Tuesday, February 3, 2026
Page 3
California Supreme Court:
Tiny, Fuzzy Font Is Insufficient to Annul Arbitration Contract
Opinion Says Although Illegibility May Indicate Procedural Unconscionability, Not Relevant to Substantive Analysis, Remands for Consideration of Whether ‘Agreement’ Lacked Mutual Assent Based on Unreadable Language
By Kimber Cooley, associate editor
The California Supreme Court held yesterday that a tiny, blurry typeface in an employment-related arbitration agreement will not, by itself, render the contract unenforceable, saying that the legibility of the terms is not relevant to the determination of substantive unconscionability.
Because an agreement to arbitrate must be found to be both substantively and procedurally unconscionable to be judicially invalidated, the court declared that a car dealership’s employment contract, which is described in the opinion as containing “nearly unreadable” lettering, cannot be avoided on that basis alone.
Justice Joshua P. Groban wrote the decision, joined in by Justices Carol Corrigan, Goodwin H. Liu, Leondra Kruger, Kelli Evans, and Presiding Justice Therese M. Stewart of the First District’s Div. Two, sitting by assignment, saying:
“[S]mall font size is indicative of procedural unconscionability because it contributes to the element of surprise. Accordingly, small font size can provide a basis for requiring a lesser showing of substantive unconscionability in the sliding scale analysis. But because font size does not affect the substance of an agreement’s terms, it cannot render a contractual term substantively unconscionable.”
However, the court remanded for consideration of whether a later-signed agreement rendered the employment contract substantively unfair by imposing a one-sided opt-out of arbitration proceedings as well as whether there could be said to be mutual assent as to the terms, given the tiny typeface.
Chief Justice Patricia Guerrero dissented, arguing that there was no factual dispute that the later agreement did not create such a one-sided obligation and that the employee had waived any assertion that a contract was never formed by failing to raise the issue before the trial court. She wrote:
“We granted review in this matter to consider several issues related to substantive unconscionability. The majority considers one—[tiny print]—and correctly rejects it….But the majority ignores the remainder, preferring instead to remand…based on errors neither raised nor briefed by the parties, and in an apparent effort to give [the employee] the opportunity to raise arguments she has clearly forfeited.”
Employment Contracts
The question arose after Evangelina Yanez Fuentes signed a contract, as part of the onboarding process when she was hired to work for the Ontario-based Empire Nissan Inc. in April 2015, which purportedly mandates the arbitration of “all disputes which may arise out of the employment context” and provides that any modification of its terms may only be accomplished “in writing and [as] signed by the President of the Company.”
She later signed two confidentiality agreements under which Empire Nissan is authorized to seek any available remedies “at law or in equity” if “legal action” is taken. There is no signature by a dealership executive on either agreement provided for the record.
After more than two years with the company, Fuentes was placed on a 12-month medical leave due to a cancer diagnosis. Following a request for a brief extension, her employment was terminated on Sept. 19, 2018.
Fuentes filed a complaint for wrongful discharge and other claims against Empire Nissan and related parties on Sept. 15, 2020. The following January, the defendants moved to compel arbitration.
Then-Los Angeles Superior Court Judge Mel Red Recana (now retired) denied the motion, concluding that the small print was indicative of substantive unfairness.
A divided Div. Eight of this district’s Court of Appeal reversed, saying that “font size and unreadability go to the process…and not the substance.” In an opinion authored by Justice John Shepard Wiley Jr., the court declined to follow Div. Two of the First District’s 2019 opinion in Davis v. TWC Dealer Group Inc., which found that font size in a similar agreement could raise substantive unconscionability concerns, and directed the trial court to grant the motion.
Procedural Unconscionability
Concluding that “the circumstances under which Fuentes signed the agreement involved…a high degree of procedural unconscionability,” Groban reasoned:
“Taken together, the agreement’s difficult-to-read text and prolix language present a substantial barrier to understanding its terms. Indeed, it is hard to understand why an employer would present an important legal agreement to its employees in such a form.”
