Bankruptcy Proceedings Related to Defamation Claims Do Not Fall Under the Personal Injury Tort Exception of 28 U.S.C. § 157(b)(2)(B)
By: Joseph Collini
St. John’s Law Student
American Bankruptcy Institute Law Review Staff
A bankruptcy court generally does not have jurisdiction over personal injury tort claims. 28 U.S.C. § 157(b) states that bankruptcy courts have jurisdiction to hear “all core proceedings,” and goes on to define which proceedings are “core.” Subsection (b)(2)(B), the personal injury tort exception, removes all personal injury torts from the bankruptcy court’s jurisdiction. In In re Gawker Media LLC, the Bankruptcy Court for the Southern District of New York held that the “personal injury tort” exception of 28 U.S.C. § 157(b)(2)(B) does not apply to tort claims for defamation.
Charles Johnson and his company, Got News LLC, filed a complaint alleging various torts, including defamation and injurious falsehood, against Gawker Media LLC for publishing and proliferating an article that allegedly falsely criticized Johnson’s professional and personal integrity. Shortly after Johnson filed this lawsuit, Gawker Media filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code thereby automatically staying the civil action against Gawker. Johnson, wanting to expedite the civil action against Gawker, filed Omnibus Objections to the claims arguing that the bankruptcy court lacked jurisdiction because the underlying claims fell under the “personal injury tort” exception of 28 U.S.C. § 157(b)(2)(B).
In analyzing whether the claims were “personal injury tort claims” within the meaning of U.S.C. § 157(b)(2), the bankruptcy court noted that there were three views of the personal injury tort exception. First, some courts have adopted the narrow view, which removes from the bankruptcy court’s jurisdiction only those torts related to the plain sense meaning of the phrase “personal injury tort.” Second, other courts have adopted the broad view, which expands the meaning of personal injury tort to a wide range of tort claims including those for libel and slander. Finally, other courts have adopted a hybrid approach, which includes torts for libel and slander, but specifically refuses to expand the exception as far as the broad view.
Here, the court adopted the “narrow view”, limiting the personal injury exception to “claims involving bodily injury, physical trauma, and/or a severe psychiatric impairment beyond mere shame and humiliation.” In doing so, the court explained that both the canons of construction and the legislative history behind the exception support its definition. Ultimately, the court decided it had jurisdiction over the case because Johnson’s claim was not a personal injury tort. The court also rejected the notion that the “emotional” injuries alleged were sufficient to transform the claim into a personal injury tort subject to the exception under 28 U.S.C. § 157(b)(2)(B).
Neither Title 28 nor the Second Circuit has expressly defined the term “personal injury tort” as it pertains to § 157 and bankruptcy cases. However, several lower courts in the Second Circuit have created their own interpretations of the exception, yielding the three approaches described above: the narrow view, the broad view, and the hybrid approach.
The Gawker court did not adopt a novel interpretation of the personal injury tort exception with its holding. Instead, the bankruptcy court adopted the approach embraced by the Southern District of New York in Perino v. Cohen. Until Congress amends the statute or the Supreme Court for the Second Circuit issues a controlling ruling, future lower courts in the Southern District of New York will have to decide for themselves which of these three approaches to adopt. These courts may even adopt a wholly different interpretation of the statute as well.
 See 28 U.S.C. § 157 (b).
 See Id. at (b)(1).
 See Id. at (b)(2).
 See Id. at (b)(2)(B)
 In re Gawker Media LLC, 571 B.R. 612 (Bankr. S.D.N.Y. 2017).
 See Id. at 617.
 See Id. at 616 (“The Gawker Articles included statements criticizing Johnson's honesty as a reporter and his professional skills as a journalist.” “The Gawker Articles also cited ‘rumors’ that Johnson had defecated in public and engaged in bestiality.”).
 See Id. at 616.
 Fed. R. Bankr. P. 3007, Omnibus Objection to Claims.
 See Id. at 618.
 See Id. at 620
 See Id.
 See Id.
 See Id.
 See Id.
 Id. at 625.
 See Id. at 620 – 623 (explaining first that the statutory canon of noscitur a sociis states that a word should be interpreted by the words around it (since the exception includes the term “wrongful death,” the personal injury tort exception should also require bodily harm); and further explaining that the congressional debates surrounding the ratification of the exception focused on asbestos cases in Bankruptcy Court (which were wrongful death actions or actions involving bodily harm).
 See Id. at 625.
 See Id. at 623 (“Incidental claims of emotional injury do not suffice to transform a tort claim into personal injury tort when it otherwise would not be.”).
 In re Residential Capital, LLC, 536 B.R. 566, 571 (Bankr. S.D.N.Y. 2015).
 See In re Gawker Media LLC, at 620.
 See Perino v. Cohen (In re Cohen), 107 B.R. 453, 455 (S.D.N.Y. 1989) (holding claims based on violating New York's anti-discrimination law “is not a claim for a ‘personal injury tort’ in the traditional, plain-meaning sense of those words, such as a slip and fall, or a psychiatric impairment beyond mere shame and humiliation,” and “[t]here is no legislative history that would bring this plaintiff's claim for a tort without trauma within the statutory exception for a personal injury tort.”)