Appeals from the United States Bankruptcy Court for the Eastern District of Wisconsin. Nos. 09-02199 & 09-02469--Susan V. Kelley, Bankruptcy Judge.
The opinion of the court was delivered by: Tinder, Circuit Judge.
Before WILLIAMS and TINDER, Circuit Judges, and GOTTSCHALL, District Judge.*fn1
Wisconsin medical provider Aurora Health Care, Inc. filed proofs of claim in an esti- mated 3,200 bankruptcy cases in the Eastern District of Wisconsin from June 2003 to December 2008 that listed the debtors' medical treatment information. The filings were public and available on the court's docket. Two groups of debtors filed separate class action lawsuits against Aurora under a Wisconsin statute that allows individuals to sue if their health care records are disclosed without permission. See Wis. Stat. § 146.84.
The bankruptcy judge granted Aurora summary judg- ment in both cases. We granted direct appeal. But granting direct appeal, although appearing proper then, was improvident given the Supreme Court's recent holding in Stern v. Marshall that bankruptcy judges lack authority under Article III of the Constitution to enter final judgments on claims that constitute "the stuff of the traditional actions at common law tried by the courts at Westminster in 1789." 131 S. Ct. 2594, 2609 (2011) (quoting N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 90 (1982) (Rehnquist, J., concurring in judgment)). Like the debtor's counterclaim in Stern v. Marshall, the debtors' claims are based on a state law that is "inde- pendent of the federal bankruptcy law" and "not neces- sarily resolvable by a ruling on the creditor's proof of claim in bankruptcy." Id. at 2611. The responsibility for deciding the debtors' claims "rests with Article III judges in Article III courts." Id. at 2609. Even though Congress gave the bankruptcy judge statutory authority to adjudicate the debtors' claims as "core" matters under 28 U.S.C. § 157(b), Stern v. Marshall reveals the absence of constitutional authority for the bankruptcy judge to enter summary judgment, or any form of final judgment, on the debtors' claims. Without a final judgment we lack a statutory basis for appellate jurisdiction. Thus, we must dismiss these appeals.
The debtors alleged that Aurora violated Wisconsin Statute section 146.82 by filing proofs of claim revealing their medical information. Wisconsin Statute section 146.82(1) mandates that "[a]ll patient health care records shall remain confidential" with certain exceptions in section 146.82 (2). The debtors sought actual damages, statutory exemplary damages of $25,000 per class mem- ber, and their costs and fees under Wisconsin Statute section 146.84(1)(b) for Aurora's alleged willful violation of section 146.82. A first set of debtors, appellants Rene Ortiz, Douglas Lindsey, and Valerie Jones (the "Ortiz debtors"), filed a class action adversary complaint in the U.S. Bankruptcy Court for the Eastern District of Wisconsin. (The district court refers all bankruptcy cases to its bankruptcy judges. See 84-1 Order of Reference, available at www.wieb.uscourts.gov/index.php/orders- rules/rules/general-orders (last visited Dec. 22, 2011).) The complaint defined the class as all Chapter 13 filers in Wisconsin's Eastern District where Aurora filed proofs of claim disclosing confidential medical information. A second pair of debtors, Kathy Bembenek and Susan Dandridge (the "Bembenek debtors"), filed a class action complaint in a Wisconsin state court based on the same statute but expanded the proposed class to all of Wisconsin. Aurora removed the Bembenek debtors' case to the bankruptcy court under 28 U.S.C. § 1452, which authorizes removal of all cases arising under Title 11 or arising in or related to cases under Title 11. See 28 U.S.C. §§ 1334 & 157(a).
Both sides sought to avoid litigating the case in the bankruptcy court but also opposed the others' proposed forum. The Ortiz debtors filed a motion for the bank- ruptcy judge to abstain from jurisdiction in favor of a Wisconsin court, see 28 U.S.C. § 1334(c)(1) & (2), and the Bembenek debtors filed a motion for the bankruptcy judge to remand the case back to the Wisconsin court, see 28 U.S.C. § 1452(b). Aurora filed motions in both cases seeking to have the district court withdraw the ref- erence from the bankruptcy judge. See 28 U.S.C. § 157(d).
The bankruptcy judge denied the abstention and the remand motions for essentially the same reason: the cases constituted core proceedings because the debtors' claims could only arise in a bankruptcy context and Congress included the allowance or disallowance of claims and counterclaims by the estate against persons filing claims against the estate in its definition of core proceedings. See 28 U.S.C. § 157(b)(2)(B) & (C). The district court then denied Aurora's motions to with- draw the reference because the debtors' claims were core proceedings involving counterclaims by the debtors' bankruptcy estate against a claimant. See id. § 157(b)(2)(C). The district court found that the bank- ruptcy court was well-suited to address whether bank- ruptcy law required Aurora to disclose the material to which the debtors objected and that it was familiar with the cases' facts and circumstances.
The bankruptcy judge then dismissed the Ortiz debtors' complaint on Aurora's motion for summary judgment because it found that Wisconsin Statute section 146.84 required proof of actual damages and that the debtors failed to point to specific evidence in the record to support the debtors' assertion that the existence of actual damages was in dispute. In re Ortiz, 430 B.R. 523, 534-35 (Bankr. E.D. Wis. 2010). The bankruptcy judge also dismissed the Bembenek debtors' case for the same reasons. Aurora joined in the debtors' motions for certification of a direct appeal under 28 U.S.C. § 158(d)(2), which gives us jurisdiction over appeals that would normally go to the district court under 28 U.S.C. § 158(a).
The bankruptcy judge granted the motions under 28 U.S.C. § 158(d)(2)(B)(ii), which states that if the bankruptcy court "receives a request made by a majority of the appellants and a majority of appellees" to certify an appeal, the bankruptcy court "shall make the certification." A motions panel of our court authorized the parties to proceed as a direct appeal, see id. § 158(d)(2)(A), and the cases were consolidated.
When we held argument in this case on February 22, 2011, our appellate jurisdiction appeared secure under 28 U.S.C. § 158(d)(2), which gives us jurisdiction to hear appeals that would typically go first to the district court. Specifically, we "have jurisdiction of appeals de- scribed in the first sentence of" § 158(a) if the bankruptcy judge certified the matter and we authorized it, id. § ...