Fuentes v. Empire Nissan

IN THE SUPREME COURT OF

CALIFORNIA

EVANGELINA YANEZ FUENTES,

Plaintiff and Respondent,

v.

EMPIRE NISSAN, INC., et al.,

Defendants and Appellants.

S280256

Second Appellate District, Division Eight

B314490

Los Angeles County Superior Court

20STCV35350

February 2, 2026

Justice Groban authored the opinion of the Court, in which

Justices Corrigan, Liu, Kruger, Evans, and Stewart* concurred.

Chief Justice Guerrero filed a dissenting opinion.

*

Presiding Justice of the Court of Appeal, First Appellate

District, Division Two, assigned by the Chief Justice pursuant

to article VI, section 6 of the California Constitution.

FUENTES v. EMPIRE NISSAN, INC.

S280256

Opinion of the Court by Groban, J.

To establish that a contract is unenforceable because it is

unconscionable, the party opposing enforcement must show

unfairness both in the procedure by which the contract was

formed and the substance of its terms. Here, we consider how

to account for illegibility in this analysis. The trial court relied

on Davis v. TWC Dealer Group, Inc. (2019) 41 Cal.App.5th 662,

674 (Davis) to conclude that small, difficult-to-read print

supports a finding of substantive unconscionability as well as

procedural unconscionability. Disagreeing with Davis, the

Court of Appeal 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.

(Fuentes v. Empire Nissan, Inc. (2023) 90 Cal.App.5th 919, 930

(Fuentes).) We granted review to resolve this conflict. We hold

that a contract’s format generally is irrelevant to the

substantive unconscionability analysis, which focuses on the

fairness of the contract’s terms, but that courts must closely

scrutinize the terms of difficult-to-read contracts for unfairness

or one-sidedness. We remand for further consideration in light

of our clarification of the law.

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FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

I. FACTUAL AND PROCEDURAL BACKGROUND

When applying to work at Empire Nissan,1 Evangelina

Yanez Fuentes signed a document titled “Applicant Statement

and Agreement.” The document contains a provision mandating

arbitration of “all disputes which may arise out of the

employment context.” The document also provides that any

future modification of its terms must be “in writing and signed

by the President of the Company.”

The document is printed in a very small font and its text

is so blurry and broken up that it is nearly unreadable. Its

arbitration provision is a lengthy, densely printed paragraph

consisting of complex sentences filled with legal jargon and

statutory references. The trial court — quoting our description

of a similarly formatted agreement in OTO, L.L.C. v. Kho (2019)

8 Cal.5th 111, 128 (Kho) — described the document as “ ‘visually

impenetrable’ ” to the point that it “ ‘challenge[s] the limits of

legibility.’ ”

The document was part of an employment application

packet that Empire Nissan gave Fuentes only five minutes to

review. Fuentes spent most of this time filling out the

employment application form. She was told that the documents

in the packet had to do with her employment application,

contacting her references, and a drug testing requirement, that

she had to complete the documents to work for Empire Nissan,

and that she should hurry because the drug testing facility was

1

We refer to appellants Empire Nissan, Inc., Romero

Motors Corporation, and Oremor Management & Investment

Company collectively as “Empire Nissan.”

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FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

about to close. She was not offered an opportunity to ask

questions. She did not receive a copy.

Fuentes later signed — at Empire Nissan’s request — two

confidentiality agreements that are substantially identical to

each other. The documents provide that Fuentes will not

“usurp, for personal gain, any opportunities in the Dealership’s

line of business.” They also prohibit her from using or disclosing

confidential information and trade secrets. Each document

provides that it “supersedes any and all prior agreements” on

the covered subjects. If Fuentes breaches the agreements, they

authorize Empire Nissan to seek “any proper injunction” in

addition to “any other remedies available . . . at law or in

equity.” If “legal action is taken to enforce” the agreements, the

prevailing party is entitled to attorney fees and costs. There is

no signature from Empire Nissan’s president on the copy of

either of the two confidentiality agreements that appears in the

record.

When Fuentes had been working for Empire Nissan for

about two and a half years, she went on medical leave for cancer

treatment. A year later, Fuentes requested a brief extension of

her leave before returning to work. Empire Nissan terminated

her employment, and Fuentes filed a complaint in court alleging

wrongful discharge and related claims.

Empire Nissan responded with a motion to compel

arbitration, which Fuentes opposed. She argued, first, that

Empire Nissan had not proved that there was a valid agreement

to arbitrate because enforcing the agreement would be contrary

to public policy due to the agreement’s illegibility and the fact

that Empire Nissan gave her so little time to review it. Second,

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FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

Fuentes argued that even if there was a valid arbitration

agreement, it was unenforceable because it was unconscionable.

The trial court denied Empire Nissan’s motion, concluding

that the arbitration agreement was unconscionable; it did not

reach Fuentes’s argument that Empire Nissan had not proved

that the arbitration agreement was valid. The court found that

the agreement’s text was barely legible, it was difficult to

understand, and Empire Nissan had not provided Fuentes a

meaningful opportunity to review it or negotiate its terms.

Based on these findings, the court ruled that Fuentes had

established “a very high degree of procedural

unconscionability.”

The court further ruled that Fuentes had established “a

low to moderate degree of substantive unconscionability.”

Citing our decision in Kho, supra, 8 Cal.5th 111 and the Court

of Appeal’s decision in Davis, supra, 41 Cal.App.5th at page 674,

it concluded that the agreement’s “ ‘fine-print terms’ ” were

indicative of substantive unconscionability. The court found

further indication of substantive unconscionability in the

confidentiality agreements’ apparent carveout from the

arbitration agreement of unfair competition, trade secret, and

confidentiality claims — claims that Empire Nissan, not

Fuentes, would bring.

Empire Nissan appealed and the Court of Appeal reversed

in a divided opinion. The majority concluded that arguments

about illegibility go exclusively to procedural

unconscionability — not to substantive unconscionability, as the

trial court had concluded. (Fuentes, supra, 90 Cal.App.5th at

p. 929.) In reaching this holding, the court criticized and

declined to follow Davis, supra, 41 Cal.App.5th at page 662,

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FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

which held that a similarly formatted arbitration agreement

was substantively unconscionable. The Davis court based this

holding in part on its understanding of Kho’s reference to “ ‘fine-

print terms’ ” as meaning terms “ ‘so small as to challenge the

limits of legibility.’ ” (See Davis, at p. 674.) Relying on the

principle that “federal and California law strongly favor

arbitration,” the majority interpreted the confidentiality

agreements as requiring arbitration of claims brought under

them. (Fuentes, at p. 931.) Based on this interpretation, it held

that “there is no substantive unconscionability.” (Id. at p. 936.)

Having so held, the court stated, “we need not and do not

address procedural unconscionability.” (Ibid.)

The dissent would have held that Fuentes had shown the

“low degree of substantive unconscionability” required given the

high degree of procedural unconscionability involved in the

agreement’s formation. (Fuentes, supra, 90 Cal.App.5th at

p. 938 (dis. opn. of Stratton, P. J.).) The dissenting justice noted

that in Kho, we “appeared to endorse the idea that ‘fine-print

terms’ would support a finding of substantive, as well as

procedural, unconscionability.” (Fuentes, at pp. 938–939 (dis.

opn. of Stratton, P. J.).) She observed that if fine print can

indicate substantive unconscionability, “then the fine print

here, which is so small as to challenge the limits of legibility,

qualifies.” (Id. at p. 939 (dis. opn. of Stratton, P. J.).)

We granted review.

II. DISCUSSION

Fuentes argues that the arbitration agreement is

unenforceable because it is unconscionable and, alternatively,

that no valid agreement to arbitrate exists because the

agreement’s almost illegible format and the way it was

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Opinion of the Court by Groban, J.

presented to her precluded her assent to its terms. We consider

each of these arguments in turn. Because the parties do not

dispute the trial court’s factual findings, our review is de novo.

(Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th

478, 493 (Ramirez).)

A. Unconscionability

“The general principles of unconscionability are well

established. A contract is unconscionable if one of the parties

lacked a meaningful choice in deciding whether to agree and the

contract contains terms that are unreasonably favorable to the

other party.” (Kho, supra, 8 Cal.5th at p. 125.) We have referred

to these two aspects of unconscionability as its “procedural and

substantive elements.” (Pinnacle Museum Tower Assn. v.

Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223,

246 (Pinnacle).) The procedural element concerns “the

circumstances of contract negotiation and formation,”

particularly “oppression or surprise due to unequal bargaining

power.” (Ibid.) The substantive element, by contrast, concerns

“the fairness of an agreement’s actual terms,” i.e., whether those

terms “are overly harsh or one-sided.” (Ibid.)

“Both procedural and substantive elements must be

present to conclude a term is unconscionable, but these required

elements need not be present to the same degree.” (Ramirez,

supra, 16 Cal.5th at p. 493.) Courts “apply a sliding scale

analysis under which ‘the more substantively oppressive [a]

term, the less evidence of procedural unconscionability is

required to come to the conclusion that the term is

unenforceable, and vice versa.’ ” (Ibid.)

When there is substantial procedural unconscionability,

“even a relatively low degree of substantive unconscionability

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FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

may suffice to render the agreement unenforceable.” (Kho,

supra, 8 Cal.5th at p. 130.) “Substantive terms that, in the

abstract, might not support an unconscionability finding take on

greater weight when imposed by a procedure that is

demonstrably oppressive. Although procedural

unconscionability alone does not invalidate a contract, its

existence requires courts to closely scrutinize the substantive

terms ‘to ensure they are not manifestly unfair or one-sided.’ ”

(Ibid.) “The ultimate issue in every case is whether the terms of

the contract are sufficiently unfair, in view of all relevant

circumstances, that a court should withhold enforcement.”

(Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899,

912 (Sanchez).)

1. The Arbitration Agreement Was Imposed with a High

Degree of Procedural Unconscionability

The parties debate the degree of procedural

unconscionability present here.

Some procedural unconscionability is present whenever

an agreement “is a contract of adhesion, i.e., a ‘standardized

contract which, imposed and drafted by the party of superior

bargaining strength, relegates to the subscribing party only the

opportunity to adhere to the contract or reject it.’ ” (Ramirez,

supra, 16 Cal.5th at p. 492.) Although ordinary contracts of

adhesion “ ‘ “are indispensable facts of modern life that are

generally enforced,” ’ ” they pose a “ ‘ “ ‘clear danger of

oppression and overreaching.’ ” ’ ” (Id. at p. 494.) Because

contracts of adhesion are “ ‘not the result of freedom or equality

of bargaining,’ ” we examine them carefully. (Id. at p. 492.)

