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Also Decided at SCOTUS: Bankruptcy and Whistleblowing

By Mark Wilson, Esq. on May 27, 2015 | Last updated on March 21, 2019

What else happened at the Supreme Court this week? As we reported yesterday, a case that's going to be of significance to patent trolls and the people who fight against them.

But there were two other opinions released yesterday, dealing with more the more prosaic topics of bankruptcy and whistleblowing. ("Patents aren't prosaic?" you're asking. The answer is "no." They're very exciting.)

So, let's see what else the Court did to put your tax dollars to work.

Wellness International Network v. Sharif

Anna Nicole Smith's bankruptcy case, Stern v. Marshall, yielded a new bit of law when it comes to bankruptcy. By statute, bankruptcy courts are limited to judgments on the bankruptcy itself, not on ancillary state-law claims that would have existed, anyway. The question in Sharif was whether a Stern claim -- "a claim designated for final adjudication in the bankruptcy court as a statutory matter, but prohibited from proceeding in that way as a constitutional matter" -- can be raised at all in the bankruptcy court, even voluntarily by the parties.

Yes, said Justice Sotomayor for the 6-3 majority, bankruptcy courts can issue a final judgment on a Stern claim with the parties' consent. As with claims before magistrate judges (who are, after all, "just" Article II judges), parties can waive their "right to Article III adjudication" before a bankruptcy court.

This makes sense, said Sotomayor, who wasn't convinced that Congress was maliciously trying to usurp judicial powers when it created bankruptcy courts. Instead, the whole point of bankruptcy law is to place bankruptcy proceedings in one place for efficiency. Allowing litigants to consent to Stern claims only makes the bankruptcy process more efficient.

The dissent, authored by Chief Justice Roberts, portended a dystopian future in which Congress takes even more control of the judicial branch away from Article III judges.

KBR v. U.S. ex rel. Carter

Benjamin Carter filed a whistleblower claim under the False Claims Act, alleging that military contractor Kellogg, Brown, and Root was charging them for support services in Iraq that it never delivered -- the very type of thing the Civil war-era False Claims Act was written to prevent.

Unfortunately, Carter waited beyond the six-year statute of limitations to file his qui tam suit. His defense, though, was that the United States was "at war" within the meaning of the Wartime Suspension of Limitations Act (WSLA), and thus the statute of limitations was tolled during that time.

Justice Alito, however, writing for a unanimous court, easily shot Carter's case down: The WSLA applies only to crimes. Not only does it refer to "offenses" -- which means "crimes" -- but it's chaptered in Title 18 of the United States Code, along with all the rest of the criminal statutes.

Alito at least cut Carter a break in that it found his remaining claim shouldn't have been dismissed with prejudice under the first-to-file rule. The Court held -- correctly -- that "a qui tam suit under the FCA ceases to be 'pending' once it is dismissed."

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