## Facts

- Vickie Lynn Marshall married J. Howard Marshall II, who died in 1995; his will left his fortune largely to his son, E. Pierce Marshall, and nothing to Vickie.
- Vickie alleged Pierce tortiously interfered with J. Howard’s intent to provide for her through a trust.
- In Texas probate proceedings, Vickie pursued a state-law tortious-interference claim and ultimately received nothing from the estate.
- Separately, Vickie filed bankruptcy in the Central District of California.
- Pierce filed a proof of claim in the bankruptcy case for defamation based on Vickie’s accusations against him.
- Vickie asserted a counterclaim against Pierce for tortious interference with an expected gift.
- The bankruptcy court treated the counterclaim as “core” under 28 U.S.C. § 157(b)(2)(C) and entered a final damages judgment for Vickie, creating tension with the Texas outcome.

## Issues

1. Whether 28 U.S.C. § 157(b)(2)(C) granted the bankruptcy court statutory authority to enter a final judgment on the estate’s counterclaim against a creditor who filed a proof of claim.
2. Whether Article III permits a non-Article III bankruptcy judge to enter a final judgment on a state-law counterclaim that is not necessarily resolved in ruling on the creditor’s proof of claim.

## Decision

- The Supreme Court affirmed the judgment that the bankruptcy court could not enter a final judgment on Vickie’s counterclaim.
- The Court held the counterclaim fell within the statutory definition of “core” proceedings under § 157(b)(2)(C).
- The Court nevertheless held Article III barred a bankruptcy court from entering final judgment on this state-law tort counterclaim because it was not resolved in the process of allowing or disallowing Pierce’s proof of claim.
- The Court treated the tortious-interference claim as a private-right claim traditionally decided by common-law courts, outside the public-rights exception as applied here.

## Legal Principles

- Congress may classify certain matters as “core” under 28 U.S.C. § 157(b), but that statutory label does not itself establish Article III authority for a bankruptcy court to enter final judgment.
- A bankruptcy court may not constitutionally enter final judgment on a state-law counterclaim when adjudicating the creditor’s proof of claim does not necessarily resolve the counterclaim.
- The public-rights exception is limited and generally does not allow final adjudication by non-Article III tribunals of traditional state-law private-right claims that exist independent of the bankruptcy process.
- Article III’s tenure and salary protections serve separation-of-powers interests that restrict Congress from assigning final adjudicatory power over certain private-right disputes to non-Article III judges.

## Conclusion

The Court held that, although § 157(b)(2)(C) treated the debtor’s counterclaim as “core,” Article III prohibited the bankruptcy court from finally adjudicating a state-law tortious-interference counterclaim not necessarily resolved by determining the creditor’s proof of claim, limiting bankruptcy courts’ final-judgment power over certain core-designated claims.


Stern v. Marshall, 564 U.S. 462 (2011)