Empire Nissan acknowledges that the agreement here is

a contract of adhesion and concedes, as it must, that Fuentes

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FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

has proved at least some procedural unconscionability. The

question then becomes one of the degree of procedural

unconscionability, and by extension, the degree of scrutiny with

which we search the substance of the agreement’s terms for

unfairness and one-sidedness. (Kho, supra, 8 Cal.5th at p. 126.)

A greater degree of procedural unconscionability is present

when the circumstances of a contract’s formation evince

“oppression” or “surprise” beyond that usually present in a

contract of adhesion. (Ibid.)

“ ‘ “Oppression occurs where a contract involves lack of

negotiation and meaningful choice.” ’ ” (Pinnacle, supra,

55 Cal.4th at p. 247.) “Courts ‘must be “particularly attuned” to

this danger in the employment setting, where “economic

pressure exerted by employers on all but the most sought-after

employees may be particularly acute.” ’ ” (Ramirez, supra,

16 Cal.5th at p. 494.)

Where, as here, a prospective employer directs an

applicant to sign an arbitration agreement as part of the

employment application process, the economic pressure on the

applicant to sign the agreement is particularly high. Empire

Nissan did not provide Fuentes a meaningful opportunity to

review the agreement or ask questions about it, much less to

negotiate its terms. When presented with the application

packet, Fuentes was told she should hurry because the drug

testing facility was about to close. The company gave her only

five minutes to complete the packet. It did not verbally inform

her that the packet included an arbitration agreement or

provide her a copy of the form after she signed it. These

circumstances constitute significant oppression. (Kho, supra,

8 Cal.5th at pp. 127–128.)

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“[S]urprise” is present when an agreement’s meaning is

difficult to ascertain, such as when “ ‘ “the allegedly

unconscionable provision is hidden within a prolix printed

form.” ’ ” (Pinnacle, supra, 55 Cal.4th at p. 247.) Small font size

and illegibility can also support a finding of surprise. (Kho,

supra, 8 Cal.5th at p. 128.)

The formation of Fuentes’s agreement involved an

unusually high degree of surprise. The agreement is printed in

a tiny, blurry font, making it very difficult to read. Once the text

is deciphered, the agreement’s language presents a further

barrier to understanding: The reader is confronted with a

collection of complex sentences replete with legal jargon and

statutory references. As the Court of Appeal observed, the

arbitration agreement consists of a “mammoth” paragraph

consisting of “something like 900 words,” with 35 lines squeezed

into “about three vertical inches” of text. (Fuentes, supra,

90 Cal.App.5th at p. 923.) One sentence, by itself, is 214 words

long. The paragraph refers to six different statutes by name, in

addition to referring generally to “other applicable state or

federal laws or regulations.” (Ibid.) The paragraph also refers

to various government agencies and cites, without explanation,

several sections of the California code. (See Kho, supra,

8 Cal.5th at p. 128 [citing similar phrasing as evidence of

surprise].) Taken together, the agreement’s difficult-to-read

text and prolix language present a substantial barrier to

understanding its terms. Indeed, it is hard to understand why

an employer would present an important legal agreement to its

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Opinion of the Court by Groban, J.

employees in such a form.2 In relation to a similarly presented

arbitration agreement, we observed in Kho: “A layperson trying

to navigate this block text, printed in tiny font, would not have

an easy journey.” (Kho, at p. 128.)

Our policy favoring the enforcement of arbitration

agreements is rooted in “respect for the parties’ mutual and

voluntary agreement to resolve disputes by this alternative

means.” (Kho, supra, 8 Cal.5th at p. 129.) Here, the significant

oppression and unusually high degree of surprise involved in the

agreement’s formation undermine the policies that normally

favor enforcement. The agreement’s formatting and the way

Empire Nissan presented it to Fuentes “did not promote

voluntary or informed agreement to its terms.” (Ibid.) Indeed,

even after she signed it, discerning its substance would have

involved an investment of effort and expense — obtaining a

copy, deciphering its almost illegible print, and hiring a

lawyer — that an employee would be unlikely to make until a

serious employment dispute arose.

Because the circumstances under which Fuentes signed

the agreement involved such a high degree of procedural

unconscionability, even a low degree of substantive

2

Issues around the formatting of employment contracts do

not appear to be confined to this case. (See e.g., Kho, supra,

8 Cal.5th at p. 128; Davis, supra, 41 Cal.App.5th at pp. 672–

673; Yeomans v. World Financial Group Insurance Agency, Inc.

(N.D.Cal. 2020) 485 F.Supp.3d 1168, 1185.) The Legislature

may wish to consider specifying requirements for employment

contracts that promote legibility and comprehensibility, as it

has with other types of contracts. (See, e.g., Code Civ. Proc., §

1295; Bus. & Prof. Code, § 7159, subd. (c); Ins. Code, § 12820,

subd. (b)(4); Civ. Code, § 1630.)

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Opinion of the Court by Groban, J.

unconscionability may render the agreement unenforceable.

(Kho, supra, 8 Cal.5th at p. 130.)

2. The Court of Appeal Erred in Its Evaluation of

Substantive Unconscionability

Fuentes argues that the arbitration agreement’s terms are

unfairly one-sided, particularly when viewed through the prism

of the high degree of procedural unconscionability present here.

Empire Nissan contends that Fuentes has not shown any

substantive unconscionability.

The substantive unconscionability analysis “examines the

fairness of a contract’s terms. This analysis ‘ensures that

contracts, particularly contracts of adhesion, do not impose

terms that have been variously described as “ ‘ “overly harsh” ’ ”

(Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1532),

“ ‘unduly oppressive’ ” (Perdue v. Crocker National Bank (1985)

38 Cal.3d 913, 925), “ ‘so one-sided as to “shock the

conscience” ’ ” (Pinnacle[, supra,] 55 Cal.4th [at p.] 246), or

“unfairly one-sided” (Little [v. Auto Stiegler, Inc. (2003)]

29 Cal.4th [1064].) All of these formulations point to the central

idea that the unconscionability doctrine is concerned not with “a

simple old-fashioned bad bargain” [citation], but with terms that

are “unreasonably favorable to the more powerful party.” ’ ”

(Kho, supra, 8 Cal.5th at pp. 129–130.) “[W]here, as here, the

written agreement has been prepared entirely by the employer,

it is a ‘well established rule of construction’ that any ambiguities

must be construed against the drafting employer and in favor of

the nondrafting employee. (Sandquist v. Lebo Automotive, Inc.

(2016) 1 Cal.5th 233, 248 (Sandquist).) “Ultimately, the

question is whether [the nondrafting employee], through

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Opinion of the Court by Groban, J.

oppression and surprise, was coerced or misled into making an

unfair bargain.” (Kho, at p. 136.)

a. “Fine-print Terms”

Fuentes first argues that the agreement’s tiny print and

almost illegible format rendered it substantively

unconscionable. In support of this argument, Fuentes relies on

Kho, supra, 8 Cal.5th at page 130, where we included “fine-print

terms” in a list of categories of terms that may be substantively

unconscionable because they “ ‘ “impair the integrity of the

bargaining process or otherwise contravene the public interest

or public policy” ’ or attempt to impermissibly alter fundamental

legal duties.” (Ibid.) She notes that in Davis, 41 Cal.App.5th at

page 674, the Court of Appeal cited this passage from Kho to

support its conclusion that print “ ‘so small as to challenge the

limits of legibility’ ” indicated substantive unconscionability.

Empire Nissan counters that our reference to “fine-print

terms” in Kho, 8 Cal.5th at page 130, is not merely a reference

to font size, as the Davis court seems to have understood it. That

is correct. The expression “fine-print terms” refers to

substantively unfair or one-sided terms hidden in a legal

document. Such terms may be hidden in a variety of ways,

including by printing them in text that is smaller than the

surrounding text, burying them in a large block of text, or

placing them in a part of the document likely to be overlooked.

(See, e.g., Fisher v. MoneyGram Intern., Inc. (2021) 66

Cal.App.5th 1084, 1103 [back of document]; Murrey v. Superior

Court (2023) 87 Cal.App.5th 1223, 1238 [click boxes for

electronic signature of lengthy documents].) The common theme

is that the terms are both hidden and unfavorable to the

nondrafting party. In Kho, we cited our decision in Sonic-

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Opinion of the Court by Groban, J.

Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145

(Sonic), in which we observed that the substantive

unconscionability analysis is concerned with terms that are

“ ‘unreasonably favorable to the more powerful party.’ ” Quoting

from Williston on Contracts, we provided a list of examples of

such terms that included “ ‘fine-print terms.’ ” The Williston

treatise observes that contract terms “whether in fine print or

legal ‘gobbledygook’ would hardly be of concern unless they were

substantively harmful to the nondrafting party as well.” (8

Williston, Contracts (4th ed. 2010) § 18:10.) This context makes

clear that we did not mean by our reference to “fine-print terms”

in Kho that a contractual term could be substantively

unconscionable merely because it was printed in a small font.

As to the arbitration agreement at issue here, we agree

with Empire Nissan that its tiny print and almost illegible

format do not indicate substantive unconscionability. An

otherwise fair and mutual term is not made substantively

unconscionable by printing it in a manner that makes it difficult

to read; the fact that a term is printed in tiny, blurry font does

not alone make it harsh, one-sided, or otherwise unreasonably

unfair. (See Kho, supra, 8 Cal.5th at pp. 129–130.) As we have

explained, small font size is indicative of procedural

unconscionability because it contributes to the element of

surprise. Accordingly, small font size can provide a basis for

requiring a lesser showing of substantive unconscionability in

the sliding scale analysis. But because font size does not affect

the substance of an agreement’s terms, it cannot render a

contractual term substantively unconscionable.

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b. Mutuality of Arbitration Mandate

Fuentes next argues that the arbitration agreement is

substantively unconscionable because, when considered

together with the confidentiality agreements, it is unfairly one-

sided. We have held that “[g]iven the disadvantages that may

exist for plaintiffs arbitrating disputes, it is unfairly one-sided

for an employer with superior bargaining power to impose

arbitration on the employee as plaintiff but not to accept such

limitations when it seeks to prosecute a claim against the

employee, without at least some reasonable justification for such

one-sidedness based on ‘business realities.’ ” (Armendariz v.

Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th

83, 117 (Armendariz).) The trial court rejected Empire Nissan’s

business justification argument, and the company has not made

any such argument to us. Whether the confidentiality

agreements support a finding of substantive unconscionability

therefore turns on whether they created a one-sided exemption

from arbitration for claims that Empire Nissan would prosecute

against Fuentes.

