BOOCHEVER, Circuit Judge:
This case concerns the constitutionality of section 636(c) of the Magistrates Act which allows magistrates, with consent of the parties to the litigation, to conduct civil trials and enter judgments. 28 U.S.C. § 636(c) (Supp. V 1981). Because this procedure offends article III of the Constitution, we reverse and remand for de novo review by the district court.
Pacemaker Diagnostic Clinic of America, Inc. charged Instromedix, Inc. with infringement of a patent. Instromedix denied infringement and alleged that the patent was invalid. The parties consented to have the case tried by a magistrate sitting without a jury. The magistrate found the patent valid, but not infringed.
Article III of the United States Constitution vests the judicial power in the Supreme Court and in such inferior courts as Congress may establish. It provides that the judges shall hold their offices during good behavior and shall not have their compensation diminished during their continuance in office. Because the office of federal magistrate is not similarly protected, we must decide whether an amendment to the Magistrates Act runs afoul of the article III dictates. The 1979 amendments to the Magistrates Act added, among other changes, 28 U.S.C. § 636(c), which confers judicial power on the magistrates, with consent of the parties, to conduct any or all proceedings in a jury or nonjury civil case and order the entry of judgment. 28 U.S.C. § 636(c)(1). The magistrate must be specially designated by the district court to exercise this jurisdiction. Id. Procedures are set up to prevent district judges or magistrates from coercing the parties to give their consent. 28 U.S.C. § 636(c)(2). The district judge has the power to vacate the reference of the case to the magistrate. 28 U.S.C. § 636(c)(6). Appeals from the magistrate's judgment may be taken to the court of appeals in the same manner as an appeal from any other judgment of the district court. 28 U.S.C. § 636(c)(3). Alternatively, the parties may consent to have
Even before the 1979 amendments, magistrates were allowed to conduct entire trials in some districts.
By contrast, the 1979 addition of 28 U.S.C. § 636(c), here in issue, explicitly allows trial by magistrate, but does not provide for de novo review by the district judge.
To the same effect as Coolidge is United States v. Raddatz, 447 U.S. 667, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980). Raddatz concerned the constitutionality of 28 U.S.C. § 636(b)(1)(B), which permits a district court to refer to a magistrate a motion to suppress evidence in a criminal case. Under that subsection, the magistrate conducts a hearing and submits proposed findings of fact and recommendations for disposition. The parties may file objections. The district court judge is then charged with making a de novo determination of the portions of the magistrate's report to which objection is made. The judge may freely accept or disregard the magistrate's finding and may take additional evidence. The Supreme Court found that because the district judge made the final determination, due process and article III rights were adequately protected. The Court declined to decide whether Congress could have delegated the task of rendering a final decision to a non-article III officer. 447 U.S. at 681, 100 S.Ct. at 2415.
Exercise of Article III Powers by Magistrates
The Supreme Court recently addressed the issue of the exercise of judicial power by non-article III officers in Northern Pipeline Construction Co. v. Marathon Pipeline Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982).
A. Lack of Article III Attributes
Magistrates are clearly not article III judges. United States v. Jenkins, No. 82-1352, slip op. at 3108 n. 1 (9th Cir. June 28, 1983); United States v. Saunders, 641 F.2d 659, 663 (9th Cir.1980), cert. denied, 452 U.S. 918, 101 S.Ct. 3055, 69 L.Ed.2d 422 (1981). Article III judges are distinguished by life tenure during good behavior and salary protection. U.S. Const. art. III, § 1. Life tenure and salary protection serve the purpose of protecting the independence of the judiciary. Northern Pipeline, 102 S.Ct. at 2864-66. By contrast to article III judges, federal magistrates serve for eight year terms and must retire at age seventy. 28 U.S.C. §§ 631(d), (e) (Supp. V 1981). Magistrates may also be removed from office during a term for incompetency, misconduct, neglect of duty, or physical or mental disability, and a sitting magistrate's office may be terminated if the Judicial Conference decides that the office is no longer needed. 28 U.S.C. § 631(i) (Supp. V 1981). The salaries of magistrates are also not protected. Salaries may be changed by the Judicial Conference to further the expeditious administration of justice. 28 U.S.C. § 633(c) (Supp. V 1981).
B. Article I Courts
Article I of the Constitution empowers Congress to establish legislative courts separate from the article III system. U.S. Const. art. I, § 8, cl. 9. The magistrate system does not qualify under this provision. As explained in Northern Pipeline, Congress may only establish separate courts in a limited class of cases "in which the grant of power to the Legislative and Executive Branches was historically and constitutionally so exceptional that the congressional assertion of a power to create legislative courts was consistent with, rather than threatening to, the constitutional mandate of separation of powers." 102 S.Ct. at 2868. Examples include courts for the territories and the District of Columbia, courts martial, and legislative courts and administrative agencies created to adjudicate cases involving "public rights". Northern Pipeline, 102 S.Ct. at 2868-71. The delegation to the magistrates is not so limited, as they may try any jury or nonjury matter with the consent of the parties. 28 U.S.C. § 636(c)(1).
