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In short, the hard insurer attacks on the soft law of the RLLI are troubling. Where a powerful interest group such as the insurance industry loses intellectual battles over legal content, it may be able to reverse those losses on the less reflective field of raw politics. Despite the attacks, Restatements continue to exert substantial influence on courts. What is unclear is the magnitude of reduction in Restatement influence and the likely future trend. Current attacks have probably taken a toll but it is unclear whether this will be a temporary phenomenon or whether Restatements and the ALI can be sufficiently de-legitimized by special interests to lose their traditional role of providing helpful soft law to courts.

(1) Insurance law is more fragmented than most contract law, in part because of the McCarran-Ferguson Act, 15 U.S.C. §1011, et seq., which provides for state regulation of the business of insurance unless expressly countermanded by federal law.

(2) See Part I, infra (describing origin and history of ALI and Restatements); American Law Institute, Restatement of the Law of Contracts (1931)

(3) See American Law Institute, Restatement of the Law (Third) Products Liability (1998); Restatement (Third) of the Law of Torts: Apportionment of Liability (2000); Restatement of Torts (Third) Liability for Physical and Emotional Harm (2012); American Law Institute, Restatement (Third) of the Law of Restitution and Unjust Enrichment ((2011). See also Part I, infra.

(4) See American Law Institute, Restatement of the Law Liability Insurance, Council Draft No. 4; Dec. 4, 2017)(“December 2017 RLLI”) and Restatement of the Law Liability Insurance, Proposed Final Draft No. 2 (April 13, 2018)(“April 2018 RLLI”); Restatement of the Law Liability Insurance (2019).

(5) See Letter of April 6, 2018 to ALI David F. Levi from Governors Henry McMaster (South Carolina), Kim Reynolds (Iowa), Paul R. LePage (Maine), Pete Rickets (Nebraska), Greg Abbott (Texas), and Gary R. Herbert (Utah).

(6) Id.

(7) See Kansas v. Nebraska, 574 U.S. 445, 135 S. Ct. 1042, 1064 (Scalia, J., concurring in part and dissenting in part). The Scalia attack on Restatements has been cited by insurer opponents of the RLLI in a number of its attacks on the RLLI.

(8) The Restitution Restatement, although not firmly adopting the prevailing rule on the point in question, adopted a position that enjoyed significant judicial and academic support. It was persuasive to five Supreme Court Justices in the Kansas v. Nebraska litigation (Majority Opinion author Kagan and Justices Ginsburg, Breyer, Sotomayor and Kennedy).

(9) Although individual sections of particular Restatements of course have critics and, more important perhaps, courts that reject them, Justice Scalia appears to be the only major judicial figure that has asserted that the Restatements as a class of publications has departed widely from settled law. In response to the Gubernatorial Letter, ALI President David Levi noted that “[o]ur good friend, Justice Scalia, who could be critical of us, was also an admirer and frequently cited and relied upon our work product.” See Letter of April 26, 2018 from David F. Levi to Governors Abbott, Herbert, LePage, McMaster, Reynolds and Ricketts. Judge Levi’s point is well taken. Justice Scalia cited Restatements as authority in nearly 100 of the opinions he wrote, including three issued after his criticism made in Kansas v. Nebraska. See Omnicare, Inc. v. Laborers Dist. Council Constru. Indus. Pension Fund, 135 S. Ct. 1318 (2015); Commil USA, LLC v. Cisco Sys., 135 S. Ct. 1920 (2015); Zivotofsky v. Kerry, 135 S. Ct. 2076 (2015).

(10) Id. at 1 (suggesting that RLLI is improper because “of the McCarran-Ferguson Act’s unambiguous commitment of insurance matters to state jurisdiction” and that many of the RLLI provisions “are properly within the prerogative of our state legislatures”).

(11) Id. at 1.

(12) Id. at 1.

(13) This has already occurred regarding some past ALI provisions. For example, when businesses and property owners disliked a section of the ALI Restatement (Third) of Torts, Intentional Torts to Persons that they viewed as insufficiently protective of land and facility owners, they successfully lobbied roughly 20 state legislatures to enact a contrary rule essentially immunizing property owners form tort liability to trespassers. See, e.g., Carter Wood, As long as it’s not ‘flagrant,’ trespassing is OK? There out to be a law, Jan. 25, 2011, www.pointoflaw (noting that the ALEC – the American Legislative Exchange Council has drafted model legislation to prevent application of ALI Restatement (Third) of Torts provision that would require property owners to show some care in preventing dangerous conditions even for trespassers and citing North Dakota H.B. 1452 as an example).

Much of this was spearheaded by two pro-business political organizations: the American Tort Reform Association (“ATRA”) and the American Legislative Exchange Council (“ALEC”). In language that is strikingly similar to attacks on the RLLI, critics of the Torts Restatement provision argued that the provision was “radical” and “would threaten to bring about fundamental changes” unsupported by case law that would “result in higher insurance premiums.”

(14) The ALI membership is demographically one unlikely to endorse a leftist agenda. Many ALI members are themselves wealthy lawyers or businesspersons with traditionally Republican sensibilities favoring limited government, lower taxes, less regulation, market-based economy and solutions to problems as well as more deference to private actors and prerogatives, including freedom of contract. Further, most ALI members who are practicing lawyers represent large, well-heeled, sophisticated clients.

Notwithstanding this, the anti-RLLI lobbying has come from politically conservative forces, as further discussed in Part III, infra. Regarding the April 6, 2018 gubernatorial letter, all six of the signing governors are Republicans from what in the U.S. are generally described as “red” or solidly Republican states with a conservative electorate.

A similar pattern is reflected in the legislators who have taken up the insurance industry cause opposing the RLLI. See Part III, infra.

(15) For more detailed description of ALI history and membership as well as more detailed discussion of the drafting and approval of the RLLI itself, see Jeffrey W. Stempel, Hard Battles Over Soft Law: The Troubling Implications of Insurance Industry Attacks on the American Law Institute Restatement of the Law of Liability Insurance, __ Cleve. St. L. Rev. __ (2021)(forthcoming). See also Jeffrey W. Stempel & Erik S. Knutsen, Stempel & Knutsen on Insurance Coverage §14A (4th ed. 2016 & Supp. 2020)(providing extensive discussion of RLLI process and controversy); Randy Maniloff & Jeffrey Stempel, Commercial General Liability Coverage: Key Issues in Every State Ch. 22 (4th ed. 2018)(providing itemized discussion of significant RLLI provisions).

(16) Among the Principles projects have been Corporate Governance (1994), Family Dissolution (2002), Transnational Insolvency: Cooperation Among the NAFTA Countries (2003), Intellectual Property (2008), Software Contracts (2010), and Aggregate Litigation (2010).

(17) Examples are the Model Penal Code promulgated by ALI in 1962 and the Uniform Commercial Code (UCC), which was a joint project with the National Conference of Commissioners on Uniform State Laws (NCCUSL). The UCC has been largely adopted in all 50 American States, as have many of the other Uniform Laws promulgated by NCCUSL). Because many of the Uniform Laws have been enacted as statutes in the states, these may be considered closer to hard law than the Restatements or Principles, which are seldom adopted by legislation but are intended more as guides for courts.