Acknowledging that unconscionability is analyzed on a sliding scale and that “even a low degree” may render the agreement unenforceable due to the significant procedural unfairness, he opined:
“[W]e agree with Empire Nissan that its tiny print and almost illegible format do not indicate substantive unconscionability. An otherwise fair and mutual term is not made substantively unconscionable by printing it in a manner that makes it difficult to read….”
Addressing Davis, he pointed out that the court cited the California Supreme Court’s 2019 decision in OTO LLC v. Kho, in which the high court observed that the unconscionability analysis is primarily concerned with terms that unreasonably favor the more powerful party and provided a list of examples, including “fine-print” terms.
Groban remarked that “we did not mean by our reference to ‘fine-print terms’ in Kho that a contractual term could be substantively unconscionable merely because it was printed in a small font.”
Addressing the impact of the confidentiality agreements, the jurist said that “[n]othing in the text of the confidentiality agreements limits Empire Nissan’s right to bring its claims under the agreements in court,” saying that the use of the term “legal action” seems to contemplate proceedings other than in arbitration, potentially creating a one-sided, unfair carveout “for claims only Empire Nissan would bring.”
Supervening Force
He continued:
“The Court of Appeal—relying on ‘the principle that the law strongly favors arbitration’—concluded that the arbitration agreement had ‘supervening force’ over the confidentiality agreements because the arbitration agreement ‘specifies it can be modified only in a writing signed by the company president, and that president never signed any modification.’ ”
Disagreeing with this analysis, Groban commented:
“In the Court of Appeal’s analysis, whether the confidentiality agreements created a substantively unconscionable one-sided carveout turned largely on whether Empire Nissan’s president signed the agreements. Empire Nissan waived any argument that its president did not sign the agreement by failing to make that argument in the trial court….[G]iven the lack of an adequate factual foundation for the Court of Appeal’s interpretation[,]…we conclude that remand is appropriate to allow the trial court to consider these questions and make relevant findings.”
Pointing out that Fuentes had argued in the trial court that there was no valid contract created due to a “public policy” concerns, he rejected the view that Fuentes waived any claim that the small print and other factors made it impossible for her to assent to the terms.
Groban added:
“[W]e hold that the Court of Appeal erred….by directing the trial court to grant Empire Nissan’s motion to compel arbitration rather than permitting the trial court to consider on remand Fuentes’s argument that the written agreement did not give rise to a valid contract. For these reasons, we reverse the judgment of the Court of Appeal and remand with directions that the case be returned to the trial court for further proceedings….”
In a footnote, he suggested that “[t]he Legislature may wish to consider specifying requirements for employment contracts that promote legibility and comprehensibility, as it has with other types of contracts.”
Guerrero’s View
Guerrero wrote:
“[U]nder well-settled principles of contract interpretation, the confidentiality agreements do not confer any right on Empire Nissan to pursue claims for relief in court, in contravention of the parties’ earlier arbitration agreement. Nothing in the…agreements contradicts…the parties’ fully mutual agreement to arbitrate all disputes between them. It is therefore irrelevant whether Empire Nissan’s president or majority owner signed the confidentiality agreements or not. Even if they had signed, it would have no effect on the mutuality of the arbitration agreement itself, and it would not make the agreement unconscionable.”
Arguing that “[t]he majority is therefore mistaken that any alleged ‘lack of an adequate factual foundation’ undermines the Court of Appeal’s unconscionability determination,” and said “its decision to reverse and remand lacks any legal or logical basis.”
Saying that “Fuentes did not mention mutual assent” in the trial court, she asserted that the public policy argument she raised was one “not about the existence of an agreement, but its enforcement.”
As to whether Div. Eight erred in directing the trial court to grant the motion to compel, she opined:
“Fuentes has never argued that the Court of Appeal made such an error, either in her petition for review or in her merits briefing, and Empire Nissan has had no opportunity to respond. The majority disregards basic appellate procedure and fundamental fairness by raising the issue itself and reversing on this basis.”
The case is Fuentes v. Empire Nissan Inc., 2026 S.O.S. 301.
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