Fuentes interprets the confidentiality agreements as

exempting claims brought under them from the arbitration

agreement’s general mandate that all claims related to her

employment must be resolved in arbitration. Fuentes contends

that these exemptions are unfair because claims for violations

of the confidentiality agreements — which prohibit Fuentes

from engaging in unfair competition with Empire Nissan or

using or disclosing confidential information and trade secrets

obtained through her employment — would only ever be

brought by Empire Nissan, never by Fuentes. As Fuentes reads

the confidentiality agreements, they allow Empire Nissan to sue

her in court, while the arbitration agreement requires Fuentes

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to arbitrate all claims she may have against Empire Nissan.

Fuentes argues that this renders the agreements, considered

together, substantively unconscionable. Empire Nissan, for its

part, does not dispute that an exemption for claims brought

under the confidentiality agreements would render the

arbitration agreement one-sided. But it contends that the

confidentiality agreements do not contemplate any particular

forum for their enforcement, and that the arbitration

agreement — which requires any exemption from it to be signed

by Empire Nissan’s president — therefore controls.

Our goal in interpreting the confidentiality agreements is

to give effect to the parties’ “ ‘mutual intention’ ” at the time of

their signing. (Waller v. Truck Ins. Exchange, Inc. (1995)

11 Cal.4th 1, 18.) To discern the parties’ intention, we look first

to the agreements’ text. (Ibid.) Nothing in the text of the

confidentiality agreements limits Empire Nissan’s right to bring

its claims under the agreements in court. Indeed, the

agreements specify that Empire Nissan may seek any remedies

available at law or in equity and that the prevailing party in a

“legal action” to enforce the agreements may recover attorney

fees and costs. We understand “legal action” in its ordinary,

popular sense, which — contrary to the dissent’s view — is a

proceeding in court, not an arbitration. (Civ. Code, § 1644

[words of a contract are generally to be understood “in their

ordinary and popular sense”]; see, e.g., Code Civ. Proc. § 22 [“An

action is an ordinary proceeding in a court of justice . . . .”

(italics added); Black’s Law Dict. (12th ed. 2024) [defining

“action” to mean a “civil or criminal judicial proceeding; esp.

lawsuit”].) Most significantly, the confidentiality agreements

make no reference to arbitration. The arbitration agreement, by

contrast, consistently uses the words “arbitrate” and

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“arbitration” when that is what it means and uses “court” and

“action” to refer to judicial proceedings. The absence of any

reference to arbitration in the confidentiality agreements

suggests that, at the time of their signing, the parties did not

intend for claims under them to be subject to mandatory

arbitration. (Waller, at p. 18.)

The dissent would have us read the absence of a statement

that expressly “confers on Empire Nissan the right to pursue

claims in court” as an indication that the parties intended to

require Empire Nissan to arbitrate its claims. (Dis. opn. of

Guerrero, C. J., post, at p. 9.) To be sure, the confidentiality

agreements could have been more explicit in authorizing Empire

Nissan to bring claims for their breach in court. (See, e.g.,

Carmona v. Lincoln Millennium Car Wash, Inc. (2014)

226 Cal.App.4th 74, 80 [confidentiality agreement providing:

“ ‘Any breach or threatened breach of this Agreement, therefore

may be present[ed] . . . to either a court or binding arbitrator

. . .’ ”].) But we part ways with the dissent because, as a general

matter, no agreement is necessary to authorize the parties to a

contract to pursue breach of contract actions in court.

Arbitration “ ‘ “ ‘is strictly a matter of consent’ ” ’ ” — absent an

agreement to arbitrate, the default rule is that parties may

litigate breach of contract claims in court. (Ford Motor Warranty

Cases (2025) 17 Cal.5th 1122, 1129.) The confidentiality

agreements’ silence about the forum for dispute resolution

therefore indicates that the parties did not intend disputes to be

subject to mandatory arbitration. (See ibid. [“ ‘Arbitration is “a

way to resolve those disputes — but only those disputes — that

the parties have agreed to submit to arbitration” ’ ”].) At least

when read in isolation, the confidentiality agreements reflect an

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understanding that Empire Nissan may bring its claims in

court.

Reading the confidentiality agreements together with the

arbitration agreement, however, reveals an ambiguity

concerning whether the parties intended claims under the

confidentiality agreements to be subject to mandatory

arbitration. (See Alberto v. Cambrian Homecare (2023)

91 Cal.App.5th 482, 490–491 [citing Civil Code section 1642 to

support construing arbitration and confidentiality agreements

executed as part of the same transaction together].) On the one

hand, the confidentiality agreements provide that they

“supersede[] any and all prior agreements” related to unfair

competition, trade secrets, and confidentiality. Such “prior

agreements” include the arbitration agreement — which was

signed first — to the extent that it applies to claims brought

under the confidentiality agreements. The arbitration

agreement mandates arbitration of all employment-related

disputes. The confidentiality agreements impose new

employment-related duties on Fuentes, giving rise to potential

claims for breach of those duties. Because the confidentiality

agreements contemplate that Empire Nissan will be able to

bring such claims in court, they appear to supersede the

arbitration agreement as to those claims. On the other hand,

the arbitration agreement limits the parties’ authority to

supersede it by requiring that any future modification of its

terms be “in writing and signed by the President of the

Company.” Reading the agreements together, it is not clear

whether the parties intended to supersede the arbitration

agreement as to Empire Nissan’s potential claims for breach of

the confidentiality agreements.

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FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

The Court of Appeal — relying on “the principle that the

law strongly favors arbitration” — concluded that the

arbitration agreement had “supervening force” over the

confidentiality agreements because the arbitration agreement

“specifies it can be modified only in a writing signed by the

company president, and that president never signed any

modification.” (Fuentes, supra, 90 Cal.App.5th at p. 931.) Based

on this conclusion, the court held that the confidentiality

agreements did not create a one-sided carveout for claims only

Empire Nissan would bring because any claim Empire Nissan

might bring for breach of the confidentiality agreements would

be subject to mandatory arbitration.

The Court of Appeal’s reliance on the policy favoring

arbitration as an interpretive presumption was misplaced. As

we recently reaffirmed in Quach v. California Commerce Club,

Inc. (2024) 16 Cal.5th 562, “the policy ‘ “favoring” ’ arbitration is

not one of promoting arbitration over litigation, but instead of

ensuring that arbitration agreements are not disfavored, i.e.,

that they are treated like other contracts.” (Id. at p. 579.) The

Court of Appeal contravened this equal treatment principle by

relying on “the principle that the law strongly favors

arbitration” to support its interpretation of the confidentiality

agreements as mandating arbitration. (Fuentes, supra,

90 Cal.App.5th at p. 931.) When, as in the present case, a high

degree of procedural unconscionability is involved in an

arbitration agreement’s formation, treating that agreement like

other contracts involves closely scrutinizing its terms for

unfairness or one-sidedness and resolving ambiguities in

meaning against the drafting party. (Kho, supra, 8 Cal.5th at

p. 130; see Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807,

819, fn. 16 [“The rule requiring the resolution of ambiguities

18

FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

against the drafting party ‘applies with peculiar force in the case

of a contract of adhesion.’ ”].)3

Applying an interpretive presumption favoring

arbitration over litigation, the Court of Appeal implicitly

resolved an underlying factual question — whether Empire

Nissan’s president signed the confidentiality agreements — in

favor of Empire Nissan’s preferred construction of the

agreements. Although the copies of the confidentiality

agreements in the record bear only Fuentes’s signature, it is fair

to assume that Empire Nissan — which drafted the agreements

and had Fuentes sign them — agreed to their terms. (See

Banner Entertainment, Inc. v. Superior Court (1998)

62 Cal.App.4th 348, 361 [“[I]t is not the presence or absence of a

signature which is dispositive; it is the presence or absence of

evidence of an agreement”], original italics.) Empire Nissan did

not assert in the trial court that its president had failed to sign

the confidentiality agreements. Nor did it argue that the

3

The dissent observes that the “principle of interpretation

against the drafter is subordinate to the principle of

interpretation in favor of validity.” (Dis. opn. of Guerrero, C. J.,

post, at p. 14.) In the dissent’s view, the validity presumption

supports Empire Nissan’s interpretation of the confidentiality

agreements because under Fuentes’s interpretation, the

arbitration agreement is unenforceable. But, as the dissent

acknowledges, the validity presumption applies only when a

contract can be interpreted in a manner that is “reasonable” and

capable of implementation “without violating the intention of

the parties.” (Civ. Code, § 1643.) Here, as we have observed,

the confidentiality agreements reflect the parties’ intent to allow

Empire Nissan to bring its claims under them in court. It would

thus violate the parties’ intention to presume that those

agreements mandate arbitration in order to uphold the validity

of the arbitration agreement.

19

FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

missing signatures on the copies of the agreements that were

before the court meant that the confidentiality agreements could

only be enforced in arbitration. As a result, Fuentes had no

reason to seek discovery related to the signature question, and

the trial court made no factual finding on it. The Court of

Appeal’s interpretation of the agreements as mandating

arbitration of Empire Nissan’s claims, which was largely based

on its assumption that the “president never signed” the

confidentiality agreements, therefore lacks an adequate factual

foundation. (Fuentes, supra, 90 Cal.App.5th at p. 931.)

We hold that the Court of Appeal erred in applying a

presumption in favor of arbitration to conclude that the

confidentiality agreements did not create a one-sided carveout

for claims only Empire Nissan would bring. In the Court of

Appeal’s analysis, whether the confidentiality agreements

created a substantively unconscionable one-sided carveout

turned largely on whether Empire Nissan’s president signed the

agreements. (Armendariz, supra, 24 Cal.4th at p. 117.)4

4

Separately, reliance on the missing signature to support

Empire Nissan’s preferred interpretation may raise concerns

about substantive fairness. Relying on the missing signature

may permit Empire Nissan — which drafted the agreement —

to have it both ways. (See Sandquist, supra, 1 Cal.5th at p. 247

[that drafting party “ ‘may leave meaning deliberately obscure,

intending to decide at a later date what meaning to assert’ ”

provides “ ‘substantial reason for preferring the meaning of the

other party’ ”].) If Empire Nissan brought a claim for breach of

the confidentiality agreements in court and Fuentes moved to

compel arbitration, Empire Nissan could produce a signed copy

and claim that it created a carveout from the arbitration

agreement. But Empire Nissan could also, as it did here,

disclaim its right to bring claims under the confidentiality

20

FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

Empire Nissan waived any argument that its president did not

sign the agreement by failing to make that argument in the trial

court, where Fuentes could have contested its factual basis and

sought related discovery. However, as the dissent observes,

Fuentes has not specifically contested the Court of Appeal’s

reliance on the missing signature in her briefs to this court.5

Because the parties have not addressed this issue, we do not

decide it here. (See Cal. Rules of Court, rule 8.516(b)(2).)

agreements in court when it would gain an advantage by doing

so, i.e., if an employee filed suit in court and argued that the

confidentiality agreements’ preservation of Empire Nissan’s

access to a judicial forum renders the arbitration agreement

substantively unconscionable. Though the dissent characterizes

our decision to remand this case for further consideration of the

signature issue as “unjustified,” in our view, it would be unjust

to permit Empire Nissan to argue for whichever interpretation

was more advantageous to it based on a matter over which it has

complete control: whether the president signs the

confidentiality agreements. (Dis. opn. of Guerrero, C. J., post,

at p. 4.) The trial court may allow further development of the

record, briefing, and argument on this issue on remand.

