Litigation Trends 2024

34 | Weil, Gotshal & Manges LLP LITIGATION TRENDS 2024 | 35 T O C E M P A N T I I P C A P R O W C C O N T A C T I N T A P P P A T C C L S E C obtaining from all website visitors entering the site opt-in consents to the use of third-party services. Given the evolving litigation and arbitration landscape in this area, companies utilizing third-party services on their websites should work closely with outside counsel to evaluate the risk of wiretapping claims and develop appropriate mitigation strategies. Courts Will Grapple With Whether Article III’s Case or Controversy Requirements Apply to Bankruptcy Courts The Fourth Circuit’s recent decision in Kiviti v. Bhatt, 80 F.4th 520 (4th Cir. 2023), has deepened a circuit split on whether bankruptcy courts are subject to Article III’s “case or controversy” requirement. Courts previously facing this issue had addressed it only in passing. The Third, Sixth, and Eighth circuits had held – without much analysis – that bankruptcy courts are subject to Article III’s strictures. In re Global Indus. Techs., 645 F.3d 201, 210 (3d Cir. 2011); Rosenfeld v. Rosenfeld (In re Rosenfeld), 698 F. App’x 300, 303 (6th Cir. 2017); GAF Holdings, LLC v. Rinaldi (In re Farmland Indus.), 639 F.3d 402, 405 (8th Cir. 2011). Conversely, the Fifth Circuit had held – also without much analysis – that bankruptcy courts are not subject to Article III’s “case or controversy” requirement, because they are not Article III courts. Furlough v. Cage (In re Technicool Sys.), 896 F.3d 382, 385 (5th Cir. 2018). Then came the Kiviti and Pettine decisions, in which the courts for the first time took a deep dive into this constitutional and statutory question – with conflicting results. In Kiviti, the Fourth Circuit joined the Fifth Circuit in holding that bankruptcy courts are not constrained by Article III’s mootness doctrine. Kiviti held that bankruptcy courts “can constitutionally adjudicate cases that would be moot if heard in an Article III court,” because “[m]ootness is an Article III doctrine, and bankruptcy courts are not Article III courts.” Bankruptcy courts also have the statutory authority to decide constitutionally moot matters. As statutory creatures, they have whatever power Congress gives them, and 28 U.S.C. § 157(b)(1) allows bankruptcy courts to “hear and determine all [bankruptcy] cases … and all core proceedings … referred to them by a district court.” Thus, not every dispute arising post-referral has to satisfy Article III’s requirements. Two months later, the Tenth Circuit Bankruptcy Appellate Panel decided Pettine v. Direct Biologist, LLC (In re Pettine), 2023 Bankr. LEXIS 2763 (10th Cir. B.A.P. Nov. 15, 2023), but reached a contrary result. The B.A.P. held that Article III’s “case or controversy” requirements apply in bankruptcy court because its “jurisdiction is entirely derivative of district court jurisdiction and cannot extend beyond” the district court’s jurisdiction. Specifically, Section 1334 grants federal district courts – not bankruptcy courts – jurisdiction over bankruptcy cases and proceedings. Section 157 then permits district courts to refer title 11 cases and proceedings to bankruptcy judges. Because district courts may only decide “cases and controversies,” so too must bankruptcy courts. Looking forward, litigants in the Fourth and Fifth Circuits will likely try to expand Kiviti’s holding to aspects of Complex Commercial Litigation C C L The Fourth Circuit’s recent decision in Kiviti v. Bhatt, 80 F.4th 520 (4th Cir. 2023), has deepened a circuit split on whether bankruptcy courts are subject to Article III’s “case or controversy” requirement.

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