(18) As discussed previously, one might subdivide soft law into categories or along a continuum. Model codes are potentially the strongest soft law in that, if accepted, they become enacted into positive law. Restatement black letter is next strongest because, although non-binding, it is presented in “rule” form that usually represents a case law consensus and is designed to be followed. Restatement Comments are less formal and forceful but can be highly influential. Reporters Notes function as something of a “super-Treatise” in that they not only represent useful scholarly analysis but analysis that had been subjected to substantially more scrutiny during the drafting process than an ordinary treatise by a law professor.

(19) See, e.g., Olsen v. Etheridge, 686 N.E.2d 563 (Ill. 1997), excerpted in David Epstein, et al. Making and Doing Deals: Contracts in Context 998 (5th ed. 2018), a leading law school instructional text)(finding Restatement (Second) Contracts §311 persuasive regarding vesting of contract rights and reversing older caselaw to the contrary).

(20) See Ultramares Corp. v. Touche, Niven & Co., 174 N.E. 441 (1931)(finding that there can be liability to clients for negligently certifying statements without adequate investigation but that liability to third parties exists only if there is fraud but not if there is only negligence). Ironically, the Restatements have since moved in the direction of greater liability for professional negligence if a third party’s reliance on the professional’s work was reasonably foreseeable. See Restatement (Second) Torts § 552 (professional may be liable for negligence if third party’s reliance on professional’s work or statements was justifiable).

(21) See, e.g., William T. Barker, Lobbying and the American Law Institute: The Example of Insurance Defense, 26 Hofstra L. Rev. 573 (1998)(noting controversy regarding panel counsel efforts to obtain revision of early drafts of Law Governing Lawyers Restatement, defending efforts as aptly within ground rules and based on law and policy arguments rather than political threats); Carrie Menkel-Meadow, The Silences of the Law Governing Lawyers: Lawyering as Only Adversary Practice, 10 Geo. J. Leg. Ethics 631 (1997)(taking issue with Lawyers Restatement for looking “backward, not forward” and providing little guidance for legal profession “of the twenty-first century.”); Jonathan R. Macey, The Transformation of the American Law Institute, 61 Geo. Wash. L. Rev. 1212, 1212 (1993)(“Few law reform efforts in this century have been as controversial as the often bitter fourteen-year battle within the [ALI] over its efforts to articulate a set of rules about American corporate law.”).

(22) Stephanie A. Middleton, Leaving Clients at the Door, ALI Reporter, Vol. 40, No. 2 (Spring 2018) at 10. Middleton is the Deputy Director of the ALI.

(23) The term “liberal establishment” in the U.S. connotes a socioeconomically elite cluster of persons, entities, or organizations, who do not use their positions to gain greater personal power but are instead interested in promoting the overall health of society.

(24) See RLLI at x (boldface removed).

(25) See Nature of a Restatement, reprinted in RLLI at x-xi. Ironically, and disturbingly, when insurers have complained about an RLLI draft by stating that an RLLI position will damage insurance markets, cause substantial increases in premiums, make insurance less available or the like, they have done so without marshalling empirical evidence. See Part II, infra. But insurers are the entities with the greatest access to underwriting, claims, loss, pricing, and profitability information –much of which is proprietary and not available to scholars or the general public, including the ALI. Such deafening silence in this regard seriously undermines insurance industry claims about deleterious impact from the RLLI– or for that matter any legal rule insurers regard as favoring policyholders. If a pro-policyholder rule actually does adversely affect the insurance business or the fortunes of insurers, the insurance industry should be able to produce at least some evidence in support of this contention

(26) Id. at xi.

(27) See Key Issues, supra note 15, Ch. 22 (providing section-by-section review of RLLI and comparison to state law concerning the topics address in the RLLI); Stempel and Knutsen on Insurance Coverage, supra note 15, §14A (4th ed. 2016 and Supp. 2020)(providing comprehensive review of RLLI and concluding that it has slightly more sections favorable to policyholder but that economic impact of sections favorable to insurers is larger).

(28) Insurance law is distinguished (or plagued, depending on one’s viewpoint) by the dominance of treatises written by practitioners rather than full-time law academics. To be sure, academics come to subject matter areas with a viewpoint but it usually is a viewpoint taken after years of study and analysis rather than formed while representing paying clients to whom duties of loyalty are owed. Further, pursuant to ABA Model Rule of Professional Responsibility 1.7, practicing attorneys must avoid conflicts of interest, including so-called “positional” conflicts in which the lawyer (or his law firm) says X in Case One but then says Y in Case Two.

A positional conflict is presented when success by a the lawyer in Case One (e.g., persuading a court to adopt a strict view of late notice on behalf of an insurer client) could create precedent that harms the lawyer’s client in Case Two (e.g., a policyholder whose notice of a claim was slightly late but caused no harm to the insurer). See Jeffrey W. Stempel, Legal Ethics and Law Reform Advocacy, 10 St. Mary’s J. Legal Malprac. & Ethics 245, 253-55 (2020)(describing concept); Consequently, the world of big-time insurance coverage practice (and only attorneys in big time practice are likely to write treatises) is fairly starkly divided into treatises written by policyholder attorneys.

Under these circumstances, a good case can be made that the RLLI is arguably the best source available for providing a neutral assessment of the law in that while the document takes positions on divided caselaw, the Comments provide nuanced discussion of the position and the Reporters Notes collect diverse caselaw on varying sides of the issue.

(29) And it is not an overgeneralization to say the composition of the Advisers group was evenly balanced. In its final incarnation (the group expanded slightly during the years of the project), it included eleven (11) insurer attorneys or executives, eleven (11) policyholder attorneys or advocates; nine (9) professors in addition to the Reporters; nine (9) judges or former judges. Also among the Advisers was counsel and vice-president to a major insurance broker who had represented insurers as an attorney and is an accomplished legal scholar and attorneys with mixed practices. In addition, an insurer attorney was designated liaison from the American Insurance Association. Overall, it was an amazingly balanced group, which had been the goal of the Reporters and the ALI from the outset. In hindsight, one might be critical of the Institute for not adding other official liaison to the group such as a formal representative of insurance brokers, third-party administrators, or government regulars as was the case for insurers.

(30) There were more than 100 MCG members involved with the RLLI and the group includes a mix of counsel, with members who were particularly prominent insurer attorneys or advocates and insurer attorneys with an extensive track record of scholarly writing. The MCG also included notable policyholder counsel and legal scholars and persons with substantial insurance industry experience.

(31) Between January 1, 2014 and July 15, 2017, there were 231 comments submitted regarding the RLLI. See American Law Institute website, Project Page for RLLI, available at ali.org. Comments submitted prior to 2014 have not been retained on the website. In addition, persons interested in the RLLI frequently make direct contact with the Reporters but do not send their comments to the ALI for posting. But whatever the final tally, it is clear that the RLLI has received substantial scrutiny and commentary. From July 15, 2017 through the time of the May 2018 Annual Meeting, there were another 69 comments as well as ten motions directed at the RLLI.

(32) See American Law Institute website, Project Page for RLLI, available at ali.org.

