Side-Stepping the Dismal Swamp: A Reply to Roosevelt

In a recent post, we sought to call attention to what we see as two issues with the way the draft Restatement (Third) of Conflict of Laws embraces a specific theory of choice of law called the “two-step” approach. First, we suggested that there is a disconnect between the “two-step” approach and the Restatement’s black letter rules. Second, we voiced our concern that some jurisdictions might view the “two-step” theory as incompatible with their own respective approaches to choice-of-law disputes, leading them to reject the Restatement (Third) and thus undermining the goal of achieving greater inter-jurisdictional uniformity and predictability. Our recommendation is less theory, that is, offering the black letter rules as a descriptive account of prevailing trends in conflict-of-laws decisions, without prescribing a particular normative account of how choice of law ought to be understood on a conceptual level.

Professor Kermit Roosevelt, the Reporter for the draft Restatement (Third), offered his response to our critiques, in short stating that we mischaracterize what the draft Restatement says. We very much appreciate that Roosevelt has taken the time to consider and respond to us—indeed, Roosevelt has for years now generously engaged with our thoughts on the Restatement (Third). And, as explained in greater detail below, we believe the Roosevelt’s response clarifies ambiguities in the current draft that will be of value both to those currently working on its development and—perhaps more importantly—the courts that will eventually be applying it. However, in certain key respects Roosevelt seems to have misunderstood the nature of our disagreement. We offer this reply to clarify why we believe that for a new Restatement of Conflict of Laws, less theory is better.

Theory or Rules?

When it comes to the relationship between the black letter rules contained in the draft Restatement and the theoretical reasoning underlying these rules, the Restatement is apparently of two minds. It is easy to see how this might happen; the values that choice of law sets out to promote are in tension with one another. Black letter rules tend to be favored because of their practical utility—they promote uniformity, are relatively easy to apply, and provide predictability for the individuals who find themselves relying on what they believe to be the applicable legal norms. But black letter rules are crude implements for capturing the nuances of legal theory, and the nuances of choice-of-law theory are no exception. Theory cries out for flexibility and adaptability, but this necessarily comes at the expense of black letter orderliness.

Clinging to its aspiration to have its cake and eat it too, the draft Restatement recommends what it refers to as the “two-step” approach. First, the judge determines the “scope” of the contending statutes—whether those legal rules reach the dispute in question—by construing them in accordance with the usual domestic process of interpretation. This directive is in conformity with standard modern choice-of-law theory, in particular governmental interest analysis. This step, apparently, is supposed to reflect the actual policies of the actual states whose laws are actually vying for application.

Then, if more than one legal rule purports to be applicable, the court is supposed to make the choice by applying the black letter rule supplied by the Restatement. The rules that are used to make this choice are called “priority rules.” This second step more nearly resembles traditional rule-based approaches like territorialism, as set out in Justice Story’s Commentaries and later, under the auspices of the “vested rights” theory, in the first Restatement, and in certain parts of the Restatement (Second).

There are places in the analysis that the Restatement seems explicitly to favor hard and fast rules over case-by-case evaluation of the underlying factors. For example, the draft Restatement deals with statutes whose applicability is unclear by simply directing the court “to presume that [any implicated law’s] scope is broad” absent a clear statement to the contrary either in the statute or from “that state’s court of last resort.” This seems like encouragement to gloss over any actual state policies that do not coincide with the Restatement’s view of appropriate scope. Similarly, Comment c to Section 5.03 advises that when determining priority at the second step, it is not necessary to consider the underlying rules’ rationale:

The rules of this Restatement are intended to provide significant guidance to courts in deciding cases and to parties in structuring transactions. They have been derived by balancing multiple and sometimes conflicting factors, but in most cases they may be applied without explicit consideration of the factors that underlie them.

Elsewhere in its discussion of priority rules, Comment b to Section 5.02, the Restatement indicates that “the law-selecting rules of this Restatement” are just like statutes requiring application of a particular law, which “skip the analysis and select one state’s law rather than another’s.”

One vision of the Restatement, therefore, is that in the first step it invites the judge to take a broad view of the contending substantive statutes, making the existence of a conflict more likely, and then refers in almost all cases to the black letter rules. Then at the priority step, the Restatement should once again favor the hard and fast rules, skipping the analysis.

But this is apparently not what Roosevelt means to direct the court to do; a flow chart appearing at Comment d to Section 5.02 indicates that the judge should always start with determining the contending statutes’ scope. One wonders whether this instruction is not likely to be overlooked (or at least, misunderstood given the language in Comment d about assuming a “broad” scope); hurried practitioners and possibly some judges are likely to give in to the seductive appeal of the short and sweet priority rules. This places additional importance on a problem that we identified in our earlier post, which Roosevelt seems to have misunderstood. For purposes of clarity, we restate it here.

