Reported / Citable
Background
California courts will refuse to enforce a contract — or specific terms within it — when the contract is “unconscionable.” Unconscionability has two parts. “Procedural” unconscionability looks at how the contract was formed: was the bargaining process oppressive, surprising, or one-sided? “Substantive” unconscionability looks at the terms themselves: are they so harsh or one-sided that they shock the conscience? A party challenging a contract has to show some of both, on a sliding scale — the more procedural unfairness there is, the less substantive unfairness is needed, and vice versa.
Evangelina Yanez Fuentes applied for a job at Empire Nissan and was given five minutes to fill out a packet of paperwork while a drug-testing facility was supposedly about to close. One of the documents was an “Applicant Statement and Agreement” containing a dense arbitration clause. The print was so small and the text so blurry that the trial court called it “visually impenetrable” and said it “challenges the limits of legibility.” Fuentes was not given a chance to ask questions or take a copy. She also signed two confidentiality agreements that arguably carved certain claims out of arbitration in favor of Empire Nissan.
After Fuentes was fired during a medical leave for cancer treatment, she sued for wrongful discharge. Empire Nissan moved to compel arbitration. The trial court refused, finding very high procedural unconscionability and at least “low to moderate” substantive unconscionability — relying in part on case law treating tiny, fine-print terms as substantively unconscionable. The Court of Appeal reversed, holding that illegibility relates only to procedural unconscionability, not substantive, and disagreed with earlier decisions that had treated visually impenetrable text as a substantive defect. The Supreme Court took up the case to resolve the split.
The Court’s Holding
Justice Groban, writing for six justices, held that a contract’s format — its font size, density, blurriness, or general legibility — is generally not a separate substantive-unconscionability problem. Substantive unconscionability is about whether the actual terms are too one-sided to enforce. How the words are printed on the page is a problem of presentation, and presentation problems are properly addressed under the procedural prong of the doctrine. To that extent, the Court of Appeal got it right.
But the court rejected the suggestion that illegibility is a minor issue or that courts should give a hard-to-read contract the same enforcement treatment as a clean one. When a contract is genuinely difficult to read — small font, blurred print, dense legal jargon, no time to absorb it — courts must scrutinize its substantive terms with extra care. The reason is practical: an unreadable contract increases the risk that one party never realized what it was agreeing to, so any one-sidedness in the text is more likely to reflect overreach than meaningful consent. Courts should be especially alert for hidden carveouts, asymmetric remedies, fee-shifting traps, or other terms that benefit only the drafter.
The court reversed and remanded. The Court of Appeal had stopped short of analyzing several issues — including whether the confidentiality agreements undermined mutuality of the arbitration clause and whether Empire Nissan ever properly signed those agreements — and the trial court must reconsider the unconscionability question under the clarified framework. Chief Justice Guerrero dissented, arguing the case could and should have been decided on the existing record without remand.
Key Takeaways
- Tiny or unreadable contract print is a procedural-unconscionability problem, not a substantive one. Drafters cannot be held substantively unconscionable just for using small fonts.
- But illegibility is not free. When a contract is hard to read, judges must look harder at the substance for any one-sidedness, hidden carveouts, or asymmetric remedies.
- Employers using arbitration agreements should make sure the documents are legibly printed, given to applicants with reasonable time to review, offered with a copy to take home, and free of asymmetric carveouts that protect only the employer.
- The decision preserves the sliding-scale framework: high procedural unconscionability still lowers the bar for the substantive showing a plaintiff must make.
- The court rejected the broader Court of Appeal approach that treated illegibility as essentially harmless once the procedural side was acknowledged. Plaintiffs can still get traction from a barely-readable contract, but they must point to specific unfair terms.
Why It Matters
This decision affects every California employer that uses pre-employment arbitration agreements, and every employee asked to sign one. The Supreme Court has drawn a clear line: how an agreement looks on the page is procedural; what it says is substantive. That clarifies a real division among California appellate courts and gives lower courts a framework for handling the recurring scenario in which a worker is rushed into signing a packet of dense, fine-print documents.
Employers cannot now defend arbitration agreements by waving away presentation problems as a stand-alone issue. If the document is hard to read, courts will scrutinize its terms more closely, and any meaningful asymmetry — a clause that lets the employer go to court while sending the employee to arbitration, a one-way fee provision, a vague carveout for confidentiality or trade secret claims — will be a strong candidate for non-enforcement. The practical fix is straightforward: clean type, plain language, time to read, and mutual terms.