Navigating the Fine Print: California Court Clarifies Small Print in Arbitration Agreements as Procedural Issues

Arbitration agreements have become increasingly popular in California and other states as a means of resolving disputes between employers and employees. However, the enforceability of these agreements has recently come under scrutiny by courts, particularly in instances where the agreement is signed by an employee without fully understanding its terms. In a recent decision, the California Court of Appeal held that small and unreadable print in an arbitration agreement renders the agreement unenforceable. This decision came in the case of Fuentes v. Empire Nissan, Inc. et al., where the plaintiff signed an arbitration agreement with Empire Nissan, Inc.

Small font and unreadable print are affecting arbitration agreements

In recent years, there has been a growing concern among employees and employee advocacy groups about the use of arbitration agreements by employers. These agreements require employees to waive their right to sue in court in the event of a dispute with their employer and instead require them to submit to binding arbitration. The concern stems from the fact that employees may not fully understand the implications of signing such an agreement, particularly if the agreement is written in small font and difficult to read.

The problem with small fonts and unreadable print in arbitration agreements is that it affects procedural unconscionability. Procedural unconscionability refers to the circumstances surrounding the formation of a contract, including the process by which the parties enter into the agreement. If an agreement is signed without the employee fully understanding its terms, it can be deemed procedurally unconscionable and, therefore, unenforceable.

In the case of Fuentes v. Empire Nissan, Inc. et al., the plaintiff applied to work for Empire Nissan, Inc. and signed an arbitration agreement. Later, Nissan terminated the plaintiff, and she filed a lawsuit alleging discrimination and wrongful termination against three defendants – Nissan, Romero Motors Corporation, and Oremor Management & Investment Company.

California Court of Appeal’s Decision

The trial court ruled that the arbitration agreement was unenforceable based on the plaintiff’s argument that the print was too small, and the agreement was therefore procedurally unconscionable. The California Court of Appeal for the Second District disagreed with the trial court’s decision and ordered it to compel arbitration. However, the appellate court noted that the small and unreadable font used during the contract formation stage was problematic for procedural reasons.

Procedural concerns with tiny and unreadable fonts

The use of small and unreadable fonts during the contract formation stage is problematic for several reasons. For one, an employee may not be able to read the agreement or understand its provisions, which can have serious consequences if the agreement waives or limits the employee’s legal rights. Additionally, an employee who is unable to read the agreement may be coerced or forced into signing it, especially if they are in a position of vulnerability, such as in the case of a job applicant.

Assessment of Mutual and Fair Agreement by the California Court of Appeal

The appellate court held that the arbitration agreement was mutual and even-handed, and therefore not substantively unconscionable. The plaintiff had argued that the agreement was unfair since it did not explain how to initiate arbitration. However, the court found that this was not a sufficient ground to render the agreement unenforceable. Ultimately, the court held that the agreement was enforceable, but noted that the small and unreadable font used during the contract formation stage cast procedural unconscionability on its enforceability.

Rejection of the Plaintiff’s Claim of Unfairness

The court’s decision to compel arbitration meant that the plaintiff’s claims would be heard in arbitration rather than in court. The plaintiff’s argument that the agreement was unfair, and therefore unenforceable, was rejected by the court, which found that the agreement was fair and did not violate public policy.

The decision in Fuentes v. Empire Nissan, Inc. et al. highlights the importance of ensuring that arbitration agreements are readable and understandable. Employees who sign such agreements should be fully aware of their legal rights and the implications of any provisions in the agreement. Employers who use such agreements should take care to ensure that they are not procedurally or substantively unconscionable. Ultimately, the enforceability of an arbitration agreement may depend on the specific circumstances surrounding its formation and whether it is fair and even-handed, regardless of the font size.

Explore more

Trend Analysis: AI in Real Estate

Navigating the real estate market has long been synonymous with staggering costs, opaque processes, and a reliance on commission-based intermediaries that can consume a significant portion of a property’s value. This traditional framework is now facing a profound disruption from artificial intelligence, a technological force empowering consumers with unprecedented levels of control, transparency, and financial savings. As the industry stands

Insurtech Digital Platforms – Review

The silent drain on an insurer’s profitability often goes unnoticed, buried within the complex and aging architecture of legacy systems that impede growth and alienate a digitally native customer base. Insurtech digital platforms represent a significant advancement in the insurance sector, offering a clear path away from these outdated constraints. This review will explore the evolution of this technology from

Trend Analysis: Insurance Operational Control

The relentless pursuit of market share that has defined the insurance landscape for years has finally met its reckoning, forcing the industry to confront a new reality where operational discipline is the true measure of strength. After a prolonged period of chasing aggressive, unrestrained growth, 2025 has marked a fundamental pivot. The market is now shifting away from a “growth-at-all-costs”

AI Grading Tools Offer Both Promise and Peril

The familiar scrawl of a teacher’s red pen, once the definitive symbol of academic feedback, is steadily being replaced by the silent, instantaneous judgment of an algorithm. From the red-inked margins of yesteryear to the instant feedback of today, the landscape of academic assessment is undergoing a seismic shift. As educators grapple with growing class sizes and the demand for

Legacy Digital Twin vs. Industry 4.0 Digital Twin: A Comparative Analysis

The promise of a perfect digital replica—a tool that could mirror every gear turn and temperature fluctuation of a physical asset—is no longer a distant vision but a bifurcated reality with two distinct evolutionary paths. On one side stands the legacy digital twin, a powerful but often isolated marvel of engineering simulation. On the other is its successor, the Industry