NEW YORK, Oct 3 (Reuters) - Anna Nicole Smith lives ... at least in the Heller Ehrman bankruptcy case.

A group of 16 prominent law firms sued by Heller, which declared bankruptcy in 2008, argue that because of a U.S. Supreme Court decision issued earlier this year in the dead Playmate's bankruptcy case, a federal district judge, not a bankruptcy judge, should hear Heller's claims against them. The firms filed consolidated motions on Sept. 28 to move the adversary proceedings to federal district court in San Francisco.

At the same time, the bankruptcy judge overseeing Heller's liquidation wants to keep the claims against the firms in his court. U.S. Bankruptcy Judge Dennis Montali filed papers Sept. 28 asserting that the high court's decision in the bankruptcy of Smith, who died in 2007, should not block him from hearing the defunct law firm's claims.

Heller, which had more than 700 lawyers at its peak in 2005, filed claims against the law firms in November 2010, arguing that it was entitled to millions in fees earned by former Heller attorneys who fled to those firms as it was imploding.

The dispute over jurisdiction hinges on Stern v. Marshall, a Supreme Court case decided in June involving a fight between the estate of Vickie Lynn Hogan (Smith's given name) and the son of her late husband, billionaire oil magnate J. Howard Marshall. In Stern, the high court limited a bankruptcy judge's authority in deciding adversary proceedings that arise within a bankruptcy case.

ROLE OF BANKRUPTCY JUDGE

The Stern ruling means that Heller's attempt to claw back fees belongs in district court, the law firms claim. The firms include Arnold & Porter; Goodwin Procter; Hogan Lovells; Orrick Herrington & Sutcliffe; Proskauer Rose; and Wilmer Cutler Pickering Hale & Dorr.

The law firms want the proceedings moved to federal district court because those judges may rely more on state laws than bankruptcy judges, which could benefit the firms. Defending Heller's claims in district court also would make it easier to appeal a ruling to the federal court of appeals.

The Stern case "strikes at the core of the bankruptcy court's role," said Jonathan Hughes, an attorney representing Arnold & Porter, whose motion was also filed on behalf of the other defendant law firms in the Heller case. The Stern case, his motion argued, restricts the bankruptcy court from deciding claims based on fraudulent transfers, as Heller asserts here.

Hughes, of Howard Rice Nemerovski Canaday Falk & Rabkin, said the jurisdiction issue was assigned on Friday to U.S. District Judge Charles Breyer, who will determine if Montali will keep the adversary proceedings in his court.

Matthew Schultz, an attorney representing Heller, said that Montali should retain jurisdiction and that the law firms were trying to "forum shop."

"This is just an attempt to delay," said Schultz, an attorney at Trepel Greenfield Sullivan & Draa in San Francisco.

COUDERT BROTHERS RULING

Both sides are likely to consider a decision last week in the Coudert Brothers bankruptcy action in New York. A group of retired Coudert partners want former Coudert partners, and the law firms they joined when Coudert faltered, to pay into Coudert's retirement fund. The retired partners argue that other partners and firms bilked them out of retirement money.

On Sept. 23, U.S. District Judge Colleen McMahon, in the Southern District of New York, vacated a previous bankruptcy court decision that dismissed the retired partners' claims. Relying on Stern, she wrote that she would consider the bankruptcy dismissal as a recommendation and would issue her own decision as to whether the retired partners' claims could proceed.

Back in San Francisco, Montali wrote in a recommendation to the district court that he had "the background and experience" to handle Heller's adversary proceedings against the law firms. He further argued that moving the case to district court would be an inefficient use of judicial resources and would be contrary to the narrow holding in the Stern case.

Kenneth Klee, a professor at University of California Los Angeles School of Law, said that the arguments presented by Montali for keeping the fee dispute in his court were "persuasive and forceful." Still, Klee said, they were contrary to recent decisions in similar cases.

Heller Ehrman is expected to file its response within days.

The case is Heller Ehrman v. Arnold & Porter, 11-CV-04848, U.S. Court for the Northern District of California. For Heller Ehrman, Matthew Schultz, Trepel Greenfield Sullivan & Draa in San Francisco.

For Arnold & Porter, et al., Jonathan Hughes, Howard Rice Nemerovski Canaday Falk & Rabkin in San Francisco.

(Reporting by Leigh Jones)

Follow us on Twitter: @ReutersLegal