(33) See Comment of Dean L. Cameron, Director, Idaho Department of Insurance (April 5, 2017)(“The Idaho Department of Insurance respectfully request that the finalization of the Restatement, Liability Insurance project be delayed to a date later than May 2017, allowing state regulators the opportunity to weigh in on important issues raised by the proposed Restatement. This topic has just now come to the attention of our legal department which requires time to delve into this complicated topic in order to advise and submit an opinion”).

(34) See Press Release Accompanying Letter of May 5, 2017 from NCOIL CEO Thomas B. Considine to ALI Director Richard Revesz and ALI Deputy Directory Stephanie Middleton.

(35) Id. at p. 2.

(36) NCOIL seems to suggest that the RLLI approach to many issues was so unduly unfavorable to insurers that it would undermine the very nature of insurance markets and the insurance business and would interfere with state regulatory efforts. NCOIL also suggests that legislatures are better able to conduct an empirical and public policy inquiry into the wisdom of proposed legal rules. But the NCOIL letter offers no empirical evidence or public policy information to support its opposition to the Restatement provisions with which it takes issue.

(37) NCOIL argued against: §3(2), which NCOIL read as providing that “[i]nsurance contracts do not need to be enforced as written.”

§19 because it means the “[i]nsurers in breach of a defense obligations may be forced to pay uncovered claims;”

§24 and §27, which NCOIL asserted provides that “[i]nsurers that reasonably refuse a settlement demand are liable for damages in excess of limits and punitive damages, irrespective of law or public policy to the contrary;” and

“Policyholders –but not insurers– can shift attorneys’ fees” in that §48(3), §49(3) and §51(1) permit fee shifting in some circumstancesSee id. at p. 2.

All of this assertions are ill-taken. See Key Issues, supra note 15, Ch. 22; Knutsen & Stem-pel, supra note 15, §14A.

(38) In addition to the treatises previously cited in this Section and the Reporter’s Notes to RLLI §§3 & 4, see also Kenneth S. Abraham, A Theory of Insurance Policy Interpretation, 95 Mich. L. Rev. 531, 532 & n. 4 (1995)(finding contra proferentem principle to be a cornerstone of insurance policy construction, addressed in more than 4,000 cases between 1980 and 1995, with court frequently also employing waiver, estoppel and reasonable expectations analysis).

(39) See RLLI §3 (adopting a “plain meaning” approach with more limited use of extrinsic evidence than predecessor drafts).

(40) See NCOIL Letter, supra note 17 at p. 1.

(41) As discussed earlier, roughly a fourth of the Advisers were persons connected to the insurance industry as employees or counsel. In addition, a prominent insurer attorney participated in the project as a liaison representative of the American Insurance Association (AIA)(There was no liaison appointed to represent a policyholder or broker organization). Among the MCG were many attorneys representing insurers in their practices. This is not to suggest that these persons agreed with all or even most of the positions taken in the RLLI.

(42) See e.g., Randy Maniloff, ALI Principles of Insurance Should Concern Industry, Law360 (April 16, 2014). Despite the long gestation period of the RLLI, the insurance industry did not mount what appears to be coordinated attack on the project until 2017. In addition to Motions like the AIG Omnibus Motion and adverse Comments submitted to ALI (e.g., NCOIL), insurer counsel took to the trade press with a vengeance to attack the RLLI. See, e.g., A. Hugh Scott, ALI’s Proposed Insurance Law Restatement: A Trojan Horse?, Law360 (Feb. 9, 2017); A. Hugh Scott, Why Criticism of ALI’s Insurance Restatement is Valid, Law360 (May 10, 2017).

(43) For example, at an April 2016 Defense Research Institute seminar I attended along with hundreds of attorneys representing insurers (many staff counsel) and even some insurance company executives (as well as one of the Treatise authors), a prominent attorney from a well-known law firm representing insurers gave a presentation in which he criticized aspects of the RLLI, described it as very pro-policyholder and advised/warned his colleagues that the RLLI was likely to be influential.

(44) See Letter of January 17, 2017 from Eric J. Dinallo and Keith J. Slattery (Debevoise & Plimpton) to ALI Leadership and RLLI Reporters.

(45) See Letter of May 18, 2017 from Peter Kochenburger (co-authored by Daniel Schwarcz and Jeffrey Thomas and joined by Professors Jay Feinman and Jeffrey W. Stempel as well as Amy Bach, Executive Director of United Policyholders) to ALI Director Richard L. Revesz and Deputy Director Stephanie A. Middleton.

(46) Id. at p. 1.

(47) The Dinallo/Slattery Letter argued that “[c]notary to the [RLLI] presumption regarding the vulnerability of the insurance consumer, comprehensive regulatory oversight, extensive insurance laws and regulations, well-developed case law and competitive market forces are already in place to protect the consumer. Therefore, the highlighted Draft rules [with which Dinallo and Slattery disagree] are unnecessary and overreaching. Those rules also depart form case law and attempt to displace the role of the regulator.” See Dinallo/Slattery Letter, supra note 44, at p. 38.

(48) See Kochenburger Letter, supra note 45, at pp. 2-4.

(49) See Kochenburger Letter, supra note 45, at pp. 4.

(50) See Kochenburger Letter, supra note 45, at pp. 5-6.

(51) See Kochenburger Letter, supra note 45, at 6-8.

(52) See Memo of June 11, 2017 from Laura A. Foggan to RLLI Reporters Tom Baker and Kyle Logue re RLLI §45 (arguing that there should at a minimum be more citation to cases in which courts enforce policy terms as written and reject public policy-based objections to enforcement); Note of July 27, 2017 from Laura Foggan to Reporters Baker and Logue attacking RLLI §13(3) permitting use of extrinsic evidence to supplement four corners of plaintiff’s complaint to create a potential for coverage and duty to defend and attaching case of Ciber, Inc. v. ACE American Ins. Co., 2017 WL 2537092 (D. Colo. June 9, 2017)

(53) See, e.g., Letter of June 28, 2017 from Kim V. Marrkand to Reporters Baker and Logue (advocating elimination of Comment d to RLLI §27, which takes that position that where an insurer’s failure to make reasonable settlement decisions results in a judgment against the policyholder in excess of policy limits, the insurer is responsible for the entire judgment even if portions of the judgment include a punitive award). Insurers oppose this approach in states where punitive damages are uninsurable as a matter of public policy and can cite one particularly prominent (but in in my view very wrongly decided case: PPG Indus., Inc. v. Transamerica Ins. Co., 975 P.2d 652, 654 (Cal. 1999) (see Stempel & Knutsen on Insurance Coverage, supra note 15, §9.05[d], supra, criticizing PPG v. Transamerica). However, RLLI Comment d correctly rejects the insurer view, noting that in cases like PPG v. Transamerica, there were powerful dissents that the Reporters found more persuasive. The RLLI “follows the approach of the dissenting judges in those cases for several reasons. First, this approach furthers the public policy in favor of encouraging reasonable settlement decisions by insurers. Second, the contrary approach would create a conflict of interest in the defense of the claim that would increase the frequency of cases in which independent counsel would be required under §16 [citing RLLI §16, Comment d.] Third, the incentive argument in favor of the contrary approach is implausible. See also Reporters Noted to §27 (“The insurer should be liable for all damages proximately caused by its breach of duty [to make reasonable settlement decision]; Jennifer A. Emmaneel, Note, Hiding Behind Policy: Confusing Compensation with Indemnification, 30 Golden Gate U. L. Rev. 637 (2000)(concluding after extensive analysis of PPG v. Transamerica that the dissent position is superior).

