|
|
|
Interview with the Honorable Peter H. Carroll: Chief Judge of the United States Bankruptcy Court, Central District of California By Golden, Jeffrey* Chief Judge Carroll, a fourth generation native Californian, is among the most learned and experienced Bankruptcy Judges. He was appointed to the bench on August 1, 2002. He earned his A.B. from UC Berkeley in 1974 and obtained his Juris Doctor from St. Mary's University in 1978. He spent 17 years in private practice in San Antonio, Texas, before leaving his position as a shareholder with the Brite & Drought firm to join the U.S. Department of Justice in 1993. Chief Judge Carroll served as the Assistant U.S. Trustee in Fresno, California from 1994, until his appointment to the bench. He received the Director's Award for Management Excellence from the U.S. Department of Justice in 1999. He is a member of the State Bar of California, Texas and Colorado. He is widely honored and recognized by the community and his peers. He is certified as a specialist in both consumer and business bankruptcy law by the American Board of Certification. He is a frequent lecturer and has published numerous articles on bankruptcy topics for various publications, including the American Bankruptcy Institute and the California Bankruptcy Journal. He has published many notable decisions including In re Valley Health Systems, 383 B.R. 156 (Bankr. C.D. Cal. 2008) (chapter 9 eligibility); In re Count Liberty, LLC, 370 B.R. 259 (Bankr. C.D. Cal. 2007) (duties of chapter 11 DIP counsel); and In re Perrine, 369 B.R. 571 (Bankr. C.D. Cal. 2007) (Rule 2016(b) disclosure). Chief Judge Carroll was kind enough to allow himself to be interviewed recently at the George E. Brown, Jr. U.S. Courthouse and Bankruptcy Court in Riverside, California. Golden: How was the transition to Chief Bankruptcy Judge of the Central District? Judge: Well, I was appointed on January 3, 2011, and succeeded Judge Vincent P. Zurzolo who had done an excellent job as chief. He understands the real challenges facing the district, and possesses a strong institutional knowledge of the bankruptcy court in the Central District dating back to 1988. Being able to bounce things off of Judge Zurzolo has been very helpful to me. Golden: What challenges do you see as Chief Bankruptcy Judge? Judge: When I took over, we had just completed a record year in 2010, with 142,790 filings. That just completely destroyed our prior record of 120,987 set in 1998. We thought that 2011 was going to be another record year because the filings continued to increase during the first three to four months of 2011, but filings started to flatten by summer and then slowly headed down by October. We ended 2011 with 134,600 total filings in the five divisions of the Central District – just short of the 2010 record. Year-to-date filings for 2012 are down about 17.9% over the same period last year. We expect filings to trend down through 2012, and then start ticking back up in 2013. We are predicting that filings will increase for two reasons: First, the banks are expected to ramp up foreclosures later this year; and secondly, the 8-year period before receiving another chapter 7 discharge will expire in 2013 for all those who rushed to file chapter 7 in 2005, prior to the effective date of BAPCPA, and they may need to file again given the economic downturn in the interim. Golden: It seems as though our Bankruptcy Court has a large number of new judges. Judge: Yes. Our court, which has always been the largest bankruptcy court in the nation, got even larger in 2011. We now have 24 active bankruptcy judges. Nine of our 24 judges have been appointed since February of 2010, so they have two years or less experience as judges on the bench. Our newest judges do not have the institutional knowledge that our veteran judges have, but they bring a lot of talent and new ideas to the bench from private practice and government. We also receive invaluable assistance from four recalled judges and an active judge from Missouri who helps us on a temporary inter-circuit assignment from the Eighth Circuit. Golden: What opportunities do you see for the Central District? Judge: This is a challenging time to be the chief judge. We are finally up to full strength with all 24 judges on board. We do not expect another retirement for a few years. As far as I can tell, the composition of the bench will remain fairly consistent for the next seven years or so. The recession and political climate has had an impact on the way we do business. Congress is not giving us the kind of money that we need to run the courts, and we need to figure out how to do things differently. Now is the time to review our strategic plan and to redefine the strategic direction of the court for the next seven years or so. We need to examine our current model, how we do things, and determine whether that model is sustainable given what we believe will be the political, social, economic and cultural environment of the Central District of California in the next ten years. We intend to reach out and get everyone involved in the process, and to develop a new model with defined goals so we can meet the challenges in the years ahead. Golden: What areas do you expect the strategic plan to address? Judge: My sense is
that we need to focus on five areas. The first is administration of
justice. We serve an increasingly large and diverse population. We
probably will not have the physical space in the future to do things the
way we've always done them in the past. What we must do is evaluate how we
can provide justice effectively and efficiently to the public given the
