Tiny-Font Arbitration Upheld: Fuentes v. Empire Nissan

In Fuentes v. Empire Nissan, Inc. (California Supreme Court, 2024), the justices confronted whether an otherwise fair employment arbitration agreement printed in tiny, nearly unreadable font—and presented on a take-it-or-leave-it basis—can be invalidated as unconscionable. Their answer clarifies how California courts must balance procedural versus substantive unfairness when employees challenge arbitration pacts.

The Case: Fuentes v. Empire Nissan, Inc.

The Court: California Second Appellate District Division Eight/L.A. County Superior Court

The Case No.: Appellate Case No.: B314490 / Superior Court Case No.: 20STCV35350

The History of the Case: Fuentes v. Empire Nissan, Inc.

Employment & Dispute: Plaintiff Maribel Fuentes worked for Empire Nissan. After her termination, she sued, alleging wage-and-hour and other statutory violations.

Trial Court (L.A. Superior): Nissan moved to compel arbitration. The Court found the one-page arbitration agreement unconscionable—largely because of its microscopic, blurred print—and denied the motion.

Court of Appeal (2d Dist.): Reversed. While the agreement showed procedural unconscionability (tiny font, adhesion contract), it contained no substantively unfair terms, so arbitration had to proceed.

California Supreme Court (2024): Granted review to resolve how far procedural flaws alone can go in invalidating an arbitration clause and ultimately affirmed the appellate ruling, reinforcing the two-part unconscionability test.

The Arbitration Agreement: Fuentes v. Empire Nissan, Inc.

To make a determination in the case, the Court considered various details in the arbitration agreement Nissan presented to Fuentes. Consider a summary of the details they considered below:

• Format: Single one-page form, extremely small and blurry type, provided to all dealership hires on a take-it-or-leave-it basis.

• Key Clauses: Key clauses appeared fair; deemed no substantive unconscionability.

• Mutuality: Bound both the employee and the employer.

• Scope & Governing Law: Covered statutory claims; incorporated California Arbitration Act procedures.

• No Hidden Waivers: Did not waive EEOC/DFEH (now CRD) charges.

• Employer Signature: Absence of Nissan’s signature went to contract formation; not substantive fairness.

• Initiation Instructions: Reference to state arbitration rules was sufficient.

The procedural concerns identified included: 1) tiny, unreadable font, 2) presented as a condition of employment (adhesion), and 3) dense legalese.

The Main Issue: Fuentes v. Empire Nissan, Inc.

Does an employment arbitration agreement that is procedurally unconscionable—because of unreadable, tiny print and adhesive presentation—become unenforceable when its substantive terms are otherwise even-handed?

The Court said no. California’s “sliding-scale” test still demands some showing of substantive unconscionability; procedural flaws alone cannot be “double-counted” to tip the scale.

What Makes Fuentes v. Empire Nissan, Inc. a Landmark Case?

Fuentes cements the bright-line rule that both procedural and substantive unconscionability must be present to void an arbitration clause. Courts may not inflate procedural defects (e.g., illegible font, adhesion) into substantive ones simply to strike down agreements. In an era of rapidly evolving employment-arbitration law, Fuentes preserves a predictable framework, signaling that California workplaces must scrutinize not only how arbitration agreements are presented but also what they say; because only truly one-sided terms, combined with process flaws, will render them unenforceable.

FAQ: Fuentes v. Empire Nissan, Inc.

Q: What is the difference between procedural and substantive unconscionability?

A: Procedural unconscionability looks at how the contract was formed—e.g., tiny unreadable font or “take-it-or-leave-it” pressure. Substantive unconscionability examines what the contract says; checking if the content is unfairly skewed in favor of the employer. California requires both types to be present before a court can strike down an arbitration agreement.

Q: Does unreadable fine print, by itself, make an arbitration clause unenforceable?

A: No. Fuentes confirms that illegible or microscopic text is a procedural flaw only. Unless the agreement also contains substantively unfair terms—such as one-sided fee rules or damage caps—courts will still enforce it.

Q: My boss handed me a “sign-or-don’t-work” arbitration form. Is that automatically invalid?

A: Adhesion contracts (take-it-or-leave-it agreements) create procedural unconscionability, but California law still demands some substantive unfairness before voiding the clause. Review the substance for red flags (e.g., waiver of statutory rights) and consider seeking legal advice before refusing to sign.

Q: Does an arbitration agreement need the employer’s signature to bind both parties?