C. Magistrates as Adjuncts of the District Court
It is also contended that 28 U.S.C. § 636(c) establishes the magistrates as "adjuncts" to the district courts.
Northern Pipeline, 102 S.Ct. at 2876-77. The plurality also stated, "[c]ritical to the Court's decision to uphold the Magistrates Act was the fact that the ultimate decision was made by the district court. 447 U.S., at 683 [100 S.Ct. at 2416]." 102 S.Ct. at 2877. See also Mathews v. Weber, 423 U.S. 261, 271, 96 S.Ct. 549, 554, 46 L.Ed.2d 483 (1976).
This is precisely the problem with 28 U.S.C. § 636(c). The magistrate makes the ultimate decision and enters a final judgment. Thus the provision cannot pass constitutional muster as authorizing an adjunct function of the district court.
Possible Saving Provisions
The use of magistrates to conduct trials and enter final judgment implicates both due process and article III concerns. We recognize that a due process right may be waived voluntarily,
A. Litigant Consent
The strongest argument in favor of constitutionality is based on the requirement of litigant consent.
No case squarely holds that litigant consent will solve the constitutional problems.
The analogy to arbitration has been suggested. If the parties can agree to submit their controversy to an arbiter, bypassing the article III judiciary altogether, the argument runs, they should also be able to authorize a magistrate to resolve their case. The analogy is inapt. When the parties use an arbiter, they do not invoke the judicial power of the United States courts. An arbiter may render a decision, but its effects flow from the parties' contractual agreement to abide by it, not from an exercise of judicial power. The arbiter has no authority to enter a judgment, and the parties must look to the courts for enforcement of an arbitration award. Also, an arbiter's decision is generally not subject to judicial review on the merits. See, e.g., United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 596, 80 S.Ct. 1358, 1360, 4 L.Ed.2d 1424 (1960). By contrast, when parties agree to trial by magistrate, they are invoking the judicial system.
The basis of the consent argument is that the right to an article III judge is a due process right, inuring to the benefit of litigants, and therefore waivable like any other due process right. See footnote 10 supra. Glidden Co. v. Zdanok, 370 U.S. 530, 82 S.Ct. 1459, 8 L.Ed.2d 671 (1962) refutes this contention. In Glidden, the Supreme Court reviewed cases in which a judge of the Court of Claims sat by designation on a panel of the second circuit and a judge of the Court of Customs and Patent Appeals presided by designation over a trial in the federal district court. Prior to Glidden, judges of the Court of Claims and of the Court of Customs and Patent Appeals had been held to be article I judges.
The Court's opinion in United States v. Raddatz, 447 U.S. 667, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980) makes it clear that the displacement of article III judges by magistrates implicates both due process and article III concerns. The Court noted that having magistrates conduct suppression hearings satisfied due process by providing a hearing appropriate to the nature of the case; Id. at 677-81, 100 S.Ct. at 2413-15. If only due process were at stake, the Court's inquiry would have then ended. Instead, the Court went on to discuss the article III objections to magistrates holding such hearings, id. at 681-83, 100 S.Ct. at 2415-16, concluding that the article III demands are satisfied where "the ultimate decision is made by the district court." Id. at 683, 100 S.Ct. at 2416.
By analogy, two adverse parties from the same state cannot waive the diversity of citizenship requirement and establish jurisdiction in the federal courts.
Article III protects institutional concerns of our system of government that due process addresses only incidentally. See Northern Pipeline, 102 S.Ct. at 2865 & n. 10-2866. For example, if Congress created an administrative agency empowered to hold fair trials in all diversity cases, due process might be satisfied even though such trials would threaten constitutional policies concerning the separation of powers, the distribution of governmental power, and the protection of judicial independence. Under those circumstances the delegation to an administrative agency would be unconstitutional, even though complying with due process.
Therefore, rather than being exclusively a due process right of the litigants waivable by them, the requirement of an article III judge is jurisdictional and thus not waivable.
