On May 21, the American Law Institute -- a kind of star chamber of 4,000 judges, law professors, and lawyers -- was scheduled to pass a "restatement" of the law of consumer contracts, with the plan being to codify case-law to ensure that terms of service would be treated as enforceable obligations by US courts.
This would have led to a virtual ban on class action suits, and would have severely curtailed the role of courts in hearing legal complaints brought by members of the public who had been harmed or lied to by corporations, replacing them with binding arbitration kangaroo courts where the "judge" is working for the company that wronged you.
The normally obscure workings of the ALI drew unprecedented attention over the move, with a bipartisan coalition of 23 states' Attorneys General publicly denouncing the plan, along with consumer rights groups and other campaigners.
The pressure worked! When the ALI sat down to finalize it at their meeting on the 21st, virtually the entire four-hour debate slot was taken up with a debate over the first of nine sections; debate began on the second section but time ran out before it could come to a vote.
A year from now, the ALI will sit again and could take up the matter once more.
Although the meeting agenda had assigned a four-hour session for consideration of the Restatement, only the first of the Restatement’s nine sections reached a vote. Section One contains the Restatement’s definitions and describes its scope. ALI’s members voted to approve an amendment to Section One to clarify that to the extent the Uniform Commercial Code applies to a transaction and provides a rule, the Restatement does not apply. While not objectionable, the amendment seems unnecessary since to the extent the Restatement sets forth the common law, common law cannot override statutory law such as the UCC.
The remainder of the session was devoted to debate on Section Two, which deals with how a consumer manifests consent to a transaction. No vote was taken on Section Two. A motion to convert the Restatement into a “principles project” was deferred until the 2020 annual meeting.
While the Restatement technically remains alive, its future is unclear. Instead of becoming a principles project, the Restatement could continue as such but with redrafting. Possible next steps could include a meeting of ALI’s Council or a meeting of the Restatement’s Advisers (of which I am one) and/or ALI’s Members Consultative Group.
ALI annual meeting ends with uncertain future for Restatement of the Law, Consumer Contracts [Alan S. Kaplinsky/Consumer Finance Monitor]
Consumer Contracts Restatement Delayed: Consumers Win...For Now [Jerri-Lynn Scofield/Naked Capitalism]
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