A: Not necessarily. Fuentes held that lack of an employer signature raises a formation question—whether a contract exists at all—but it is not evidence of substantive unconscionability. If both sides intended to be bound, courts generally treat the agreement as valid.

If you have questions about how to file a California employment law complaint, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Knowledgeable employment law attorneys are ready to help in various law firm offices in Riverside, San Francisco, Sacramento, San Diego, Los Angeles, and Chicago.

Negligent Credentialing Case Cites Landmark Elam v. College Park Hospital Case

A pending case in Santa Clara County Superior Court revisits a foundational legal question raised in the landmark Elam v. College Park Hospital ruling: Can a hospital be held directly liable for failing to properly screen and monitor the competence of its staff physicians?

Case: Marybeth Lakso v. HCA Healthcare, Inc. and Good Samaritan Hospital

Court: Santa Clara County Superior Court, Dept. 20 – Judge William J. Monahan

Hearing: Continued to June 6, 2025, at 9:00 AM in Dept. 20

Lakso v. HCA Healthcare: The Plaintiff's Allegations

Marybeth Lakso has filed a lawsuit in Santa Clara County Superior Court against HCA Healthcare, Inc. and Good Samaritan Hospital, alleging she was harmed due to the hospital's failure to uphold its legal duty to ensure the competency of its medical staff. While case-specific details remain limited, the suit aligns with a broader legal theory known as negligent credentialing, which holds hospitals accountable for failing to oversee independent physicians adequately granted admitting privileges.

More About the Defendant: Lakso v. HCA Healthcare

HCA Healthcare, Inc. is a national health system that operates numerous hospitals, including Good Samaritan Hospital in San Jose, California. These institutions are responsible not only for providing medical care but also for selecting and reviewing the doctors who treat patients within their facilities. The lawsuit challenges whether these responsibilities were met in Lakso's case.

Key Legal Question: Lakso v. HCA Healthcare

The primary legal question is whether HCA and Good Samaritan Hospital breached a duty of care by negligently credentialing or retaining a physician who caused patient harm, and whether that breach justifies hospital liability under the Elam precedent. This involves determining whether a hospital must actively investigate and monitor the qualifications and ongoing competency of non-employee medical staff.

The Allegations in the Case:

While the specific facts of Lakso's case have not yet been disclosed in public filings, the action centers on the hospital's alleged failure to properly screen, supervise, or reevaluate a staff physician whose care allegedly caused patient harm. The case explicitly references Elam v. College Park Hospital, a California Court of Appeal decision that established a precedent for holding hospitals liable under the doctrine of corporate negligence when they fail to ensure the competence of medical personnel operating under their roof.

Legal Implications: Lakso v. HCA Healthcare

The Elam decision was a turning point in California healthcare law. It held that hospitals owe a direct duty of care to their patients to exercise reasonable care in selecting and reviewing medical staff. If the court applies Elam in Lakso's case, it could reaffirm and even expand the doctrine of corporate hospital liability, holding institutions directly accountable when independent physicians provide substandard care. It also signals that hospitals may no longer be able to avoid liability simply because a doctor is classified as an independent contractor.

Lakso v. HCA Healthcare: The Employer's Position

As of now, HCA Healthcare and Good Samaritan Hospital have not publicly responded to the complaint. In past cases involving credentialing liability, hospitals often argue that they fulfilled all legal and professional obligations during the credentialing process and that the treating physician—not the institution—is solely liable for any malpractice.

Why This Case Matters: Lakso v. HCA Healthcare

This case could reaffirm or reshape how hospital accountability is viewed in California. The Elam ruling expanded the scope of hospital liability beyond direct employees to include independent physicians granted access to hospital facilities. A decision in Lakso's favor could further define the standards hospitals must meet when credentialing, re-appointing, and monitoring medical staff, with implications for medical malpractice litigation statewide.

What Comes Next for Lakso v. HCA Healthcare

A hearing in the Lakso v. HCA Healthcare case is currently scheduled for June 6, 2025, at 9:00 AM in Department 20 of Santa Clara County Superior Court before Judge William J. Monahan. The court may evaluate early motions or set a discovery schedule. If the Elam precedent plays a central role, this could become a closely watched test case on negligent credentialing and the evolving responsibilities of corporate hospitals.

FAQ: Lakso v. HCA Healthcare

Q: What is negligent credentialing?

A: Negligent credentialing refers to a hospital's failure to properly vet or monitor the qualifications and competence of physicians allowed to practice within its facility.

Q: What did Elam v. College Park Hospital establish?

