A bankruptcy court may adjudicate tort claims, including libel and slander against a debtor, if it concludes that it has jurisdiction over those claims. The statutes governing a bankruptcy court’s jurisdiction, including title 11 of the United States Code (“The Bankruptcy Code”) and title 28 of the United States Code, are ambiguous. Consequently, the bankruptcy courts are divided as to their jurisdiction over libel and slander claims.
At the heart of this issue is the personal injury tort exception under 28 U.S.C.A. §157(b). The exception specifically limits the jurisdiction of the bankruptcy courts and states that personal injury torts must be handled in the district courts. However, neither title 28 nor the Bankruptcy Code define the term personal injury tort. Therefore, the bankruptcy courts have defined the exception for themselves. Ultimately, the courts have settled on three different interpretations of the exception: the narrow view, the broad view, and the hybrid approach. Whether a bankruptcy court decides it has jurisdiction over a libel or slander claim will likely depend on which of these views the presiding court adopts. This memorandum will address whether a bankruptcy court has jurisdiction to adjudicate libel and slander claims against a debtor.
Section I of this memorandum will examine the legislative history and statutory interpretations of the personal injury tort exception in an effort to define its meaning. Section II will analyze the three differing views the courts have taken in defining the exception. Finally, the last section will briefly summarize the previous sections and conclude that bankruptcy court jurisdiction over libel and slander claims will likely depend on the approach that the court adopts regarding the personal injury tort exception.