Regular readers of this blog know that we write regularly, and some would say too often, on the issue of filing deadlines and jurisdiction. Hat tip to PT reader Ronald Byers and to Carl Smith for alerting me to this case. Because of a series of Supreme Court cases over the past 15+ years, a number of courts have shifted their views on what makes a time frame jurisdictional. The most recent court to weigh in on this issue occurred on October 28, 2020, in the case of Tennial v. REI Nation, LLC (6th Cir.).
In this case the Sixth Circuit overturns the decision of the lower courts regarding the jurisdictional nature of the time frame to file an appeal from a bankruptcy court decision holding that the time frame, created by a Bankruptcy Rule, does not create a jurisdictional period. Nonetheless, it finds the time period mandatory and the debtor lacking in a basis for equitable tolling. So, it affirms the decision of the lower court that her time to appeal passed before she acted cutting off her opportunity to appeal.
The outcome parallels the outcome in the CDP case of Cunningham v. Commissioner, 716 Fed. Appx. 182 (4th Cir. 2018) where the Fourth Circuit declined to even get to the jurisdictional issue because it found her excuse lacking under the Supreme Court’s decision in Irwin v Veterans Administration, 498 U.S. 89 (1990). Having a time period declared non-jurisdictional will not get a late litigant into court without a good reason for being late. I also wrote specifically about the jurisdictional issues regarding the timing of an appeal from the Tax Court to a circuit court here.
Ms. Tennial filed bankruptcy to stop the foreclosure of her home. After she entered bankruptcy her lender sold the mortgage to REI Nation, which moved the lift the automatic stay in order that it could move forward and complete foreclosure on her home. The bankruptcy court granted the motion to lift the stay. Bankruptcy Rule 8002(a)(1) proves a 14-day time period to appeal an order of this type.
The order terminating the stay was entered on September 12, 2019. Her attorney received electronic notice of the order that day. On September 14, 2019 a copy of the order was mailed to her. She did not file notice of appeal until October 9, 2019. In her notice of appeal, she stated that she did not receive the mailed copy of the order until September 26, 2019 – the day on which the appeal needed to be filed. She did not explain what happened to the electronic notice sent to her attorney on the day of the order.
The district court determined that it lacked jurisdiction because of the late filing of the appeal. It cited to 28 U.S.C. 158(c)(2) which provides that bankruptcy appeals “shall be taken in the same manner as appeals in civil proceedings generally are taken to the courts of appeals from the district courts and in the time provided by Rule 8002 of the Bankruptcy Rules.”
The Sixth Circuit noted that it had treated this deadline as jurisdictional in prior opinions, which would have bound the district court. One of the prior opinions issued in 2017; however, the court noted that it had not looked at the question of jurisdiction in light of the recent Supreme Court guidance. Looking at it in that light, it determined that a time frame created by a rule and not by a statute could not impose a jurisdictional limit on the federal courts.
The Sixth Circuit analyzed some of the same Supreme Court jurisprudence that we have written about in prior posts here and here. It found that its prior decisions on this subject failed to take into account the jurisprudence coming from the Supreme Court noting:
the Supreme Court has been rigorous and vigorous in distinguishing between requirements that go to the subject matter jurisdiction of the federal courts and requirements that are merely mandatory. To the end of simplifying and clarifying the issue, Justice Ginsburg wrote a trailblazing unanimous decision for the Court that created a clear-statement rule for the daunting array of settings in which the question arises. Congress must “clearly state[]” that the requirement implicates the judiciary’s subject matter jurisdiction—its “statutory or constitutional power to adjudicate the case”—before the federal courts will treat the requirement as a non-waivable and non-forfeitable jurisdictional imperative. Arbaugh v. Y&H Corp., 546 U.S. 500, 515 (2006) … Consistent with that goal and consistent with the clear-statement rule, the Court has treated most of the procedural requirements that have come before it since then as not being jurisdictional in the constitutional sense of the term. See, e.g., Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010); United States v. Kwai Fun Wong, 575 U.S. 402 (2015); Musacchio v. United States, 136 S. Ct. 709 (2016).
The Sixth Circuit says the rule is not hard to apply in this situation because nothing in the statute establishes the bankruptcy appeal deadline as a jurisdictional prerequisite much less a clearly stated one. It goes on to find as a second prong for its decision that four of the jurisdictional cases decided by the Supreme Court in its spate of cases about jurisdiction deal with time frames established by rule rather than by statute. It finds that the four cases addressing time frames set by rules establish a precedent that rule based time frames do not create a jurisdictional issue. It lists the four cases and then draws from them a general principle:
How did the Court resolve these cases? Based on this straightforward principle: Rule-based deadlines are jurisdictional when they implement an appeal deadline created by Congress. Otherwise, they are not.
In explaining this principle it states further that:
No less significantly, if deadlines established by the rules process alone created jurisdictional limits, that would mean the rules committee could change the scope of federal court subject matter jurisdiction on its own. That’s good work if you can get it, to be sure. But the Constitution gives that power to Congress alone.
The Court notes that its decision here runs contrary not only to its own prior decisions but to the of other circuit courts. This statement reminded me of advice of my dean, John Manning, who assisted in the moot of the argument our clinic made in a case before the Second Circuit four years ago. Dean Manning had been asked by the Supreme Court to participate as an amicus in a jurisdictional case to argue the court lacked jurisdiction. After inviting him to make the argument, the Supreme Court ruled that the timing issue was not jurisdictional – as it has done in all of the cases post 2004 not covered by prior Supreme Court precedent. He told the student and me that we would lose our case in the Second Circuit but if we could get to the Supreme Court we would win.
Just as the circuit courts are almost uniformly rejecting our arguments in tax cases, they have done so in bankruptcy cases. The Sixth Circuit makes a break from precedent here. It will be interesting to watch if this changes the situation in the bankruptcy area and has any impact on non-bankruptcy jurisdictional cases. I am inspired to find a jurisdictional case in the Sixth Circuit, which has not faced the issue in a tax case.
Postscript
I recently discussed the two pending jurisdictional cases involving the Tax Court here. Both are CDP cases. There is a small update in one of the two cases. The taxpayer has now filed its brief with the Second Circuit in the Castillo case. That brief can be found here. The IRS response is not yet due. In the Boechler case pending in the 8th Circuit, the IRS response to the motion for rehearing en banc was filed on October 16th and can be found here. The en banc 8th Circuit has not yet ruled on the motion.