Fuentes v. Empire Nissan, Inc. (Feb. 2, 2026, No. S280256) 2026 WL 26557
During her onboarding process as an employee, plaintiff was given less than five minutes to review a long arbitration agreement printed in small, blurry text. She later signed two confidentiality agreements that appeared to allow only the employer to litigate certain claims in court. Three years later, plaintiff was fired and filed suit for wrongful discharge. The employer moved to compel arbitration. The trial court denied the motion, finding the agreement procedurally unconscionable because of its illegibility and rushed presentation and substantively unconscionable due to the agreement’s fine-print text and employer-favored provisions allowing litigation of certain claims.
Following a decision by the Court of Appeal, the California Supreme Court granted review and concluded that contract formatting does not amount to substantive unconscionability, which focuses on the fairness of contract terms. However, the court emphasized “that courts must closely scrutinize the terms of difficult-to-read contracts for unfairness or one-sidedness.” The court also held that resolving contractual ambiguities based on a “policy favoring arbitration as an interpretive presumption [is] misplaced” because “the policy ‘ “favoring” ’ arbitration is not one of promoting arbitration over litigation, but instead of ensuring that arbitration agreements are not disfavored [and] that they are treated like other contracts.”
