•  
  •  
 

Abstract

A restitution revival is underway. Restitution and unjust enrichment theory, born in the United States, fell out of favor here while surging in Commonwealth countries and beyond. The American Law Institute’s (ALI) Restatement (Third) of Restitution & Unjust Enrichment streamlines the law of unjust enrichment in a language the modern American lawyer can understand, but it may encounter unintended problems from the law-equity distinction. Restitution is often misinterpreted as always equitable given its focus on fairness. This blurs decision making on the constitutional right to a jury trial, which "preserves" the right to a jury in federal and state cases for "suits at common law" satisfying specified dollar amounts. Restitution originated in law, equity, and sometimes both. The Restatement notably attempts to untangle restitution from the law-equity labels, as well as natural justice roots. It explicitly eschews equity’s irreparable injury prerequisite, which historically commanded that no equitable remedy would lie if an adequate legal remedy existed. Can restitution law resist hearing equity’s call from the grave? Will it avoid the pitfalls of the Supreme Court’s recent injunction cases that return to historical, equitable principles and reanimate equity’s irreparable injury rule? Losing anachronistic, procedural remedy barriers is welcome, but the Restatement must be careful to maintain the soul of unjust enrichment, which includes flexibility, creativity, justice and morality underpinnings, and discretion. The project’s success depends on streamlining the language, unhinging from equity’s arcane procedures, and providing guidance for bounded discretion. I argue that the ALI’s groundbreaking restitution project will suffer because it adopts language of inadequacy and affirms the hierarchy of remedies, which prefers legal to equitable remedies. The Restatement notably liberates all restitutionary remedies, including those emanating from equity (e.g., constructive trusts), from demonstrating the inadequacy of available remedies at law. This shift moves in the right direction, but ultimately the project falls short in a provocative section that authorizes disgorgement of profits for opportunistic breaches of contract. The disgorgement remedy reallocates the breacher’s wrongful profit to the plaintiff if the breach is deliberate and profitable and the contractual entitlement inadequately protected. Disgorgement is an alternate remedy to traditional contract damages and, notably, would apply without the contractual breach rising to the level of a tort or breach of fiduciary duty. The inadequacy requirement may purposefully narrow a bold, and perhaps feared, disgorgement remedy, but it creates unnecessary confusion by taking the focus away from the breacher’s opportunism and redirecting the focus to the adequacy of plaintiff’s compensation. Even as the restitution revival garners traction, inadequacy haunts this important restitutionary remedy with equity’s ghosts.

Share

COinS
 

To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.