The Sixth Circuit is one of only five federal appellate courts to institute a bankruptcy appellate panel under 28 U.S.C. § 158(b).  (The others are the First, Eighth, Ninth, and Tenth circuits.) As the bankruptcy appellate panel is unfamiliar to many non-bankruptcy attorneys, this post will review the Sixth Circuit’s bankruptcy appellate panel.

Section 158(b) encourages the federal appellate courts to create three-judge panels to hear appeals from the bankruptcy courts that would otherwise be heard by district courts.  It also allows each district to choose whether to use the bankruptcy appellate panel (“BAP”).  All appeals from bankruptcy courts in those districts are heard by the BAP unless one of the parties chooses to have the appeal heard by a district court judge.  The Sixth Circuit BAP began in 1997, with the goals of promoting the uniformity of bankruptcy law within the Sixth Circuit and minimizing the cost and delay of a bankruptcy appeal.  All districts in the Sixth Circuit use the BAP except the E.D. Mich., W.D. Ky., and E.D. Tenn.  Parties can appeal to the Sixth Circuit from a BAP decision just as they would from a decision by a district court.

The Sixth Circuit BAP judges are bankruptcy judge that sit for staggered four-year terms, and cannot hear appeals from their home districts.  The bankruptcy judges currently sitting on the Sixth Circuit BAP are Judges Boswell (W.D. TN), Fulton (W.D. KY), Harris (N.D. OH), McIvor (E.D. MI), Rhodes (E.D. MI), and Shea-Stonum (N.D. OH).  As in other circuits, some judges are re-appointed to multiple terms.  The Sixth Circuit BAP hears about 60% of the total bankruptcy appeals from the districts that have elected to use it, which comes to about 150 appeals each year.

Despite the Sixth Circuit’s local rules state that BAP decisions are precedential unless the panel states otherwise, see 6th Cir. BAP LBR 8013 – 1(a)); Specker Motor Sales Co. v. Eisen, 393 F.3d 659, 663 n.3 (6th Cir. 2004) (BAP decisions are “equivalent to review by a district court”), there are significant disagreements within the Sixth Circuit about whether those decisions have binding effect.  Some bankruptcy courts have held that BAP decision are “binding authority,” Rhiel v. OhioHealth Corp., 380 B.R. 753, 775 (Bankr. S.D. Ohio 2008), while others state those decisions “do not have binding precedential effect,” In re Boyd, 414 B.R. 223, 232 (Bankr. N.D. Ohio 2009).  A recent survey by Professor Kuney found similar confusion in all circuits, finding that most bankruptcy judges do not feel bound by their circuit’s BAP decisions or even by district court decisions.  Similarly, BAP decisions are often persuasive to district courts, but are not binding.  Q Tech. Inc. v. Allard, 2009 U.S. Dist. LEXIS 36953, *12 n.1 (E.D. Mich. May 1, 2009); see also Threadgill v. Armstrong World Indus., 928 F.3d 1366, 1371 (3d Cir. 1991) (“The doctrine of stare decisis does not compel one district court judge to follow the decision of another.”) (citation omitted).  At the least, Sixth Circuit BAP panels should be bound by their own past decisions under 6th Cir. BAP LBR 8013 – 1(a).

Parties elect to use the BAP a little more than half the time in the Sixth Circuit, but making that decision in a particular case can be difficult.  Adverse but distinguishable BAP precedent may suggest that the district court could be a more favorable venue, but the choice often comes down to the whether the appeal focuses on bankruptcy or non-bankruptcy grounds.  Bankruptcy judges have more experience with bankruptcy law, but bankruptcy appeals often turn on issues unrelated to bankruptcy that may be more suitable for a district court.

Lauren Henderson, currently working as a law clerk at SSD, contributed to this post.