The Bankruptcy Appellate Panel

A statutory option for the establishment of a bankruptcy appellate panel in each Circuit as an alternative forum to a District Court for the resolution of appeals from bankruptcy court decisions was originally established within the framework of the Bankruptcy Reform Act of 1978.¹ Only the First and Ninth Circuits created such panels shortly after the effective date of this 1978 Act. In 1982, the First Circuit’s panel was dissolved after the U.S. Supreme Court’s decision in Northern Pipeline Const. Co. v. Marathon Pipe Line Co.² questioned such a forum’s jurisdictional authority because of the inherent non-inclusion of Article III judicial officers in the panel’s composition. Due to a variant assessment of jurisdictional validity as recognized in the panel’s situs within the Article III purview of a Court of Appeals, though, the Ninth Circuit continued to retain its BAP as a bankruptcy appeals option. With the October 22, 1994, signing into law of the Bankruptcy Reform Act of 1994,³ 28 U.S. C. §158 was amended to require the establishment of a bankruptcy appellate panel (BAP) in each Circuit unless a lack of sufficient resources prevented its formation and maintenance. Accordingly, in addition to the already existing Ninth Circuit BAP, each of the following Circuits established this alternate appellate forum: First, Second , Sixth, Eighth, and Tenth. Of these, as of December 8, 1999, only the Second Circuit’s BAP no longer operates.

In the Sixth Circuit, with the ultimate goal being greater uniformity in the Circuit’s bankruptcy case law, the process of establishing a bankruptcy appellate panel and its supporting structure began on November 30, 1994, when the Circuit’s Judicial Council authorized Chief Judge Gilbert Merritt to appoint an Ad Hoc Committee on Establishing a Bankruptcy Appellate Panel for the Sixth Circuit.⁴ This Ad Hoc Committee was assigned the following tasks: to review the provisions of the new act; and, to draft recommendations on how the Circuit would meet the statute’s BAP requirements. In order to gauge the willingness and readiness of the Circuit to establish a BAP, Chief Judge Merritt requested that Circuit Executive James A. Higgins first distribute a survey to all of the Circuit’s bankruptcy judges. Since the survey results indicated a definite consensus among the forty responding judges to establish a BAP as well as a willingness to serve on such a panel and/or agreement to lend assistance in the resolution of BAP cases, the next step was to confirm the availability of necessary support resources. This point served to provide the basis for the principal matters which were considered and resolved during the Ad Hoc Committee’s first meeting on August 11, 1995,⁵ in Chattanooga, TN: 1) that the Act’s mandate to create a BAP in each Circuit, if resources permit, does not also require each District within a particular Circuit to participate; and, 2) statistics from the Ninth Circuit showing that 40% of bankruptcy appeals opt out of the BAP option could serve as a guidepost for the Sixth Circuit’s BAP planning. The next step was to confirm the availability of necessary support resources. With the necessity of an additional law clerk for BAP participants having been provided by Judicial Conference of the United States action in 1981 and funding for such positions being currently available, an agreement from five recalled bankruptcy judges to serve without an additional law clerk, in addition to assurance provided by Circuit Clerk Leonard Green as to the adequacy of the contemporaneous administrative support services, the Circuit’s BAP structure was set to materialize.

Prime consideration in establishing the framework for how a BAP would operate within the Sixth Circuit centered on the optimal minimization of cost and delay to the parties. With this goal in mind, the Ad Hoc Committee proposed that cases appealed to a BAP should be decided without oral argument, or , in the alternative, by telephonic oral argument. Additional resolutions of the Ad Hoc Committee at its October 17, 1995, meeting were: 1) that five bankruptcy judges with at least one judge from each of the four states of the Circuit be selected initially to serve on the BAP; 2) that each panel would serve for a period of four years; and that, 3) the BAP rules of procedure would be promulgated by the Circuit Clerk’s office. One final resolution was that a majority vote of all district judges in each district of the Circuit would decide whether or not each particular district’s bankruptcy appeals would be sent to the Bankruptcy Appellate Panel.

