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AMERICAN LAW INSTITUTE – ACADEMICS OR ACTIVISTS?

Once a stalwart of the American legal profession, it appears the American Law Institute has shifted its mis-sion from its original purpose to promote the clarification and simplification of the law to that of an advocacy organization.

WHAT IS THE AMERICAN LAW INSTITUTE?

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.

The American Law Institute (ALI) was established in 1923 “to promote the clarification and simplification of the law and its better adaptation to social needs, to secure the better administration of justice, and to encourage and carry on scholarly and scientific legal work.” These are certainly worthy objectives, and the membership of the organization, carefully selected from the elite leadership of the legal profession – judges, lawyers, law professors, and law school deans – has historically provided guidance for the profession and development of the law.

The ALI publishes treatises, known as Restatements, with the intent to “clarify, modernize, and other- wise improve the law.” The Restatements summarize state common law and the legal principles articulated in judicial opinions from around the country. Judges often look to these Restatements when making decisions and accord them great deference, as though they had the force of statute or precedent. ALI publications are cited thousands of times each year by courts and have been cited a total of more than 210,000 times by courts over the past century. Some of the ALI’s most famous Restatements, including the Restatement (Second) of Torts; Restatement of the Law Third, Torts: Liability for Physical and Emotional Harm; Restatement Third, Torts: Products Liability; and Restatement (Second) of Contracts have had a significant influence on matters of interest to the ATRF. The ALI also publishes Principles of the Law, which are meant to influence legislators and guide them when drafting legislation.

The ALI has long been held out as the gold standard for positive guiding developments in the law. But recently the Institute has at times deviated in a troubling way from its traditional approach. Rather than simply restating and summarizing the law, it has proposed dramatic changes in key, long- established areas that have stood the test of time.

SEISMIC SHIFT IN 2010

The ALI’s 2010 “Restatement of the Law Third, Torts: Liability for Physical and Emotional Harm” 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. This embrace of minority views marked a dramatic change for the organization.

Tellingly, ALI reporters then 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. The article provided detailed guidance for plaintiffs’ lawyers looking to forge a lucrative new line of trespassers’ lawsuits against property and business owners. This new coziness with the trial bar marked a decided turn away from the ALI’s largely objective past and toward a future of openly subjective advocacy.

In response to the restatement, the American Tort Reform Association led an effort to codify the relevant law on the duty of care owed to trespassers. The 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, such laws were enacted in 24 states, and no court has subsequently adopted the ALI provision on trespassers.

ADDITIONAL ADVOCACY PROJECTS FOLLOWED

Unfortunately, the trespass doctrine was not a one-off and the ALI has taken an activist approach to several new projects including the 2018 Restatement of the Law of Liability Insurance and the pending “Restatement of the Law of Consumer Contracts.”

RESTATEMENT OF THE LAW OF LIABILITY INSURANCE

In May of 2018, the American Law Institute voted to adopt the troublesome Restatement of the Law of Liability Insurance. This restatement failed to restate the law as it was written, but rather represents the minority views.

The restatement contains a number of litigation fuel centers that were not supported by existing law:

It recognizes a novel vicarious liability claim against insurers for the independent professional malprac- tice of retained defense counsel lacking “adequate” malpractice
It states that insurers can be forced to pay punitive damages for reckless behavior, even if the policy excludes punitive

RESTATEMENT OF THE LAW OF CONSUMER CONTRACTS

Perhaps the most troubling of all of the ALI’s recent restatements is the Restatement of the Law of Consumer Contracts. It attempts to create out of whole cloth a separate area of contract law for so-called consumer con- tracts 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. The proposed Restatement also would 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. Plaintiffs’ lawyers are already scurrying to eliminate predispute arbitration in many of the Judicial Hellholes, and these clauses are unlikely to be upheld, opening the door for entrepreneurial plaintiffs’ lawyers to file a multitude of class actions.

In many ways, this restatement is no different than an article in a law journal advocating expanded civil liability, and judges should treat it that way. The late Justice Antonin Scalia said as much in a 2015 decision, writing that authors of ALI restatements have, “[o]ver time … abandoned the mission of describing the law, and have chosen instead to set forth their aspirations for what the law ought to be.”

There is universal concern about the direction the ALI is taking this project- from state Attorneys General to the Civil Justice community, the project is an orphan and does not appear to have support outside the four walls of the ALI.

A May 2020 vote was delayed due to COVID-19.

RESTATEMENT (THIRD) OF TORTS: CONCLUDING PROVISIONS

The ALI is proposing to “restate” a medical monitoring rule as part of the organization’s pending Restatement (Third) of Torts: Concluding Provisions. The draft restatement includes a controversial provision that would allow medical monitoring to be awarded as part of damages even in the absence of a present physical injury.

Such a restatement rule implicates the same policy considerations expressed by other courts that have rejected medical monitoring claims by the unimpaired in favor of a present physical injury requirement. Most recently in 2020, the Illinois Supreme Court took this mainstream approach and refused to award medical monitoring costs when a plaintiff has not experienced a present physical injury.

In Berry v. City of Chicago, plaintiffs’ lawyers filed a class action on behalf of city residents in an area where the city had replaced water lines, alleging that negligently performed work may have exposed them to lead. The action sought to require the city to establish a trust fund to pay for the medical monitoring of all class members to diagnose potential incidences of lead poisoning. The Illinois Supreme Court’s September 2020 ruling recognized that the tort system compensates individuals for actual harm and that an increased risk of harm is not an injury. As the court explained, requiring a present physical injury “establishes a workable standard for judges and juries who must determine liability, protects court dockets from becoming clogged with comparatively unimportant or trivial claims, and reduces the threat of unlimited and unpredictable liability.” The U.S. Supreme Court and other state high courts have followed similar reasoning in rejecting medical monitoring claims.

ALI membership will likely vote at the 2021 Annual Meeting on whether to tentatively approve the medical monitoring provision of the Restatement.