In 2012, the American Law Institute asked us to serve as reporters for a new Restatement of Consumer Contracts. Recognizing that many innovations in American contract law in the past generation occurred in the area of consumer transactions, the project seemed timely and challenging. We discovered that many of these innovations are controversial and seemingly subject to conflicting approaches in the case law and heated debates among commentators. We also discovered that prior attempts to devise a unified set of rules have largely failed. We therefore decided to take a new approach to our search for, and restatement of, the emerging rules. In addition to identifying the majority rules, we used an empirical approach that involved collecting, coding, and systematically analyzing the entire body of court decisions on relevant questions. We identified the degree of support that different rules garnered in courts and the rate at which they were adopted or rejected over time. We thus discovered which rulings and rationales serve as guiding precedent. We based the black-letter rules in the final draft of the Restatement of Consumer Contracts on these findings (complementing them with qualitative support). In this Essay, we present our empirical approach to searching for the law and legal precedent, discuss its conceptual and normative foundations, and describe some of the doctrinal debates it helped resolve.
Applying a precedent is the fundamental craft of a common-law judge. Judges do not go back to general principles to derive novel solutions to each case at hand, along with novel justifications and renewed persuasion efforts. Instead, they turn to the legal decisions in prior cases with similar facts and import their effect and reasoning.
But what is the legal precedent? What if different rules have been previously applied to cases with similar facts? In an adversarial system in which the attorneys for the disputing parties thrive on exposing vagueness in precedent, identifying the precedent and its exact prevalence is often difficult, time intensive, and potentially error prone.
Various methods have developed over time to reduce the costs of searching prior law and distilling the precedent. Prominent among them is the American Law Institute’s (ALI) Restatement project, which seeks “to promote the clarification and simplification of the law.”1 Restatements sometimes aspire to steer the law in new directions, but even then it is the role of the reporters to identify where the governing rules currently lie and explain why they need to be reformed.
In 2012, the ALI asked us to serve as reporters for a new Restatement of the Law, Consumer Contracts. Recognizing that many innovations in American contract law in the past generation occurred in the area of consumer transactions, the project seemed timely and challenging. We discovered that many of these innovations are controversial and subject to seemingly conflicting approaches in the case law, rendering an unclear picture of what the law actually is. We also discovered that prior attempts to devise a unified set of rules had largely failed. We therefore decided to take a new approach to our search for, and restatement of, the emerging rules—a comprehensive quantitative approach.
Our approach was intended to answer the question of what rules the majority of courts and jurisdictions follow. To answer this question, we collected the entire body of court decisions on a given issue. We read these cases and coded their relevant facts, characteristics, decisions, rationales, and citations. We then used quantitative methods to analyze the database. For example, by analyzing the statistical relationship between facts and legal outcomes, we were able to discern the type of notice that satisfies the doctrinal requirement of precontractual disclosure in the formation of a contract.
This method provided a broader, richer view of precedent in an environment in which discerning precedent is challenging. Many of the central questions in consumer contract law have not been settled by state supreme courts, and therefore the conventional ALI method of discerning the majority rule by looking to the highest court in each state was not sufficient. We thus had to look to federal courts and to lower state courts. But how should they be counted and weighed?
Our basic insight was to aggregate the body of cases by measuring the influence of each case. We calculated how many times each ruling had been positively cited or followed, focusing on out-of-state citations (which are used as persuasive precedent when there is no binding intrajurisdictional precedent). We also studied trends, looking at how the rate at which cases were adopted or rejected changed over time. This analysis produced more robust conclusions about which rulings and rationales were guiding courts. Some lawyers and commentators, and even some reporters of Restatement projects, intuit which are the leading or influential cases. With our methodology, the relative importance of a decision became the conclusion of our analysis.2 We based the black-letter rules in the Restatement on these findings (complementing them in the official comments with qualitative and normative support).3
This short Essay presents our quantitative approach. Part I lays out jurisprudential and practical problems in searching for the common law and legal precedent. Part II presents the quantitative approach and illustrates its application to two of the most important questions in consumer contract law: the legal effect of “shrinkwrap” terms and the status of privacy “notices” posted on websites. Finally, Part III addresses objections to the use of the quantitative methodology.
- 1. About ALI: Creation (ALI), archived at http://perma.cc/9W6X-KSYZ.
- 2. We emphasize the importance of transparency, and we will make our databases, search criteria, and coding decisions publicly available once the Restatement is published.
- 3. The empirical methodology was used to derive some, but not all, of the rules in the draft Restatement. Some rules, such as the unconscionability rule and the deception rule, were restated as general standards and thus were less susceptible to the empirical methodology.