The late Justice Antonin Scalia was lauded by conservatives as a strict literalist who parsed every word of laws and the Constitution to ascertain their original (and thus authentic) meaning. Peeling back the curtain reveals that the Wizard of Argle-Bargle was a gigantic fraud who invented new meaning and new law whenever he wished and to hell with what the words actually said.
Nowhere is that more evident than in his decisions about arbitration.
… Scalia wrote a series of opinions—each on behalf of the same five-Justice majority—reinterpreting the Federal Arbitration Act and dramatically swinging the balance in favor of corporations … 
So begins a new report from the American Constitution Society for Law and Policy (ACS), a progressive think tank that can be considered the liberal counterpart to the Federalist Society. Authors Deepak Gupta and Lina Khan list the harsh effects that these Supreme Court rulings, ostensibly conservative literalist interpretations of law, have on consumers and citizens:
- The arbitrators themselves, rather than a court, can rule on whether an arbitration clause is valid and legal
- Corporations have the right to unilaterally and entirely ban class actions against themselves
- Corporations can force arbitration even when it completely closes off any redress as required by law
- Arbitration clauses can preempt state laws which mandate administrative hearings
Mandatory arbitration clauses are now included in untold numbers of consumer contracts and agreements. If you have any doubt, read the fine print on the printed documents and online "click to OK and proceed" agreements regarding your credit card, online banking, cell phone service, employment contract, mortgage, software license, cinema tickets, dentist, hospital or the guarantee on your washing machine.
At first glance, arbitration appears to be a reasonable way to achieve impartial and rapid resolution of problems. Cases can take many years to wend their way through overcrowded courts, litigation is very expensive, and the formal proceedings are more daunting to the average person than a modest informal arbitration setting. Yet, as we all know, appearances can be deceiving and the ACS paper rips away the illusion of fairness and accessibility.
Part I — History of arbitration and the courts
Many of us barely remember, and others are too young to have anything to remember, when forced arbitration clauses were not included in just about every contract and service agreement. Disputes between employers and workers or between customers and companies that rose to legal action were settled via small claims court, governmental administrative boards, or in class action lawsuits.
Gupta and Khan present a history of arbitration, a history that will probably surprise most readers. Few non-lawyers probably know that legally binding arbitration is less than a century old and that it was never intended to be used in disputes between businesses and their customers or employees.
Business interests lobbied for legislation in the 1920s that would allow courts to enforce private arbitration rulings; early arbitrations had no legal standing and a court would not compel the parties to honor them. Corporate sponsors gave lawmakers their assurance that such a private parallel legal system would be utilized only to resolve disputes between equal entities: business versus business. The inherent danger of injustice arising from an extra-legal proceeding between parties of unequal bargaining power was recognized by the proponents, drafters and Congress members who voted on it.
For example, labor was concerned that powerful railroad and shipping companies could force arbitration on their employees. Sponsors of the legislation assured labor representatives in a Senate hearing that such was not the case and that arbitration would be strictly limited in its scope:
It is not intended this shall be an act referring to labor disputes, at all. It is purely an act to give the merchants the right or the privilege of sitting down and agreeing with each other as to what their damages are, if they want to do it.  [bold emphasis by Krotor]
Language was even added to guarantee narrow use of arbitration: "… nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in interstate or foreign commerce." [bold emphasis by Krotor]
Thus Congress passed the Federal Arbitration Act in 1925. It provided the legal foundation and framework to make arbitration awards (in a court, they would be called judgments) binding and enforceable by federal and state courts (in other words, one party can't simply ignore the ruling with impunity). The act also makes the rulings final, more or less: they can't be appealed to the courts in most cases.
Arbitrations were meant to settle disagreements about terms of private contracts (such as whether a payment was made on time or if products received were of the quality agreed upon); they were not to be mini-courtrooms where matters of public law would be decided (such as if a labor regulation was violated or if a company was engaging in monopolistic antitrust behavior).
For more than half a century, arbitration worked mostly as planned. Businesses found it useful to quickly settle their differences and consumers and workers had almost no knowledge of nor contact with the system. Then the 1980s happened and, like just about everything of the Reagan era, every tool became a hammer to pound the middle, working and poor classes.
Despite the extensive legislative debate and history during its passage, when proponents assured their congressional colleagues that the FAA would only be applied to business-to-business transactions, the Supreme Court invented a whole new, and entirely false, history and intent:
One key moment came in 1983, when the Court declared that the FAA reflected a “federal policy favoring arbitration.” 
And with that mind boggling invention of counterfactual history, the floodgates were open. The courts would become increasingly closed off to non-corporate persons and arbitrators were soon granted extraordinary powers via a series of judicial decisions. The original intent and purpose of the law had been transformed, extending its reach in ways that Congress had never imagined, much less approved.
State laws limiting the scope and breadth of arbitration were struck down. Arbitrators were given authority to rule on statutory law (civil rights, labor regulations, and more) rather than merely determine the merits of commercial aspects of contracts and agreements. Next, the Supreme Court ruled that binding arbitrations were allowed in consumer, not just business-to-business, contracts. That prompted Sandra Day O'Connor, hardly a liberal justice, to declare that
“… over the past decade, the Court has abandoned all pretense of ascertaining congressional intent with respect to the Federal Arbitration Act, building instead, case by case, an edifice of its own creation.” 