increased demands that we have and our reduced resources. We have a lot of forms and the most exhaustive local rules of any district in the country. Sometimes, if forms and rules are not easily understandable and readily available, that may present in and of itself a barrier. So what we're doing in that regard, at least as a first step, is redesigning the Court's website with input from the bar and the public. There will be areas in the website where people who speak Spanish, for example, can go to get instructions and information in Spanish. We're going to have to evaluate how many languages that we can put on the website, but that's the direction we're going so as to provide access in an understandable format. Judge Tighe has been working on a pilot project through the Administrative Office of the U.S. Courts known as the “Pro Se Pathfinder Project” which would assist pro se debtors in preparing and filing bankruptcy petitions electronically. We wanted to make certain that whatever is ramped up on a national level meets our needs. The third strategic issue is the judicial workforce of the future. We've got judges, experienced managers, and Court personnel that we need to retain. It's difficult to retain those people when you don't have any money. The judges are leaving the bench because there's more money to be made in private practice. The same is true with Court personnel. The issue is how can we retain a highly skilled team of judges and Court personnel who are committed to public service given increased fiscal challenges and changing career expectations? Fourth, we need to evaluate our space needs in all five divisions and develop a solid infrastructure to achieve administrative efficiencies, provide a safe and secure environment, and enhance the public’s access to court information and services. And finally, fifth, we need to increase public understanding, trust and confidence in the judicial system by community outreach and by involving our stakeholders more into the process. For example, we recently set up an IT Committee with two bankruptcy practitioners serving on the committee. They know what technology they are using in their offices, and we need to design our systems to best interface with the technology used by the attorneys and people we serve. So those are some of the ideas I have about our strategic plan for the future. But again, this is a long-term process, and we're going to have not only input from all the judges and staff, but also the lawyers and other constituents. Golden: What procedural challenges do you see in the Court's future? Judge: As far as law and procedure, probably the biggest question that's been hanging over us since last June is what do we do about Stern v. Marshall. The District Court really doesn't know what to do about Stern v. Marshall, and the bankruptcy judges have different views. The Southern District of New York came up with a general order that has been adopted in one form or another by other districts to deal with the issues raised in Stern v. Marshall. At some point, the District Court’s general order referring bankruptcy cases and proceedings to the Bankruptcy Court in the Central District of California may have to be amended to address the situation. In the meantime, I think bankruptcy judges have one of three alternatives in light of Stern v. Marshall — make findings of fact and conclusions of law; instruct the parties to file a motion with the District Court seeking a withdrawal of the reference; or abstain. I have a serious concern given the language of Stern v. Marshall whether or not a bankruptcy judge can get informed consent from the parties to enter a binding final judgment on a non-core claim. This is a topic that will be discussed next week at the Chief Judges' Conference. Also, Chief Judge Kozinski asked for amicus briefs last November in a case called Executive Benefits Ins. Agency v. Arkison (In re Bellingham Ins. Agency, Inc.). My understanding is that a decision in that case is forthcoming. So we're all waiting to see what the Ninth Circuit says in Bellingham before we take the next step. I don't think the holding in Stern v. Marshall is as narrow as the majority seems to think it is, or they say it is. The majority says this is a very narrow holding and it will not have any significant impact at all on the Bankruptcy Court. It’s having a big impact; a huge impact. There are a lot more non core matters in Bankruptcy Court than the Supreme Court might think, and judges have a big disagreement as to whether or not parties can truly give binding consent to a bankruptcy judge to exercise Article III power over a particular issue. Golden: Do you predict more chapter 9's in the Central District's future? Judge: I think the Vallejo case created a scare. It scared the unions and it scared a lot of creditors. That's why we've had legislation. Assembly Bill 155 was introduced in response to Vallejo for the specific purpose of limiting immediate access to chapter 9 by municipalities in the state. That bill died and now we have Assembly Bill 506 which was signed into law last November as a compromise. To qualify under state law for chapter 9 relief, a municipality must now go through a neutral evaluation process or vote to declare a fiscal emergency after a public hearing. California’s access to chapter 9 was pretty liberal before the Vallejo case. I don't think this legislation will, in and of itself, stop chapter 9's from happening in California. In 2010, total municipal debt outstanding exceeded $2.9 trillion and almost 20% of that debt was in California. But I think the consequences of filing a chapter 9 are enormous, and a municipality is not going to do it unless it's just simply the last resort. Golden: Do you enjoy being Chief Bankruptcy Judge? Judge: I never thought I would like the management aspect of the practice of law, but I served as a managing partner of the firm while in private practice and ended up enjoying management as an Assistant U.S. Trustee. I thought well maybe I'd like to have that experience again, at least for four years, as chief judge. I've enjoyed it. I understand the Court a lot better than I did prior to my appointment as chief, and I'll probably take away from the experience a better understanding of Court administration and a deeper appreciation for the dedicated individuals who serve the Court. *Jeffrey I. Golden, a founding partner of Weiland, Golden, Smiley, Wang Ekvall & Strok, LLP, is a bankruptcy trustee of the Central District of California and Co-Editor in Chief of the California Bankruptcy Journal. He formerly served as a law clerk to the Honorable Peter M. Ellliott and to the Honorable Calvin K. Ashland, Judges of the United States Bankruptcy Court and the Bankruptcy Appellate Panel, and is a past President of the Orange County Bankruptcy Forum. |
The Receivership News is extremely pleased to present the following
interview with the distinguished jurist, Chief Bankruptcy Judge Peter
H. Carroll of the United States Bankruptcy Court for the Central
District of California. Jeff Golden asked Judge Carroll about his role as
Chief Bankruptcy Judge and his perspective on key trends in the future.