Statement of the United States Bankruptcy
Judges for the District of Arizona to the
Commission on Structural Alternatives for
The Federal Courts of Appeal

The United States Bankruptcy Judges for the District of Arizona respectfully oppose division of Ninth Circuit Court of Appeals.

Whether the split would be accomplished by creation of a new circuit, transfer of certain districts to an existing circuit, or some combination, the result would be loss of a unique, innovative judicial management entity. We have formally expressed our concern on this subject to our Congressional delegation as early as the Fall of 1995. We appreciate this opportunity to now make our concerns known to the commission in this statement and through the testimony of the Arizona Chief Bankruptcy Judge.

In the broad issue of the court's appellate work, we support the case established by Chief Ninth Circuit Judge Proctor Hug, Jr., Senior Ninth Circuit Judge J. Clifford Wallace, Senior Seventh Circuit Judge Harlington Woods, Jr. and Senior District Judge William W. Schwarzer.⁽¹⁾

We agree with these witnesses that the Ninth Circuit handles its case load, consisting of one-sixth of all federal appeals, efficiently and productively. It maintains a uniform body of case law for nine western states and Pacific territories.

Since a Circuit Court imposes a uniform body of case law, logically it should be composed of districts that share a common commercial and cultural heritage. A number of proposals place Arizona in a Circuit separate from California. We are unaware of any principle of judicial administration which justifies this.

California is huge. Its neighbors don't want to be dominated. Nonetheless, Arizona residents are well aware of the important commercial and cultural ties shared with California. In 1997, Arizona debtors listed 44,416 California creditors in their petitions and 620 California attorneys entered an appearance in our Court.⁽²⁾

The Ninth Circuit's Large Resources
and Skilled Management Provides Vital
Administrative Support to Its Bankruptcy Courts

We address a more specialized, yet equally important, subject: the court's administrative assistance to 13 separate United States bankruptcy courts and the Bankruptcy Appellate Panel. Bankruptcy is no small matter. With filings of more than a million cases annually, the Bankruptcy Code touches more Americans than any other statute, except the Federal Tax Code. Of the 1,367,364 bankruptcies filed nationally in 1997, Ninth Circuit bankruptcy courts handled 309,150 cases and an additional 17,893 adversary proceedings.⁽³⁾

This circuit supports courts ranging from the nation's largest bankruptcy court in the Central District of California to small northwestern districts with largely rural and agricultural orientations. It has consistently been a leading innovator in bankruptcy administration.

A prime example is the Bankruptcy Appellate Panel for the Ninth Circuit ("BAP"). While that institution will provide its own witness for this commission, we also wish to briefly address its operations.

Although Congress authorized appellate panels for all circuits in the 1978 Bankruptcy Reform Act, only in the Ninth Circuit have these innovative courts flourished early and consistently. This Circuit's BAP, entirely staffed by volunteer bankruptcy judges, handles an average of 40-60% of bankruptcy appeals, providing Article III district judges additional time for their vital criminal and civil caseloads.⁽⁴⁾

This circuit's BAP is an invaluable source of judicial precedent and a significant force for uniform bankruptcy case law. Its judges, selected by the circuit with recommendations from the circuit's chief bankruptcy judges, are well respected. Its opinions are often cited.⁽⁵⁾ When Congress subsequently mandated in 1994 that each circuit must establish a BAP, Ninth Circuit staff were often consulted by other jurisdictions for assistance.

We are very concerned that dividing the circuit will destroy this valuable institution. No matter how a split is physically accomplished,⁽⁶⁾ the institutional continuity of the BAP would be severely impaired. More importantly, a division could leave one or both of the resulting circuits with insufficient volunteer judges either to continue the BAP or staff an additional one. This is caused, in part, by the requirement that no member of a BAP panel can hear an appeal from that judge's district. The Central District of California, staffed with approximately 21 bankruptcy judges for 115,686 cases,⁽⁷⁾ accounts for a high proportion of the BAP caseload. It is not clear there are sufficient volunteer judges to service the Central District in a reduced circuit.

The Circuit's Size Allows Rapid and
Efficient Deployment of Judicial Resources
to Deal with Overworked Districts

Another Ninth Circuit innovation is the Bankruptcy Workload Equalization Project ("BWEP"). Taking advantage of this circuit's size and larger resources, volunteer bankruptcy judges are assigned litigation from overworked districts. Blocks of 100 to 200 adversary proceedings are assigned to a single out-of-district judge. Circuit BWEP regulations establish time lines to resolve the caseload and prohibit more than one trip to the forum district for the entire block of cases. Restrictions on travel and close circuit monitoring result in an average 5.9 months to resolve the individual lawsuit and a per case travel cost of $42.00.⁽⁸⁾

Currently, bankruptcy judges in Oregon, Washington, Montana, Idaho and Alaska are resolving adversaries pending in the Northern, Southern and Central Districts of California.⁽⁹⁾ While the project is not a substitute for prompt Congressional authorization of necessary additional judgeships, it does demonstrate how innovative management uses the resources of a larger circuit to resolve short-term problems.

