California Supreme Court weighs whether an unreadable arbitration agreement can bind workers

In a 6-1 decision, the California Supreme Court addressed a simple but significant question: Can an arbitration agreement be enforced when its operative terms are nearly impossible to read?

More broadly, how should courts treat illegibility when determining whether a contract is unconscionable, or whether a contract was formed at all?

Ultimately, the Supreme Court's decision reinforces a foundational contract principle: meaningful assent requires meaningful opportunity to understand the agreement.

The issue stems from Evangelina Yanez Fuentes v. Empire Nissan, Inc., No. S280256 (Cal. Sup. Ct. Feb. 2, 2026). There the court clarified how illegibility of an agreement fits within California's unconscionability framework and emphasized that arbitration agreements are subject to the same contract principles as any other agreement.

How the case came before the Supreme Court

Evangelina Yanez Fuentes, an auto sales agent, filed suit against her former employer alleging discrimination, wrongful termination and related statutory violations.

The former employer, Empire Nissan, moved to compel arbitration based on a one-page "Applicant Statement and Agreement" signed during the hiring process. The document contained an arbitration provision in extremely small, blurred print due to repeated photocopying. The California Supreme Court entertained oral argument and issued its decision, which clarified the standards of unconscionability when considering agreements, including arbitration agreements.

The trial court

By way of background, at the trial court level, Fuentes argued that the arbitration agreement was unenforceable because it was unconscionable and, alternatively, that no valid agreement to arbitrate exists because the agreement was virtually illegible thereby precluding her assent to its terms.

The trial court denied the motion to compel arbitration, finding the agreement unconscionable due to its microscopic and barely legible text. Relying on Davis v. TWC Dealer Group, Inc. (2019) 41Cal.App.5th 662, 674, the court found that small, difficult-to-read print contributed to a high degree of procedural unconscionability, and the format also supported at least a low to moderate degree of substantive unconscionability. However, the trial court did not reach Fuentes's argument--that Empire Nissan failed to prove that the arbitration agreement was valid.

The Court of Appeal

Disagreeing with Davis, the Court of Appeal reversed and held that "tiny and unreadable print" is a problem of procedural unconscionability only and should not be "double counted" as a problem of substantive unconscionability. Applying California's two-part unconscionability test, which provides that both procedural and substantive elements must be present to conclude a term or agreement is unconscionable, the court held that procedural unconscionability alone was insufficient to invalidate the arbitration agreement.

The Supreme Court review

The California Supreme Court granted review to resolve the conflict between the two approaches and clarified how procedural defects such as illegibility should be analyzed under the unconscionability sliding-scale framework.

During oral argument, several justices expressed skepticism that an illegible agreement can meaningfully bind an employee, raising questions whether the appellate court's analysis unduly minimized the practical impact of an unreadable contract.

In its February 2, 2026 opinion, the court reversed the Court of Appeal decision, clarified the proper framework for review of the enforceability of the agreement, and found that the agreement in question was imposed with a high degree of procedural unconscionability. Furthermore, the court stated that with such a high degree of procedural unconscionability, even a low degree of substantive unconscionability could render the agreement unenforceable.

The following facts were significant in the court's analysis:

• Fuentes was given only five minutes to review an entire application packet.

• She was told to hurry because the drug testing facility was closing.

• She was not informed that the packet contained an arbitration agreement.

• She was not given an opportunity to ask questions.

• She was not provided a copy of the agreement after signing.

• And the arbitration provision itself appeared in a tiny, blurry font, compressed into a dense, jargon-heavy paragraph nearly impossible to decipher.

"Indeed, it is hard to understand why an employer would present an important legal agreement to its employees in such a form," the majority wrote. Taken together, the court found significant "oppression" and "surprise." The court did, however, reaffirm California's sliding-scale nature of unconscionability.

Where procedural unconscionability is substantial, only a low degree of substantive unfairness is needed to render an agreement unenforceable. That principle, the court emphasized, requires careful judicial examination of the agreement's actual terms when the formation process is suspect.

Importantly, the court clarified that illegibility, standing alone, generally relates to procedural unconscionability, not substantive unfairness. However, when the formation process is highly suspect, courts must carefully scrutinize the agreement's terms for even minor substantive imbalances.

Arbitration agreements are not alone

Notably, the court was clear that the arbitration agreement must be treated like any other contract and carefully examined. As such, ambiguities in the contract must be construed against the drafter. Likewise, courts must carefully evaluate both the formation issues and the substance of arbitration agreements.

Ultimately, the Supreme Court reversed the appellate judgment and remanded the case, with directions that the trial court must address Fuentes' separate argument that the illegible document may not have formed a valid contract at all.

Although it is not yet clear how the trial court will decide the issue, the Supreme Court's ruling leaves employers with important lessons: if a purported agreement is illegible, mutual assent itself may be automatically lacking, regardless of unconscionability.

Implications for employers

The court's ruling offers employers a cautionary roadmap: arbitration agreements presented during the hiring process, under time pressure, without explanation and in difficult-to-read format, will face heightened judicial scrutiny.

Employers and counsel should adopt clear protocol under which employees review arbitration as well as other employment agreements. Moreover, agreements that are poorly reproduced, excessively dense or difficult to read may be vulnerable to challenge even if their substantive terms are otherwise lawful, particularly when combined with formation circumstances, such as those identified in Fuentes.

As a best practice, employers should ensure that arbitration agreements and other employment-related documents are:

• Clearly legible

• Written in understandable language and in readable font size and format

• Presented in a manner that allows employees a meaningful opportunity to review them

This opinion underscores the importance of maintaining clear, accessible, and well-drafted employment agreements to minimize litigation risk and makes clear that courts will not overlook procedural defects simply because arbitration agreements are favored under the law.