(54) See Letter of June 28, 2017 from Victor E. Schwartz to Reporters Baker and Logue (attacking fee-shifting as a remedy and proposing revisions of §§48, 49 and 51 to defer to existing state-by-state law).

(55) See Letter of June 19, 2017 from Malcolm E. Wheeler to Reporters (urging revision of RLLI §§24, 25, and 35 to add additional requirements before a policyholder may settle a matter without an insurer’s consent and urging approach similar to Travelers v. Stress-com, 370 P.3d 140 (Colo. 2016) on which the insurer prevailed in an unauthorized settlement case).

(56) See Letter of May 24, 2017 from Louis C. Long (President, Pennsylvania Defense Institute) to Reporters (criticizing §§ 3, 12, 13, 10 and “numerous other sections” (by which we think he means §§48, 49 and 51) regarding fee shifting).

(57) See. e.g., Letter of May 15, 2017 from Parks T. Chastain to Reporters (urging postponement of vote on RLLI); Letter of Enrique Marinez (President, Association of Defense Counsel of Northern California and Nevada) to Reporters (referencing and adopting DRI criticism); Letter of May 22, 2017 from Swift Currie (self-described insurer firm writing “on behalf of several insurance company clients”) to Reporters Letter of May 16, 2017 from David T. Moran to ALI Director (arguing that RLLI §3 regarding extrinsic evidence and the duty to defend is not supported by caselaw)(an incorrect assertion in our view). See also Letter of May 19, 2017 from Thomas D. Hughes (Greater New York Insurance Company) to Reporters; Letter of May 19, 2017 from Carmello Puglisi (American Family Mutual Ins. Co.)(and other insurer counsel) to Reporters; Letter of May 19, 2017 from Carl Perni-cone (insurer law firm Wilson Elser) to Reporters; Letter of May 18, 2017 from William T. Russell, Jr. to Reporters; Letter of May 18, 2017 from William A. Bossen (insurer counsel Musick, Peeler & Garrett LLP) to Reporters; Letter of May 17 from R. Mark Mifflin (Illinois Association of Defense Trial Counsel); Letter of May 17, 2017 from Todd A. Strother (EMC Insurance) to Reporters; Letter of May 17, 2017 form Ellen D. Melchionni (New York Insurance Association) to Reporters; Letter of May 17, 2017 form Bonnie L. Guth (Munich Re) to Reporters.

In a Letter of May 19, 2017 to Reporters, Jennifer Hammer (Director, Illinois Department of Insurance) criticizes the RLLI as deviating from settled law and quoting Justice Scalia concurrence in Kanas v. Nebraska, 135 S.Ct. 1042, 1061 (2015) in which he accuses ALI and Restatements of advocating new law rather than distilling existing law as well as opposing RLLI §19(2) and §24). See also Letter of May 15, 2017 from Patrick M. McPharlin (Director, Michigan Department of Insurance and Financial Services (incorrectly arguing that RLLI provisions on use of extrinsic evidence for insurance policy construction creates “subjective exception to the plain meaning rule” and that RLLI “could significantly alter the environment in which insurance contracts are interpreted in a way that would create instability for insurers and higher prices for consumers.”).

The staggering baselessness of Director Hammer’s criticism, which raises doubts about the competence and independence of state insurance regulators, is addressed in more detail in Stempel, Hard Battles, supra note 15, p. 26, note 101 and Stempel & Knutsen on Insurance Coverage, supra note 15, §14A.

(58) See Note of June 30, 2017 from Guy Miller Struve to Reporters Baker and Logue, titled “A New Low in the Opposition to the Liability Insurance Project” in which he takes issue with an opinion piece in the Wall Street Journal (Tort Lawyers Take Over the American Law Institute, Wall. St. J., June 30, 2017). Struve succinctly makes his point: “Every ALI member owes it to the Institute to defend it publicly against this sort of distortion” and

[t]his observation applies with particular force to those ALI members who are asking the ALI to make changes favored by the insurance industry… Whether such members like it or not, the barrage of pressure against the American Law Institute inevitably creates the risk (and the perception) that any changes made [to the RLLI] form this point forward may be the result of pressure, not the result of changed convictions on the merits. This will be especially true if the members supporting such changes have not publicly disavowed the pressure barrage.

Id. As Struve points out, the allegation that the Institute is particularly pro-plaintiff is belied by the facts. For example, while I was on the floor at the May 2017 Annual Meeting, a motion (made by Struve) that narrowed the scope of liability for battery in the Torts Restatement was adopted by the Membership over fairly uniform opposition from the law faculty members on the floor.

(59) See, e.g., Letter of May 21, 2017 from Lorelie S. Masters to Reporters (noting extensive insurance industry participation in or awareness of the RLLI project for years and questioning attack on RLLI at such a late stage of the project); Letter of May 22, 2017 from John G. Buchanan III to Reporters (seeking stronger version of RLLI §13 more protective of policyholders).

(60) See Letter of May 16, 2-17 to “Fellow DRI Members” from John E. Cuttino, DRI President.

(61) Id.

(62) See §9.03, supra (discussing degree to which insurers are “clients” of counsel representing policyholders in litigation.

(63) See William T. Barker, An Insurer Need Not Defend if Undisputed Facts Note at Issue or Potentially at Issue in the Underlying Action Establish as a Matter of Law That the Legal Action is Not Covered, Proposed Amendment to Restatement of the Law of Liability Insurance Proposed Final Draft; Anastasia Markakis Nye, Conditions Under Which the Insurer Must Defend, Proposed Amendment to Restatement of the Law of Liability Insurance, Proposed Final Draft (March 27 [sic], 2017)(seeking similar changes to permit insurers to refuse to defend based on facts outside the complaint known to insurers).

(64) See Michael Aylward, Proposed Amendment to Restatement of the Law, Liability Insurance, Proposal Final Draft (March 28, 2017), Section 24 – The Insurer’s Duty to Make Reasonable Settlement Decisions (seeking to delete Comment e and related portions of Reporters’ Note). Comment e sets forth as factors that a judge or jury may consider in determining whether an insurer acted in a reasonable manner in addressing a claim).

(65) See Larry Stewart, Restatement of the Law, Liability Insurance, Motion to Amend §42 by Adopting the “Unavailability Rule”; Lorelie S. Masters, John G. Buchanan III & David Goodwin, Joinder in [Stewart] Motion to Amend 42(b) Adopting the “Unavailability Rule” (joined by Amy Back, David H. Brown, Timothy W. Burns, Dennis R. Connolly, Mitchell F. Dolin, Jonathan M. Goodman, Timothy P. Law, Barry S. Levin, Meghan H. Magruder, Leo P. Martinez, J.W. Montgomery II, David L. Mulliken, Gita F. Rothschild, Jeffrey W. Stempel, and Jeffry E. Thomas).