5

The dissent contends that it is “unjustified” for us to rely

on the lack of a factual foundation for the Court of Appeal’s

ruling as a basis for reversing its judgment because the parties

“have had no chance to respond.” (Dis. opn. of Guerrero, C. J.,

post, at p. 5.) But, as explained above, had Empire Nissan raised

the lack of signature as a defense, Fuentes could have taken

discovery on the issue. The Court of Appeal relied on the lack of

signature without a factual record to support that conclusion.

In remanding this case to the trial court, we are affording the

parties an opportunity to respond, and to litigate this factual

issue in an appropriate forum for resolving it. And, as detailed

above, we are concluding that the Court of Appeal applied the

wrong interpretive framework and allowing the trial court on

remand to apply the correct framework. Given this procedural

posture, Fuentes is entitled to have the trial court adjudicate the

issue on remand.

21

FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

Nevertheless, given the lack of an adequate factual foundation

for the Court of Appeal’s interpretation of the confidentiality

agreements as requiring Empire Nissan to bring its claims in

arbitration — which was the primary basis for its conclusion

that the agreements, considered together, are not substantively

unconscionable — we conclude that remand is appropriate to

allow the trial court to consider these questions and make

relevant findings. The trial court may, in its discretion, permit

further development of the record and entertain further briefing

and argument on remand.6

B. Validity of Arbitration Agreement

Separate and apart from arguing that the arbitration

agreement is unenforceable because it is unconscionable,

6

Fuentes also argues that the arbitration agreement is

substantively unconscionable because it contains an unlawful

waiver of Fuentes’s right to bring a representative action under

the Labor Code Private Attorneys General Act of 2004 (PAGA;

Lab. Code, § 2698 et seq.) in any forum. (See Iskanian v. CLS

Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 384

[holding that when “an employment agreement compels the

waiver of representative claims under the PAGA, it is contrary

to public policy and unenforceable as a matter of state law”].)

Fuentes acknowledges that the Court of Appeal held that she

had forfeited this argument, but she contends that we have

discretion to reach it anyway. (See Fuentes, supra,

90 Cal.App.5th at p. 935.) Empire Nissan does not contest our

discretion to reach the argument or the unlawfulness of the

PAGA waiver; instead, it argues that the arbitration

agreement’s language should be reformed or restricted to

preserve the enforceability of the balance of the arbitration

agreement. We recently clarified the analytical framework for

addressing questions of this nature in Ramirez, supra,

16 Cal.5th at pages 516–517. On remand, the trial court may,

in its discretion, allow briefing on these questions.

22

FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

Fuentes — supported by amicus curiae Public Justice — argues

that the written arbitration agreement did not give rise to a

valid contract because the agreement’s formatting and how it

was presented to her precluded her assent to its terms. (See

Domestic Linen Supply Co., Inc. v. L J T Flowers, Inc. (2020)

58 Cal.App.5th 180, 182, 185 [no agreement to arbitrate where

agreement hidden in tiny print on reverse side of signature

page]; Windsor Mills, Inc. v. Collins & Aikman Corp. (1972)

25 Cal.App.3d 987, 994 [no agreement to arbitrate where

arbitration provision was in small, inconspicuous print and

plaintiff was not advised of its existence].)

Empire Nissan contends that Fuentes waived this

argument by not contesting the trial court’s ruling that an

agreement to arbitrate exists. We disagree. It is true that

Fuentes did not contest that ruling. But the ruling was no more

than a determination that Empire Nissan’s motion to compel

arbitration had satisfied the pleading requirement set out in

California Rules of Court, rule 3.1330, which requires a motion

to compel arbitration to state “the provisions of the written

agreement and the paragraph that provides for arbitration.”

Fuentes did not waive her argument that she did not assent to

the arbitration agreement by acknowledging that Empire

Nissan’s motion adequately pleaded the terms of the arbitration

agreement in its motion to compel arbitration.

Indeed, Fuentes challenged the existence of an enforceable

contract in the trial court, arguing that the arbitration

agreement was invalid and that enforcing it would be contrary

to public policy due to its “illegible” formatting and the fact that

she “had less than five minutes to read the entire document

prior to signing it.” She contended that the “procedures and

tactics” Empire Nissan used to get her to sign the agreement

23

FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

“preclude formation of a valid contract.” The trial court

expressly declined to address these arguments because it

concluded that the agreement was unconscionable. The court

observed, however, that “the Court of Appeal has raised public

policy concerns with enforcing contract provisions containing

small, illegible text.” (See Celli v. Sports Car Club of America,

Inc. (1972) 29 Cal.App.3d 511, 521.)7

Although Fuentes did not waive her argument that the

written agreement did not give rise to a valid contract, we

7

The dissent highlights a difference in emphasis between

Fuentes’s arguments in the trial court and her arguments in our

court and asserts, based on this difference, that Fuentes has

waived the arguments she makes in our court. (Dis. opn. of

Guerrero, C. J., post, at pp. 23–25.) We disagree. We do not find

waiver, as the dissent would, based on the fact that Fuentes

framed her argument in the trial court as concerning whether

Empire Nissan’s conduct precludes the agreement’s

“ ‘enforcement,’ ” rather than framing the argument as

concerning whether Empire Nissan’s conduct rendered the

agreement invalid. (Id. at p. 24.) We also do not agree that

Fuentes waived her argument because she focused on public

policy grounds instead of arguing that she “could not or did not

assent” to the agreement. (Id. at p. 24.) The essence of her

arguments in the trial court and before us is the same: Fuentes

contends that the arbitration agreement is invalid and should

not be enforced because of its nearly illegible formatting and the

fact that she was given inadequate opportunity to review

it. Indeed, as the dissent acknowledges, Fuentes briefly argued

in the trial court that these factors “preclude formation of a valid

contract” (emphasis added) — the very sort of language the

dissent contends is necessary to preserve the assent-focused

argument that she made to us. Given this posture, it would be

“flawed and unjustified” not to remand this case to the trial

court to permit it to rule on this issue. (Id. at p. 4.)

24

FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

decline to reach it. Because the trial court did not rule on the

argument, it is not properly before us.8

The argument was also not properly before the Court of

Appeal, which nevertheless directed the trial court to grant

Empire Nissan’s motion to compel arbitration, implicitly ruling

that the trial court could not consider the agreement’s validity.9

This was error.

8

The dissent observes that Fuentes has not challenged the

Court of Appeal’s dispositional language. (Dis. opn. of Guerrero,

C. J., post, at p. 17.) The dissent contends that by relying on the

Court of Appeal’s dispositional error as a basis for remand, our

opinion “runs afoul of Government Code section 68081 and

applicable rules of court” (dis. opn. at p. 23) as well as

“fundamental fairness” (id. at p. 17). The dissent is correct that

Fuentes has not specifically challenged the Court of Appeal’s

dispositional language, but she has challenged its disposition:

She urges us to reverse the judgment of the Court of Appeal. We

agree with the dissent that it would be improper for us to render

a decision on a substantive issue the parties had not had an

opportunity to brief. (Dis. opn. at p. 21, citing Gov. Code,

§ 68081 & Rule 8.516(b)(2).) But there is a difference between a

decision on the merits and a decision to remand: The disposition

is not, by itself, a substantive issue and the parties have briefed

the substantive grounds for reversal. It does not contravene

Government Code section 68081, or the rules of court (or

“fundamental fairness”) to allow the trial court to consider on

remand an argument that it declined to reach because it ruled

on a different ground.

9

Contrary to the dissent’s assertion, Fuentes has not

conceded that this argument was raised for the first time in her

briefing in this court. (Dis. opn. of Guerrero, C. J., post, at p. 25,

fn. 7.) While Fuentes invoked the rule that pure questions of

law may be asserted for the first time on appeal, she did not

concede that she failed to raise the issue below or that it was not

fairly included in her petition for review.

25

FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

The trial court may consider the parties’ arguments

concerning whether the agreement gave rise to a valid contract

on remand. In light of our clarification that arguments about

font size and formatting are not relevant to substantive

unconscionability, the trial court may, in its discretion, allow the

parties to submit additional briefing on the relationship

between legibility and mutual assent. We express no view on

this subject.

III. CONCLUSION

In sum, we agree with the Court of Appeal that the trial

court erred in relying on the arbitration agreement’s illegibility

to support a finding of substantive unconscionability. A

contract’s legibility generally does not affect the substance of its

terms.

Nevertheless, we hold that the Court of Appeal erred in

two ways. First, it erred by relying on a presumption in favor of

arbitration to conclude that the agreement’s terms were not

substantively unconscionable, while declining to rule on

whether the agreement was procedurally unconscionable.

(Fuentes, supra, 90 Cal.App.5th at p. 931.) The court should

instead have treated the arbitration agreement like any other

contract and closely scrutinized the agreement’s terms for

unfairness or one-sidedness, given the high degree of procedural

unconscionability, and construed any ambiguous provisions

against Empire Nissan, as the drafting party. (Kho, supra,

8 Cal.5th at p. 130; Sandquist, supra, 1 Cal.5th at p. 248.)

Second, the court erred by directing the trial court to grant

Empire Nissan’s motion to compel arbitration rather than

permitting the trial court to consider on remand Fuentes’s

argument that the written agreement did not give rise to a valid

26

FUENTES v. EMPIRE NISSAN, INC.

Opinion of the Court by Groban, J.

contract. For these reasons, we reverse the judgment of the

Court of Appeal and remand with directions that the case be

returned to the trial court for further proceedings consistent

with our decision.

GROBAN, J.

We Concur:

CORRIGAN, J.

LIU, J.

KRUGER, J.

EVANS, J.

STEWART, J.*

*

Presiding Justice of the Court of Appeal, First Appellate

District, Division Two, assigned by the Chief Justice pursuant

to article VI, section 6 of the California Constitution.

27

FUENTES v. EMPIRE NISSAN, INC.

