I attended The Rutgers Law School–Camden Center for Risk and Responsibility’s ALI Restatement conference on February 27th.

It had been my first time on the Rutgers-Camden Law School campus since I’d been deemed unworthy of being there 27 years ago. Frankly, after being underwhelmed by the school’s snack situation, as well as an issue with the soap dispenser in the men’s room, it was a blessing in disguise that I was turned down by Rutgers.

The conference brought together a huge number of the key players involved with the ALI Restatement – formally a Principles project. And it was exactly as I expected – a full day of nuanced presentations and debate between the insurer- and policyholder-side factions. The discussion got into a level of minutiae that I’d never seen at an insurance conference. But I wasn’t surprised by this. The speakers were steeped in the project and much of the audience was quite familiar with it. It was graduate level from jump.

Much kudos to Professors Jay Feinman, Adam Scales and Rick Swedloff, of the Law School’s Center for Risk and Responsibility, for putting together a superb program. Not to mention that it ran with Patak Philippe precision.

The Rutgers conference was punctuated by the fact that, the day before, the Reporters released the eagerly-awaited draft of chapters 1 and 2 of the Restatement. This was the first opportunity to see how the draft text had changed from a Principles project to a now Restatement. I plan to discuss this more in future issues of CO.

The conference included lots of discussion of the substantive issues in the Restatement – focusing much on duty to defend; duty to settle; and policy interpretation. But the real take-away for me did not involve any of the specific Restatement provisions. Instead, it came from Virginia Law Professor Ken Abraham’s discussion of a common source of tension among project participants and watchers – what is a Restatement and can it adopt rules of law that are minority positions? Professor Abraham, a member of the ALI Council, has been at the forefront of the liability insurance project since its earliest stages. And he has been involved in a lot of Restatement projects over the course of many years.

The source of the minority position discussion comes from this. In general terms, a Principles project has, as its objective, to set forth what the law on liability insurance should be, i.e., it is aspirational. The objective of a Restatement, however, is much different. It is (or generally stated to be) to lay out rules describing what the law is. More specifically, the ALI defines a Restatement as follows: “Restatements are primarily addressed to courts. They aim at clear formulations of common law and its statutory elements or variations and reflect the law as it presently stands or might plausibly be stated by a court.”

To be sure, the insurance industry did not had a love affair with the Principles project. In general, insurers and their counsel criticized it for adopting the minority position on several issues that were adverse to their interests. But, since it was a Principles project, the adoption of minority positions could seemingly be justified on the basis that it was only aspirational. This took away some bite from insurers’ objections.

But if a Restatement’s aim is to reflect the law as it presently stands or might plausibly be stated by a court, then the minority rules adopted by the Principles, that so troubled insurers, should now give way to the adoption of the favored majority rule. Right? That is certainly how I saw the change from a Principles project to a Restatement playing out. And I’m not alone in this thinking among those on the insurer side.

But it turns out that this is not automatically so. This is where Professor Abraham’s discussion of what is a Restatement, and can it adopt rules of law that are minority positions, comes in.

Professor Abraham was unambiguous: Restatements can adopt minority positions, and there is nothing inappropriate in doing so, as long as there is a basis for it that is more than just fervent hope that it is the law. He was also quick to state that, if a Restatement adopts a minority position, such status must be noted in the text. In fact, Professor Abraham pointed out that two of the most influential Restatement sections ever, Restatement of Torts § 402A (adopting strict liability for products) and Restatement of Contracts § 90 (promissory estoppel), were “very much minority positions when adopted.”

The issue of what is a Restatement was recently addressed in the ALI’s Revised Style Manual that was approved by the ALI Council in January 2015. It is beyond the scope here to describe it in detail. To keep the discussion focused, I cite the part where it takes direct aim at the role of minority positions in the process of drafting a Restatement. Just as Professor Abraham said, they have a place at the table. The Revised Style Manual states as follows:

“The Restatement process contains four principal elements. The first is to ascertain the nature of the majority rule. If most courts faced with an issue have resolved it in a particular way, that is obviously important to the inquiry. The second step is to ascertain trends in the law. If 30 jurisdictions have gone one way, but the 20 jurisdictions to look at the issue most recently went the other way, or refined their prior adherence to the majority rule, that is obviously important as well. Perhaps the majority rule is now widely regarded as outmoded or undesirable. If Restatements were not to pay attention to trends, the ALI would be a roadblock to change, rather than a ‘law reform’ organization. A third step is to determine what specific rule fits best with the broader body of law and therefore leads to more coherence in the law. And the fourth step is to ascertain the relative desirability of competing rules. Here social-science evidence and empirical analysis can be helpful. A Restatement consists of an appropriate mix of these four elements, with the relative weighing of these considerations being art and not science. The Institute, however, needs to be clear about what it is doing. For example, if a Restatement declines to follow the majority rule, it should say so explicitly and explain why.”

As the Restatement process proceeds, look for insurers to argue aggressively against the adoption of minority positions that are adverse to their interests. That a rule of law is in the minority is a valid basis for arguing against its adoption in a Restatement. But insurers are going to have to deal with minority positions not being a per se basis for exclusion. Case in point – the adoption by the Principles, of the rule that an insurer that breaches the duty to defend forfeits an otherwise applicable coverage defense, is the vast minority rule nationally. And nobody disputes that. Insurers railed against it. But now, as a Restatement, surely this rule was eliminated. It had to be. Uh, no. This same minority rule is included in the first draft of the Restatement.

Lastly, the conference also included talk of what I am coining the “Scalia coincidence.” On February 24th, just three days before the conference, Justice Scalia issued a concurring in part and dissenting in part opinion in Kansas v. Nebraska and Colorado, a case involving a water rights dispute between these states, where the Restatement (Third) of Restitution and Unjust Enrichment (2010) played a role in other justices’ opinions. Scalia was quite critical of Restatements, describing them as being “of questionable value, and must be used with caution. The object of the original Restatements was ‘to present an orderly statement of the general common law.’ (citation omitted). 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. . . . Restatement sections such as that should be given no weight whatever as to the current state of the law, and no more weight regarding what the law ought to be than the recommendations of any respected lawyer or scholar.”

Those unhappy with the project, especially on account of a Restatement’s possible adoption of minority positions, were quick to mention Scalia’s words.