Roosevelt apparently accepts that, to the extent that these black letter priority rules aspire to reflect the substantive policies implicated by the fact pattern that the court is facing, they do not reflect the actual policies of the actual states in the actual case, but some sort of homogenized synthesis of what the Restatement drafters imagine the policies underlying the competing laws to be. Indeed, there is no avoiding this conclusion; the black letter priority rules were drafted by the American Law Institute (“ALI”)—not the two or more states whose laws are involved in the dispute that the court now addresses—and approved by the ALI membership long before the current dispute arose.

As we pointed out in our original post, this is characteristic of Restatements; but for most Restatements it is not problematic. The Restatement of Torts does not hide the fact that it is a synthetic recreation of the law of torts; it does not purport to represent faithfully any particular state’s tort policy. And the Restatement of Conflict of Laws does not have to disguise the fact that it is a synthetic recreation of the law of conflicts. That is in fact the raison d’être of most Restatement projects. But there is something problematic about the Restatement of Conflicts setting out black letter rules purporting to authoritatively reflect the policies underlying the law of torts, contracts, or property law.

The Restatement’s experts are chosen for their expertise in conflict of laws, not their expertise in contracts, torts, or property. Their mandate does not extend to expressing their opinions on subjects such as contracts, torts, or property. They do not study these other legal subjects the way that they study conflict of laws, in preparing their recommendations. The fact is, this is a Restatement of Conflicts, not a Restatement of Torts.

Our problem with the Restatement, in other words, is not that we think that it “tells courts how to interpret particular statutes” (as Roosevelt rephrases our initial post). It does make assumptions about substantive policies that are unwarranted, however—pre-Erie Railroad type assumptions about the nature of tort, contracts, and property law. Especially given the emphasis that the Restatement of Conflicts places on legislative supremacy and the legitimate authority of states to have the final word on their own substantive law, the methodology for developing the black letter “priority rules” is fundamentally inauthentic.

 Logical Necessity?

Another observation we made in our post was that the draft Restatement’s adoption of the “two-step” approach, thus tying the Restatement to a particular set of theoretical commitments, risked further inflaming decades-long divisions over theories of choice of law and potentially turning some jurisdictions off of the Restatement entirely. Professor Roosevelt’s response is essentially that there is no approach other than the “two-step” and thus there is no way a court could view its own jurisdiction’s approach as inconsistent with the Restatement’s preferred theory. As he states, the two-step model “is simply a description of what courts do in every choice-of-law case: decide whether a choice-of-law problem exists, and, if it does, resolve it.”

Roosevelt is wrong to characterize the “two-step” as a logical necessity. As we have explained in greater detail elsewhere, it is far from a given that a court’s resolution of a choice-of-law dispute can be neatly boiled down to separate “scope” determinations and “priority rules.” In support, one need look no further than Brainerd Currie, the progenitor of governmental interests analysis. Although he used different terminology, Currie too held the view that the first step in resolving a choice-of-law dispute is to determine whether more than one state’s law actually extended to the dispute. However, Currie also advised that if a preliminary analysis indicated that there was more than one “interested” state, then the court should undertake a “moderate and restrained” reassessment of the states’ interests with an eye towards finding the single jurisdiction with the greatest interest in the case. In other words, Currie advised integrating “priority”-like weighing of the relative interests of the implicated states into “scope” step.

Currie was not alone in collapsing together, at least to a degree, the “scope” and “priority” steps. Indeed, it is common for courts to hand down choice-of-law decisions setting out rules that straddle the line between the first and second step by, for example, making the scope of a given state’s statute depend on a case-specific determination as to whether that state is the one with the most significant relationship to the conduct underlying the dispute. The draft Restatement’s “two-step” theory—with its diametrically opposed treatment of precedent based on whether it is characterized as based on a determination of “scope” or “priority” (sister state’s scope determinations are given total deference, while its priority determinations are ignored)—cannot be easily reconciled with these sorts of decisions.

In fact, the draft Restatement itself illustrates the challenge of characterizing a sister state’s choice-of-law rule as reflecting “scope” or “priority.” While Comment b to Section 5.01 describes “[t]he traditional territorial approach [as] us[ing] only the first step of the two-step model,” Illustration 5 to the same section states that when confronted with a case implicating the law of a sister state that has adopted a territorial approach to choice of law, the forum should presume that the other state’s laws are nonetheless broad in scope and thus treat the territorial principles as “priority” rules. Like a modern form of the “characterization” problem realists identified with the first Restatement’s vested rights theory, the challenge in distinguishing between the “two steps” threatens to undermine the Restatement (Third).

Conclusion

These issues present difficult theoretical issues—certainly the type that ought to be debated in law reviews and other academic forums. But, in our view, the Restatement (Third) is better off side-stepping them altogether. By allowing its black-letter rules to stand on their own merits as descriptive statements about prevailing trends, a theory-less Restatement can help move American choice of law toward greater predictability and uniformity and avoid simply pushing the field further into the proverbial dismal swamp.

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