The California Supreme Court held in Fuentes v. Empire Nissan, Inc. (Feb. 2, 2026) that small or blurry print in an arbitration agreement does not automatically invalidate the agreement as unconscionable. Instead, the Court clarified that “illegibility” may create procedural unconscionability – i.e., unfairness in the way the agreement was presented to an employee – but a court must still also find substantive unconscionability – i.e., one-sided, unfair terms – to invalidate the agreement on the basis of unconscionability. The Court then sent the case back to the trial court to re-evaluate the enforceability of the arbitration agreement under the proper framework.
Background
An employee applicant, Evangelina Yanez Fuentes, signed an “Applicant Statement and Agreement” containing a broad arbitration clause covering “all disputes which may arise out of the employment context” and a clause requiring that any future modification be “in writing and signed by the President of the Company.” The document was printed in very small, blurry, densely packed text with complex, jargon-heavy language. Fuentes later signed two confidentiality agreements that, among other things, stated they “supersede[] any and all prior agreements” on certain subjects (unfair competition, trade secrets, confidentiality) and authorized injunctive relief and fee shifting, features that can invite employer-initiated claims. The copies in the record did not show the company president’s signature on the confidentiality agreements.
After Fuentes was terminated following medical leave, she sued, and the employer moved to compel arbitration. Fuentes opposed on two fronts: (1) there was no valid agreement to arbitrate, and (2) even if valid, the agreement was unenforceable because it was unconscionable.
The trial court denied the motion to compel arbitration, concluding that the small, difficult-to-read print supported the finding of both procedural and substantive unconscionability. Typically, a court must find both substantive and procedural unconscionability to deny a motion to compel arbitration on unconscionability grounds. The trial court did not reach the issue of whether the agreement was valid.
The Court of Appeal reversed and ordered arbitration, concluding illegibility affects only procedural unconscionability and interpreting the confidentiality agreements as still requiring arbitration.
The California Supreme Court agreed with the Court of Appeal that a contract’s tiny, blurry, hard-to-read format generally does not itself establish substantive unconscionability, because font size does not make a term “harsh, one-sided, or otherwise unreasonably unfair.”
The Court emphasized that “fine-print terms” in prior cases referred to unfavorable terms that are hidden, not simply that the terms were in small font. But the Court also held the Court of Appeal made two missteps by leaning into a pro-arbitration interpretive presumption to resolve ambiguity, and it effectively prevented the trial court from considering factual arguments about contract formation/assent that the trial court had not reached. The Supreme Court reversed and remanded, directing further proceedings under its clarified approach.
Considerations for Employers
First, employers should ensure that arbitration agreements are formatted to aid readability. While the Court rejected double-counting small print as both procedural and substantive unfairness, it underscored that difficult-to-read agreements heighten procedural unconscionability and trigger closer court scrutiny of the terms for substantive unfairness.
Second, employers should review secondary employment agreements, such as confidentiality agreements, which may affect or conflict with an arbitration agreement. The Court explained that the general federal and state policy favoring arbitration does not mean that an arbitration agreement’s terms will necessarily trump over potentially conflicting terms relating to arbitration in other agreements.
If you have questions about how this case impacts your arbitration agreements or related issues, contact a Jackson Lewis attorney to discuss.