“Anna Nicole Smith.”
With no gratuitous offense toward the deceased intended, the name itself constitutes an all-purpose punch line, a towering monument to the tawdry, the trivial, the frivolous. Images of intoxicated spending sprees on Rodeo Drive for “reality” television audiences immediately spring to mind.
Suddenly, however, her name also symbolizes something more important.
The grotesque legal imbroglio involving her estate has again reached the United States Supreme Court, with oral argument scheduled for early this year. The case implicates our Constitution’s balance between Article I and Article III courts, the ongoing struggle against the federal government’s insatiable quest for power, and the need to restrain relentless trial lawyers from forum-shopping until they achieve the “jackpot justice” they seek.
The tale began in 1994, when 89-year-old Texas oil man J. Howard Marshall II married the 26-year-old former Playboy model. One year and approximately $6 million in gifts later, Mr. Marshall died.
Then came the rude awakening for Anna Nicole. Namely, she had been deliberately excluded from the late Mr. Marshall’s will in favor of his own offspring.
Accordingly, Ms. Smith did what any fading nude model and pole dancer would do, and hired a lawyer to challenge Mr. Marshall’s estate. Compounding this charade, her dual-purpose attorney and paramour’s name was Howard K. Stern.
The Smith-Stern duo alleged that Mr. Marshall had verbally promised her a portion of his vast estate, despite the explicit provisions of his written will. The appropriate authority, a Texas probate court, rejected her claim after an extended six-month trial and testimony from over 40 witnesses.
But here’s why the case matters beyond the gossip pages.
While the matter proceeded in Texas probate court, Ms. Smith’s attorneys rolled the jackpot justice dice by filing a simultaneous claim in federal bankruptcy court in California. Never mind that matters of estate are governed by state law, and best adjudicated by state courts familiar with those statutes. Sure enough, their forum-shopping paid off when that federal bankruptcy court awarded her $474 million.
On appeal, however, the federal district court vacated the bankruptcy court’s ruling and reduced Smith’s award to $88 million. The case was then appealed to the Ninth Circuit Court of Appeals. When the Ninth Circuit ruled that the California District Court’s ruling was invalid, stating that state courts had jurisdiction over estate probate matters, Smith petitioned the Supreme Court in 2005. The Supreme Court ruled that there was no federal probate exception and remanded the case back to the Ninth Circuit, opening the door for specialty courts to interfere in probate cases that are best decided by state-level courts.
In 2007, Ms. Smith died of an apparent drug overdose. That didn’t deter her esteemed counsel Howard K. Stern, of course.
Last March, the Ninth Circuit again ruled that the Texas probate court was the court of record. Undeterred, Stern again appealed last August to the Supreme Court, which granted certiorari in Stern v. Marshall to clarify federal bankruptcy court jurisdiction.
This presents the Supreme Court with a valuable opportunity.
Although the Ninth Circuit’s recent record is far from sterling, affirming its judgment in this case is critical. By doing so, the Supreme Court can prevent confusion in estate planning by preserving judicial forum certainty. Additionally, the Supreme Court can preserve our Constitution’s balance of Article I and Article III judges, as well as Congress’s intent that federal bankruptcy courts possess specific, limited core authority. It can also restrain out-of-control trial lawyers from simply forum-shopping until they land in a court more hospitable to their claim.
Should the Supreme Court rule in Stern’s favor, it will trigger more lawyer abuse and unrestrained specialty court interference in matters far beyond its proper authority. Ultimately, Congressional correction would be necessary.
This case represents how the legal system can be exploited to delay justice and prolong litigious abuse. After fifteen long years, it’s time for the Court to put this sordid litigation to a proper end.
Timothy H. Lee is vice president of legal and public affairs at the Center for Individual Freedom.