All of the recommendations of the Ad Hoc Committee were unanimously adopted by the Sixth Circuit Judicial Council on October 17, 1995. This action was followed by Chief Judge Merritt’s request that the Ad Hoc Committee continue to maintain a guiding role in the development of the BAP’s implemental structure, and, in addition, a subcommittee⁶ was appointed in order to construct rules of Bankruptcy Appellate Panel selection as well as BAP procedure. The full subcommittee’s December 21, 1995, meeting in Cincinnati, Ohio, resulted in several recommendations, the first being that October 1, 1996, would be the effective initial date for BAP operation despite the fact that only two districts in the Circuit –- the Northern and Southern Districts of Ohio -- gave an affirmative response to the poll regarding whether to offer the BAP as an alternate appellate forum. The subcommittee also recommended that the following selection criteria be used for panel qualification: (1) a minimum five year tenure as a judicial officer of the Circuit (a term which could be waivable if deemed necessary); (2) recalled bankruptcy judges could serve as panel members; (3) a prospective panel member’s opinion writing should be superior; (4) collegiality and decisiveness instant; (5) peer and bar respect should have already been earned and evident; (6) current caseloads should be well managed; and (7) any prospective panel member should have expressed a willingness to serve four year terms to the conclusion of all business commenced in such term, with the initial panel staggered so that there would not be a complete turnover of the entire panel all at once. Additional proposals included a provision for the appointment of a Pro Tem judge or Pro Tem judges in the event of unforseen temporary unavailability of regular panel members; a recommendation that the Council select a Chief Judge of the BAP from among the five members of each panel; and a proposed method of selecting the initial panel members which consisted of the submission of three names of bankruptcy judges from each of the four states of the Circuit to the Ad Hoc Committee for final selection. Since Ohio’s two Districts were both already committed to utilize the BAP option for appeals, the subcommittee additionally recommended that the initial BAP panel specifically include one bankruptcy judge from the Northern District of Ohio and one from the state’s Southern District.

In compliance with the subcommittee’s additional mandate to draft BAP internal operating procedures and local rules, drafts of both were submitted as appendices to the July 10, 1996, Report of the Subcommittee to the Ad Hoc Committee on Establishing a Bankruptcy Appellate Panel for the Sixth Circuit. These proposed local rules and internal operating procedures were based on those then being utilized by the BAP of the Ninth Circuit Court of Appeals in addition to the then draft rules of the First Circuit’s BAP.⁷

The original target date for BAP commencement, i.e., October 1, 1996, passed. Meanwhile the rules and operating procedures were released for public comment. Even though this comment period had not yet concluded, it was due to end shortly, so, the Minutes of the Sixth Circuit Judicial Council Meeting of November 13, 1996, reflected a vote approving the two drafts with the proviso that any suggested changes gleaned from public comments on either rules or operating procedures be considered at the Council’s next meeting. Any proposed changes were to be first forwarded to Sixth Circuit Clerk Leonard Green, who, in accordance with the newly adopted internal operating procedures, was now also Clerk of the BAP.

Following a review of the Ad Hoc Committee’s final inaugural panel selections, the culminating order of BAP business at the November 13, 1996, Judicial Council meeting was the designation of the first Bankruptcy Appellate Panel of the Sixth Circuit Court of Appeals:

Honorable Randolph M. Baxter, Northern District of Ohio – 2 year term
Honorable Keith M. Lundin, Middle District of Tennessee – 2 year term
Honorable Steven W. Rhodes, Eastern District of Michigan – 4 year term
Honorable David T. Stosberg, Western District of Kentucky – 1 year term
Honorable Thomas F. Waldron, Southern District of Ohio – 4 year term

