When Lawyers No Longer Interpret the Law but Create It, Trouble Always Follows

The American Law Institute, in a departure from its traditional role, is attempting to revise laws in accordance with activists’ demands.

T he American Law Institute (ALI) is probably one of the most important institutions you’ve never heard of. Hardly anyone who is not a lawyer knows about the century-old body of 3,000 judges, academics, and practicing lawyers that plays a key role in distilling what the law is in practice, as it’s enforced by our courts. That’s why it’s so disturbing that the ALI, which is not a legislature and not even a governmental body, is veering away from describing the law and seeking instead to establish new law and policy.

Traditionally, the ALI has served a valuable function of filling in gaps in laws and making their meaning accessible to non-specialists.

The institute’s publications “Restatements of the Law” set forth the principles, or “black letter law,” that judges use as guidance. The general guidelines of the tracts are often cited almost as though they were statutory law. The Supreme Court cites the ALI every few weeks, on average, in its decisions.

But the body is at risk of undermining its well-earned credibility by usurping the legislative process in a growing number of areas, from liability insurance to copyright law to sexual assault.

A few years ago, ALI leaders proposed adopting a model penal code that would make “affirmative consent” the ALI’s official policy in sexual relations. The move was finally killed after critics pointed out this would shift the burden of proof to the accused — something profoundly at odds with our judicial system.

As Ashe Schow wrote in the Washington Examiner in 2016:

The accused would have to prove they had received ‘communicated willingness.’ This would mean that any time someone engages in sexual activity, they not only have to make sure they obtain this specific form of consent, but also proof of this consent. And outside a videotape, there’s really no way to get proof. [Italics in original.]

The ALI was clearly trying to move away from restating basic legal principles in favor of creating its own new version of “Catch-22” law.

Just before his death in 2016, Justice Antonin Scalia, joined by Justice Clarence Thomas, warned about the ALI’s drift. In the Supreme Court’s Kansas v. Nebraska decision, he wrote: “Modern Restatements . . .  are of questionable value, and must be used with caution. . . . Over time, the Restatements’ authors have abandoned the mission of describing the law, and have chosen instead to set forth their aspirations for what the law ought to be.” Scalia warned that the ALI’s increasingly novel views of the law should carry “no more weight regarding what the law ought to be than the recommendations of any respected lawyer or scholar.” No longer can one assume that “a Restatement provision describes rather than revises current law,” he wrote.

But the ALI still carries the weight of nearly absolute authority in many circles. And its latest effort will matter to consumers and business. For the past decade, it has been working to “restate” the law of what it calls “consumer contracts.”

Jonathan Macey, a leading scholar at Yale Law School, told me that the ALI’s Restatements of the law are respected to the extent that they present “clear formulations of common law as it presently stands or might appropriately be stated by a court.” But in the area of consumer contracts, the ALI is seeking to carve out a separate set of rules that operate differently from the general law of contracts.

The project’s authors, aware of the lack of common-law support for principles that are specific to “consumer contracts,” have looked instead to consumer-protection statutes and regulations, as their primary support for some Restatement rules.

But this statutory law was created to address unfair business practices in the marketing and sales of products and services; it was not created as a basis for the law of contracts. By attempting to graft select elements of this statutory law to create a common-law foundation for a set of novel “consumer contract” rules, the project is making major public-policy innovations that are totally contrary to the purpose of a Restatement.

Opposition to the “consumer contract” project has been fierce and has come from both consumer and business groups. Twenty-three state attorneys general — almost all liberals — wrote a letter in 2019 criticizing the project before the ALI’s annual meeting. They complained that the new rules would allow businesses to impose contracts on customers without consumer consent.

Following a bitter debate at the 2019 meeting on the consumer-contract issue, no further drafts of that Restatement were issued for two and a half years. Then, two months ago, a new draft appeared that incorporated almost none of the legitimate criticism that had been raised. The ALI’s legal activists appear to be on autopilot and impervious to outside advice.

Especially troubling aspects of the current draft include:

First, the ALI’s Restatement seeks to have courts adopt new consumer-contract rules that are inconsistent with both the Federal Arbitration Act’s provisions and the Supreme Court’s interpretations of it.

Second, the Restatement would provide courts with a new basis for invalidating terms in contracts between businesses and consumers. It establishes a novel basis for consumers to void any “contract or term adopted as a result of a deceptive act or practice” This broad, amorphous, and untested common-law rule does not reflect the law of any state.

Third, the Restatement proposes a remedy that would give courts virtually unfettered discretion to refuse to enforce all or part of any consumer contract.

It’s now clear that the ALI is structured in such a way as to give a minority of legal activists an unbalanced influence in its final work product and the ability to exclude broader views.

If the ALI doesn’t decide to retreat to its more traditional role, you can expect elected officials, regulators, the business community, and even consumers to push back on its increasingly bold territorial ambitions.