(66) See, e.g., Michael Aylward, Proposed Amendment to Restatement of the Law, Liability Insurance, Proposed Final Draft (March 28, 2017) –36– Notice-of-Claim Conditions; Michael Aylward, Proposed Amend to Restatement of the Law, Liability Insurance, Proposal Final Draft (March 2, 2017), Section 47 (Insurance of Known Liabilities)(arguing that prospective insurers should be required to report without being asked all demands and claims known to them at the time of seeking insurance rather than only those claims where liability is certain); Anastasia Markakis Nye, Insurance of Known Liabilities, Proposed Amendment to Restatement of the Law, Liability Insurance, Proposed Final Draft (dated March 27 [actual date May 27], 2017)(seeing to delete Comment (g) to §47, providing that known loss rules of section do not apply to claims-made policies).

(67) Although NCOIL purports to be a “big tent” group of legislators interested in insurance policy, it also has elements of a generally politically conservative state legislators with ties to the insurance industry and large corporations who have banded together to promote legislation favorable to insurers. That said, however, NCOIL and insurance industry organizations are not always in agreement. See, e.g., American Insurance Association, News Release: AIA Concerned by Adoption of NCOIL Regulations (July 14, 2014), available at www.aiadc.org (taking issue with resolutions favoring national capital standards as unduly intrusive on states).

(68) See NCOIL Press Release, NCOIL Pleased ALI Postponed Adoption of the Restatement, May 22, 2017 (“NCOIL legislators are pleased that the ALI heeded our advice,” said [NCOIL CEO Tom] Considine. “We continue to call for an immediate dialogue with the ALI to ensure their restatements to not creep into the realm of legislative prerogative.”).

(69) See, e.g., Andrew G. Simpson, Update: Insurers Sound Alarm Over Liability Law Restatement; Vote Delayed, Ins. J. (May 22, 2017), available at www.insurancejournal.com (quoting Tom Karol, general counsel for the National Association of Mutual Insurers (NAMIC), Tom Considine, CEO of NCOIL, Stephen Zielenzienski, general counsel and senior vice president of the American Insurance Association, all in opposition to the RLLI and pleased at the postponement but promising to continue to oppose the RLLI unless changed).

(70) For example, posted comments to the Simpson article suggested that readers were convinced that the RLLI and perhaps even the ALI were evil things. Once asked:

Why would a committee of non elected individuals have this much power[?] Last I checked in a republic such as The USA there are 3 separate and distinct bodies who are to enact, enforce and adjudicate the laws. This group [ALI] is not of those 3…. This smells like tyranny to me!!!

Id. (Comment of “mrbob”).

Although ALI members would perhaps like to be this powerful, the statement is of course inaccurate but reflects the type of anti-ALI, anti-RLLI sentiment that insurers have been able to engender. In a similar vein, another commentator wrote:

I’m not fond of some insurance companies and the way they pay claims, but these things would turn our industry on its head. Apparently, it would leave insurers with little defenses. How can you have no policy limits? What is this, Obamacare? How could you rate for this? Absurd? At the very least agents would have to become determiners of character of their clients and potential clients. Prices would jump through the roof. You would have far fewer insurers. Who are these guys [ALI] anyways? There [sic] acting like legislators. Not good.

Id. (comments of “Lou”).

(71) See, e.g., NCOIL, Press Release, NCOIL Pleased ALI Postponed Adoption of Restatement [sic] (May 22, 2017, available at ncoil.org)(stating that “NCOIL legislators are pleased that the ALI heeded our advice” (quoting NCOIL CEO Thomas B. Considine)(“We continue to call for an immediate dialogue with the ALI to ensure their restatements to not creep into the realm of legislative prerogative.”).

(72) See Text and Accompanying Notes (“TAN”) 5-10, supra, discussing Letter of April 6, 2018 from Governors of Iowa, Main, Nebraska, South Carolina, Texas and Utah to ALI President David Levi. See also Letter of April 26, 2018 from David F. Levi in Reply to the Governors.

(73) See NCOIL Writes to State Chief Judges Urging Action on ALI’s Proposed Liability Insurance Restatement (from ncoil.org website), reproducing letter of Feb. 27, 2018 from Thomas B. Considine, NCOIL CEO to Hon. Thomas A. Balmer, Chief Justices, Supreme Court of Oregon (arguing that RLLI is impermissible intrusion on state legislative authority and urging lobbying against the RLLI)(at pp. 1-3 of Letter).

(74) See NCOIL Resolution Encouraging the American Law Institute to Materially Change the Proposed Restatement of the Law of Liability Insurance, Adopted by the NCOIL Property and Casualty Insurance Committee on November 16, 2017 and the NCOIL Executive Committee on January 5, 2018 (Sponsored by Sen. Neil Breslin (NY) and Sen. James Seward (N.Y.), (available at ncoil.org) taking the position that if the RLLI is not revised to accommodate NCOIL/insurance industry preferences: the RLLI.

Should not be afforded recognition by the courts as an authoritative reference regarding established rules and principles of insurance law, as Restatement traditionally have been afforded

[further urging] state legislators across the country to adopt resolutions declaring that this Restatement should not be afforded such recognition by court.

(75) Although NCOIL leadership is a mix of Republican and Democratic legislators, NCOIL’s policy slant is distinctly conservative and more in line with traditionally Republican resistance to regulation of business. For example, NCOIL has opposed the U.S. Department of Labor’s “fiduciary rule” concerning financial advisers, submitted amicus briefs advocating reduced or no insurer liability, exemption from state and local taxes for ride share companies such as Uber. In addition, NCOIL has not dealt with a seeming contradiction in that if one is “pro-business,” this does not necessarily mean favoring insurers. Frequently, the policyholders locked in litigation with their insurers are commercial entities, ranging from Fortune 100 corporations to “Mom and Pop” small businesses. In addition, the biographies of NCOIL activists reflect considerable political conservatism and ties to the insurance industry. Of the 81 NCOIL member legislators serving on Committees of the Organization, 55 are Republicans and 26 are Democrats. Thirty work in the insurance industry – by far the largest vocational category of the group.

(76) See NCOIL Proposed Resolution (included in NCOIL Press Release cited in previous note).

(77) Id.

(78) The closest parallel is attorney activity surrounding the ALI Principles of Corporate Governance Project. Even though that was a “Principles” project rather than a “Restatement,” many corporation leaders were opposed to aspects of the projects viewed as according shareholders and other constituencies (e.g., governments, employees) too much power relative to corporate management. When Corporate Governance was being debated at the several ALI meetings in which it was on the agenda, the number of Institute members on the floor surged. After the debate and voting on the Project, many of the attorneys left. It was, as one ALI insider put it to me at the time, as if the attorneys (many form large, prestigious law firms) “took the shuttle down to Washington just to vote for corporate management and then took the first shuttle back after the vote.” This was a widespread perception of many in the ALI that reportedly led to the Institute being more interested in diversifying its membership so that “Wall Street lawyers” would have reduced power as a voting block.

