Marshall v. Marshall: Anna Nicole Smith’s Estate Battle and Legacy

Marshall v. Marshall is the U.S. Supreme Court case that grew out of Anna Nicole Smith’s fight for a share of her late husband’s $1.6 billion oil fortune. Decided unanimously on May 1, 2006, it narrowed the “probate exception” to federal court jurisdiction and let Smith’s tortious interference claim be heard in federal court. She won that round. She lost the war. After a second Supreme Court decision in 2011 and a final Texas appellate ruling in 2015, her estate walked away with nothing.¹

The Marriage and the Fortune

J. Howard Marshall II made his money in oil. In the 1960s he traded his stake in Great Northern Oil Company for what became roughly 16% of Koch Industries, the private conglomerate founded by Fred Koch.² By the time he died on August 4, 1995, his estate was worth about $1.6 billion.³

In 1994, at 89, he married Vickie Lynn Marshall, the 26-year-old model and former Playboy Playmate known as Anna Nicole Smith. The marriage lasted about fourteen months. During that time Marshall gave her cash and personal property worth several million dollars, but his estate plan, built around a living trust and a pourover will, left everything to his son E. Pierce Marshall. Smith was not a named beneficiary.¹

Smith argued that J. Howard had promised her a substantial share of his wealth and that Pierce had interfered with that intended gift. From that claim, nearly two decades of litigation followed.

Two Courts, Two Verdicts

The fight ran in parallel in two states, and that is what eventually made it a jurisdictional case.

In Texas, a Harris County probate court held a jury trial that lasted five and a half months. In 2001 the jury sided with Pierce Marshall. It upheld the validity of J. Howard’s estate plan, found that he never intended to leave a large gift to Smith, and awarded Pierce’s side millions on counterclaims for fraud and tortious interference.³

In California, Smith had filed for bankruptcy. Pierce submitted a defamation claim in that proceeding; Smith counterclaimed for tortious interference with an expected gift. The bankruptcy court ruled for Smith and initially awarded her more than $449 million in compensatory damages plus $25 million in punitives. On review, the federal district court cut the award to $44.3 million in compensatory damages and an equal amount in punitives.¹

Pierce appealed. The Ninth Circuit reversed, holding that the “probate exception” to federal jurisdiction broadly barred federal courts from deciding questions that would ordinarily belong to a state probate court, including tortious interference claims tied to an estate. On that reasoning, the federal courts had no jurisdiction over Smith’s claim at all.⁴

What the 2006 Supreme Court Decided

The Supreme Court granted certiorari, heard argument on February 28, 2006, and on May 1 handed down a unanimous opinion by Justice Ruth Bader Ginsburg reversing the Ninth Circuit.⁴

The question was how far the probate exception reaches. The Ninth Circuit had read it broadly. The Supreme Court read it narrowly. Under the ruling, the probate exception reserves to state probate courts only three things:

Probating or annulling a will.
Administering a decedent’s estate.
Disposing of property that is in the custody of a state probate court.

Everything else is fair game for federal courts, even when it touches an estate or an inheritance. Justice Ginsburg described the probate exception as a judge-made doctrine rooted in “misty understandings of English legal history,” not in the Constitution or any federal statute.¹ The Court also held that states cannot use their own probate statutes to strip federal courts of jurisdiction they otherwise have.⁵

Smith’s claim was an ordinary tort seeking money damages from Pierce personally. It did not ask a federal court to probate a will, administer an estate, or take control of property already held by the Texas probate court. So the federal courts had jurisdiction, and the Ninth Circuit was wrong.⁵ The Court sent the case back to the Ninth Circuit to sort out remaining questions about bankruptcy jurisdiction and whether the Texas judgment already precluded the federal claim.

