How an arbitration agreement looks is one thing. What it says is another. On February 2, 2026, the Supreme Court of California made that distinction law. In Fuentes v. Empire Nissan, Inc., the court held that an agreement’s poor readability—small fonts, dense text, blurry photocopies—generally does not make its terms substantively unconscionable. For employers who use arbitration provisions, the decision offers both assurance and a warning.
The Stakes
Arbitration agreements matter to California employers. They move disputes out of court and into private proceedings that typically stay confidential. They also avoid jury trials—a consideration that looms large for companies facing employment claims in plaintiff-friendly jurisdictions. But these agreements face constant challenge. Employees regularly argue that arbitration provisions are unconscionable and should not be enforced.
California law requires both procedural and substantive unconscionability to void an arbitration agreement. Procedural unconscionability concerns how the agreement was formed: Was one party in a weaker bargaining position? Was the agreement take-it-or-leave-it? Were terms buried in fine print? Substantive unconscionability concerns what the agreement says: For example, are the terms themselves unfair or one-sided? Courts apply these elements on a sliding scale—strong procedural problems require less substantive unfairness, and vice versa—but some showing of each is required.
This framework has produced a recurring question: can presentation problems contribute to substantive unconscionability, or do they bear only on procedural concerns? Fuentes answers that question.
The Ruling
The case arose from an arbitration agreement that the trial court called “visually impenetrable”—approximately 6-point font on a repeatedly photocopied form. The trial court refused to enforce it, concluding that the unreadable format supported findings of both procedural and substantive unconscionability. The Court of Appeal reversed, holding that illegibility affects only procedural unconscionability and that the agreement’s terms were not substantively unfair.
The Supreme Court of California agreed with the Court of Appeal on the core legal question: an agreement’s physical characteristics—font size, placement, prominence, readability—typically bear only on procedural unconscionability. A term that is fair and mutual does not become substantively unconscionable because it is hard to read. Font size does not change what a contract says. But the high court reversed on two other grounds.
The Nuance
The Fuentes holding does not mean presentation of an arbitration agreement is irrelevant. Two additional points from the decision deserve attention.
First, when procedural unconscionability runs high—as where an agreement is difficult to read—courts must examine the substantive terms more closely. Poor presentation does not itself establish substantive unconscionability, but it may lower the threshold. An agreement that might survive casual review will face harder scrutiny if it was presented in a way that made its terms difficult to discover.
Second, judges should not invoke pro-arbitration policy to rescue ambiguous drafting. If an agreement can reasonably be read to favor the employer—say, by requiring employees to arbitrate while preserving the employer’s access to court—courts may find it substantively unconscionable without straining for a friendlier interpretation. In other words, employers cannot rely on the judicial thumb on the scale that has historically favored arbitration.
What This Means in Practice
Fuentes confirms that presentation problems alone will not void an arbitration agreement. Employers with substantively fair arbitration provisions can enforce them even when the presentation was flawed. That is meaningful reassurance for companies that have used arbitration agreements for years without incident.
But Fuentes’s emphasis on heightened scrutiny changes the calculus. Presentation problems now carry greater risk—not because they void agreements outright, but because they invite closer examination of terms that might otherwise pass muster.
In light of this ruling, employers should consider:
- Reviewing arbitration agreements for genuine mutuality—provisions should bind both parties, with any employer carve-outs matched by equivalent employee carve-outs;
- Auditing terms that courts commonly scrutinize: discovery limits, fee-shifting, shortened limitations periods, and damages caps;
- Improving readability through reasonable font sizes, clear formatting, and plain language;
- Drafting with precision, since ambiguous terms will no longer receive the benefit of pro-arbitration interpretation; and
- Presenting arbitration agreements as standalone documents rather than embedding them in dense applications or handbooks.
Grey Ocean assists startups and growth-stage companies with arbitration agreements and California employment compliance.