RULE 426. JURY TRIALS BEFORE BANKRUPTCY JUDGES

A. Effective Date

This rule applies and is effective as to cases commenced under Title 11 of the United States Code on or after October 22, 1994, and as to civil matters and proceedings related to or arising in such cases.

B. Designation of Bankruptcy Judges to Conduct Jury Trials

Each bankruptcy judge appointed or designated to hold court in this District is specially desginated to conduct jury trials pursuant to 28 U.S.C. §157(e). The District Court may for good cause withdraw the designation of any bankruptcy judge. Such withdrawal shall be in the form of a general order.

C. Consent

Any bankruptcy judge designated to conduct a jury trial may conduct such a trial in any case, proceeding, or matter that may be heard under 28 U.S.C. §157, within which the right to a jury trial exists, only upon the consent of all parties. Any time a party is added, the consent of each party must be of record, either in writing or recorded in open court. The filing of a consent does not preclude a party from challenging whether the demand was timely filed or whether the right to a jury trial exists.

D. Applicability of Federal Rules of Civil Procedure

Fed.R. Civ.P. 38, 39, and 47-51 and Fed.R. Civ.P. 81(c) nsofar as it applies to jury trials, shall apply in cases and proceedings within which the right to a jury trial exists, except that the filing of a demand made under Fed.R. Civ.P. 38(b) shall be accomplished in accordance with Fed.R. Bank.P. 5005 rather than Fed.R.Civ.P. 5(b).

E. Applicability of General Rules Regarding Jury Procedures

General Rules 1.30, 1.31, and 1.32 shall apply to jury trials conducted by bankruptcy judges, provided that the terms "judge of this Court," "trial judge," "the court," and "the presiding judge" in sections 1.30D, 1.30E, 1.31, and 1.32, respectively, shall mean the bankruptcy judge conducting the jury trial. The terms "chief judge" and "clerk" as used in General

Committee Note

Section A: This section implements new §157(e) of Title 28, added by §112 of the Bankruptcy Reform Act of 1994. Section 112 of the Act provides:
 
SEC. 112 AUTHORITY OF BANKRUPTCY JUDGES TO CONDUCT JURY TRIALS IN CIVIL PROCEEDINGS.
Section 157 of title 28, United States Code, is amended by adding at the end the following:
(e) If the right to a jury trial applies in a proceeding that may be heard under this section by a bankruptcy judge, the bankruptcy judge may conduct the jury trial if specially designated to exercise such jurisdiction by the district court and with the express consent of all parties. The effective date established by section A follows the effective date of §112 as provided in §702(a) of that Act.

Section B: This section provides that each bankruptcy judge "appointed or designated to hold court in this District is specially designated to hold jury trials" on consent of the parties (emphasis added). This will include those bankruptcy judges currently sitting who are appointed to bankruptcy judgeships authorized for the District as well as any bankruptcy judges who will subsequently be appointed to such judgeships. It also covers those bankruptcy judges from other district who are from time to time designated to hold court in this District.

Section B also provides that the District Court may "for good cause withdraw the designation of any bankruptcy judge" by issuing a general order to that effect.

Section C: The Act did not specify whether "express consent" of the parties to a jury trial before the bankruptcy judge must be in writing. The requirement that parties consent to the bankruptcy judge conducting the jury trial is clearly analogous to the requirement for consent of parties in order for a magistrate judge to conduct civil trials pursuant to 28 U.S.C. §636(c). With regard to such consents the Seventh Circuit held in Mark I, Inc., v. Cyril Gruber, 38 Fed.3d 369 (7th Cir. 1994) that "we do not insist that the consent be in writing, but it must be on the record and unequivocal." In the same case the Court also noted that "[u]nless each litigant expressly assents, the case must be tried by a district judge."

In civil cases the identity of the "parties" required to consent is a relatively straightforward matter. In bankruptcy cases in which the bankruptcy judge may conduct a jury trial on consent, defining the "parties" whose consent is required may be less obvious. The Act requires the "express consent of all parties" in a proceeding "where the right to a jury trial right applies." These will usually consist of adversary cases filed under Fed.R. Bankr.P. 7001 wherein the parties are expressly identified in the complaint and summons. However, this rule could apply as well in the event a jury trial right applies to a contested matter which originates on motion and thereupon is treated quite similarly to an adversary proceeding under Fed.R.Bankr.P. 9014. The "parties" to such contested matters are the parties who file pleadings in order to participate therein, even though no formal complaint and summons is required.

Jury trials in "related" proceedings should not proceed before a bankruptcy judge unless the parties to those proceedings also consent to a trial to judment pursuant to 28 U.S.C. §157(c)(2). Without such consent, the bankruptcy judge could hold the trial and take the jury's verdict, but would only be able to recommend that a district judge render final judgment and pass on post-judgment motions. The awkwardness of such procedure is apparent. If parties wish a district judge to enter judgment in a "related" proceeding, the jury trial should be held before a district judge.

The final sentence of the section provides that even after filing a consent a party can challenge the right to a jury trial either on the grounds that the demand was not timely or on the grounds that there is no right to such a trial in the issue at hand.

Section D: This section is intended to identify those Federal Rules of Civil Procedure applicable to jury trials covered by this Rule. It also makes clear that jury demands are to be filed in accordance with Fed.R.Bankr.P. 5005 rather than Fed.R.Civ.P. 5(b).

Section E: There is no need to establish a new administrative structure to obtain prospective jurors. The few civil jury trials likely to result under the Act are best administered under existing District Court procedures and rules. As there should be no differences in those requirements from civil jury trials held before other judicial officers of the District Court, local General Rules 1.30, 1.31, and 1.32 should apply to jury trials before bankruptcy judges. The language of the section C makes clear that the chief judge and clerk referred to in the underlying General Rules are, respectively, the chief judge and clerk of the District Court, but that the various references to the trial court are to be interpreted as referring to the bankruptcy judge.

General: This rule does not follow the practice before magistrate judges of requiring the clerk of Court to mail notice of right to consent to parties in all cases. (See Local General Rule 1.72) The occasions for jury trials are so rare in bankruptcy that such burden on the bankruptcy clerk is not warranted. Furthermore, while such notice is required by 28 U.S.C.§636(c)(2), it is not required by 28 U.S.C.§157(e).