Consolidation of Bankruptcy and District Court Clerks’ Offices

Bankruptcy courts also faced Article III incursions into their statutory right to clerks’ offices controlled by bankruptcy judges. Shortly after AO Director Foley rescinded his July 11, 1984 memorandum announcing the AO’s refusal to pay bankruptcy judges, a district judge in the Northern District of Ohio exercised supervisory administrative control over employees of the bankruptcy clerk’s office in that district. The district judge entered a “Final Nonappealable Administrative Order” directing a bankruptcy clerk of court to reinstate two deputies he had dismissed for malfeasance. Two years later, in 1986, the Sixth Circuit, after finding that the “nonappealable” order was appealable, reversed in In re Rini, 782 F.2d 603 (6th Cir. 1986).

The next year, in 1985, the Executive Committee of the Judicial Conference, without a recommendation from its Bankruptcy Committee, urged consideration of consolidation of district court and bankruptcy court clerks’ offices to save costs where feasible. That created a system-wide threat to bankruptcy courts of forced consolidations of bankruptcy and district court clerks’ offices. In 1985 and 1986, four bankruptcy and district court clerks’ offices consolidated (D. Idaho, W.D. Missouri, S.D. Tex., and E.D. Penn.), one of which (E.D. Penn.) deconsolidated about a decade later. A letter dated April 30, 1986 by Richard Heltzel (Clerk, E.D. Cal. Ret.) gives a flavor of the times. He muses that efforts to resist consolidation “reminds me of the greek monster Hydra. Each time one of its heads is cut off, it grows a new one.” He elaborated:

[T]he consolidation issue seems to be gaining momentum. The issue is being framed in economic terms with unsubstantiated savings being offered as the primary inducement to consolidation. At the same time, those who appear to be behind the push for consolidation already are accusing anyone from the bankruptcy courts who opposes consolidation with self-serving turf protection.

NCBJ President Ralph H. Kelley (E.D. Tenn., Ret.) and Bankruptcy Clerks Harold Beck (Clerk, W.D. Va., Ret.), David Bird (Clerk, D. Del.), Richard Heltzel, and Jack Wagner (Clerk, C.D. Cal., Ret.), played a prominent role in what Mr. Heltzel describes as “the fight against consolidation.” Mr. Heltzel reflected: “I think it is important to recognize the unwavering support of Senator Dennis DeConcini, Ariz., (a member of the Senate Judiciary Committee), who did so much for the bankruptcy court system in those years. He was a true friend of the bankruptcy courts. It was his staff that Harold, David, Jack, and I worked with to draft the protective language in 28 USC § 156 which ultimately made its way into the 1986 legislation.” In a June 4, 1986 letter from House Judiciary Chair Peter W. Rodino to Ralph Kelly, Representative Rodino thanked Ralph for forwarding to him a paper written by Richard Heltzel concerning consolidation of district and bankruptcy court clerks’ offices. In the letter, Representative Rodino remarked:

It is disturbing to me that consolidation has occurred without Congressional approval or involvement. I agree with you that having a separate bankruptcy clerk’s office controlled by the bankruptcy judges is very important to the efficient operation of the bankruptcy system.”

Richard’s “white paper,” which remains relevant today, examines compelling reasons why “consolidation is not only unnecessary, but unwise and counterproductive to the goal of effective bankruptcy administration.” Representative Rodino added the clerk’s office consolidation provision to a bill he introduced in the House. The bill, enacted into law on October 27, 1986 as The Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy Act of 1986, added subsection (d) to 28 U.S.C. § 156, which provides, “No office of the bankruptcy clerk of court may be consolidated with the district clerk of court office without the prior approval of the Judicial Conference and the Congress.”