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Bankruptcy Judge Kaplan to Sit in Rochester Temporarily (or maybe more than temporarily)

With no updated news about appointment of a bankruptcy judge to replace retiring Judge Ninfo in Rochester, the Bankruptcy Court for the Western District of New York has established a contingency plan for January and February 2012. The Hon. Michael Kaplan, one of the two Buffalo bankruptcy judges, will be coming to Rochester and Watkins Glen to cover motions and hearings. Some have speculated that this might be more than a temporary situation (more on that later in this blog.)

The administrative order posted on the Court Website states that the motion calendars for Rochester in January and February will be held on Fridays rather than Wednesdays, but will otherwise not be altered. Motions will be heard January 6, 13, 20 and February 3, 10, and 17. Chapter 13 plan confirmation hearings will be held on Thursdays, January 5 & 26, and February 9 and 22. The Watkins Glen calendar will be unchanged.

My understanding is that Judge Kaplan will be commuting to Rochester on Thursdays and Fridays, at least until a new judge is named by the Second Circuit Court of Appeals. The format of the Rochester motion practice will remain unchanged for the time being. Motion practice is procedurally different between the Rochester and Buffalo Divisions of the Western District of New York (WDNY) bankruptcy court. In Rochester, many routine motions are 'default' motions, meaning that no actual hearing is held unless a party objects to the motion and requests a hearing. In Buffalo, every motion is heard, even if unopposed. In Rochester, attorneys pick the date they wish to have their motion heard, while in Buffalo, attorneys must obtain pre-approval from the judge's chambers to schedule a motion date and time. These practices will not change in the immediate future.

How long this temporary situation will last is the subject of lively speculation, based on what I would call logical rumors. While federal district court judges are appointed by the President and confirmed by the Senate, Bankruptcy judges are appointed by the Circuit Courts of Appeal. The Second Circuit, which includes New York State, has been conducting an appointment process for Rochester since March, and several sources report that the two finalists for the Rochester bankruptcy judgeship are Kathleen Schmitt, Esq., the Assistant United States Trustee for the Rochester office, and Paul Warren, Esq., the Clerk of the Bankruptcy Court for the Western District of New York. However, sources also report that nothing has been heard from the Second Circuit about this process for quite some time.

So the speculation, or logical rumor, is that the Second Circuit might be sitting on the replacement appointment for budgetary purposes. Like other branches of the federal government, the judiciary is under pressure to reduce expenses. Last Spring, the Judiciary asked Congress for a $299 million increase of its $7 billion budget for 2012, which was apparently its lowest level of requested increase on record (see U.S. Courts News Item April 6, 2011.)

This request was further reduced, with a House committee approving a bill reducing the budget by 2%, or $142 million. If enacted, as many as 5,000 positions in the judiciary nationwide could be eliminated, according to an August 2011 news posting on the Federal Bar Association website.

The judiciary branch is further impacted by a national decline in bankruptcy filings, as almost all the filing fees received by federal courts are bankruptcy fees. As of June 30, 2011, total national bankruptcy filings for the previous 12 months were down 2.7% from the 12 month period ending June 30, 2010. In partial compensation, bankruptcy filing fees will be increased $7 effective November 1.

A second aspect of this speculation is whether there is a need for three bankruptcy judges in the Western District of New York. Filings in the district were down 16.9% for the year preceding June 30, 2011, compared to the year before, and in the year before that, when national bankruptcy filings were 20.4%, WDNY filings rose only 0.5%.

The judiciary calculates the workload of bankruptcy judges based on a "weighted case load." A statistical analysis of the average time expended by judges for different types of cases was recalculated in 2009, varying from 0.069 hours for a non-business chapter 7 with assets under $50,000 to 11.234 hours for a chapter 11 case with assets over a million dollars. The judiciary recommends 1,500 weighted caseload hours as the maximum for a bankruptcy judge.

I have not found a chart that specifies the current weighted caseload of bankruptcy courts by district, but my own analysis based on July 2010 to June 2011 cases filed in WDNY shows a weighted caseload of well under 3,000 (I come up with about 2,400.) If my calculation is correct, it underscores what other sources have said, that we may not need three judges in our district, that the current filings could be handled by two judges.

If it were a Buffalo judge retiring, the likelihood of leaving the position vacant would be much higher. It is inconvenient, to say the least, for one of the Buffalo judges to travel to Rochester several times a week, not to mention the long haul once a month to Watkins Glen. On the other hand, the savings in reducing the cost of one judge, including the staff of his or her chambers, is significant.

There are approximately 350 bankruptcy judges in the United States.  No permanent judgship has been added since 1992; since then Conhgress has added 'temporary' judgships as need arises.  For example, the Northern District of New York (Albany to Syracuse) has two permanent judges and one temporary judgship, while WDNY has three permanent judgships, even though the caseload in the Northern District are higher than in the Western District.  Temporary judges are appointed to the same 14 year term as permanent judges.  But without further legislative change, if any of the three NDNY judges retires after the temporary judgship period expires, he or she will not be replaced. It is unclear, to me at least, whether the Circuit Courts are authorized to leave a permanent judgship permanently vacant.

So the future in WDNY is murky. Perhaps this is all speculation, and a new Rochester Judge will be announced shortly. However, if the judiciary chooses to leave the position vacant for a while, perhaps months, perhaps years (until a Buffalo judge retires), it would be considerate, to say the least, to let the local bankruptcy system know what the situation is.

As of January 1, assuming a new judge is not appointed by then, Judge Kaplan will be deciding issues based on his own judicial philosophy; he will not be 'substituting' for another judge. But for how long? Over time, other elements of the bankruptcy system orient their practice, procedures and philosophy around the philosophy of the bankruptcy judge assigned to the case. These other elements include the clerk's office, the Chapter 13 trustee, the chapter 7 trustees, the office of the US Trustee, debtor attorneys and creditor attorneys. Over a short span of time, these elements will make temporary adjustments to Judge Kaplan's outlook, but longer term adjustments will need to be made at some point.

I view this with more than journalistic interest. It is important, to me at least, that I be able to advise my clients as to what will happen when they file a bankruptcy petition. Good bankruptcy attorneys follow closely the practices and philosophy of all elements of the bankruptcy system, including judicial philosophy, in order to advise clients. If you are interested in advise as to whether bankruptcy is an option you should consider, please contact my office for a phone consultation, at no charge.

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