STATEMENT
TO THE COMMISSION ON STRUCTURAL
ALTERNATIVES FOR THE FEDERAL COURTS OF APPEALS
Peter
J. Benvenutti
May 20, 1998
[Testimony in San Francisco, May 29, 1998]
The views presented in this statement are those of a practicing bankruptcy attorney whose experience has been earned principally in the courts of the Ninth Circuit. I do not profess any special expertise regarding the appellate process, and I have not made a disciplined study of judicial administration.
I do, however, come before the Commission as a regular consumer of the federal appellate courts’ work product. In that very important sense, I believe I am representative of a substantial number of attorneys who would be affected significantly by any radical change in the structure of the courts of appeal in general, or the Ninth Circuit in particular. Through my practice and my participation in professional organizations, I have spoken with many bankruptcy attorneys, most of whom have expressed sentiments generally consistent with those set forth here. Nonetheless, I do not appear as the representative of any specific group, and the views presented here are my own.
I have been a bankruptcy attorney since I was admitted to the bar in California in 1974. I began practice with a small (and now defunct) firm in San Francisco, Dinkelspiel & Dinkelspiel. Since 1988, I have been a shareholder in Heller Ehrman White & McAuliffe, a firm with about 365 lawyers, the vast majority of whom are based in one or another of our offices in seven cities in the Ninth Circuit -- San Diego, Los Angeles, Palo Alto, San Francisco, Portland, Seattle and Anchorage. We also have a few lawyers in cities outside the Circuit -- Hong Kong, Singapore and Washington, D.C. I am admitted and appear with frequency in the bankruptcy courts of the Northern and Central Districts of California. I am also admitted in the Eastern and Southern Districts of California and the District of Arizona, and I have appeared in bankruptcy or district courts in Nevada, Washington and Hawaii. I also advise clients in workouts, as well as in transactional matters, principally though not exclusively in the commercial law area, and usually in insolvency-related settings.
From my perspective, the Ninth Circuit functions effectively in what I believe is a primary role of any appellate tribunal -- to provide a body of case law to inform the advice which lawyers give to their clients, and the decisions which clients make in light of that advice. The vast majority of practicing lawyers do not appear with any frequency in appellate courts. The percentage of clients who wish to avoid involvement in appellate proceedings where they can "make law" is, I suspect, even higher. For those of us who are not regularly involved in the appellate process, the most important accomplishment of the appellate courts is to provide predictability when we advise our clients, whether in the transactional or litigation context.
The Ninth Circuit performs this function quite well. Indeed, its size is a real virtue, for at least two reasons. First, more judges and more appeals produce a larger volume of case law, which in turn enhances the prospect of finding controlling or at least enlightening authority on any issue. Although bankruptcy law is governed by a comprehensive federal statute, there are many areas of ambiguity or legislative silence in which judicial construction is necessary. Examples include plan confirmation standards and procedures, claims classification, cram-down requirements, the new value exception, the mootness doctrine, and standards for the allowance of professional compensation. Practitioners are more likely to find appellate decisions of the Ninth Circuit than any other on these and a host of other issues with which we deal on a frequent or even daily basis.
Second, because federal law is uniformly interpreted at the appellate level within the large geographic area served by the Ninth Circuit, a bankruptcy lawyer based in San Francisco (or, for that matter, a lawyer based in Portland or Seattle or Reno or Boise) can provide competent advice on bankruptcy law to a client involved as a creditor, asset purchaser, lender or litigant in a bankruptcy case or workout in another Western state. This phenomenon occurs quite frequently, since commercial bankruptcy practice -- especially with regard to chapter 11 -- tends to be regional. I for one think it is a good thing to enable a client to obtain legal advice from an attorney with whom the client has a relationship, even though the advice relates to a situation in another state or district.
Though I have little first hand experience in other areas such as environmental, labor, securities, or maritime law which are controlled or heavily influenced by federal law, I suspect the same principle applies there as well. As I understand to be the case, and as I have observed in my practice, the trend in business is toward regional, national and global focus and activities as businesses seek to enhance efficiency and profitability. It therefore seems to me desirable for the courts to afford these businesses -- which are the most frequent ultimate consumers of the courts’ civil case law output -- as broad an area of uniform interpretation of law as possible. This objective is furthered by a large circuit such as the Ninth, and undercut by creating more appellate courts each of which necessarily presides over a smaller area. This benefit of uniformity is, I submit, particularly important in the intellectual property, commercial and maritime fields, where federal law plays such an important role.
An important way in which the Ninth Circuit furthers the desirable objective of providing a substantial body of uniform case law is the Bankruptcy Appellate Panel. The Ninth Circuit has been a pioneer in creating and actively encouraging the use of the BAP. To a very considerable degree, the BAP has won acceptance as the authoritative interpreter of bankruptcy law in this Circuit, second only to the court of appeals. In my experience, most practitioners in the Circuit -- and most bankruptcy courts as well -- consider BAP case law to be highly persuasive authority, even if it is not formally controlling as precedent. That this is so is a tribute to the quality of the BAP’s judges and work product.
This accomplishment is all the more remarkable in view of the BAP’s jurisdictional structure and the consequent opportunities for forum shopping by litigants and possible disregard by bankruptcy and district courts of BAP decisions as non-binding. I believe the Ninth Circuit deserves special recognition for its efforts in establishing and supporting the BAP. The BAP epitomizes the Ninth Circuit’s receptiveness to innovation -- for a number of years the Ninth was the only Circuit with a functioning BAP -- and demonstrates that innovation of this sort can pay substantial dividends for the administration of justice.
