A Theory-Less Restatement for Conflict of Laws

For the first time in over half a century, the American Law Institute (“ALI”) is drafting a new Restatement of Conflict of Laws. The world has changed a great deal since 1971 when the Restatement (Second) was published, growing far more interconnected—so the idea of a new Restatement, taking into account the last few decades of developments in the law, holds great promise. But at the heart of the current draft of the Restatement (Third) of Conflict of Laws lies a contradiction so vast it threatens to consume the project entirely.

This contradiction emerges from the dual ambitions of its drafters. On the one hand, the drafters have provided an authoritative set of black letter rules, dictating how particular choice-of-law disputes ought to be decided. And on the other, they set out to make conflicts less archaic and more “intelligible” by providing within the Restatement itself a theoretical explanation of what the choice-of-law project entails. When described at this very high-level of abstraction, no incongruity is evident. But once one digs into the specifics of the theoretical commitments endorsed by the draft Restatement (Third), problems start appearing.

The Two-Step Theory

The theoretical framework that the drafters of the Restatement (Third) have embraced is at once novel and entirely routine. Now called the “two-step” theory, it takes the basic tenets of a school of thought once known as “governmental interest analysis” (a familiar theoretical model that a small number of states have adopted) and repackages it with some updated terminology. As the introduction to Chapter 5 of the draft Restatement explains, under the “two-step” theory choice-of-law analysis starts by determining the scope of the different contending laws—that is, it “decid[es] to which people, in which places, under which circumstances” the law “extend[s] rights or obligations.” This first step interprets each state’s statute unilaterally, without reference to the fact that other states may be involved. Kermit Roosevelt, the Restatement (Third)’s Reporter, has described this first step as using the same “ordinary” tools of interpretation as are used in purely domestic cases. The second step, on the other hand, makes a multilateral, system-oriented determination as to which law should be prioritized—a process that Roosevelt has likened to the application of the supremacy principle to resolve conflicts between federal and state law.

The drafters’ stated motivation for integrating the “two-step” framework into the Restatement (Third) is understandable, and even laudable. The public perception of choice of law in the United States has never been a particularly positive one—Dean William Prosser famously called the field “a dismal swamp, filled with quaking quagmires”—and, by adding this theoretical framework, the hope, as the Reporters’ Memorandum to the draft Restatement explains, is to make the choice-of-law methods more “intelligible to nonspecialists” and more “align[ed] with the ordinary process of legal analysis.” In other words, by offering a theory of choice of law that the drafters themselves view to be attractive (indeed, the “two-step” is the theory Roosevelt, the Reporter, has promoted for more than two decades), they hope to win over judges and lawyers who may be intimidated by or otherwise wary of choice-of-law rules and principles.

Problems with the Two-Step Approach

But this approach, however commendable its intentions, generates serious issues for the future of the Restatement (Third).  The first issue is that the “two-step” theory’s conception of choice of law is fundamentally in conflict with the rule-based approach set out in the Restatement itself. As noted earlier, the draft Restatement seeks to win over the bench and bar with the easily administered and predictable rules that they crave while also providing choice of law with a theoretical grounding. Consistent with that first goal, the draft Restatement (Third) contains numerous black-letter rules of the sort familiar from the Restatement (Second), such as the rule that a court should apply the law of the forum in determining a person’s domicile. These rules are essential to the Restatement’s practical utility: an instructional manual that merely set out theoretical first premises about the nature of choice of law could not be expected to lead courts to predictable results.

The issue arises, however, in the manner the drafters have attempted to bridge the gap between the first goal of setting out rules and the second goal of providing a theoretical framework. Specifically, the draft Restatement asserts that its black letter rules are derived from the “two-step” theory. But this claim is inherently suspect. The “two-step” method directs judges to approach a choice-of-law dispute by first determining the scope of the contending laws, a process that necessarily involves individually assessing the particular substantive laws of the particular states implicated in the dispute and determining their respective underlying policies. If Alabama law is competing with Minnesota law, then the judge interprets the laws of those two states.  But that is not what the Restatement’s drafters are doing. The project of the drafters is formulating homogenized rules for the United States as a whole (often, but not always, deferring to the majority practice). This is simply a different exercise, one which imputes a single version of the underlying state policy to state actors that may, in fact, have very different preferences, perspectives, and motivations.

Take a concrete example. The draft Restatement indicates that when “State X has a wrongful-death statute that by its terms applies to deaths ‘caused in this state,’” that statutory language should be interpreted as a limitation on the geographic scope of the law, meaning that in no circumstances should it be applied to a case involving a death caused outside of State X, regardless of what other connecting factors exist between State X and the death at issue. Ostensibly, this rule is derived from studying prevailing trends among the courts (as Restatement rules typically are). But this is not the only possible interpretation of such a statute:

A State X court studying the statute carefully—examining, for example, legislative history and other language in State X’s code—might conclude that its state’s statute has a broader scope and that the “caused in this state” language is intended to serve as what the “two-step” would call a “priority rule,” directing the application of the statute whenever the death is caused in the state without ruling out its application in other cases. The “two-step” approach requires the court to undertake this careful study in a unilateral fashion, as an interpretation of actual State X policies—rendering irrelevant the considered views of a group of forward-looking scholars, judges, and practicing lawyers from outside their community who have been charged with developing black letter rules for the nation as a whole.  Of course, one might point out that this is what Restatements do—they synthesize a single recommended black letter rule from the laws and practices of fifty different jurisdictions.  That’s true.  But other Restatements don’t then claim that they got their black letter rules by interpretation of actual statutes.