The BAP judges also recommended that Judge Waldron be designated as chief judge of the BAP. Upon motion of Circuit Judge Eugene Siler, seconded by District Judge William Bertelsman, the council unanimously approved the terms of office and selection of chief judge.⁸ The panel’s terms of office commenced on January 1, 1997.⁹ According to the 1998 Annual Report and Roster of Judges presented at the Sixth Circuit Judicial Conference in Ashville, North Carolina, during its first twelve month period, 97 original appeals were filed with the BAP, and 17 bankruptcy appeals cases pending prior to January 1, 1997, in either an Ohio Northern or Southern District Court were transferred to the BAP with the consent of each respective District Court and all affected parties. Of the six circuits with BAPs, the Sixth is the only one which adopted such a transfer provision ab initio. The Report further concluded that: “The BAP is a model of efficiency in several respects. It is staffed by only five sitting bankruptcy judges who have volunteered for BAP duty in addition to their regular dockets. Unlike several other BAPS, the Sixth Circuit BAP has no separate clerk’s office or other staff. Instead, the Clerk of the Court of Appeals also serves as clerk of the BAP, and the Circuit Mediation Office provides mediation services to litigants before the BAP.”¹⁰ In summation, Chief Judge Boyce F. Martin, Jr. stated in the 1998 Report that: “One of the great success stories in the Sixth Circuit during 1997 was the service provided to bench and bar by the Bankruptcy Appellate Panel (BAP).”¹¹

The success story continued through the Panel’s second year, at the conclusion of which the terms of Judge Randolph Baxter (N.D. Ohio) and Judge Keith M. Lundin (M.D. Tenn.) also ended. “In addition to their distinguished appellate work, they were two of the original BAP judges who drafted the BAP’s local rules practice manual, policies and procedures, and, perhaps more importantly, provided initial shape to a then formless entity, which has become a significant component of the Circuit’s bankruptcy appellate process.”¹²

The end of the BAP’s third year produced some notable statistics: in 1999, 62% of bankruptcy appeals (or 66 cases) in Ohio consented to BAP jurisdiction; of these, 19 were settled by the Circuit Mediation Office; and the average total time from notice of appeal to disposition of all 66 cases was 7 months and 6 days. One additional significant event was that as of February 1, 2000, appeals to the BAP would also be heard from the United States District Court for the Western District of Tennessee.¹³

With now three participating district courts, in 2000, 121 appeals were filed with the BAP and 73 cases were terminated, 29 of these resulting in opinions on the merits, 15 of which were precedential. “The average time for deciding these 29 appeals was 42 days after submission.”¹⁴ During the BAP’s first four years, 104 decisions on the merits were handed down, while of the 13 cases appealed to the Sixth Circuit Court of Appeals, 12 out of 13 were affirmed.¹⁵

The BAP continued to hear appeals from three of the Circuit’s districts for the next several years. During this period, the noteworthy case of Hood v. Tennessee Student Assistance Corp. (In re Hood) was decided by the BAP in 2001, affirmed on appeal to the Sixth Circuit Court of Appeals in 2003, and on certiorari, the U.S. Supreme Court upheld this decision on May 17, 2004,¹⁶ by affirming that “states are bound by a bankruptcy court’s decision discharging a debtor’s student loans”.¹⁷

In 2005, one additional district was added to Panel participation, when: “By Administrative Order entered September 8, 2005, and effective October 1, 2005, until December 31, 2007, the BAP was authorized to hear appeals in the Western District of Michigan.”¹⁸ From all four participating districts, the BAP heard 82 cases in 2005, or 65% of all bankruptcy appeals from within the Circuit.¹⁹

Further augmentation of participating district numbers occurred with the 2006 addition of the Eastern District of Kentucky, the Middle District of Tennessee in 2007, and the continued participation of the Western District of Michigan in 2008, bringing the total current number to six.

In the Sixth Circuit, statistical records²⁰ show how over the years, the Court’s Bankruptcy Appellate Panel²¹ established, and, by means of rules and procedures currently in place,²² consistently continues to uphold a successful record of efficient and effective case resolution.