(79) See TAN 5-15, supra, discussing Scalia concurrence in Kansas v. Nebraska, 135 S. Ct. 1042, 1064 (2015), which has been frequently cited in the submissions of RLLI opponents.

(80) In addition to top scholars at the pinnacle of the project (Virginia Law professor Kenneth Abraham and Reporters Tom Baker (Penn) and Kyle Logue (Michigan), several prominent U.S. insurance law professors were Advisers to the project, as was Cambridge University Professor Malcolm Clarke, perhaps England’s most prominent authority on insurance contracts. In addition, the MCG included law prominent law professors.

(81) The exception is George Priest of Yale Law School, admittedly a prominent scholar but nonetheless a lonely one in his criticism of the RLLI, for which he was compensated by an insurer organization.

(82) To be sure, there is always the chance that I am unaware of some critics. But because I regularly review legal literature and news about insurance, I find this unlikely. It can be said with certainty that no full-time law professor has submitted anti-RLLI comments to the ALI. See George L. Priest, A Principled Approach Toward Insurance Law: The Economics of Insurance and the Current Restatement Project, 24 Geo. Mason L. Rev. 635 (2017). RLLI Reports convincingly responded to Professor Priest’s criticisms. See Tom Baker & Kyle D. Logue, In Defense of the Restatement of Liability Insurance Law, 24 Geo. Mason L. Rev. 767, 768 (2017) (responding to Priest’s “aggressive and rather meandering attack” on the RLLI; finding many of Priest’s assertions to be “groundless and unsubstantiated”). See also Stempel, Hard Battles, supra note??, at 38-39 (providing more information about and approving Baker/Logue rejoinder to Priest).

(83) The most sustained scholarly discussion of the RLLI has taken place in the context of a symposium devoted to the project. See Symposium, 68 Rutgers U. L. Rev. 1 (2015); Jay M. Feinman, The Restatement of the Law of Liability Insurance as a Restatement: An Introduction to the Issue, 68 Rutgers U.L. Rev. 1 (2015). The issue contained a range of articles, some critical of portions of the RLLI or arguably even the RLLI as a whole. But all of the anti-RLLI articles were authored not by full-time law professors but by lawyers who regularly represent insurers.

(84) See, e.g., Jeffrey W. Stempel, An Analytic “Gap”: The Perils of Robotic Enforcement of Payment-by-Underlying-Insurer-Only Language in Excess Insurance Policies, 52 Tort, Trial & Ins. L.J. 807 (2017); Charles Silver & William T. Barker, The Treatment of Insurers’ Defense-Related Responsibilities in the Principles of the Law of Liability Insurance: A Critique, 68 Rutgers U. L. Rev. 83 (2015)(full-time law professor and prominent insurer counsel levels discrete criticisms at settlement provisions of RLLI); George M. Cohen, Liability of Insurers for Defense Counsel Malpractice, 68 Rutgers U. L. Rev. 119 (2015)(taking issue with some aspects of RLLI section expanding insurer responsibility for attorney error); Leo P. Martinez, The Restatement of the Law of Liability Insurance and the Duty to Settle, 68 Rutgers U. L. Rev. 155 (2015)(questioning aspects of RLLI provision on insurer’s duty to make reasonable settlement decisions); Jeffrey E. Thomas, The Standard for Breach of a Liability Insurer’s Duty to Make Reasonable Settlement Decisions: Exploring the Alternatives, 68 Rutgers U. L. Rev. 229 (2015)(same). See also Kenneth S. Abraham, The Liability Insurer’s Duty to Settle Uncertain and Mixed Claims, 68 Rutgers U. L. Rev. 337 (2015)(essentially backing the RLLI approach to insurer settlement duties); Mark A. Geistfield, Interpreting the Rules of Insurance Contract Interpretation, 68 Rutgers U. L. Rev. 371 (2015)(essentially backing RLLI approach to insurance policy construction); Jeffrey W. Stempel, Enhancing the Socially Instrumental Role of Insurance: The Emerging Opportunity Presented by Treatment of Breach of the Duty to Defend, 5 U.C.–Irvine L. Rev. 587 (2015)(praising prior RLLI draft providing that insurer in breach of duty to defend could not contest coverage, a provision subsequently withdrawn in response to insurer protest).

(85) See, e.g., Letter of April 6, 2018 from Harold Kim (U.S. Chamber of Commerce Institute for Legal Reform) to ALI Council (criticizing §§ 3, 4, and 12); Letters of December 12 & December 28, 2017 from Thomas B. Considine (NCOIL) to David F. Levi & Robert Cooper Ramo (ALI)(discussed in more detail at TAN, infra); Letter (undated; approx. September 2017) from J. Stephen (“Stef”) Zielenzienski (American Insurance Association) and Tom Karol (National Association of Mutual Insurance Companies) to David Levi (criticizing August 2017 RLLI Draft as not having moved sufficiently in the direction of insurers in the wake of May 2017 Annual Meeting; accusing RLLI §12 of “eviscerating” attorney rules of professional conduct, creating a “judicial watchdog” over the insurance industry, and creating new remedies for breach of contract).

(86) See, e.g., Letter of January 5, 2018 from Harold Kim (Executive Vice President, U.S. Chamber Institute for Legal Reform (criticizing §§3, 12, 18, 47, 48, and 50 of December 2017 RLLI Draft); Letter of May 10, 2017 to David F. Levi (ALI President-Designate) from general counsel of TAMKO Building Products, Inc., ConocoPhillips, Brunswick Corp., Eli Lilly & Co., Novartis Corp., RMP Int’l Inc., Shell Oil Co., GlaxoSmithKline and Johnson & Johnson (attacking RLLI as excessively pro-consumer and insufficiently supported in case law but not citing cases; also opposing fee-shifting to policyholders “[a]lthough we… might benefit from such a provision in our capacity as corporate policyholders as it is not “inherently an insurance law issue.”

(87) See, e.g., Letter of April 27, 2018 [mistakenly indicating 2018 date] from Laura A. Foggan (Crowell & Moring) to David F. Levi and Roberta Cooper Ramo (ALI)(listing complaints about 12 sections or subsections of the Proposed Final Draft RLLI); Letter of April 9, 2018 from David W. Rivkin (Debevoise) to Richard Revesz and Stephanie Middleton (seeking further narrowing of potential insurer liability for attorney error in §12) (noting that only one state requires attorneys to carry professional liability insurance; arguing from this that insurer selection of counsel without adequate such insurance should not result in insurer liability if counsel is negligent); Letter of April 7, 2018 from Peter Solmssen to Reporters Tom Baker & Kyle Logue; Letter of April 6, 2018 from Jackson & Campbell (multiple signers) to Baker & Logue; Letter of April 4, 2018 from Laura A. Foggan (Crowell & Moring) to Baker and Logue (proposing revisions of RLLI §§ 3, 4, & 12); Letter of April 3, 2018 from Michael Alyward (Morrison Mahoney) to Baker & Logue (suggesting revision of commentary regarding RLLI contract construction); Memorandum of William T. Barker (Dentons) to Baker & Logue; Letter of January 13, 2018 (mistakenly dated “2017”) from Thomas F. Segall to Baker & Logue (criticizing December 2017 Council Draft provisions on fee shifting); Letter of January 6, 2018 from Malcolm E. Wheeler (WheelerTriggO’Donnell to Baker & Logue (criticizing settlement provisions of December 2017 RLLI); Letter of January 4, 2018 from Peter Solmssen to ALI Council (co-signed by 20 lawyers form firms generally representing insurers and in-house counsel for Stat Farm Insurance and Liberty Mutual Insurance); Letter of December 29, 2017 from Victor E. Schwartz & Christopher Appel (ShookHardy) to Reporters Baker &Logue (taking issue with RLLI position on fee shifting); Letter of October 6, 2017 from Defense Research Institute President John E. Cuttino to Richard Revesz (attacking August 2017 RLLI Draft provisions regarding contract construction, insurer liability for errors of counsel).

