ALI Oversteps With Expansive Restatement Of Contract Law

ALI Oversteps With Expansive Restatement Of Contract Law

In The News | May 13, 2022

This op-ed was originally published by Law360. Once considered a scholarly organization that was safely above the fray in broader policy disputes, the American Law Institute has become an advocacy group, […]

This op-ed was originally published by Law360.

Once considered a scholarly organization that was safely above the fray in broader policy disputes, the American Law Institute has become an advocacy group, proposing novel expansions in liability law.

During ALI’s upcoming annual meeting from May 16 to May 18, the institute will take an important vote on its so-called consumer contracts restatement project. If it moves forward, the ALI will create a separate and unprecedented area of law distinct from the established law of contracts.

The ALI’s restatements — which are drafted by law professors, not practicing lawyers — are the institute’s main tools for clarifying and simplifying the law, and historically have been quite influential with judges and lawyers all over the country. They serve as well-recognized secondary sources of legal reference and authority.

Consider the fact that over the course of the current pandemic alone, ALI restatements have been cited more than 3,000 times in opinions.[1] That is why the upcoming vote on ALI’s proposed Restatement of the Law of Consumer Contracts, which intertwines contract law with state consumer protection statutes, is so important.

The proposed restatement creates a new theory of deceptive contracts, allowing consumers to challenge — and courts to overturn — any allegedly deceptive contract or term. Imagine litigating every line of the terms of service of a software agreement, or a cellphone contract alleged by any consumer to be misleading, unfair or deceptive, and you’ll begin to see the scale of what’s at stake with the ALI’s new approach.

Additionally, the proposed Restatement of the Law of Consumer Contracts ignores both the Federal Arbitration Act and the U.S. Supreme Court’s ample precedents favoring arbitration and predispute arbitration agreements. If adopted, it would encourage any state court judge to nullify arbitration agreements, or otherwise reach results inconsistent with existing law.

The ALI has adopted a number of novel legal policies that are outside the legal mainstream, and that do not, in fact, restate any legitimate common law consensus.

The earliest example of this departure is the trespass provision included in the Restatement on the Law of Physical and Emotional Harm, adopted in 2010. This restatement departed from decades of accepted law and practice, and declared that land possessors owed a novel duty of care to trespassers — those unlawfully on their property.

Under this theory, a trespasser could successfully sue a landowner for failing to act reasonably in preventing the trespasser’s injury. This approach upended the traditional common law rule, which provided that a landowner generally owes no duty to a trespasser, except to refrain from willfully or wantonly injuring the trespasser.

It also created an exception for “flagrant trespassers” — a term that was undefined in the law, and therefore would contribute to its complexity. This is a direct contradiction to the ALI’s stated goal to promote simplicity.

Showing just how out of line the ALI’s restatement on trespass is, 25 states rejected it by enacting statutes to codify their respective laws on the duty of care owed to a trespasser. This broad-based rejection of a key provision of a restatement was unprecedented at that time.

Another concerning project: the Restatement (Third) of Torts: Concluding Provisions. It is currently in the draft stage, but already includes a problematic medical monitoring provision, which is a remedy available only in a minority of states. The project also includes a proposed rule that would establish innovator liability, a significant change outside the mainstream of settled law in most states.

The ALI is, by nature, deliberative, insular and slow-moving. Its work generally is performed by member volunteers, and its membership is exclusive and self-perpetuating. Successful candidates for membership must be nominated by a current member with support from two additional members before being elected by ALI’s leadership.

One result of this highly exclusive structure is that the ALI’s restatements can take decades to complete. For example, the third restatement of the law of torts, begun in 1992, is entering its fourth decade, and remains a work in progress.

A lawyer elected to membership in the ALI at age 35, when the project began, has reached retirement age. The long arc of these projects transcends the tenure of the reporters and ALI leaders that champion this process.

Each successor inherently imposes a slightly different viewpoint and his or her own imprimatur on the project — a practice that has seemingly pulled the ALI further and further away from its intended purpose to survey and synthesize, not reshape, the common law. The unfortunate reality is that members of the legal profession can no longer look to the ALI as a gold standard for legal syntheses, and judges must carefully scrutinize its restatements.

If the ALI intends to engage in the scholarly exercise of restating the law, then it should maintain fidelity to that limited but essential role. It’s not too late for ALI members to work to regain the trust of the broader legal community, and vote against the latest novel expansion at the annual meeting this month.

But if ALI plans to continue to serve as an advocacy organization, then it should queue up with other entities, including the American Tort Reform Association, at the doors to the courthouses and the statehouses, prepared to plead its case.

Sherman Joyce is president of the American Tort Reform Association.

[1] See https://www.ali.org/media/filer_public/61/7c/617c010f-a610-4467-989f-070aee8b7e0a/2020-2021_annual_report.pdf