S280256

Dissenting Opinion by Chief Justice Guerrero

Plaintiff Evangelina Yanez Fuentes and her employer

Empire Nissan, Inc. (Empire Nissan) agreed by contract that

“any claim, dispute, and/or controversy that either party may

have against one another . . . shall be submitted to and

determined exclusively by binding arbitration.” They further

agreed that the contract could not be modified except by written

agreement signed by Empire Nissan’s president or majority

owner. Later, Fuentes signed two confidentiality agreements,

which were substantially identical and covered “the secrecy, use

and disclosure” of Empire Nissan’s confidential information.

The agreements in the appellate record are not signed by

Empire Nissan’s president or majority owner.

The majority speculates that the confidentiality

agreements could nonetheless have been signed or approved by

the required person, and it holds that remand is required to

address this “underlying factual question.” (Maj. opn., ante, at

p. 19.) The majority’s speculation has no basis in the record or

the parties’ briefing, which nowhere mentions the possibility of

an unresolved factual dispute. It contravenes basic appellate

procedure — and fundamental fairness — to reverse on this

basis.

Moreover, even on its own terms, this “factual question”

does not justify the majority’s decision to reverse and remand.

The required signature is only consequential if the

1

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

confidentiality agreements would render the arbitration

agreement nonmutual and therefore unconscionable. The

majority never addresses this question, even though it was fully

briefed by the parties and considered by the Court of Appeal

below.

If the majority had engaged in this analysis, it would be

compelled to conclude that the confidentiality agreements have

no effect on the parties’ mutual agreement to arbitrate,

regardless of whether they were signed or not. Based on their

plain language, and construed in accordance with settled rules

of contract interpretation, the confidentiality agreements do not

confer any right on Empire Nissan to proceed in court, in

contravention of the parties’ earlier agreement to arbitrate. The

majority cites language in the agreements confirming Empire

Nissan’s right to seek remedies “at law or in equity.” (Maj. opn.,

ante, at p. 15.) But it is black letter law that an arbitrator has

the power to order legal and equitable remedies, including final

injunctions, in his or her award. (Advanced Micro Devices, Inc.

v. Intel Corp. (1994) 9 Cal.4th 362, 390–391 (Advanced Micro

Devices); O’Hare v. Municipal Resource Consultants (2003)

107 Cal.App.4th 267, 278 (O’Hare).) The agreements’ bare

reference to these remedies does not imply the right to seek

them in court. The majority also cites language conferring the

right to attorney fees on a prevailing party in the event of “ ‘legal

action’ ” to enforce the agreements. (Maj. opn., ante, at p. 15.)

But this language, too, does not say anything about Empire

Nissan’s ability to pursue claims in court, in contravention of

the arbitration agreement. (See Lombardo v. Gramercy Court

(2024) 107 Cal.App.5th 1028, 1035 (Lombardo) [arbitration

agreement determined how plaintiff could “pursue legal action

against defendant”].) Finally, even if the confidentiality

2

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

agreements created some ambiguity regarding Empire Nissan’s

right to seek relief in court, any such ambiguity must be resolved

in favor of the agreements’ validity, i.e., in favor of arbitration.

(Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th

478, 507 (Ramirez).)

Separately, the majority holds that reversal and remand

is justified because the Court of Appeal directed the trial court

to grant Empire Nissan’s motion to compel arbitration, instead

of remanding for further proceedings. (Maj. opn., ante, at p. 25.)

Like the allegedly unresolved “factual question” above, this

issue is entirely one of the majority’s own creation. Fuentes has

never claimed that the Court of Appeal erred by not remanding

the matter to consider any remaining arguments. The majority

attempts to draw a connection between those arguments and

certain arguments raised in this court regarding contract

formation and mutual assent. This connection is illusory, since

the arguments are not the same. It is also irrelevant to the

decision to remand. Fuentes seeks a ruling on the merits of her

arguments and does not claim the procedural error the majority

finds dispositive. (Cf. Gov. Code, § 68081.)

We granted review in this matter to consider several

issues related to substantive unconscionability. The majority

considers one — “ ‘fine-print terms’ ” — and correctly rejects it.

(Maj. opn., ante, at pp. 12–13.) But the majority ignores the

remainder, preferring instead to remand for further proceedings

based on errors neither raised nor briefed by the parties, and in

an apparent effort to give Fuentes the opportunity to raise

arguments she has clearly forfeited. (See, e.g., maj. opn., ante,

at p. 22 [required signatures]; id. at pp. 20–21, fn. 4 [purposely

omitted signatures]; id. at p. 22, fn. 6 [representative action

waiver]; id. at p. 26 [contract formation and mutual assent].)

3

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

Because I find the majority’s approach flawed and unjustified, I

respectfully dissent.

I. UNCONSCIONABILITY AND MUTUALITY

“An agreement to submit disputes to arbitration ‘is valid,

enforceable and irrevocable, save upon such grounds as exist for

the revocation of any contract.’ ” (OTO, L.L.C. v. Kho (2019)

8 Cal.5th 111, 125 (Kho).) One generally applicable ground for

invalidating a contract is unconscionability. (Sonic-Calabasas

A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145.) “Because

unconscionability is a contract defense, the party asserting the

defense bears the burden of proof.” (Sanchez v. Valencia

Holding Co., LLC (2015) 61 Cal.4th 899, 911.) The burden of

proving unconscionability in this matter therefore falls on

Fuentes.

The majority accurately identifies the two elements of

unconscionability — procedural and substantive — and

confirms that both must be present to invalidate a contract.

(Maj. opn., ante, at pp. 6–7.) The majority correctly rejects

Fuentes’s argument that small font size and illegibility can

satisfy both elements. As the majority explains, “small font size

is indicative of procedural unconscionability because it

contributes to the element of surprise. . . . But because font size

does not affect an agreement’s terms, it cannot render a

contractual term substantively unconscionable.” (Maj. opn.,

ante, at p. 13.)

Fuentes does not rely solely on the illegibility of the

agreement, however. She also argues that the arbitration

agreement is nonmutual, and therefore substantively

unconscionable, based on language in the separate

confidentiality agreements. Her argument assumes that the

4

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

confidentiality agreements could modify the arbitration

agreement. She does not address the Court of Appeal’s point

that no modification was possible because the confidentiality

agreements do not comply with the arbitration agreement’s

strict limits on modification. (See Fuentes v. Empire Nissan,

Inc. (2023) 90 Cal.App.5th 919, 931 (Fuentes) [“The arbitration

contract has supervening force because it specifies it can be

modified only in a writing signed by the company president, and

that president never signed any modification”].) As the majority

admits, “Fuentes has not specifically contested the Court of

Appeal’s reliance on the missing signature in her briefs to this

court.” (Maj. opn., ante, at p. 21.)

Fuentes’s failure to address this point should undercut her

argument, since it was one of the grounds for the Court of

Appeal’s holding that the arbitration agreement was not

substantively unconscionable. (Fuentes, supra, 90 Cal.App.5th

at p. 931.) The majority pursues the opposite course. Despite

neither party raising the issue, the majority concludes it was the

Court of Appeal that erred by relying on the absence of the

president’s signature. It asserts that the Court of Appeal’s

holding “lacks an adequate factual foundation.” (Maj. opn., ante,

at p. 20.) The majority’s reliance on this ground is unjustified,

particularly since the parties have had no chance to respond.1

The majority is also incorrect that the Court of Appeal’s

holding lacks foundation. The confidentiality agreements in the

1

The majority claims that, in remanding to the trial court,

“we are affording the parties an opportunity to respond.” (Maj.

opn., ante, at p. 21, fn. 5.) But the parties have a right to be

heard in this court, before this court takes action and reverses

the judgment below.

5

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

record demonstrate that Empire Nissan’s president has not

signed them, and Fuentes has never suggested otherwise. The

majority invokes the general rule that a party’s agreement, not

its signature, is dispositive. (Maj. opn., ante, at p. 19.) That

general rule has no application here, where the parties’

arbitration agreement required any modification to be “in

writing and signed” by Empire Nissan’s president or majority

owner.

Nonetheless, seizing on this “factual question,” the

majority holds that reversal and remand is appropriate. (Maj.

opn., ante, at p. 19.) The premise of this holding is that the

confidentiality agreements, if signed by the president, would

render the arbitration agreement nonmutual and substantively

unconscionable. The Court of Appeal considered this question

as well, and the parties have fully briefed it, but the majority

barely mentions it. The majority briefly examines the

confidentiality agreements in isolation, and it claims the

existence of the arbitration agreement creates “an ambiguity”

(maj. opn., ante, at p. 17), but it does not consider whether this

ambiguity could be resolved — as the parties urge — without

considering the required signature. This lack of engagement is

telling. If the majority had examined the confidentiality

agreements in context, it would be compelled to conclude that

they do not undermine the mutuality of the earlier arbitration

agreement.2

2

The majority criticizes the Court of Appeal for “relying on

‘the principle that the law strongly favors arbitration.’ ” (Maj.

opn., ante, at p. 18.) Even assuming the Court of Appeal erred

by broadly interpreting that principle, it does not support the

6

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

We have held that an arbitration agreement “cannot

require ‘one contracting party, but not the other, to arbitrate all

claims arising out of the same transaction or occurrence or

series of transactions or occurrences.’ ” (Ramirez, supra,

16 Cal.5th at p. 495.) “ ‘Given the disadvantages that may exist

for plaintiffs arbitrating disputes, it is unfairly one-sided for an

employer with superior bargaining power to impose arbitration

on the employee as plaintiff but not to accept such limitations

when it seeks to prosecute a claim against the employee, without

at least some reasonable justification for such one-sidedness

based on “business realities.” ’ ” (Ibid.)

As noted, Fuentes contends the arbitration agreement is

unconscionable because it requires Fuentes to arbitrate all of

her claims against Empire Nissan but, because of the

confidentiality agreements, Empire Nissan does not have the

same obligation. Empire Nissan disputes that the

majority’s decision to reverse and remand for further factual

development in the trial court. The majority claims the Court

of Appeal used this interpretive principle to “resolve[] an

underlying factual question” (maj. opn., ante, at p. 19), but it is

unclear how a principle of contract interpretation could give rise

to a factual finding. The Court of Appeal’s view that Empire

Nissan’s president did not sign the confidentiality agreements

is based on the agreements in the record, which are not signed

by Empire Nissan’s president. These agreements in the record

are more than sufficient to support the Court of Appeal’s factual

determination, and Fuentes has never suggested otherwise.

The majority also criticizes the Court of Appeal for

“declining to rule on whether the agreement was procedurally

unconscionable.” (Maj. opn., ante, at p. 26.) But, as the majority

recognizes, a finding of unconscionability requires both

procedural and substantive unconscionability. If an agreement

is not substantively unconscionable, a court need not consider

procedural unconscionability.

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FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

confidentiality agreements confer any right to pursue its claims

in court, as opposed to arbitration.

