Justice Scalia\u27s Hat Trick and the Supreme Court\u27s Flawed Understanding of Twenty-First Century Arbitration

In this article, I report on the results of my close examination of more than two dozen opinions the Court has handed down interpreting the FAA--arising primarily from commercial, consumer, employment, or securities disputes--since the beginning of the twenty-first century only fifteen years ago.19 I focus on cases in which the Court was asked to decide a question of arbitrability--whether a claim is arbitrable or whether an agreement to arbitrate is enforceable under FAA section 2. I have concluded that these decisions are built on a narrative of an arbitration process that no longer exists, although it may have existed in the twentieth century when Congress passed the FAA. The Court\u27s antiquated understanding of the process threatens to undermine arbitration as a just alternative dispute resolution (ADR) mechanism. Part I of this article describes the process of arbitration, the law that regulates the process, and how both law and process have evolved from the twentieth to the twenty-first century. Part II zeroes in on three opinions enforcing arbitration agreements challenged by consumers seeking to bring statutory claims as class actions. All three opinions were authored by Justice Scalia in 2011, 2012, and 2013--what I call Scalia\u27s “Hat Trick.” As I see it, Justice Scalia scored three times in the game of arbitration--and corporate counsel were likely cheering on the sidelines as their “goals” were achieved: to suppress consumers\u27 ability to bring individual class actions against companies based on claims arising under federal statutes. Many arbitration scholars have sharply criticized those decisions as anti-consumer or anti-employee, claim suppressing, and at odds with the fundamental right to have a dispute heard in a courtroom. Part III argues that, in the Court\u27s twenty-first-century arbitration cases, when justifying its holdings, the Court assumes without factual basis that arbitration is a one-size-fits-all process that is quick and inexpensive for all disputants who have ultimate control over the procedures. This part demonstrates that the Court\u27s oversimplified and out-of-touch decisions have crafted a legal framework that regulates an arbitration process that largely no longer exists. The article concludes by arguing that the Court\u27s expansion of the FAA improperly rests on an outmoded understanding of the modern arbitration process and fails to recognize the many varieties of arbitration that exist today. Those decisions have led to concerns and criticisms that arbitration is no longer a fair process and have promoted a flight from arbitration. This flight necessarily decreases the range of ADR options that parties have at their disposal and ultimately hurts the values of process pluralism. By setting the record straight, I hope to provide some insights into challenges to the Court\u27s FAA decisions that may still exist and that have the potential to lead to a reinvigoration of many types of arbitration as appealing alternatives to litigation