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June 2012 CBA REPORT
cover article
erty, and the priority of mortgages.
20
The
court recited a list of enumerated activi-
ties which had been held to constitute the
practice of law in the bankruptcy setting,
and then readily concluded “that Ritten-
house has engaged in the practice of law
in Michigan. The court also concludes,
without difficulty, that because Ritten-
house is not a member of the State Bar,
his practice of law was not authorized.”
21
Rittenhouse appealed the decision of
the bankruptcy court to the U.S. District
Court for the Western District of Michi-
gan, arguing that he was an “attorney”
under applicable law.
22
Rittenhouse did
not object to any of the bankruptcy
court’s findings of fact, and the district
court therefore adopted them.
23
Further,
upon a
de novo
review of the bankruptcy
court’s opinion, the district court found
no error.
24
Nevertheless, the court chose
to expound on the term “applicable law,”
as it is used in the Bankruptcy Code’s
definition of “attorney.”
25
The district court said that “[i]n
concluding that Rittenhouse is not an
attorney authorized to practice law under
applicable law, the bankruptcy court
correctly observed that rules of both
federal and state law determine who is
authorized to practice law in the bank-
ruptcy court.”
26
The court noted that
Rittenhouse did not deny that he had en-
gaged in the practice of law in Michigan;
rather, he argued that his activities were
limited to bankruptcy matters and thus
authorized by his admission to practice
in the bankruptcy court.
27
Rittenhouse
thus rejected the bankruptcy court’s
conclusion that the state and federal rules
applicable to his circumstances could be
read in harmony. Rather, he argued that
the federal rules preempted contrary
state rules.
28
“The bankruptcy court correctly
rejected this preemption argument,” the
district court said, when it held that “the
relevant federal and state rules govern
different spheres of conduct and are com-
plimentary.”
29
In making his preemption
argument, Rittenhouse cited a then-re-
cent decision of the Court of Appeals for
the Ninth Circuit,
In re Poole,
222 F.3d
618 (9
th
Cir. 2000).
30
In circumstances
analogous to Rittenhouse’s, the
Poole
court concluded that Arizona law could
not be the “applicable law” to which the
Bankruptcy Code referred.
31
The district
court explicitly rejected the holding of the
Poole
court, finding instead that “[f]or the
reasons stated by the bankruptcy court,
its holding that appellant Rittenhouse had
engaged in the unauthorized practice of
law and was not an ‘attorney’ within the
meaning of the Bankruptcy Code repre-
sents a correct application of governing
law.”
32
The judgment of the bankruptcy
court was thus affirmed.
33
Rittenhouse appealed the judgment
that he was not an attorney as defined
by the Bankruptcy Code to the Court of
Appeals for the Sixth Circuit.
34
In a split
decision, the district court’s judgment
was reversed.
35
The majority stated that “[t]he central
issue of the case is, therefore, whether
the ‘applicable law’ authorizing an at-
torney to practice before the bankruptcy
court consists solely of the federal rules
for admission to the federal bar, or also
includes the state rules for admission to
the state bar, even when not referenced in
the federal rules.”
36
Noting that that question had not
been resolved by the Sixth Circuit, the
majority sought persuasive authority,
which it found in
In re Poole
, and in a
seminal U.S. Supreme Court case,
Sperry
v. Florida ex rel. The Florida Bar,
373 U.S.
379 (1963).
37
The majority decided that
the district court in the instant case had
misstated the holding of
Sperry
, to the
effect that “when federal and state law
do not directly conflict, state law need
not give way.”
38
Rather,
Sperry
held that
“when a state licensing law excludes a
lawyer from practice that federal rules
expressly allow, the two rules
do
conflict,
and the state law must give way.”
39
In the instant matter, the Sixth
Circuit noted, the bankruptcy court
had determined the applicable state
and federal rules were compatible, by
interpreting the local federal rule on
admission to practice as only authorizing
practice
in the court
, and not regulating
the general practice of law, which was
left to the state bar’s authority.
40
Thus,
there were two “spheres,” and no con-
flict. The Sixth Circuit disagreed, on two
grounds.
41
First, the local rule defines the
phrase “practice in this court” to include
the authority to “counsel a client in the
action or proceeding for compensation.”
42
Second, Rittenhouse
did
have a valid
state source of authority to practice law
— his Texas license — and that was all
that the local rule for the Western Dis-
trict of Michigan required.
43
The majority
concluded that “[b]ecause Rittenhouse
was properly admitted to the federal bar
under the applicable rule, and because
federal standards govern practice before
the federal bar, we reject the bankruptcy
court’s determination as adopted by the
district court.”
44
The district court’s judg-
ment was reversed.
45
The dissenting judge said he saw
“nothing in any federal statute or rule
that withdraws from these courts [the
bankruptcy court and the district court]
the authority to regulate practice before
them, nor do I see any reason to say that
the phrase ‘authorized under applicable
law to practice law’ in §101 (4), Title 11,
does not include those Michigan rules of
law practice recognized by the Michigan
federal courts.”
46
That judge would not
support the establishment of a national
agency to regulate federal practice, but,
rather, would “continue the longstand-
ing practice of the federal courts in
rendering comity to the state courts in
regulating the practice of law.”
47
“Further, if Rittenhouse can practice
regularly before the Michigan bank-
ruptcy court with a Texas law license,”
the dissenting judge concluded, “ he has
successfully circumvented the Michigan
state bar exam and requirements for
admission. Opening the door to such
a practice places an undue burden on
federal courts to regulate and discipline
attorneys who are no longer under the
oversight of their local state bar and
Some federal district courts require active status
and good standing in the bar of the state in
which they sit, and some do not.
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