“A contract’s legibility generally does not affect the substance of its terms.” With that sentence, the California Supreme Court held in Fuentes v. Empire Nissan, Inc. that small, hard-to-read print counts against an arbitration agreement only on the procedural side of the unconscionability test. That’s good news for employers with old onboarding forms. The same opinion also says courts must closely scrutinize the terms of hard-to-read agreements and read any ambiguity against the employer, so a cramped form still carries real risk.
What did the Supreme Court decide?
The court decided Fuentes v. Empire Nissan, Inc., No. S280256, on February 2, 2026, in a published opinion by Justice Groban. Chief Justice Guerrero dissented. The holding, in the court’s words:
“We hold that a contract’s format generally is irrelevant to the substantive unconscionability analysis, which focuses on the fairness of the contract’s terms, but that courts must closely scrutinize the terms of difficult-to-read contracts for unfairness or one-sidedness.”
The court reversed the Court of Appeal and sent the case back to the trial court “for further proceedings consistent with our decision.”
What were the facts?
As the opinion describes the record, the arbitration agreement was part of an employment application packet. The court wrote that the document “is printed in a very small font and its text is so blurry and broken up that it is nearly unreadable,” and that the employer gave the applicant “only five minutes to review” the packet. The trial court had relied on Davis v. TWC Dealer Group, Inc. (2019) 41 Cal.App.5th 662 to treat the tiny print as evidence of substantive unfairness too, and refused to compel arbitration. The Court of Appeal disagreed and ordered arbitration.
How does unconscionability work, and what changed?
Under Civil Code section 1670.5(a), a court that finds a contract clause “to have been unconscionable at the time it was made” may refuse to enforce it. An employee who wants to avoid an arbitration agreement on that ground has to show two things. As the opinion puts it, “the party opposing enforcement must show unfairness both in the procedure by which the contract was formed and the substance of its terms.” Procedural unconscionability is about how the agreement was presented: pressure, lack of time, surprise. Substantive unconscionability is about whether the terms themselves are one-sided. Courts weigh the two on a sliding scale, so more of one means less of the other is needed.
Fuentes settles where formatting goes. The court said “small font size is indicative of procedural unconscionability because it contributes to the element of surprise,” and “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.”
So a fair, mutual arbitration clause printed in six-point type isn’t unfair because of the type. It may, though, face a lower bar for the employee to defeat it on the terms.
What’s the catch for employers?
The second half of the holding. The court found the Court of Appeal erred “by relying on a presumption in favor of arbitration to conclude that the agreement’s terms were not substantively unconscionable.” It should “instead have treated the arbitration agreement like any other contract and closely scrutinized the agreement’s terms for unfairness or one-sidedness, given the high degree of procedural unconscionability, and construed any ambiguous provisions against Empire Nissan, as the drafting party.”
That matters most where an employer has several agreements that overlap. In Fuentes, the employee later signed confidentiality agreements, and the question was whether they carved out claims only the employer would bring, such as trade secret claims, from arbitration. The court held the Court of Appeal erred in using a pro-arbitration presumption to resolve that question. A one-sided carve-out is a classic substantive unconscionability problem, and ambiguous drafting gets read against the company that wrote it.
The procedural posture is worth noting too. The court said the Court of Appeal also erred by ordering arbitration outright instead of letting the trial court consider the employee’s argument “that the written agreement did not give rise to a valid contract.”
| Issue | Rule after Fuentes |
|---|---|
| Small or blurry print | Counts toward procedural unconscionability (surprise) |
| Small print and substantive fairness | Can’t make a term substantively unconscionable by itself |
| Highly procedurally unconscionable form | Terms get close scrutiny, and a lesser showing of substantive unfairness may be enough |
| Ambiguous terms | Construed against the drafting employer |
| Presumption favoring arbitration | Not a substitute for scrutinizing the terms for one-sidedness |
What should an employer do with its arbitration forms now?
Most of what Fuentes rewards is in the employer’s control before any dispute exists. The firm has also written about motions to compel arbitration in California employment cases and electronic signatures on arbitration agreements.
- Reissue the agreement as a stand-alone, readable document in a readable font with plain language, and give employees real time to read it.
- Read the arbitration agreement side by side with every confidentiality and invention agreement the company uses, and remove carve-outs that let only the employer go to court.
- When a lawsuit arrives, preserve the signed agreement, the onboarding records showing when and how it was presented, and any later agreements that mention dispute resolution.
- Calendar the response deadline on the complaint, and decide quickly whether to move to compel, since delay can waive arbitration.
- Talk to a lawyer before filing a motion to compel, and sooner if the form is hard to read or other agreements contain their own dispute clauses.
How arbitration agreements are evaluated at the start of a case is part of what the firm’s California employment defense page covers.
If an employee says your arbitration agreement is unreadable
If your company has been sued and the employee opposes arbitration because the agreement was cramped or rushed, the other terms of the agreement and how they fit with your confidentiality agreements usually decide the motion. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving motions to compel arbitration. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The opinion is Fuentes v. Empire Nissan, Inc. (Cal. Feb. 2, 2026, S280256).
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.