Heller Ehrman LLP v. Arnold & Porter, LLP (In re Heller Ehrman LLP)

MEMORANDUM AND ORDER DENYING MOTION TO WITHDRAW THE REFERENCE

This case deals with the parameters of the Supreme Court’s recent decision in Stern v. Marshall, — U.S.-, 131 S.Ct. 2594 , 180 L.Ed.2d 475 (2011). Stem v. Marshall held bankruptcy judges did not have Article III constitutional authority to enter final judgment under 28 U.S.C. § 157 (b)(2)(C) on a debtor’s state-law counterclaim that is not resolved in the process of ruling on the creditor’s proof of claim. -U.S.-, 131 S.Ct. 2594, 2608 , 180 L.Ed.2d 475 .

Sixteen law firm defendants 1 have asked this Court to withdraw from the bankruptcy judge the eases pending against them by the Plan Administrator for Heller Ehrman LLP (“Heller”). The cases stem out of Heller’s dissolution, and the shareholders movement to other law firms. Heller is now suing those other law firms to recover profits from unfinished business Heller shareholders brought with them to new firms, under the theory that they were fraudulent transfers.

The law firm defendants (“Defendants”) argue the reasoning of Stem precludes bankruptcy judges from entering a final judgment on fraudulent conveyance actions brought pursuant to 28 U.S.C. § 157 (b)(2)(H).…