State Supreme Court questions fairness of illegible arbitration agreement

The state Supreme Court considered Tuesday whether an arbitration agreement is unenforceable if it is impossible for a prospective employee to read -- even if its contents are fair.

Justices seemed inclined to reverse a 2nd District Court of Appeal decision in a car dealership's favor, but more likely on the unconscionability of the agreement because it was difficult to read and not on whether a contract was formed, an issue not raised at the appellate court.

"A normal person would not be able to read this agreement," Clarkson Law Firm PC partner Glenn A. Danas, who represents plaintiff Evangelina Fuentes, told the court. Fuentes v. Empire Nissan Inc. et al., S280256 (Cal. S. Ct., filed May 31, 2023).

Chief Justice Patricia Guerrero expressed discomfort with taking up the question of contract formation, and Justice Leondra R. Kruger asked what rule trial courts should follow to decide whether a contract's legibility should determine whether it has been formed.

Danas, citing a dissent by 2nd District Justice Maria E. Stratton, said the illegibility of an agreement "defeats mutuality" because the employer knows the terms of an agreement while a prospective employee has no idea what it says.

But if justices were uncertain about the contract formation, others focused on whether agreements that prospective employees cannot read are unconscionable.

"If we agree with you on the unconscionability side, you win, right?" Justice Carol A. Corrigan said. "I'm casting about for why we should invest a lot of time and energy in an argument that wasn't raised in the Court of Appeal and wasn't granted here."

Several justices asked what obligation the employee has in asking for a more legible copy. Guerrero cited block language above Fuentes' signature, stating, "DO NOT SIGN UNTIL YOU HAVE READ THE ABOVE STATEMENT & AGREEMENT."

Danas complained that the entire document, which was in six-point font and had been copied multiple times, was blurry and difficult to read. Further, he said the company "picked everything but arbitration in the unreadable one-page form" to tell Fuentes, including drug testing requirements.

2nd District Justice John Shepherd Wiley Jr. wrote for the majority, which reversed a Los Angeles County Superior Court judge's decision and granted defendant Empire Nissan Inc.'s motion to compel arbitration of Fuentes' employment claim after she was fired. "Its substance is fair," he wrote.

Christopher C. Hoffman, founding partner of Fisher & Phillips LLP who represents Empire Nissan, argued that the only focus of the argument is "substantive unconscionability," which the 2nd District Court of Appeal majority said did not exist.

"We have not disputed that this is a difficult agreement to read," he told the justices. But he added that prospective employees were told to ask a company representative if they have questions.

"That certainly puts an employee or a potential offeree on notice, and must do something more than simply sign," Hoffman added.

Justice Joshua P. Groban told Hoffman it was "a dangerous rule to go down that road to say, 'Parts of the agreement are almost impossible to read but there were other parts they could read.' That's not the rule you want us to write, is it?"

"There's an obligation on the part of the person signing it to read it," Hoffman replied.

Corrigan, putting herself in the position of a job applicant, asked what it would do to her chances with a prospective employer if she asked for 20 more minutes to read a legal document or remarked that the print is illegible.

"What do I as an applicant for a job think that's going to do to make me a more attractive candidate for hiring?" she asked.

"There's undoubtedly pressures in every situation," Hoffman replied. "Just because someone couldn't read the terms doesn't mean the terms are unfair."

Corrigan didn't seem to accept that answer, saying applicants asking for citations to the Code of Civil Procedure will doom their prospects. "That person is not getting this job," she said.

Justice Therese M. Stewart of the 1st District Court of Appeal sat as the seventh member on the court for the argument. Justice Martin J. Jenkins retired effective Friday.