The draft Restatement’s solution to this problem is to tell judges that it does not expect them to actually decide choice-of-law disputes by direct recourse to the “two-step” framework. Instead, judges are advised to just follow the rules; the theory is included, as noted above, simply in order to make the rules more “intelligible” to those who do not spend their days pondering choice-of-law issues. But if the rules are irrelevant from the perspective of the “two-step” theory, the theory cannot render them intelligible. To the contrary, under the “two-step” theory, a court that fails to interpret the statute at issue and instead just defers to the Restatement (Third)’s rule would be substituting judicial fiat for legislative supremacy. The result, as we have explained in further detail elsewhere, is a document at war with itself: at once giving courts helpful rules and telling the courts to ignore them.

The second foundational problem with the Restatement draft reflects the extremely unusual nature of the project that the drafters have undertaken. Other Restatements don’t have the problem just described because they recognize the synthetic nature of their enterprise and make the most of it. There are good reasons for following this path and leaving out the sort of theorizing exemplified by the discussion of two-step theory. By tying the Restatement to a particular set of theoretical commitments, the drafters risk further inflaming the divisions that have characterized choice-of-law practice within the United States for over a century. Here, we are reminded of Joseph Beale’s decision, while serving as Reporter for the first Restatement of Conflict of Laws, to structure the document around his “vested rights” theory, based on the territorial premise that a state’s law was supreme within its own jurisdiction but powerless beyond those borders. Although similarly guided by a desire to bring order and intelligibility to the field, the result was fierce academic infighting and division (often including oddly personal attacks against Beale), culminating in the so-called “choice of law revolution” as more and more jurisdictions moved away from Bealean vested rights and towards other concepts, such as “interests” and “significant relationships.” The “revolution” fractured American choice of law to this day—with a sizeable minority of states still following the vested rights theory, approximately half using some form of the Restatement (Second)’s most significant relationship approach, and a scattered few adopting interest analysis and other methods.

In the face of this division, the draft Restatement (Third) throws its own particular theoretical synthesis of the field into the mix, complete with its own terminology and concepts, new first premises, and the sort of argumentation that would not be out of place in a law review article. In so doing, the drafters run what is, in our view, the very real risk that courts will reject the Restatement (Third) as premised on conceptual commitments incompatible with their own respective jurisdictions’ choice-of-law doctrines. Often people who agree about how particular cases should be decided are willing to fight to the death over the conceptual basis for their opinions. The Restatement’s forays into choice of law theory maximize the likelihood that intellectual infighting will continue indefinitely.

Less Theory, More Clear Rules

So, what is to be done? Our proposal is simple: less theory. Rather than offering a first-principles defense of a particular approach to choice-of-law problems, the draft Restatement (Third) should allow its black-letter rules to stand on their own merits. That is what Restatements of other subjects do; and that is what Restatements are good at. As we have explained elsewhere, except in those rare circumstances in which a state legislature has explicitly codified particular choice-of-law rules, the role of the court in resolving choice-of-law disputes is not fundamentally different from its role when addressing a substantive issue of contracts or torts; in both context, the court must utilize its common-lawmaking authority to apply past precedent to the present facts, filling in the interstitial gaps along the way.

Accordingly, just as the Restatement (Second) of Contracts is, for example, able to assist courts in resolving difficult issues of first impression through its distillation of precedent into clear principles, the Restatement (Third) of Conflict of Laws can serve as a resource simply by providing black-letter rules developed through the careful review of nation-wide precedent, all the while standing above the theoretical fray. In our view, such a theory-less Restatement (Third) would be more likely to attract support from jurisdictions across the United States, regardless of the particular theoretical approaches to which their courts profess adherence. In other words, the more closely the Restatement tracks the prevailing positions, the more likely it will gain adherents—and the more it will deserve them. (Of course, that is not to say that theoretical debate should not continue unabated outside of the pages of the Restatement (Third)—it just means that scholars’ theoretical views of the nature of choice of law do not necessarily belong in Restatements).

Earning greater support for its rules would not simply burnish the reputation of the Restatement (Third), it would also help bring about a valuable benefit to the legal system on the national level: greater cross-jurisdictional uniformity and enhanced predictability for litigants as to what substantive law will ultimately govern their disputes. Although proponents of interest analysis and its related theories have long de-emphasized the importance of uniformity and predictability in the choice-of-law context in favor of forwarding the underlying substantive ends of the individual states, it is our view that states care deeply about these sorts of “system values,” as they are sometimes called. For example, it is because of states’ prioritization of system values that every state continues to hold on to the much maligned “situs rule” governing real property despite decades of academic attacks. The issue, however, is that because state courts cannot engage in direct negotiations, it is exceedingly difficult to coordinate a uniform response to any given type of choice-of-law dispute.

The solution comes from game theory: externally set “focal point” rules around which the independently acting courts can naturally coordinate. A theory-less Restatement (Third) of Conflict of Laws could provide the focal points around which different states’ courts can converge, helping to enhance system values while rising above the theoretical divides that have long characterized the field. In so doing, the Restatement (Third) would help bring about a new revolution in American choice of law, a revolution focused less on academic disagreements and more on achieving a workable system for resolving conflicts of laws.

As Beale explained as the ALI debated the adoption of the first Restatement of Conflict of Laws in 1925, his goal for the Restatement was not simply to “represent the law” as it was but also to “unify the law by making the law of the forum the same as the law of all other forums.” Beale never achieved the goal of achieving lasting uniformity—at least in part because of the theoretical debates that ultimately overshadowed the Restatement’s rules. We believe the Restatement (Third) can escape that fate. But to do so, the drafters must be willing to pursue a course fundamentally at odds with the drafters’ understandable academic inclinations: jettisoning abstract principles, and embracing the inherent merit of the black-letter law.