(88) See Letter of March 14, 2018 from Jacob R. Cox to Reporters Tom Baker & Kyle Logue (supporting RLLI provisions requiring insurers to make reasonable settlement decisions but criticizing RLLI for moving away from earlier rule stripping insurers of coverage defenses for breach of the duty to defend and failing to routinely require losing insurers to pay policyholder counsel fees).

(89) See Letter of December 12, 2017 from Thomas B. Considine, NCOIL CEO to David F. Levi.

(90) See Letter of November 28, 2017 from Tomas B. Considine, NCOIL CEO to ALI Presidents David F. Levi and Robert Cooper Ramo at p. 4.

(91) The ALI parliamentary tradition is to use voice votes on matters that are expected to pass easily (e.g., a motion to call the question) or fail easily (a motion made at the first session to cancel the rest of the Annual Meeting). For most issues of consequence at the 2018 Annual Meeting, the ALI took votes by show of hands. Where the winner of the vote was obvious, a final tally was not taken, as was the case will all of the 2018 votes surrounding the RLLI.

Based on my observation while attending the meeting, I have estimated the rough ratio of the votes. In all cases surrounding the RLLI, votes were very one-sided – roughly 9:1 in favor of the winning position. I did not see any votes that could credibly be characterized as less than 80 percent support for the winning position.

(92) See David Goodwin, et al., Motion to Amend §46 by Deleting Subsection 46(2) (a)(submitted on May 17, 2018)(available at ali.org). I was one of the five signers of the Goodwin Motion.

(93) See Tom Baker & Kyle Logue, Comments and Motions on RLLI Settlement Sections (24, 25, 27) (submitted May 18, 2018)(available at ali.org). See also Malcom E. Wheeler, Revised Proposed Amendment to Restatement of the Law: Liability Insurance Proposed Final Draft No. 2, Section 27 (submitted May 10, 2018)(available at ali.org)(member motion on which the Reporters’ Motion was based in part).

(94) See Vanita M. Banks, Proposal to Amend Section 3 to delete Comment c. Custom, practices and usage, and Illustrations 1 and 2)(submitted May 10, 2018)(available at ali.org); Michael Aylward, Proposed Amendment to Restatement, Section 3 – The Plain-Meaning Rule (submitted May 17, 2018)(available at ali.org).

(95) See RLLI §3, Comment c.

(96) See Victor E. Schwartz, Proposed Amendment to §27, Comment c (submitted May 17, 2018)(available at ali.org).

(97) See PPG Indus., Inc. v. Transamerica Ins. Co., 975 P.2d 652, 654 (Cal. 1999); Lira v. Shelter Ins. Co., 913 P.2d 514, 516-17 (Colo 1996). See also 975 P.2d at 658-660 (Dissent in PPG); 913 P.2d at 521 (Dissent in Lira); Soto v. State Farm Ins. Co., 635 N.E.2d 1222, 1223-24 (N.Y. 1994)(finding no insurer responsibility for punitive damages component of excess judgment; no dissents).

(98) See RLLI Reporters’ Note to §27, Comment e. In addition, as an Adviser to the RLLI project, I was present for discussion of this section and comment and recall comparatively little controversy regarding Comment e. While not all Advisers supported the Reporters, the clear bulk did and those in disagreement did not debate the issue at any length.

(99) Attributed to William Barker (Denton’s USA) by Douglas Richmond, counsel to insurance broker Aon. Conversation of May 22, 2018 at ALI Annual Meeting.

(100) For example, when asked during the 2016 presidential campaign who he would nominate to the Supreme Court, then-candidate Donald Trump repeatedly used Justice Scalia as a model. In ultimately appointing Tenth Circuit Judge Neil Gorsuch, Trump largely followed through in that Gorsuch, like Scalia, is highly credentialed and very conservative. Similar comparisons to Justice Scalia were made when President Trumpt nominated Brett Kavanaugh to the Supreme Court.

(101) RLLI §§12– 23. For example, RLLI §12 can be regarded as perhaps a modest expansion of insurer liability for negligence in selecting or supervising defense counsel. RLLI §13 takes a fairly strong “four corners” approach supplemented by an insurer’s responsibility to defend if it knows of facts outside the complaint that create a potential for coverage, which is an approach more favorable to policyholders than some jurisdictions but is followed in many states and is hardly a new or novel approach. Also, §13 does not require the insurer to dig for facts that might create a potential for coverage. RLLI §21 disfavors recoupment of defense costs spent on uncovered claims and is thus predictably disliked by insurers but this is a mainstream and perhaps even the majority view of the courts.

(102) See RLLI §§ 2-4. But recall that RLLI §3 creates a presumption in favor of the “plain meaning” of policy text.

(103) See RLLI §42.

(104) The earliest citation appears to be Wisconsin Pharmacal Co., LLC v. Neb. Cultures of Cal., Inc., 876 N.W.2d 72, (Wis. March 1, 2016)(applying Wisconsin and California law), in which the Court found that incorporation of a defective ingredients into probiotic supplement tablets manufactured by the policyholder did not constitute covered “property damage” caused by an “occurrence.” In a scorching dissent, Chief Justice Shirley Abramson attacked the majority’s conflation of the economic loss doctrine of tort law with insurance coverage issues of property damage and noted in passing that the RLLI “discussion drafts on this project do not address the economic loss doctrine” but implicitly hoped that “other drafts might.” See 876 N.W.2d at 95, n. 21 (Abrahamson, C.J., dissenting).

(105) See, e.g., Evanston Ins. Co. v. Desert State Life Mgmt., 2020 U.S. Dist. LEXIS 7652, at *82-*83 (D. N.M. 2020)(citing RLLI treatment of exclusion as in accord with case law); Scottsdale Ins. Co. v. Darke, 424 F. Supp. 3d 638, 642-43 (N.D. Cal. 2019)(citing RLLI provisions on duty to defend in addition to consistent state law precedent); Conway v. Northfield Ins. Co., 399 F. Supp. 3d 950, 959 (N.D. Cal. 2019)(same); Mesa Underwriters Specialty Ins. Co. v. Blackboard Ins. Specialty Co., 400 F. Supp. 3d 928, 936 (N.D. Cal. 2019)(same); Marcus v. Allied World Ins. Co., 384 F. Supp. 3d 115, 122-23 (D. Me. 2019) (citing RLLL as additional authority along with state precedent that exclusions from coverage are interpreted narrowly, with insurer holding burden of persuasion); Country Mut. Ins. Co. v. Martinez, 2019 U.S. Dist. LEXIS 69283 *41, n. 15 (D. Ariz. April 24, 2019) (citing RLLI draft in footnote along with controlling state law for proposition that insurer is not liable for errors of panel counsel absent negligence in selection or active responsibility for counsel’s error); Webcor Constr., LP v. Zurich Am. Ins. Co., 372 F. Supp. 3d 1061, 1070 (N.D. Cal. 2019)(citing RLLI draft in addition to controlling state law regarding duty to defend).

