 20544
Re: Testimony for Appearance on May 29, 1998, San Francisco, CA
Dear Mr. Meador:
This memo concerns my opinion, as Chief Bankruptcy Judge of the Central District
of California, on the status of the Ninth Circuit as currently configured and
on the proposal to split the state of California between two circuits. In summary,
from the perspective of the bankruptcy court, I believe that the Ninth Circuit
works extremely well. I also believe that any division of the state of California
between two circuits would be a disaster for the handling of bankruptcy cases.
I. The Ninth Circuit Works Very Well for the Bankruptcy System
A. Covering Shifting Workload
The size and geographic diversity of the Ninth Circuit increases the availability of resources to quickly respond to the rapid changes in case load that is inherent in the bankruptcy system. Bankruptcy filings in different states increase or decrease at different times. There is often a wave of change that moves across the nation from east to west and from north to south and back again. The size and diversity of the Ninth Circuit allows us to work together to cover this shifting workload.
For example, some years ago Alaska was undergoing first an economic boom followed by economic bust. The Central District of California provided them with a visiting judge to handle long and complex trials that the resident judge did not have time to adjudicate. After some years, filings in Alaska fell dramatically. However, by that point in time, the Central District of California was seeing an unprecedented increase in caseload. This substantial increase occurred in all of the districts in the state of California, but was much slower in hitting the Pacific Northwest. Initially, the districts of Alaska, Washington (W), Oregon and Nevada were able to provide visiting judges who came to the Central District of California to try adversary proceedings that the local bankruptcy judges were unable to calendar because of workload.
At the present time, recalled annuitant judges from Oregon and Washington (E) regularly sit in our Santa Barbara Division to assist the single judge that we have there with her massive case load. As the Central District of California has only one resident recalled annuitant judge (who is assisting in the Los Angeles Divisional Office), these resources from other districts within the circuit are absolutely invaluable to us.
The Workload Equalization Program was established by the Ninth Circuit so that districts whose judges carry the heaviest case load could obtain assistance from districts whose judges are not as busy. This program is now some three years old and consists of transferring blocks of adversary cases to judges in other districts. All of the borrowing districts are in the state of California: California (N), California (S) and California (C). The lending districts are mostly in the Pacific Northwest. My district has received tremendous help from Alaska (who accepted 200 of our adversary cases from the Los Angeles Divisional Office) and Oregon (who accepted 200 of our adversary cases from the Riverside Divisional office).
The ability of our circuit to quickly react to the shifting of case load size and to judicial emergencies has been of tremendous benefit to us in handling our work. It is an efficient and effective way to deal with the delays that are inherent in having to seek congressional approval for each new judgeship.
B. Other Programs
1. The Conference of Chief Bankruptcy Judges. Twice a year all of the chief bankruptcy judges in the circuit meet to work together on common problems and obtain administrative assistance. Thus, for example, we have dealt with creating and carrying out EEO and EDR plans, and we have recommended a procedure for reappointment of bankruptcy judges, given input on coordination between bankruptcy courts and district courts, dealt with decentralized budgeting, etc. The size and diversity of our gathering has been extremely beneficial in the continued training and education of chief bankruptcy judges.
2. The Bankruptcy Judges Education Committee. Under the auspices of the Conference of Chief Bankruptcy Judges, the Bankruptcy Judges Education Committee works in coordination with the general circuit educational process, as well as creating special programs for the training of bankruptcy judges in cooperation with the Federal Judicial Center. For the last five years or so, the Bankruptcy Judges Education Committee has sponsored a special education program immediately following our circuit conference. About 60 judges often attend and receive training in such areas as automation, judicial opinion writing and analyzing witness credibility. The cost of these programs to the judiciary is minimal and the administrative burden is tolerable because of the large number of judges who attend.
For some years there was an annual program in which 6 bankruptcy judges and their courtroom deputies would meet together for a day-and-a-half to discuss procedures for more effective administration of the case load. We found that this sharing of ideas between large and small courts was extremely valuable. In the case of my own district, I learned a method from the District of Nevada that saved our courtroom deputies 25% of their working day and made calendaring much more efficient and effective for the bar. The size of our circuit has allowed for and encouraged this kind of interchange of ideas.
3. Bankruptcy Appellate Panel. The Bankruptcy Appellate Panel is a real boon to establishing uniformity of bankruptcy law within the western states. Few bankruptcy cases result in published opinions from the Ninth Circuit and a mere handful are decided by the Supreme Court. District Court opinions do not provide consistency, even within their district. In fact, it is not unusual for district court judges to come to the opposite conclusion on an issue (for example: see Gumport v. Growth Financial Corp. (In re Transcon Lines), 121 B. R. 837 (C.D. Cal. 1990) and In re Great American Mfg. and Sales, Inc., 129 B.R. 663 (C.D. Cal. 1991)). Because a BAP judge cannot sit on an appeal coming from his/her own district, the availability of judges from districts which do not provide as many cases to the BAP as other districts is part of what makes the Bankruptcy Appellate Panel work.
- Uniformity of Bankruptcy Law
One of the benefits of a large circuit is that between the Bankruptcy Appellate Panel and the Ninth Circuit, there is a body of bankruptcy appellate law covering many disputed issues under the bankruptcy code. This not only lends certainty to the outcome of cases, but saves the courts and the litigants a tremendous amount of time because the same issue does not have to be tried again and again until there is a final determination that is binding on the courts of that circuit. There is little chance that most issues will result in a published opinion in smaller circuits which handle fewer cases. The large number of cases that are decided by the Ninth Circuit has led to a substantial body of law on a wide variety of disputed bankruptcy issues.
II. Concerning a Proposal to Split the State of California Between Two Circuits
A. Bankruptcy cases involve substantial interpretation of state law.
If the state of California is split, presumably there would have to be some sort of intermediate appellate court to deal with cases which have conflicting interpretation of state law. Bankruptcy cases often include issues of state law. Some of the areas are:
(1) Exemptions
(2) Security Interests and Commercial Code
(A) When is there a security interest?
(B) When is it perfected?
(C) Law of the sale of goods
(D) Law of Negotiable Instruments
(3) Real Property Law
(A) Perfection
(B) Foreclosure
(C) Creation and Release of Liens
(D) Transfers of Title
(E) Right to Possession
(4) Enforceability of Contracts
(5) Creation of Trusts
In many cases there will be no conflict between the two circuits, as only one of the circuits will have ruled. Or it might be that no one appeals from a ruling that is in conflict. Either way, the bankruptcy courts would be forced to look to the law of two different circuits just to interpret the law of the state of California. This adds an unnecessary layer of confusion to the bankruptcy cases.
B. An Additional Level of Appeal is Unwarranted in Bankruptcy Cases
As noted above, there is the potential for conflicts between the two circuits in interpreting the law of the state of California. At the present time there are already three levels of appeal in bankruptcy cases before a final and universally binding interpretation takes place (Bankruptcy Appellate Panel or District Court, Circuit Court, Supreme Court). Now there
would be four levels of appeal. Bankruptcy cases simply cannot sustain the costs and delays involved in so many levels of appeal.
C. A Split of the State Would Lead to Forum Shopping
While it is a significant business event to establish yourself in more than one state and thus meet the various business requirements of multiple states (and pay taxes in multiple states), having locations in various counties within a state is extremely simple. All that debtor must do is rent an additional office in another county. We can expect debtors to forum shop, choosing their county of filing depending on which circuit's opinions are seen as being less invasive of business practice.
Thank you for considering these comments.
Very truly yours,
GERALDINE MUND
Chief Bankruptcy Judge
Central District of California
GM:yg