To resolve this dispute, we turn to familiar principles of

contract interpretation. “ ‘Under statutory rules of contract

interpretation, the mutual intention of the parties at the time

the contract is formed governs interpretation. [Citation.] Such

intent is to be inferred, if possible, solely from the written

provisions of the contract. [Citation.] The “clear and explicit”

meaning of these provisions, interpreted in their “ordinary and

popular sense,” unless “used by the parties in a technical sense

or a special meaning is given to them by usage” [citation],

controls judicial interpretation. [Citation.]’ [Citations.] A

policy provision will be considered ambiguous when it is capable

of two or more constructions, both of which are reasonable.

[Citation.] But language in a contract must be interpreted as a

whole, and in the circumstances of the case, and cannot be found

to be ambiguous in the abstract. [Citation.] Courts will not

strain to create an ambiguity where none exists.” (Waller v.

Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18–19 (Waller).)

“ ‘The mere fact that a word or phrase . . . may have

multiple meanings does not create an ambiguity.’ [Citation.]

Rather, the meaning of the word or phrase must be considered

in light of its context.” (Yahoo Inc. v. National Union Fire Ins.

Co. etc. (2022) 14 Cal.5th 58, 69.) Where, as here, the parties

execute separate written contracts relating to the same subject

matter, the context includes all such contracts, which should be

construed together. (Chern v. Bank of America (1976) 15 Cal.3d

866, 874; see Civ. Code, § 1642.)

Fuentes’s argument fails for the simple reason that

nothing in the plain language of the confidentiality agreements

8

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

confers on Empire Nissan the right to pursue claims in court.

The arbitration agreement imposes a fully mutual arbitration

obligation. It provides that “any claim, dispute, and/or

controversy that either party may have against one

another . . . shall be submitted to and determined exclusively by

binding arbitration.” Fuentes contends that the later

confidentiality agreements “provide a carve out for certain of

Empire Nissan’s claims.” But the plain meaning of the language

cited by Fuentes reflects no such carve out.

First, Fuentes cites language in the confidentiality

agreements allowing Empire Nissan to seek injunctive relief.

Conspicuously absent, however, is any language allowing

Empire Nissan to seek injunctive relief in court. (Cf. Carmona

v. Lincoln Millenium Car Wash, Inc. (2014) 226 Cal.App.4th 74,

86 [finding a lack of mutuality where an agreement allowed an

employer to seek relief from “ ‘either a court or binding

arbitrator’ ”].) Nor does the language confer such a right by

implication. An arbitrator has the power to order an injunction

(O’Hare, supra, 107 Cal.App.4th at p. 278), and any party to an

arbitration agreement may seek a preliminary injunction in

court (Code Civ. Proc., § 1281.8, subd. (b)). As such, this

language does not affect or undermine the bilateral obligation to

arbitrate in the arbitration agreement. It is not evidence of one-

sidedness.

Second, Fuentes cites the confidentiality agreements’

severability clause, which refers to a “court of competent

jurisdiction.” The clause provides, in relevant part, “Each

provision of this Agreement is intended to be severable. If any

court of competent jurisdiction determines that one or more of

the provisions of this Agreement, or any part thereof, is or are

invalid, illegal or unenforceable, such invalidity, illegality or

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FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

unenforceability shall not affect or impair any other provision of

this Agreement . . . .” The plain meaning of this language, too,

does not confer on Empire Nissan any right to pursue claims in

court. It does not say anything about Empire Nissan’s claims at

all. Indeed, severability clauses commonly refer to a “court of

competent jurisdiction,” and it is well settled that a court’s

authority to consider the invalidity or unenforceability of a

contract (and the possibility of severance) is fully consistent

with an agreement to arbitrate. (See, e.g., Ramirez, supra,

16 Cal.5th at p. 514.)

Notably, the majority does not rely on either of the

provisions cited by Fuentes. Instead, it assesses the

confidentiality agreements as a whole, and “in isolation” from

the arbitration agreement, to conclude that the confidentiality

agreements would allow Empire Nissan to pursue claims for

relief in court. (Maj. opn., ante, at p. 16.) But it is irrelevant

whether the confidentiality agreements, read in isolation, would

allow Empire Nissan to pursue claims for relief in court. No one

disputes that they would. The issue is whether the

confidentiality agreements exempt certain claims from the

parties’ overall agreement to arbitrate. To determine this

question, the confidentiality agreements must be read in the

context of the parties’ earlier arbitration agreement. The

majority fails to undertake this essential task.

The majority cites two specific provisions of the

confidentiality agreements that, in the majority’s view,

“suggest[] that, at the time of their signing, the parties did not

intend for claims under [the confidentiality agreements] to be

subject to mandatory arbitration.” (Maj. opn., ante, at p. 16.)

Since Fuentes never raised these additional provisions, and

Empire Nissan has had no chance to respond, the majority’s

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FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

reliance on them is suspect. But even setting that hurdle aside,

the provisions cited by the majority do not confer any right on

Empire Nissan to pursue claims in court.

The first provision states that Empire Nissan may obtain

“any proper injunction . . . in addition to any other remedies

available to [it] at law or in equity.” The majority claims the

phrase “at law or in equity” means that Empire Nissan may

enforce the confidentiality agreements in court. (Maj. opn., ante,

at p. 15.) The majority provides no explanation for this claim,

so its reasoning is impossible to evaluate. But based on the plain

language of the agreements, the reference to law and equity does

not confer any right on Empire Nissan to pursue its claims in

court. An arbitrator has the power to order legal and equitable

remedies, including injunctions. (Advanced Micro Devices,

supra, 9 Cal.4th at pp. 390–391 [“remedies available to a court

are only the minimum available to an arbitrator”]; accord,

O’Hare, supra, 107 Cal.App.4th at p. 278.) The language at

issue does not confer any right on Empire Nissan to pursue such

remedies in a non-arbitration forum. Moreover, the phrase “in

addition to any other remedies” shows that it is “a general

reference to other remedies to which [Empire Nissan] may be

entitled, and not an investiture of remedies not otherwise

available.” (Lange v. Monster Energy Co. (2020) 46 Cal.App.5th

436, 451.)

The second provision cited by the majority states, “You

agree that if legal action is taken to enforce the terms of this

Agreement, the prevailing party in any such action shall be

entitled to recover legal cost [sic] and fees incurred in the action

including, but not limited to, attorney fees.” Contrary to the

majority’s assertion (maj. opn., ante, at p. 15), the phrase “legal

action” can refer to an arbitration proceeding. (See, e.g.,

11

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

Ramirez, supra, 16 Cal.5th at p. 508 [attorney fee award not

available “unless the arbitrator finds that the action was

frivolous, unreasonable, or groundless when brought” (italics

added)]; Lombardo, supra, 107 Cal.App.5th at p. 1035

[arbitration agreement determined how plaintiff could “pursue

legal action against defendant”].) But even if it referred to an

action before the court, the plain meaning of the cited provision

confers only the right to seek attorney fees. In other words, the

parties would have agreed that attorney fees are available in a

court action, but not otherwise. (Cf. Turner v. Schultz (2009)

175 Cal.App.4th 974, 983 [“defendants’ entitlement to attorney

fees in this legal action is independent of the outcome of the

arbitration of the merits of the underlying dispute”].) Nothing

about this attorney fee provision allows Empire Nissan to

pursue claims for relief in court, in contravention of the parties’

arbitration agreement.3

The majority also generally refers to the confidentiality

agreements’ silence regarding arbitration. The majority asserts,

“The absence of any reference to arbitration in the

confidentiality agreements suggests, at the time of their signing,

3

Because the confidentiality agreements, properly

interpreted, do not allow Empire Nissan to pursue claims for

relief in court, the majority’s speculation regarding Empire

Nissan’s ability to “argue for whichever interpretation was more

advantageous to it” is misplaced. (Maj. opn., ante, at p. 21,

fn. 4.) Regardless of whether Empire Nissan’s president signed

the confidentiality agreements, they do not confer on Empire

Nissan any right to pursue claims for relief in court, in

contravention of the parties’ earlier arbitration agreement.

Thus, the proper interpretation of the agreements does not

depend on “a matter over which [Empire Nissan] has complete

control.” (Ibid.)

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FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

the parties did not intend for claims under them to be subject to

mandatory arbitration.” (Maj. opn., ante, at p. 16.) This

assertion ignores the parties’ prior arbitration agreement.

Given this prior agreement, something more than silence is

required to exempt claims under the confidentiality agreements

from arbitration. (See Jenks v. DLA Piper Rudnick Gray Cary

US LLP (2015) 243 Cal.App.4th 1, 17 [“Where one agreement

identifies arbitration as the forum for resolving disputes, and a

subsequent agreement omits any reference to such a forum,

‘ “any doubts must be resolved in favor of arbitration” ’ ”]; Cione

v. Foresters Equity Services, Inc. (1997) 58 Cal.App.4th 625, 638

[employment agreement, which “did not specify any forum for

resolving any disputes between the parties,” did not supersede

earlier arbitration agreement].)

The majority allows that the agreements, read together,

at least create “an ambiguity” regarding Empire Nissan’s ability

to pursue claims for relief in court. (Maj. opn., ante, at p. 17.)

In this context, the majority points out that the confidentiality

agreements contain a partial integration clause, which states

that they “ ‘supersede[] any and all prior agreements’ related to

unfair competition, trade secrets, and confidentiality.” (Ibid.)

The majority asserts that this partial integration clause may

impact the earlier arbitration agreement “to the extent that it

applies to claims brought under the confidentiality agreements.”

(Ibid.) The majority is incorrect. The partial integration clause

does not refer to any “claims,” directly or indirectly. Instead, it

states, “This is the entire agreement between the Company and

you regarding the secrecy, use and disclosure of the Company’s

Proprietary Information, Trade Secrets and Confidential

Information and this Agreement supersedes any and all prior

agreements regarding these issues.” Thus, the partial

13

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

integration clause covers “secrecy, use and disclosure” of

confidential information — not “claims” based on breach or

misappropriation, for example. The plain meaning of the clause

does not support any inference that the confidentiality

agreements supersede the arbitration agreement on the proper

venue for Empire Nissan’s claims. It does not create any

ambiguity regarding the scope of the parties’ arbitration

agreement.

But even if the provisions of the confidentiality

agreements were ambiguous regarding Empire Nissan’s right to

pursue claims for relief in court, our precedent — and general

principles of contract law — require us to resolve this ambiguity

against such a right, if finding such a right would render the

agreement unconscionable. “Where a contract is susceptible to

two interpretations, one which renders it valid and the other

which renders it void, a court should select the interpretation

that makes the contract valid.” (Ramirez, supra, 16 Cal.5th at

p. 507; accord, Pearson Dental Supplies, Inc. v. Superior Court

(2010) 48 Cal.4th 665, 682; 11 Williston on Contracts (4th ed.

