Trial Lawyers Just Rewrote Centuries-old Contract Law

Trial Lawyers Just Rewrote Centuries-old Contract Law

In The News | June 13, 2022

This op-ed was originally published by the Washington Examiner. Last month, an exclusive organization of judges, law professors, and lawyers called the American Law Institute spent a weekend in the nation’s […]

This op-ed was originally published by the Washington Examiner.

Last month, an exclusive organization of judges, law professors, and lawyers called the American Law Institute spent a weekend in the nation’s capital rewriting centuries of well-established contract law at the behest of the class action bar.

While known by few, the ALI’s influence is far-reaching in courts across the country. Over the course of the current pandemic alone, ALI restatements were cited more than 3,000 times in judicial opinions. If adopted by state courts, ALI’s new “restatement” will turn every consumer-facing contract, such as cellphone plans, rental car agreements, and online retail website agreements, into a slot machine for trial lawyers.

For nearly a century, the ALI produced what is known as legal restatements, which functioned essentially as handbooks of legal best practices that “survey and synthesize” the consensus of evolving state law. These restatements were broadly trusted and adopted by state courts. Today, that role is diminished. Every state statute and virtually all judicial opinions are online and a mere click away — raising the question of whether restatements continue to serve a necessary purpose.

Perhaps seeking to maintain relevance, the ALI, traditionally an independent, scholarly institution, has shifted to an advocacy organization. It now uses these restatements to advance novel theories well outside the established legal mainstream that remake, rather than restate, the law. Often, these restatements are the net result of decades of scholarly work. The ALI moves at a glacial pace (its current torts restatement project is closing in on its fourth decade), and tenured law professors play an outsize role in steering its processes.

In its latest legal misadventure, the ALI adopted “Interpretation and Construction of Consumer Contracts.” That document says standard contract boilerplate terms — the fine print terms we all quickly scroll through and click “agree” to accept — should be interpreted to effectuate the “reasonable expectations of the consumer” and construed “against the drafter of the term” (the business). It also says that any ambiguities in the language of the standard contract term assent to provisions “are to be resolved against the business supplying the term or process.”

This is a litigation road map with the ALI’s fingerprint firmly on the scale of justice. Armed with the ALI’s new language, class action lawyers can comb through thousands of pages of contractual legalese and use any textual ambiguity to file a class action or unfair competition claim in front of a favored judge, citing the ALI’s new policy as a legal authority. If the class is certified, then it’s essentially game over — consumers get a few bucks or a coupon while lawyers rake in millions.

We’ve seen this folly before from the ALI, when it embraced an unprecedented legal theory in 2010 that would allow, for example, a dog walker to sue a landowner if she fell in a previously undiscovered hole and broke an ankle while unlawfully trespassing on the landowner’s property. Twenty-five states responded by enacting laws rejecting this legal theory. The ALI should now expect to see an avalanche of similar legislative activity pushing back on their most recent liability-expanding restatements.

It is beyond dispute now that the ALI has fully embraced its new role and has become an advocacy organization, proposing novel liability expansion. Accordingly, it must no longer be given special deference by judges across the country. The late Justice Antonin Scalia said as much in a 2015 opinion. The authors of ALI restatements, he observed, have “over time … abandoned the mission of describing the law, and have chosen instead to set forth their aspirations for what the law ought to be.” Judges can no longer rely on restatements to provide an unbiased synthesis of current law.

As well-known trial lawyer Liz Cabraser said in a recent ALI video, “American law belongs to the American people.” On this point, we agree. It’s well past time for the people to reclaim it from the ALI.

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