ALI Consumer Contract Restatement Is Biased Advocacy

ALI Consumer Contract Restatement Is Biased Advocacy

In The News | July 22, 2020

ATRA President Tiger Joyce writes about the American Law Institute’s diversion from its original mission in this opinion editorial for Law360.

For nearly a century, the American Law Institute has been a stalwart of the American legal profession. But in recent years, its mission appears to have shifted from its original purpose to promote the clarification and simplification of the law to that of an advocacy organization.

The ALI publishes periodic restatements of the law, and these traditionally have been highly influential resources for judges, scholars, practicing lawyers and students due to a tradition of thoughtful and objective analysis in doing precisely what the name suggests: restating the law. In fact, the organization’s style manual, which is the guide for these works, discourages making “major innovations in matters of public policy.”

ALI reporters leading the development of restatements generally conduct extensive surveys and analyses in order to describe existing law. This is quite distinct from those scholars who advocate for significant change in the law. The utility of and respect for these restatements — and the ALI as an institution — grew due to the institute’s faithful adherence to its mission.

Regrettably, however, this appears to be no longer true. What once was a scholarly institution that was safely above the fray, has now plainly shifted its focus to legal advocacy.

As evidence of this, the ALI went so far as to hire a lobbyist last year to represent it in the Texas Legislature to oppose a bill that declared that the ALI’s restatements were not controlling in any action governed by the laws of Texas. The ALI saw this as a threat to both its prestige and influence.

Its latest problematic project — the restatement of law on consumer contracts — follows the 2018 restatement of law on liability insurance, and from several years before that, its expansion of liability for injuries suffered by trespassers. This matter was the first to reveal the shift of the ALI.

Its 2010 restatement on tort action for physical and emotional harm liability reversed decades of accepted doctrine regarding the duty of care owed by land possessors to trespassers. It declared that such a duty did, in fact, exist, with the notable exception for flagrant trespassers — a completely undefined term in the law. Following ALI’s approval of this restatement, ALI reporters even wrote an article in Trial Magazine, a publication for the plaintiffs bar, extolling this and other provisions as a boon to that segment of the bar and their clients.

As a result of this, my organization, the American Tort Reform Association, led an effort to codify the relevant law on the duty of care owed to trespassers. Our effort focused on freezing the law in place — in statute — so that any court called upon to rule on this issue would look to that statute, not the new restatement.

Since 2011, we succeeded in enacting such laws in 24 states, and no court has subsequently adopted the ALI provision on trespassers. When this effort concluded, we hoped this would be the end of this type of advocacy by the ALI. Regrettably, it was only the beginning.

The restatement of law on consumer contracts, set to be voted on in May 2021, is the most recent example of ALI’s departure from its mission. It attempts to create out of whole cloth a separate area of contract law for so-called consumer contracts despite the fact that it does not appear that any court has articulated a separate set of consumer contract rules that operate differently than the general law of contracts.

Furthermore, it is abundantly clear that the restatement seeks to merge contract law with consumer protection statutes. Such law exists for the purpose of regulation and broader protection for the public.

They are not intended as a means by which to compensate individuals or entities that have contractual disputes. It would also create a novel theory of deceptive contracts, allowing a consumer to void any contract or term adopted as a result of what is alleged to be a deceptive act or practice. This concept would be an inappropriately broad and amorphous new common law rule, which is derived from statute, not judicial development of the common law.

The restatement further seeks to expand the traditional unconscionability doctrine, which would embolden courts further to invalidate or modify certain contracts or portions of contracts between businesses and consumers.

Finally, the restatement’s arbitration provision ignores both the Federal Arbitration Act and U.S. Supreme Court precedent regarding predispute arbitration agreements. A broad and ambiguous requirement granting judges the power to determine whether an arbitration clause was entered into in good faith undoubtedly will lead to lawsuits regarding what exactly constitutes that good faith.

This increased ambiguity in the law regarding the validity of arbitration clauses will only serve to increase litigation. In jurisdictions commonly referred to as judicial hellholes, where plaintiffs lawyers are already scurrying to eliminate predispute arbitration in many cases, these clauses are unlikely to be upheld, opening the door for entrepreneurial plaintiffs lawyers to file a multitude of class actions.

The American Tort Reform Association actively supports changing the law through legislation and other forms of advocacy. We believe the positions we take are compelling, and the broader legal reform movement has been very successful over the years.

We recognize, however, that we must make a compelling case to public officials, and the broader community. The organized plaintiffs bar, similarly, advocates its positions in opposition to reform and seeking to expand the opportunities to recover for their clients.

Like the American Tort Reform Association and the plaintiffs bar, the ALI is certainly free to enter this advocacy space. But in doing so, the institute and all in the legal community must acknowledge that they are forfeiting their special status as scholars, which was cultivated over many decades.

The late Supreme Court Justice Antonin Scalia warned in 2015 against the ALI’s restatements, deeming them to be of “questionable value” that “must be used with caution.” He further stated that ALI’s restatement authors “abandoned the mission of describing the law, and have chosen instead to set forth their aspirations for what the law ought to be.”

Sadly, Justice Scalia was prescient. And unless the ALI reverses course, its restatements ought to be treated no differently than an article in a law journal advocating for various public policy agendas — and not as true, unbiased restatements of existing law.

This piece was originally published by Law360.