Why the Ruling Still Matters

Marshall v. Marshall is the Supreme Court’s most recent significant statement on the probate exception. Before 2006, some lower courts, the Ninth Circuit in particular, had stretched the exception to shield a wide range of estate-related disputes from federal jurisdiction. The 2006 opinion pulled it back to the three narrow categories above and effectively replaced the vague “interference” test from the Court’s 1946 decision in Markham v. Allen with a “prior exclusive jurisdiction” rule: when a state court is already exercising control over specific estate property, a second court cannot claim control over the same property.⁶

The exception still exists only because courts made it and Congress never wrote a statute to displace it. Lower courts continue to disagree about how it applies to federal statutory claims involving bankruptcy, civil rights, and ERISA, questions the 2006 decision did not fully resolve.⁶

Deaths and the Second Trip to the Supreme Court

Neither of the original parties lived to see the case end. E. Pierce Marshall died on June 20, 2006, weeks after the Supreme Court ruling, from what was described as a “brief and extremely aggressive infection.”⁷ Anna Nicole Smith died in February 2007 at age 39. Her infant daughter, Dannielynn Birkhead, became her sole heir and, through Smith’s estate, the party still pressing the claim.⁸

On remand, the Ninth Circuit in 2010 concluded that Smith’s counterclaim was not a “core” bankruptcy proceeding, so the bankruptcy court’s judgment had never been final. Because the Texas probate court’s 2001 judgment against Smith predated the federal district court’s 2002 affirmance of her bankruptcy award, the Ninth Circuit held that the Texas judgment was entitled to preclusive effect under the Full Faith and Credit Act. The $88 million federal award was vacated.⁸

The case reached the Supreme Court again as Stern v. Marshall, decided 5-4 on June 23, 2011. The question this time was constitutional: could a bankruptcy court, whose judges lack the life tenure and salary protections Article III requires, enter a final judgment on a state-law counterclaim? The Court said no. Congress had labeled certain counterclaims as “core” proceedings, but the Constitution does not allow non-Article III judges to issue final, binding judgments on ordinary state-law tort claims that exist independently of the bankruptcy case.⁹

The result was fatal to Smith’s estate. The bankruptcy judgment, once measured in hundreds of millions of dollars, was constitutionally invalid. The Texas probate verdict was the controlling final decision.¹⁰

How the Estate Battle Ended

In August 2014, U.S. District Judge David O. Carter denied a final request by Dannielynn Birkhead’s lawyers to win $44 million in sanctions from the Marshall family. Judge Carter called the ruling “the end of the case.”¹¹

On July 16, 2015, the Texas Court of Appeals affirmed the 2001 probate verdict with only a minor modification eliminating an attorneys’ fee claim held by Pierce Marshall’s estate. The appeals court confirmed that J. Howard Marshall II never intended to leave anything to Anna Nicole Smith and that his son had carried out his father’s wishes.¹²

After nearly twenty years, proceedings in bankruptcy court, two federal district courts, the Ninth Circuit twice, a Texas probate court, a Texas appellate court, and two trips to the U.S. Supreme Court, Dannielynn Birkhead received no portion of the Marshall fortune. What Smith’s case did leave behind was the law: a Supreme Court opinion that keeps most estate-adjacent tort claims where they were meant to be, in the federal courts that have jurisdiction over them.⁸

1
Justia. Marshall v. Marshall, 547 U.S. 293
2
Forbes. The Marshall Family
3
Ware Jackson. Firm Trial, Appellate, and Probate Skills in the J. Howard Marshall Estate Battle
4
Oyez. Marshall v. Marshall
5
Cornell Law Institute. Marshall v. Marshall, 547 U.S. 293
6
Harvard Law Review. Federal Questions and the Probate Exception
7
Los Angeles Times. E. Pierce Marshall Dies
8
FindLaw. The End of the Battle Over Anna Nicole Smith’s Late Husband’s Estate
9
Cornell Law Institute. Stern v. Marshall, 564 U.S. 462
10
ABC News. Supreme Court Rules on Anna Nicole Smith’s 15-Year Legal Battle
11
UPI. Anna Nicole Smith’s Estate Loses Bid for J. Howard Marshall’s Millions
12
PR Newswire. Texas Court of Appeals Affirms Findings in J. Howard Marshall II Probate Litigation