At the 1997 Annual Meeting in Washington, the Institute approved without extensive change the Proposed Final Draft of Restatement Third, Torts: Products Liability, thus clearing the way for publication of the official text within the next year. While the successful completion of the Products Liability Restatement was undoubtedly the major achievement of the May Meeting, progress in varying degrees was achieved with respect to the eight other drafts submitted as well.
Consideration of the Products Liability draft began with one final challenge to its controversial formulation requiring proof of a reasonable alternative design in order to establish a defective design. The amendment proposed, however, which essentially would have returned the Institute to the ``unreasonably dangerous'' and ``consumer expectations'' standards of the Second Restatement, was defeated overwhelmingly on a voice vote. Reporters James A. Henderson, Jr., and Aaron D. Twerski had themselves proposed a series of 13 amendments to language in the draft based on suggestions received following its publication; while accepting most of these, the members did reject, by a vote of 156-92, a proposed change that could be read as softening the requirement that users of a product be warned of nonobvious risks associated with its use. Most of the proposed amendments opposed by the Reporters were defeated, although a last-minute motion to delete tobacco from the list, in Comment d to § 2, of examples of products requiring specific proof in order to be found defective was adopted by voice vote.
Ultimately, the new Restatement was adopted, subject to the revisions agreed upon and the usual editorial improvement, without a single dissenting vote, and the Reporters were commended by President Wright for their ``stunning performance.'' After the Annual Meeting, the Institute's Executive Committee decided that Professors Henderson and Twerski should be jointly designated as the Institute's latest R. Ammi Cutter Reporters in recognition of their outstanding work on the project.
Two other Restatement projects also moved significantly closer to completion at this year's Meeting. Tentative Draft No. 6 of Restatement Third, Property (Servitudes), which dealt with the extent to which changed conditions may justify termination or modification of private land-use controls, was approved, with only relatively minor changes suggested. Chapter 4 of Restatement Third, The Law Governing Lawyers, dealing with Lawyer Civil Liability, which in 1994 had been recommitted to the Reporters for redrafting, was this year tentatively approved, although again not without controversy. In the course of an inquiry as to whether § 76A(2), on lawyer liability to a client for breach of fiduciary duty not amounting to malpractice, should be confined to ``intentional breach,'' a lengthy debate developed as to the overall structure of the chapter and the relationship between malpractice and other types of civil liability. Eventually, the membership decided to delete ``intentional'' from § 76A(2) but rejected attempts to delete both that subsection and § 76A in its entirety, and the Reporters agreed to reconsider the architecture of Chapter 4. After another extensive debate, the members agreed with the Council's decision to drop the bracketed language of § 73(5) and the related Comment i from the Restatement; the contested provision would have established a breach of the duty of care to a nonclient in circumstances in which failure of a lawyer to act ``to prevent the client from committing a crime imminently threatening to cause death or serious bodily injury to an identifiable person who is unaware of the risk'' was found to have ``facilitated the crime.''
Because of the time needed to dispose of Chapter 4, progress on the two chapters on representation, also contained in Tentative Draft No. 8, was limited. The eight sections reached for discussion, §§ 151-159, were tentatively approved, but the remainder will have to be resubmitted.
All three of the Uniform Commercial Code drafts on the Annual Meeting agenda--Article 2 (Sales), Article 2B (Licenses), and Article 9 (Secured Transactions)--were denominated Discussion Drafts because the Council had not completed its review of them. Nevertheless, in order to assure that ALI views were sufficiently reflected in the ongoing drafting process, Director Geoffrey C. Hazard, Jr., recommended that the discussion be utilized to ascertain such views on major issues presented by the drafts. Thus, although no votes were taken on the drafts as a whole, there were votes on several specific issues. In Article 2, the Institute rejected a motion, by a vote of 143-78, to repeal the Statute of Frauds provision governing the sale of goods, but motions to lower the minimum amount required for the provision to apply from $10,000 to $500 or $5,000 were also defeated. By a 94-77 vote, the membership endorsed an alternative version of the Commentary to § 2-405 that would make it clear that products liability law should be the basis for determining the merchantability of the product involved in an action for injury to person or property. In Article 2B, an amendment to prohibit terms in mass-market licenses inconsistent with user rights established by federal copyright law was adopted by an extremely narrow vote of 86-83. A motion to exclude ``operating'' deposit accounts as security interests within the scope of Article 9 was defeated.
Although the Institute's UCC drafting partner, the National Conference of Commissioners on Uniform State Laws, had hoped to complete final readings of Articles 2 and 2B at the NCCUSL Annual Meeting this summer, it was announced in Washington that final readings for both, as well as for Articles 2A and 9 would be deferred until the summer of 1998, following the Institute's scheduled final review of all of these next May. As was the case last year, a special ad hoc ALI Committee will be attending NCCUSL's 1997 Annual Meeting in Sacramento and participating in the next review of these UCC drafts.
The Institute also approved the Tentative Drafts of the International Statements of both Canadian and United States Bankruptcy Law for Phase I of the Transnational Insolvency Project. The corresponding Mexican Statement is expected to be ready for submission next year. Although the first Tentative Draft for the new Federal Judicial Code Revision Project, on supplemental jurisdiction, was extensively discussed and numerous suggestions for revision and clarification were offered, no votes were taken on the draft. It had been decided in advance of the discussion that the draft, as subsequently revised, should be resubmitted in 1998, together with additional material on removal from state to federal courts.
A complete listing of actions taken on the drafts considered at the 1997 Annual Meeting will appear in the fall issue of the Reporter. An edited transcript of the entire Annual Meeting will subsequently be published in the 1997 Proceedings.