Notice & Comment

Degrading the Judicial Power

In a characteristically thoughtful post, Professor Richard Re examines whether the transfer of an increasing number of cases to Article I legislative courts could pose a threat to the Article III judicial power exercised by federal district courts. He writes in the context of Wellness International Network v. Sharif, which sanctioned some exercise of the judicial power by bankruptcy judges, who lack Article III tenure and salary protections.

Re pushes a bit against the conventional wisdom, which dictates that the assignment of more and more responsibilities to legislative courts will make the A3 courts a mere sideshow in the resolution of significant federal disputes. Re instead argues that burdening the A3 courts with increasing responsibilities might dampen their prestige. That is, “if Congress can’t assign cases to legislative courts, then it will predictably assign more cases to the federal courts.” And an A3 court’s work will consequently “become more tedious, exhausting, and interminable,” meaning that it will be less appealing to qualified candidates. The A3 judiciary will expand, but with weaker judges.

There are several possible objections to Re’s arguments (why not just increase judicial salaries? or make specialized courts A3 courts?), and Re makes his arguments cautiously and with appropriate qualifications. Here, I’d like to think about how the Tax Court bears on Re’s analysis.

The Tax Court was originally organized as a mere federal agency but was later established as a legislative court. It now hears the vast majority of federal tax cases, largely because a taxpayer does not need to first pay his taxes to proceed in that forum. (To fight the IRS in a first district court, a taxpayer must first pay the assessed taxes and then sue for a refund.)

Has this transferring of the judicial power in the tax area protected the prestige of A3 courts? I’m highly skeptical. The Tax Court hears many junk cases involving tax protesters or other recalcitrant taxpayers, but its influence over a major area of federal law cannot be questioned. In fact, the Supreme Court explicitly announced that it would give special deference to the Tax Court on its analysis of legal issues. Although Congress has tried to overrule that result by statute (see 26 USC 7482), the appellate courts nonetheless frequently give respect to the Tax Court’s interpretation of the Internal Revenue Code. This elevates the Tax Court vis-a-vis district courts, whose analysis of tax issues or other legal issues is reviewed under a de novo standard.

If the transferring of power to legislative courts related to only minor matters, I could more readily accept Re’s arguments. However, Congress can apparently transfer cases involving “public rights” to legislative courts, and the significance of those cases in our ever-expanding administrative state cannot be questioned. If Congress continues to push more public rights cases to legislative courts, this will necessarily confer greater prestige on legislative courts. There has already been an associated transfer of influence in the tax area, and this could very well happen in other areas, if SCOTUS or Congress does not limit the damage caused by Wellness International Network v. Sharif.

By Andy Grewal

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