So, historical intent of the basis for the FAA had been tossed out. But the pro-business majority wasn't finished with refashioning the law to suit their own new purpose. They still hadn't dismantled the provisions prohibiting forced arbitration in labor disputes, clearly one of the legal relationships most asymmetrical in balance of power between the parties. The law clearly and specifically forbade it but that didn't stop them from creating an interpretation completely unmoored from the FAA's actual wording.
In 2001, the Court ruled against a group of Circuit City workers, holding that employers could use arbitration clauses in contracts with employees despite statutory language to the contrary [Krotor: as noted above in the quote "or any other class of workers"]. In 2004, a court ruled that arbitration clauses were enforceable against illiterate consumers; a separate court ruled that they were enforceable even when a blind consumer had no knowledge of the agreement. 
In what may be the most topsy-turvy pretzeling of the English language in all of history, the Court interpreted "… employment of seamen, railroad employees, or any other class of workers ..." to mean only seamen and railroad workers and that the FAA would apply to all other workers. Somehow the word "or" found new meaning as "and excluding" so the text (in their opinion) reads "… employment of seamen, railroad employees, and excluding any other class of workers ..." In normal usage of English, "or" is considered an inclusive term, linking equally valid terms; in Scalia's truly marvellous adaptation of the language, it becomes exclusive. So if one day his spouse asked him if he would like hot dogs or lobster that evening for dinner, one can only assume he immediately realized hot dogs were to be the main course and lobster was categorically ruled out as a choice.
The corporate promised land was finally reached when the Supreme Court ruled in 2011 (AT&T Mobility v. Concepcion) that arbitration clauses could preclude class actions, even when state laws specifically permitted such actions and banned clauses that prohibited them.
Despite arguments by states' attorney generals, consumer groups, legal scholars and more, the Court decided in 2013 that
… arbitration clauses containing class action bans were enforceable—even when it meant citizens had no way to “effectively vindicate” their rights and were left with no recourse. 
As an example, a dispute over fraudulent $5 bank or loan charges would never be litigated individually, as the cost would far exceed any redress. Only putting many thousands of customers together in one suit would make it possible to pursue justice.
Arbitration is often not a viable solution for consumers either. Many forced arbitration clauses require the consumer to pay fees for arbitration services well in excess of the amount claimed, with additional risk that the arbitrator can award the much higher business fee if the consumer or employee loses the case. The principal arbitration services charge individuals as much as $250 per case and businesses pay $1000 and up. How many people will risk losing $1250 or more to pursue a relatively small claim against a business?
Arbitration costs don't stop there. Just as in real courtroom hearings, the parties incur other expenses, such as attorney fees, professional witness fees, document discovery and copying, travel expenses and more. Altogether, the costs to an individual in arbitration can be close to the costs for a trial before an actual judge, not an unaccountable arbitrator whose livelihood is dependent on repeat business from the very party the individual has filed a claim against.
Prohibiting class actions and the costs and risks of arbitration mean that consumers and employees are often bereft of any reasonable way to pursue redress, no matter how egregiously a business violates contract terms or the law. The Court effectively said it didn't care and that businesses are free to carry on with illegal acts, whether they are fraudulent overcharges to customers, wage theft from employees or failure to provide contracted services and goods.
A running connection through this series of pro-corporate, anti-consumer decisions? Antonin Scalia, who led 5-4 majorities in most of the relevant cases. He skewed the history, intent and even the actual wording of the laws so that up became down and yes meant no. Gupta and Khan act like Toto, yanking the curtain and showing that Scalia had zero respect for original intent and meaning despite his braggadocious bluster to the contrary.
From modest and very limited beginnings, arbitration has now become a dominant player in our legal system, even though it stands at least partly outside the legal system and affords few of the safeguards we value and expect in a court of law. The Consumer Financial Protection Bureau (CFPB) has found that 92% of prepaid credit cards, 86% of student loans and 99% of payday loans include forced arbitration clauses. Due to settlement of an antitrust lawsuit, some of the largest banks had to drop forced arbitration clauses for several years; with its expiration, it's believed that well over 90% of credit card card agreements include forced arbitration.
In other areas, such as employment contracts, it is more difficult to find hard data. Such contracts are private and generally not supervised by government agencies, unlike many consumer finance contracts. Nevertheless, the data that is available points to as many as 25% of jobs being covered by forced arbitration clauses.
In all types of individual contracts and agreements, class action bans are generally included. Corporations have, by and large, shut workers and consumers out of the courtroom and shunted them into their own rigged and largely useless (to the individual) system.
In Part II tomorrow I will explore the ACS authors' assertion that misuse of arbitration laws is yet another means for transferring wealth from the 99% to the 1%, leading to ever greater wealth inequality.
 Arbitration as Wealth Transfer by Deepak Gupta and Lina Khan, American Constitution Society for Law and Policy
 Robert D. GILMER, Petitioner v. INTERSTATE/JOHNSON LANE CORPORATION, Supreme Court decision published by Cornell University Law School
 Supremes Diss Challenge To Their “Skewed” Forced Arbitration Jurisprudence by Simon Lazarus, Constitutional Accountability Center
 Arbitrator and administrative fees, Wikipedia
 The arbitration epidemic by Katherine V.W. Stone and Alexander J.S. Colvin, Economic Policy Institute