The bankruptcy courts in the Ninth Circuit have also been able to employ intra-Circuit temporary judicial assignments to alleviate unduly high case loads and allocate efficiently judicial resources to meet the needs of the judicial system and litigants. For example, a year or so ago when the volume of pending bankruptcy cases in the Pacific Northwest was down, bankruptcy judges from Washington and Oregon handled trials in the Northern District of California to help our judges deal with an unusually high level of adversary proceedings. As I understand it, this assistance enabled the judges in the Northern District to reduce their backlog substantially in fairly short order, at a relatively modest cost for judicial travel and subsistence. This kind of flexibility would be much more difficult to achieve in a small circuit, due both to the smaller number of judges available for temporary reassignment, and the prospect that all courts in a smaller circuit would be more likely to experience comparable levels of activity -- high or low -- simultaneously.
Another positive feature of the bankruptcy judiciary in the Ninth Circuit is the process for selecting bankruptcy judges and the high caliber of those who apply, are considered, and are ultimately appointed. I suggest that the size of the Ninth Circuit helps to assure that highly qualified candidates are appointed to the bankruptcy courts. As you know, bankruptcy judges are appointed by the court of appeals, through a merit selection process. In the Ninth Circuit, it is not uncommon for experienced and highly qualified lawyers to apply for bankruptcy judge positions in different districts than those in which they practice. For example, within the past year I am aware of a prominent lawyer from Seattle and another from Idaho who were among the five finalists for a bankruptcy court position in the Eastern District of Washington, and a San Francisco attorney who was a finalist for that same position, as well as for openings in the Central District of California and in Portland (she was subsequently appointed to another position in the Central District).
Because the case law is uniform throughout the Circuit, bankruptcy lawyers from anywhere in the Circuit can apply for bankruptcy court positions anywhere within the Circuit, and can be reasonably confident that they are familiar with the controlling federal law. This tends to broaden the pool of highly qualified potential applicants for any bankruptcy court position in the Circuit, thus enhancing the overall quality of the individuals selected. Serious consideration and the occasional appointment of judges from another district serves to retard the reemergence of the perception of the infamous "bankruptcy ring" which formerly was thought by many to control practice in many bankruptcy courts.
As you can tell, I think the Ninth Circuit in its current configuration well serves practicing lawyers like me. Much of the benefit we derive from the Circuit would diminish if it were to be divided. Nor do I find the arguments advanced to divide the Ninth Circuit to be persuasive. One such argument -- which I think has little weight -- is that it is unfairly burdensome to require a lawyer or litigant from a remote rural area to travel a great distance to have his or her appeal heard. Presumably the point is that, with a smaller circuit, this burden would be reduced. As noted above, for most lawyers an appeal to the court of appeals is a rare occurrence. In the course of an appeal which proceeds through oral argument, typically only a single appearance in the courthouse is required; other business can readily be conducted by telephone, facsimile, mail or express deliveries. For lawyers in remote locations, some substantial travel will be required in any case, absent a proliferation of appellate courthouses which we are never likely to see. And I understand the Ninth Circuit has been quite flexible about scheduling hearings in locations in addition to the four cities in which it has courthouses -- in recent years, Ninth Circuit panels have heard oral arguments in Anchorage, Boise, Honolulu, Las Vegas, Phoenix and Reno.
One of the greatest problems with splitting the Ninth Circuit is that there does not appear to be any practical way to divide the existing territory into two logical segments. I won’t repeat what has been said and written on this subject, but I do wish to emphasize two points should the Commission be inclined to recommend some form of reconfiguration.
First, to divide California between two circuits would in my opinion be extremely disruptive. For many lawyers, and particularly for bankruptcy lawyers, California is truly a single, state-wide jurisdiction. I frequently have as much or more work based in Southern California as I do in the Bay Area. It is very common for bankruptcy lawyers to practice throughout the state. It is equally common for business clients to operate on a statewide basis. The volume of travel on the shuttle between the Bay Area and the Los Angeles basin is daily testimony to the geographically integrated nature of business and legal practice in this State. To impose on lawyers and clients the burden of anticipating divergent and possible conflicting federal appellate precedent based on the fortuity of whether a chapter 11 case has been (or may be) filed in Los Angeles, San Diego, San Jose or Sacramento -- all of which may be permissible venue choices when affiliates are taken into account -- should not be permitted to happen absent some truly compelling necessity.
Second, although none of the suggested realignments strike me as appealing, I think that the least objectionable reconfiguration would combine California, Nevada, Arizona and Hawaii. These states have long-standing economic, legal and cultural ties, which weigh heavily in favor of keeping them together in the same federal circuit. Geographic contiguity (and hence some measure of efficiency) also militates in favor of an alignment which retains California, Nevada and Arizona in a single circuit.
I am a practicing lawyer, not a legal scholar. In this statement I have attempted to provide some of the reasons why I believe the Ninth Circuit, as it currently exists, functions effectively. I frankly do not seen any benefits to be derived from a reconfiguration, but instead some real detriment. In considering the efforts to dismantle the Ninth Circuit, I cannot avoid the conclusion that those who wish to do so are motivated far more by politics and a desire to influence the outcome of judicial decisions than by any considered assessment that a change would improve the administration of the judicial system. I therefore urge the Commission to impose on the proponents of change the burden of persuasion, both as to the need for change and, just as important, in proposing an alternative structure which is demonstrably better than the one which exists now.
Thank you for providing me the opportunity to appear before you and express my opinions.