2025) § 32:11.) We must adopt the interpretation that

“eliminates any unconscionability.” (Ramirez, at p. 507.)

The majority cites — though it does not apply — the

interpretive principle that contractual ambiguities should be

resolved against the drafting party, here Empire Nissan. (Maj.

opn., ante, at pp. 11, 18; see Sandquist v. Lebo Automotive, Inc.

(2016) 1 Cal.5th 233, 248.) Since the majority does not apply

this principle or interpret the agreements, the significance of

this principle in the majority’s analysis is unclear. But it is well

settled that the principle of interpretation against the drafter is

subordinate to the principle of interpretation in favor of validity.

“The rule [of interpretation against the drafter] applies ‘only as

14

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

a last resort’ when the meaning of a provision remains

ambiguous after exhausting the ordinary methods of

interpretation.” (Lamps Plus, Inc. v. Varela (2019) 587 U.S. 176,

186.) The principle of interpretation against the drafter is

embodied in Civil Code section 1654. That statute provides, “In

cases of uncertainty not removed by the preceding rules, the

language of a contract should be interpreted most strongly

against the party who caused the uncertainty to exist.” (Civ.

Code, § 1654, italics added.) One of the preceding rules

referenced in the statute is the principle of interpretation in

favor of validity: “A contract must receive such an

interpretation as will make it lawful, operative, definite,

reasonable, and capable of being carried into effect, if it can be

done without violating the intention of the parties.” (Id.,

§ 1643.) Thus, the principle of interpretation in favor of validity

has priority. Indeed, in Ramirez, we interpreted an adhesive

arbitration agreement to save its validity and did not invoke the

rule of interpretation against the drafter. (Ramirez, supra,

16 Cal.5th at p. 507; see id. at p. 493 [arbitration agreement was

“an adhesion contract”].)

The majority appears to suggest that, where there is “a

high degree of procedural unconscionability,” a court must

“resolve[] ambiguities in meaning against the drafting party.”

(Maj. opn., ante, at p. 18.) To the extent this suggestion is

intended, the majority cites no authority for the proposition that

procedural unconscionability should affect the interpretation of

a contract, and I am aware of none. In Kho, supra, 8 Cal.5th at

page 130, we considered the doctrine of unconscionability, not

contract interpretation. In Graham v. Scissor-Tail, Inc. (1981)

28 Cal.3d 807, 819, fn. 16, we explained, “The rule requiring the

resolution of ambiguities against the drafting party ‘applies

15

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

with peculiar force in the case of a contract of adhesion.’ ” We

did not suggest that the rule should be applied outside its

established bounds, to the exclusion of other rules of contract

interpretation. To the contrary, we held that adhesive contracts

“are subject to interpretation under established principles.”

(Ibid.)4

In sum, under well-settled principles of contract

interpretation, the confidentiality agreements do not confer any

right on Empire Nissan to pursue claims for relief in court, in

contravention of the parties’ earlier arbitration agreement.

Nothing in the confidentiality agreements contradicts or

undermines the parties’ fully mutual agreement to arbitrate all

disputes between them. It is therefore irrelevant whether

Empire Nissan’s president or majority owner signed the

confidentiality agreements or not. Even if they had signed, it

would have no effect on the mutuality of the arbitration

agreement itself, and it would not make the agreement

unconscionable. The majority is therefore mistaken that any

alleged “lack of an adequate factual foundation” undermines the

Court of Appeal’s unconscionability determination (maj. opn.,

4

The majority further suggests that the presumption in

favor of validity may not apply because any allowable

interpretation must be “ ‘reasonable’ and capable of

implementation ‘without violating the intention of the parties.’ ”

(Maj. opn., ante, at p. 19, fn. 3; see Civ. Code, § 1643.) But if an

ambiguity exists, the interpretations underlying the ambiguity

are by definition reasonable interpretations of the parties’

agreement that are capable of being implemented. (Waller,

supra, 11 Cal.4th at p. 18 [ambiguity exists if contract language

is subject to “two or more constructions, both of which are

reasonable”].) If one interpretation would “violate the parties’

intention” (maj. opn., ante, at p. 19, fn. 3), it cannot create an

ambiguity.

16

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

ante, at p. 22), and its decision to reverse and remand lacks any

legal or logical basis.

II. APPELLATE REVIEW AND ERROR

As a separate and apparently independent ground for

reversal, the majority concludes the Court of Appeal erred in its

disposition by directing the trial court to order the dispute to

arbitration, rather than remanding for consideration of any

remaining arguments not previously addressed. (Maj. opn.,

ante, at p. 25.) The majority’s consideration of this alleged

error — and its reversal on that basis — contravenes the

primary statute governing the scope of our review and related

rules of court. Fuentes has never argued that the Court of

Appeal made such an error, either in her petition for review or

in her merits briefing, and Empire Nissan has had no

opportunity to respond. The majority disregards basic appellate

procedure and fundamental fairness by raising the issue itself

and reversing on this basis.

The majority compounds this mistake by

mischaracterizing the arguments that may remain to be

addressed. It correctly notes that Fuentes argues in this court

that the arbitration agreement was so illegible as to preclude

her assent to its terms. (Maj. opn., ante, at p. 23.) But it

incorrectly asserts that Fuentes made the same argument in the

trial court. (Id. at pp. 23–24.) She did not. In fact, Fuentes

expressly acknowledges that she made this argument “for the

first time” in her opening brief on the merits here, which was

itself improper because the issue was not raised in Fuentes’s

petition for review. Thus, even if the majority were correct that

the matter should be remanded to the trial court to consider any

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FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

remaining arguments, Fuentes’s argument regarding mutual

assent should not be included.

A. Background

In the trial court, in addition to her unconscionability

defense, Fuentes argued that Empire Nissan had not shown

“there was an enforceable agreement to arbitrate.” This

argument had three components: (1) “At the time of signing, the

agreement was illegible, and in such small, condensed type that

it would be against public policy to enforce.” (2) “The Agreement

is not mutual. An agreement to arbitrate claims that is worded

to obligate only the employee, with no equivalent promise by the

employer, is unenforceable for lack of consideration.” (3) “The

Agreement was superseded by subsequent employment

agreements that do not include any arbitration clauses.”

Despite this framing, only the first appears to describe an

argument potentially distinct from unconscionability.

In its order denying Empire Nissan’s motion to compel

arbitration, the trial court noted that Empire Nissan had

submitted a copy of the arbitration agreement and a declaration

attesting that Fuentes had signed it. The court found that

Empire Nissan had met its burden of alleging the existence of

an arbitration agreement. (Cal. Rules of Court, rule 3.1330.)5 It

observed that Fuentes “acknowledges the existence of an

arbitration agreement,” but she “contends that it is

unenforceable.”

The trial court found the agreement unenforceable based

on unconscionability. It therefore declined to consider Fuentes’s

5

Subsequent rule references are to the California Rules of

Court.

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FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

alternative argument based on public policy. The court wrote,

“Plaintiff argues that public policy precludes the arbitration

agreement from being enforced due to its small, illegible print.

The court notes that the Court of Appeal has raised public policy

concerns with enforcing contract provisions containing small,

illegible text.” In support, the trial court cited Celli v. Sports

Car Club of America, Inc. (1972) 29 Cal.App.3d 511, 521 (Celli).

Empire Nissan appealed. In its opening brief, it requested

that the Court of Appeal reverse and remand with directions to

grant its motion to compel arbitration. Fuentes did not

specifically contest this requested disposition, and she never

claimed that she had remaining arguments for the trial court to

address. In discussing her trial court opposition, Fuentes

mentioned only unconscionability.

The Court of Appeal majority concluded that the

agreement was not unconscionable. (Fuentes, supra,

90 Cal.App.5th at p. 923 (maj. opn. of Wiley, J.).) Its disposition

stated, “We reverse and direct the trial court to grant the motion

to compel arbitration. We award costs to appellants.” (Id. at

p. 936.) The dissenting opinion would have found the agreement

unconscionable, but it did not mention any error in the

majority’s dispositional language or any outstanding arguments

yet to be considered. (Id. at pp. 938, 941 (dis. opn. of Stratton,

P. J.).) Fuentes did not petition for rehearing.

In her petition for review in this court, Fuentes identified

four issues, all of which related to substantive

unconscionability. For example, her first issue stated, “Does

inclusion by the more powerful, drafting party of arbitration

terms that are so small, blurry, and crammed together as to be

unreadable, render the agreement ‘non-mutual,’ insofar as only

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FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

the drafting party knows what the agreement’s terms are, and

therefore substantively unconscionable?” Nowhere in the issues

identified for review, or in the petition for review itself, did

Fuentes take issue with the Court of Appeal’s dispositional

language.

In her opening brief on the merits in this court, Fuentes

attempted to brief a fifth issue: “Whether a valid contract can

form under California law, and specifically, whether there was

mutual assent where the material terms of the arbitration were

unreadable and hidden in tiny, blurry print, such that the

arbitration provision’s material terms were known only by that

the [sic] drafting party?” Fuentes claimed this issue was fairly

included in her petition for review because the illegibility of the

agreement “goes both to substantive unconscionability and to

mutual assent.” She did not contend the Court of Appeal erred

in its disposition by failing to remand for consideration of this

argument or any other.

Empire Nissan disagreed that this fifth issue was fairly

included in Fuentes’s petition for review. It noted that the

phrase “mutual assent” does not appear in the petition. Empire

Nissan further contended that Fuentes was bound by the trial

court’s factual finding that an arbitration agreement had been

formed.

In reply, Fuentes disagreed that the trial court had made

such a factual finding. She acknowledged, however, that her

mutual assent argument was raised for the first time in her

opening brief. In a heading, Fuentes argued, “Empire Nissan’s

waiver argument fails because arguments raised for the first

time in this court are routinely considered where the issue is

purely legal and based on undisputed facts.” (Italics added,

20

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

boldface and capitalization omitted.) Again, Fuentes did not

contend the Court of Appeal erred by failing to remand for

consideration of any argument.

B. Alleged Dispositional Error

As noted, the majority concludes the Court of Appeal erred

by directing the trial court to grant Empire Nissan’s motion to

compel arbitration, rather than remanding the case to the trial

court to consider any remaining arguments. (Maj. opn., ante, at

p. 25.) By raising this argument itself, and reversing on this

basis, the majority contravenes the statute governing the scope

of our review and applicable rules of court. For example,

Government Code section 68081 provides, “Before the Supreme

Court . . . renders a decision in a proceeding other than a

summary denial of a petition for an extraordinary writ, based

upon an issue which was not proposed or briefed by any party to

the proceeding, the court shall afford the parties an opportunity

to present their views on the matter through supplemental

briefing.” Similarly, rule 8.516(b)(1) provides, “The Supreme

Court may decide any issues that are raised or fairly included in

the petition or answer.” We may not decide any other issue, no

matter how compelling it might seem, without giving the parties

“reasonable notice and opportunity to brief and argue it.”