(106) See, e.g., GGA, Inc. v. Kiewit Infrastructure West Co., 2020 U.S. Dist. LEXIS 10151 at *70 (D. Haw. 2020)(reflecting influence of RLLI bar to insurer recoupment of defense costs absent specific policy language granting right to insurer); Sapienza v. Liberty Mut. Fire Ins. Co., 389 F. Supp. 3d 648, 655, 656 (D. S.D. 2019)(citing RLLI and relying in part on RLLI provisions regarding limited circumstances where insurer may be liable for errors of counsel to dismiss claim against insurer); Selective Ins. Co. of Am. v. Smiley Body Shop, Inc., 260 F. Supp. 3d 1023, 1033 (7th Cir. 2017)(relying in part on RLLI draft in concluding that insurer not entitled to recoupment of portion of defense expenditures related to claims outside potential coverage); Twin City Fire Ins. Co. v. Hartman, 2017 U.S. Dist. LEXIS 227524 at *16 (N.D. Ga. Feb. 28, 2017)(relying in part on RLLI draft to conclude that insurer not entitled to recoupment of portion of settlement purportedly outside coverage); Century Surety Co. v. Andrew, 432 P.3d 180, 186 (Nev. 2018)(adopting RLLI view that insurer in breach of duty to defend is responsible for resulting judgment, including amount in excess of policy limits, as a consequential damage flowing from the breach; bad faith not necessary).

(107) See, e.g., Outdoor Venture Corp. v. Phila. Indem. Ins. Co., 2018 U.S. Dist. LEXIS 167986 at *55-*56 (D. Ky. Sept. 27, 2018)(rejecting RLLI position on when independent defense counsel required rather than insurer-selected panel counsel but largely on basis of existing Kentucky law rather than criticism of RLLI); Nooter Corp. v. Allianz Underwriters Ins. Co., 536 S.W.3d 251, 271-72 (Mo. Ct. App. 2017)(adopting all sum approach to insurer coverage responsibility rather than pro-rata allocation by time on risk advocated by insurers; noting RLLI draft favors pro-ration); Catlin Specialty Ins. Co. v. CBL & Assocs. Props., 2018 Del. Super. LEXIS 342 at *7, nn. 23 & 24 (Aug. 9, 2018)(disagreeing with RLLI position on recoupment of defense costs and favoring recoupment by insurer); See also Progressive Northwestern Ins. Co. v. Gant, 957 F.3d 1144 (10th Cir. 2020) and 2018 U.S. Dist. LEXIS 163624 at *15 (D. Kan. Sept. 25, 2018)(finding RLLI position on insurer liability for conduct of defense counsel inapplicable because insurer not negligent in retaining attorney and did direct conduct of counsel in manner that created violation of professional standards).

(108) See, e.g., Ariz. House Bill 2644 (passed Arizona House Feb. 27, 2020; consideration pending in state Senate); Ark. Senate Bill No. 565/Act 742 (approved by both chambers, becoming law April 5, 2019)(codified at Ark. Code Ann. §23-60-112); Idaho Sen. Bill No. 1176 (introduced March 6, 2019); Indiana House Concurrent Res. No. 62 & House Res. No. 86 (approved April 24, 2019); Kentucky House Res. No. 222 (adopted March 27, 2018); Louisiana Sen. Res. No. 149 (adopted May 30, 2019)Michigan Compiled Laws §500.3032 (effective Jan. 2, 2020); North Dakota House Bill No. 1142 (passed by both chambers and becoming law March 21, 2019)(codified at N.D. Cen. Code Ann. §26.1-02-34); Ohio Revised Code §3901.82 (amended via language inserted in appropriations bill July 30, 2018)(effective Oct. 29, 2018); Texas House Bill No. 2757 (enacted June 10, 2019; effective Sept. 1, 2019)(codified at Tex. Civ. Prac. & Rem. Code §5.001) and House Concurrent Res. No. 58 (committee report distributed May 2, 2019). See also Tenn. Code Ann. §56-7-102 (effective April 9, 2019)(codifying traditional state rules regarding insurance policy status as contract, traditional rules of construction and four corners rule on duty to defend, legislation that appears to have been prompted by RLLI in spite of not directly attacking RLLI).

(109) See Mich. Compiled Laws §500.3032 (effective Jan. 1, 2020).

(110) N.D. Cen. Code Ann. §26.1-02-34.

(111) Ohio Rev. Code §3901.82.

(112) See, e.g., Texas House Concurrent Res. No. 58; Idaho Sen. Bill No. 1176; Kentucky House R. No. 222; Indian House Concurrent Res. No. 62. The basic language and contention of these resolutions is similar to the model resolution threatened by NCOIL in its attacks on the RLLI prior to its approval by the ALI. See note??, supra.

(113) Hearings in Arizona and Florida are illustrative. See, e.g., http://azleg.granicus.com/MediaPlayer.php?view_id=13&clip_id=24038 (beginning at 6:18 an running through 37:50); (https://myfloridahouse.gov/VideoPlayer.aspx?eventID=2443575804_2020011093 (beginning at 7:30 and running through 45:30).

(114) For example, it is probably no accident that the six governors signing the April 6, 2018 Letter attacking the RLLI are all Republicans. In the U.S., the Republican Party has generally enjoyed substantial support from insurers and has been identified as the friendlier of the two major parties toward big business. And insurance is very big business. See generally Richard Ericson, et al., Insurance as Governance 4 (2003)(insurance industry constitutes economy larger than all but four nations); Andrew Tobias, The Invisible Bankers (1982).

(115) This is a structural and institutional shortcoming well beyond the scope of this article but bears mentioning. In the typical legislative session, interest group lobbyists come with an agenda for legislation favoring the interest group. Although their proposed legislation may be vetted by legislative staff, these staffers are typically overworked and overwhelmed by many demands on their time during the legislative session.

In addition to normally lacking time to conduct a thorough vetting of interest group contentions and proposals, these staffer and the members typically do not draw upon potentially available expertise on the issues before the legislature unless the issues are very high profile (e.g., a ban on abortion; school vouchers), the high profile typically being the result of interest group activity and media interest rather than the importance of the issue per se. Seldom are professors or accomplish professionals sought for comments and testimony unless already affiliated with an interest group or suggested by an interest group. Although legislators themselves often have expertise, term limits and the press of other business make it unlikely that legislator competence can correct the problems of information asymmetry and insufficient scrutiny of interest group attacks on the RLLI and other Restatements. As a result, the factual and analytic inputs received by a state legislature are almost guaranteed to be inferior to that received by the ALI during the Restatement process.