It’s a matter of propriety, really. It’s hard to explain, but there are certain things one doesn’t do in public or even behind closed doors, because it doesn’t look right and it makes a bad impression.
Giving the appearance of a conflict of interests is one of those things.
Eyebrows were raised and speculation prompted when the American Law Institute (ALI) announced that one of its symposia discussing the newly-adopted Restatement of the Law of Liability Insurance would include a pair of judges in a federal courthouse. The Restatement extends insurer liability in some civil cases to include punitive damages against policyholders for reckless behavior – even if punitive damages are not covered in their policies.
“When I saw that federal judges were hosting this, I really felt that it was inappropriate for the American Law Institute to put a federal judge in that position, because one can then infer that maybe the judge is actually endorsing the Restatement,” explains attorney Kim Marrkand, head of the insurance practice at Mintz Levin in Boston.
“I did check with many ALI members,” she confides, “and no one has really heard of a road show for a Restatement that actually has a conference sponsored by sitting federal court judges.”
Other attorneys have described the proposed Restatement as “litigation fuel” and questioned whether ALI is restating existing laws or creating new ones. Lawmakers in Ohio and a federal judge in Kansas have already rejected the revisionary document.
“Judges have to be careful on two fronts,” Marrkand emphasizes. “Is there a conflict and, secondly, might there be an appearance of a conflict? I think here, this has certainly raised at a minimum the appearance of a conflict, as a neutral finder of the law about an extremely controversial Restatement, where you seem to be endorsing it. That can’t be right.”
Marrkand thinks other ALI members would also “raise an eyebrow and be quite skeptical of why are we doing this. It’s not the way this should be handled.”
Bad form, at best. The judges should decline.