B. Internal Delegation
One of the dangers of diluting article III jurisdiction is the threat to the separation of powers. For example, when cases involving more than the rights of the parties before the court are committed to administrative agencies which exist at the pleasure of the political branches, there is a possibility that the exercise of judicial power will be subject to influence by those political branches. However, here the magistrates are a part of the judicial branch and it is argued that if their independence is in question, they are under the control of judges, not Congress or the President. Litigants and judges, both within the judicial branch, and not Congress or the President, decide which cases go to a magistrate rather than to an article III judge. 28 U.S.C. § 636(c). Therefore, it is argued that the magistrate system poses no separation of powers problem. Threats to the judicial decisionmaker's independence from within the judicial branch, however, may be just as
A more direct answer is that the magistrates are not insulated from legislative pressures. Their salaries
"Moreover, the internal delegation argument ignores the plain import of article III's language, which authorizes article III judges, and not their delegates, to exercise judicial power." Comment, Article III Limits on Article I Courts: The Constitutionality of the Bankruptcy Court and the 1979 Magistrate Act, 80 Colum.L.Rev. 560, 590 (1980) (footnote omitted).
We conclude that internal delegation does not elevate § 636(c) to the attributes demanded by article III.
C. Appellate Review
The argument is made that article III is satisfied because the magistrate's decision can be appealed to an article III court, either to the district court or to the court of appeals. 28 U.S.C. § 636(c)(3)-(5); see Crowell v. Benson, 285 U.S. 22, 52 S.Ct. 285, 76 L.Ed. 598 (1932).
The Supreme Court implicitly rejected this contention in Glidden Co. v. Zdanok, 370 U.S. 530, 82 S.Ct. 1459, 8 L.Ed.2d 671 (1962). In one of the two cases consolidated for hearing in Glidden, a retired judge of the Court of Customs and Patent Appeals, sitting by designation in the U.S. district court, presided over a criminal trial. The Court was not swayed by the fact that the case had been heard on appeal by two article III courts, the court of appeals and the Supreme Court itself. See also Ward v. Village of Monroeville, 409 U.S. 57, 61-62, 93 S.Ct. 80, 83-84, 34 L.Ed.2d 267 (1972).
Northern Pipeline even more emphatically rejects the appellate review argument. The Bankruptcy Reform Act of 1978 provided for appeals from the bankruptcy court either directly to the district court and then to the court of appeal or alternatively to a panel of bankruptcy judges. 28 U.S.C. §§ 1293, 1334, 1482 (Supp. V 1981). Justice White in dissent suggested that these provisions for appellate review by article III courts satisfied article III objections. 102 S.Ct. at 2894 (White, J., dissenting). The plurality labelled this reasoning "incorrect". 102 S.Ct. at 2873 n. 23 (plurality opinion). The plurality later stated that the text of article III and the Court's "precedents make it clear that the constitutional requirements for the exercise of judicial power must be met at all stages of adjudication, and not only on appeal". 102 S.Ct. at 2879 n. 39.
We conclude that appellate review by the district court and the court of appeals will not save section 636(c).
Having held 28 U.S.C. § 636(c) unconstitutional, we must consider whether the holding should be applied retroactively or only prospectively. The question is of enormous importance, as hundreds of cases across the country have been tried by magistrates with the consent of the parties.
It might be argued that our holding was foreshadowed by Northern Pipeline. In light of the weight of the arguments on both sides, the complexity of the issue, and the fact that other provisions of the 1979 Magistrates Act have been held constitutional,
Retroactive application would not further the operation of the holding. It is very clear that retroactive application would visit substantial injustice and hardship upon those litigants who relied upon the 1979 Act's vesting of jurisdiction in the magistrates. We hold that, with the exception of the case before us, our decision shall not apply to any case of this Circuit referred to a magistrate under the provisions of 28 U.S.C. § 636(c) prior to the date on which the mandate shall issue in this case.
The judgment of the magistrate is vacated. Our holding prohibits magistrates from rendering final decisions in civil cases, a function reserved for article III officers. It is clear that a magistrate may perform the lesser functions of presiding over a trial and recommending a disposition, so long as the ultimate decision is made by the district judge. Coolidge v. Schooner California, 637 F.2d 1321, 1325 (9th Cir.), cert. denied, 451 U.S. 1020, 101 S.Ct. 3011, 69 L.Ed.2d 392 (1981). Because the parties substantially and in good faith relied on the power of the magistrate to hear the case, and there is a constitutionally valid procedure available, we remand the case to the district judge to review the decision of the magistrate in the manner provided by 28 U.S.C. § 636(b)(1).
VACATED and REMANDED.
Secondly, it is only coincidental that this case concerns patents. Magistrates have the power to try any jury or nonjury civil matter, not just patent cases. 28 U.S.C. § 636(c)(1).
69 U.S. (2 Wall.) at 133 (footnote omitted).
Id. at 293, 50 S.Ct. at 256. See also id. at 288, 50 S.Ct. at 254. This phrasing indicates that some article III rights do relate to the framework of government and may not be waived by the parties. See also id. at 294, 50 S.Ct. at 256 (quoting Low v. United States, 169 F. 86, 92 (6th Cir.1909) (Lurton, J.)).