The Circuit Actively Utilizes
Bankruptcy Judges as a Resource

This circuit successfully deals with almost one-third of the nation's bankruptcy cases,⁽¹⁰⁾ by involving its bankruptcy judges in all aspects of circuit operations.

Bankruptcy policy advice is provided to the Judicial Council through the Conference of Chief Bankruptcy Judges. The Ninth is the first, and we believe, still the only circuit to establish such a body. The circuit's 14 chief bankruptcy judges, including the chief BAP judge, meet at least twice a year with the Chief Circuit Judge, circuit staff, invited Article III judges and other experts. The conference has provided long-range planning, administrative team work development and conducted several discussions with members of the Bankruptcy Review Commission regarding amendments to the Bankruptcy Code. The Director of the Justice Department's United States Trustee Program is a frequent guest. A representative from the Conference of Chief District Judges is always invited.

Because of this creative management structure, we believe the circuit's bankruptcy judges are well informed and able to provide leadership at the national level.

The chair of the conference, appointed by tenure, sits on the circuit committee that recommends applicants for appointment as United States Bankruptcy Judges. The chair also sits as an observer at the Judicial Council, representing all circuit bankruptcy judges. The Ninth Circuit was the first circuit to place a bankruptcy judge on its council. Bankruptcy judges fully participate in circuit conferences, where they attend both general sessions and individual constituent meetings. Specialized educational programs are offered. All bankruptcy judges are provided access to an E-mail network and Internet web page, which allows both private and group electronic communication.

Diminishing or Fragmenting the Circuit's
Resources Will Impact Bankruptcy Court Operations

In short, current Ninth Circuit operations demonstrate the advantages of a large resource pool. The administrative benefits obtained by this judicious management can be lost or fragmented by an ill-considered division. The BAP, which must serve the nation's largest bankruptcy court, will not function as well--if at all--in a small circuit. A large circuit makes it easy and efficient to temporarily extend judicial resources to high workload areas, when the need arises.

This circuit is well run, with a strong record of innovation. It is a model of how scarce government resources should be deployed for the public.

United States bankruptcy courts are at the center of many of the largest, most complex legal cases. This work has an enormous impact on the national economy. The bankruptcy court is the federal court most likely to directly impact the lives of our citizens.

Whether resolving complex commercial issues or responding to the consumer needs of our people, we need the administrative support of the Ninth Circuit to do our job. Loss or fragmentation of this assistance is an extraordinarily high cost to pay for the perceived benefits of dividing this viable, respected institution.

We greatly appreciate this opportunity to address the commission. We are always available to provide additional information upon your request.

Respectfully,

George B. Nielsen, Jr.
Chief United States Bankruptcy Judge

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Robert G. Mooreman
United States Bankruptcy Judge

Lawrence Ollason
United States Bankruptcy Judge

Sarah Sharer Curley
United States Bankruptcy Judge

Redfield T. Baum
United States Bankruptcy Judge

James M. Marlar
United States Bankruptcy Judge

Charles G. Case II
United States Bankruptcy Judge

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1. Judge Proctor Hug, Jr., The Ninth Circuit Functions Well and Should Not be Divided (undated memorandum); Testimony of Judge J. Clifford Wallace (April 3, 1998); Letter of Judge Harlington Wood, Jr. (April 2, 1998); Testimony of Judge William W. Schwarzer (April 24, 1998) (all on file with the Commission).

2. Arizona Bankruptcy Court, Statistics of California Affiliated Cases for the District of Arizona (April 6, 1998) (Unpublished Study on File with Arizona Bankruptcy Court)

3. Administrative Office of the U.S. Courts, Judicial Business of the United States Courts (1997) at 257,259,265.

4. Tisha Morris, The Establishment of Bankruptcy Appellate Panels Under the Bankruptcy Reform Act of 1994: Historical Background and Sixth Circuit Analysis, 26 U. Mem. L. Rev. 1501, 1518 (1996). See also J. Sloan & G. Bermant, Bankruptcy Appellate Panels: The Ninth Circuit's Experience, 21 Ariz. St. L.J. 181, 212-16 (1989).

5. Morris, Id. at 1518.

6. The April 8, 1998, letter to this Commission of Chief Circuit Judge Stephanie K. Seymour, expressing concern over possible transfer of Arizona into the Tenth Circuit, is an indication of the difficulty in attempting to realign circuits in a split.

7. Supra, note one at 259.

8. Robert E. Rucker, Ph.D., Assistant Circuit Executive, Bankruptcy Workload Equalization Project Data Analysis (May 18, 1998) (unpublished memorandum to the Conference of Chief Bankruptcy Judges (on file with Circuit Executive).

9. Id at pages 2-5.

10. Note 2, supra, at 259.