(Rule 8.516(b)(2).)

Government Code section 68081 and similar rules of court

are not mere technicalities. They ensure a baseline level of

fairness in appellate proceedings, so that courts do not rely on

grounds for reversal that the parties have not had a chance to

address. They also ensure that courts have the benefit of the

parties’ briefing and argument when deciding an issue, so that

any risk of error is minimized.

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FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

The majority disregards both the letter and the spirit of

these provisions. It is evident that Fuentes did not raise any

issue regarding the Court of Appeal’s dispositional language in

her petition for review, nor is it fairly included. The majority

does not contend otherwise. Instead, Fuentes challenged the

Court of Appeal’s unconscionability holding on the merits.

Fuentes’s opening and reply briefs followed suit. They

addressed the merits of Empire Nissan’s motion to compel

arbitration, and they did not identify any error in the Court of

Appeal’s dispositional language.

The majority asserts that Fuentes’s challenge to the Court

of Appeal’s unconscionability determination, which provided the

basis for its disposition, was sufficient to raise any error in the

Court of Appeal’s dispositional language. (Maj. opn., ante, at

p. 25, fn. 8.) It was not. A party’s substantive challenge to the

judgment of the Court of Appeal does not automatically raise

every issue that might affect that judgment. Here, for example,

the proper disposition under the circumstances of a given appeal

is governed by its own body of law. (See, e.g., 9 Witkin, Cal.

Proc. (6th ed. 2021) Appeal, § 903, p. 914 [“If . . . the record

clearly shows that only one judgment is proper under the law

and undisputed facts and that a new trial would be a waste of

effort, that direction is proper”].) It is not a mere subset of the

substantive issues a party raises. For example, the Court of

Appeal could have been entirely correct in its discussion of the

merits (as I believe it was), and it still could have erred by

directing the trial court to grant Empire Nissan’s motion to

compel arbitration in its disposition. The two issues are

independent, and one is not fairly included in the other. Indeed,

the majority does not rely on Fuentes’s briefing in deciding to

22

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

reverse. It expressly concedes the relevant argument “is not

properly before us.” (Maj. opn., ante, at p. 25.)

The majority claims “there is a difference between a

decision on the merits and a decision to remand.” (Maj. opn.,

ante, at p. 25, fn. 8.) But the majority has rendered a decision

on the merits — the merits of the Court of Appeal’s dispositional

language. It has found error in that language and, on that basis,

decided to reverse. Because no party raised any issue regarding

the Court of Appeal’s dispositional language, the majority runs

afoul of Government Code section 68081 and applicable rules of

court by considering and deciding this issue without briefing

and argument from the parties.

C. Directions on Remand

Even assuming the Court of Appeal erred by directing the

trial court to grant Empire Nissan’s motion to compel

arbitration, rather than remanding for further proceedings, the

majority mischaracterizes the issues that remain. The majority

focuses on arguments Fuentes made in this court regarding her

ability to assent to the terms of the arbitration agreement, given

its formatting and blurry text. It claims that its decision to

remand will allow Fuentes to pursue these arguments. (Maj.

opn., ante, at p. 26.) The majority is incorrect. The arguments

Fuentes makes in this court — which she admits she made “for

the first time” in her opening brief on the merits — are not the

same as the arguments she made in the trial court.6

6

Although it does not appear to be dispositive, given the

majority’s other procedural missteps, the majority’s focus on the

mutual assent argument is additionally noteworthy because the

rules of court require us to disregard it. Fuentes did not raise

23

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

In this court, Fuentes argues that she could not or did not

assent to the terms of the arbitration agreement. By contrast,

in the trial court, Fuentes did not mention mutual assent. She

argued that “the agreement’s illegibility precludes its

enforcement.” (Boldface and capitalization omitted.) As this

language shows, Fuentes’s argument was not about the

existence of an agreement, but its enforcement. Fuentes cited

cases where statutes or public policy required certain

contractual clauses be clear and conspicuous in order to be

enforced, like Celli, supra, 29 Cal.App.3d 511.

The majority highlights Celli. (Maj. opn., ante, at p. 24.)

But it shows just how starkly Fuentes’s current arguments

diverge from her trial court arguments. Celli expressed

skepticism, in dicta, that “public policy in this state would

permit judicial enforcement of a [release] provision printed in

such small type.” (Celli, supra, 29 Cal.App.3d at p. 521.) There

was no question in Celli that the parties had assented to the

contract. Its point was that the contract should not be enforced

on public policy grounds. The trial court’s reference to Celli does

not show that Fuentes made any argument regarding mutual

assent below.

The majority also quotes portions of a sentence from

Fuentes’s trial court opposition, in which she wrote, “The

procedures and tactics that Defendant used . . . preclude

formation of a valid contract.” (See maj. opn., ante, at p. 24.)

However, this sentence fails to articulate any legal basis that

would preclude contract formation, let alone raise an argument

the issue of mutual assent in her petition for review. Instead,

she explicitly added it as an additional issue in her opening brief

on the merits. This addition was improper. (Rule 8.520(b)(3).)

24

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

regarding mutual assent. Nor does any of the surrounding text

provide support for such an argument. The sentence appears at

the end of a section entitled, “The Agreement Defendants’ [sic]

Attempt to Enforce Has Been Superseded by Subsequent

Employment Agreements.” (Boldface and underscoring

omitted.) Nothing in this section, including the sentence quoted

by the majority, raises any argument regarding mutual assent.

Indeed, aside from the sentence quoted by the majority, the

section does not relate to contract formation at all. The majority

presumably sees this sentence as its best evidence that Fuentes

raised her mutual assent argument in the trial court. It is

wholly unpersuasive.7

Finally, the majority invites the trial court to receive

additional briefing “on the relationship between legibility and

mutual assent” in light of its “clarification that arguments about

font size and formatting are not relevant to substantive

unconscionability.” (Maj. opn., ante, at p. 26.) This invitation

wrongly suggests a connection between substantive

unconscionability and mutual assent. The majority’s discussion

of substantive unconscionability does not affect the well-

established body of law governing mutual assent. Nor does it

affect black letter law that a party may assent to a contract even

without being able to read it. (See, e.g., Hawkins v. Hawkins

7

The majority claims these distinctions merely reflect a

“difference in emphasis between Fuentes’s arguments in the

trial court and her arguments in our court.” (Maj. opn., ante, at

p. 24, fn. 7.) The majority is incorrect. A party’s assent to a

contractual offer and the enforcement of any resulting contract

are separate issues, governed by separate bodies of law. As

Fuentes herself admitted, she raised her mutual assent

arguments “for the first time” in this court, not the trial court.

25

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

(1875) 50 Cal. 558, 560; Caballero v. Premier Care Simi Valley

LLC (2021) 69 Cal.App.5th 512, 519 [a party’s “decision to sign

a document he could not read is not a basis for avoiding an

arbitration agreement”]; Windsor Mills, Inc. v. Collins &

Aikman Corp. (1972) 25 Cal.App.3d 987, 992 [“an offeree,

knowing that an offer has been made to him but not knowing all

of its terms, may be held to have accepted, by his conduct,

whatever terms the offer contains”]; see also 1 Williston on

Contracts, supra, § 4:19.) Notwithstanding the majority’s

unusual invitation, its opinion should not be read as questioning

any of these principles.

III. CONCLUSION

In her petition for review, Fuentes requested that this

court address four issues related to substantive

unconscionability that, in her view, justified reversing the

judgment of the Court of Appeal. The majority considers just

one — “ ‘fine-print terms’ ” — and concludes the Court of Appeal

was correct. From there, the majority forges its own path. It

discovers an allegedly unresolved “factual issue” that no party

has identified, and it speculates that the issue may be

dispositive without actually engaging in any substantive

analysis. The majority goes on to find error in the dispositional

language of the Court of Appeal, an issue likewise never raised

by any party, and it concludes that this alleged error requires

reversal as well. The majority does not consider the remaining

three arguments Fuentes raised in her petition for review.

Instead, it invites the lower courts to consider alternative

arguments that Fuentes plainly forfeited.

The majority’s approach runs afoul of the statute and

court rules governing our review, in addition to basic appellate

26

FUENTES v. EMPIRE NISSAN, INC.

Guerrero, C. J., dissenting

procedures and fundamental fairness. It also does a disservice

to the parties, who have now litigated this matter for over five

years but are no closer to a resolution of their dispute. If this

court had simply addressed the issues in Fuentes’s petition for

review, we could have made some progress toward that goal.

But the majority has chosen a different course. I respectfully

dissent.

GUERRERO, C. J.

27

See next page for addresses and telephone numbers for counsel who

argued in Supreme Court.

Name of Opinion Fuentes v. Empire Nissan, Inc.

__________________________________________________________

Procedural Posture (see XX below)

Original Appeal

Original Proceeding

Review Granted (published) XX 90 Cal.App.5th 919

Review Granted (unpublished)

Rehearing Granted

__________________________________________________________

Opinion No. S280256

Date Filed: February 2, 2026

__________________________________________________________

Court: Superior

County: Los Angeles

Judge: Mel Red Recana

__________________________________________________________

Counsel:

Fisher & Phillips, John M. Polson, Tyler Rasmussen, Bret Martin,

Megan E. Walker and Christopher C. Hoffman for Defendants and

Appellants.

Schaerr | Jaffe, Donald M. Falk and Gene C. Schaerr for the Chamber

of Commerce of the United States of America as Amicus Curiae on

behalf of Defendants and Appellants.

Shegerian & Associates, Carney R. Shegerian, Victoria A. Hane;

Javanmardi Law, Peter A. Javanmardi, Marc A. Holmquist; Clarkson

Law Firm, Glenn A. Danas, Ashley M. Boulton, Katelyn Leeviraphan;

Mossavar Law and Miranda A. Mossavar for Plaintiff and Respondent.

Hannah M. Kieschnick for Public Justice as Amicus Curiae on behalf

of Plaintiff and Respondent.

Counsel who argued in Supreme Court (not intended for

publication with opinion):

Christopher C. Hoffman

Fisher & Phillips LLP

4747 Executive Drive, Suite 1000

San Diego, CA 92121

(858) 597-9600

Glenn A. Danas

Clarkson Law Firm, P.C.

22525 Pacific Coast Highway

Malibu, CA 90265

(213) 788-4050