In In Re Laura Charlene Goebel, No. 25-103 (2d Cir. 2026), the Second Circuit joins a circuit split over whether Article I bankruptcy courts are constrained by Article III case or controversy requirements.
The IRS appealed a decision of a bankruptcy judge not to dismiss a debtor’s pending adversary action for “lack of subject matter jurisdiction, arguing both that it did not present a justiciable dispute and that it requested relief barred by the federal tax exception to the Declaratory Judgment Act, 28 U.S.C. § 2201(a).”
The Second Circuit vacates on the jurisdictional ground that plaintiff did not allege a cognizable injury, and orders dismissal of the action.
Tucked in a footnote, the Second Circuit addresses the threshold issue of whether Article III standing arguments even apply in an Article I court.
“To be sure, bankruptcy courts are not Article III courts. See Stern v. Marshall, 564 U.S. 462, 502–03 (2011). But, at least with respect to adversary proceedings, we agree with the circuits that have concluded ‘Article III’s standing requirements apply to proceedings in bankruptcy courts just as they do to proceedings in district courts.’ In re Res. Tech. Corp., 624 F.3d 376, 382 (7th Cir. 2010).” The footnote also cites cases from the Third, Eighth, and Ninth Circuits.
“Though we recognize the Fourth and Fifth Circuits have viewed the issue differently, see Kiviti v. Bhatt, 80 F.4th 520, 532–33 (4th Cir. 2023); In re Highland Cap. Mgmt., L.P., 74 F.4th 361, 366–67 (5th Cir. 2023), those decisions fail to ‘recognize the derivative nature of bankruptcy court jurisdiction,’ In re Pettine, 655 B.R. 196, 211 (B.A.P. 10th Cir. 2023), under 28 U.S.C. § 157 and § 1334.”
There would of course also be the practical problem that if Article I courts could hear matters regardless of Article III standing or mootness, there might be no jurisdiction by the U.S. Courts of Appeals to hear appeals from those courts.
Still, one would suppose that this issue would require a more searching examination.
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