A: It established that California hospitals can be held directly liable for patient harm if they fail to exercise reasonable care in selecting and overseeing their medical staff, even if those doctors are independent contractors.

Q: Why is this doctrine significant today?

A: As hospitals increasingly operate like healthcare corporations, this doctrine ensures they maintain active responsibility over the medical care provided under their supervision, not just over facility operations.

Q: Can hospitals be sued even if a doctor isn't their employee?

A: Yes. Under the Elam doctrine, hospitals may be held liable for negligent actions related to staffing decisions, regardless of whether the physician is an employee or an independent contractor.

Q: What might this case change?

A: If successful, it could strengthen legal protections for patients and increase pressure on hospitals to reform or reinforce staff credentialing and oversight procedures.

Do you have questions about filing a California employment law complaint? Please contact Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Knowledgeable employment law attorneys are ready to assist you in various law firm offices in Riverside, San Francisco, Sacramento, San Diego, Los Angeles, and Chicago.

California Model Alleges Agency Failed to Provide Payment In Accordance with Contract

After completing an assignment based on a contract with a California-based agency, a California model claimed that the company actually owed her significantly more due to “waiting time penalties.”

The Case: Brighton Collectibles, LLC v. Hockey

The Court: Super. Ct. No. 19CV06616, Santa Barbara County

The Case No.: 2d Civ. No. B307235

The Plaintiff: Brighton Collectibles, LLC v. Hockey

The plaintiff in the case is Natalie Hockey. Hockey was a model who directed her modeling agency to negotiate a contract on her behalf. The contract was with Defendant Brighton Collectibles, LLC, the defendant in the case. According to the contract, the agency agreed that Plaintiff would perform a one-day modeling shoot (a job estimated to last 10 hours) for Brighton Collectibles in exchange for $3,000, payable on receipt of the invoice. Hockey completed the 10 hour modeling job as described. After the job, Hockey sued the agency, alleging that the Defendant was her employer and violated Labor Code section 201 by not paying her the total amount due at the end of her modeling shoot day, and claiming that Brighton Collectibles actually owed her waiting time penalties totaling $90,000.

The Defendant: Brighton Collectibles, LLC v. Hockey

The defendant in the case, Brighton Collectibles, LLC, quickly cross-claimed for fraud. The cross-claim argued that the Plaintiff had represented that she would be paid $3,000 upon receipt of an invoice, and that the Defendant based their actions on that representation. The defendant further claimed that they were damaged by being subjected to the risk of liability to Hockey (amounting to the claimed $90,000). Hockey responded by filing an anti-SLAPP motion, seeking to strike Brighton Collectible’s cross-claim. The plaintiff’s motion was granted in trial court, but the defendant appealed.

The Case: Brighton Collectibles, LLC v. Hockey

The California Court of Appeal reversed the trial court's order granting the plaintiff’s anti-SLAPP motion attempting to strike Brighton's cross-claim for fraud. Even if the court assumed that Hockey met her burden of showing that the defendant’s cross-claim for fraud arose from protected conduct, the reversal was required based on the probability that the agency would prevail on its cross-claim. According to the evidence submitted, the court determined that the Defendant would likely be able to show that Hockey made a misrepresentation when she told the company to pay the agency for her modeling services upon receipt of an invoice, rather than immediately upon her “termination” as an employee at the end of the day (or the conclusion of the modeling shoot). Additionally, the court supposed it could be inferred that the plaintiff knew the misrepresentation was false based on her actions and intended for the agency to rely on her misrepresentation. The defendant did so - justifiably. And the plaintiff’s misrepresentation damaged the defendant by exposing the agency to $90,000 in waiting-time penalties (plus additional expenses due to attorney’s fees and costs associated with the case).

If you have questions about California labor law violations or contract negotiation, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Is Kellogg the First of Many to Exploit Supreme Court Arbitration Victory?

A group of former Kellogg employees are suing the cereal giant claiming that the company shouldn’t have sued them earlier in 2018. Kellogg sued the employees for suing the company. It’s a bit confusing.

Kellogg targeted the group of former employees for defying their arbitration agreements and in doing so, they announced a clear warning to all their employees: not to sue the company. The complicated case has hearings scheduled for February and will be watched by many as one of the first instances when U.S. employees with grievances seek justice after the recent U.S. Supreme Court precedent that is making waves.

Last year a Kellogg employee out of Nevada filed suit against the company in federal court. The suit was filed on behalf of co-workers who were not provided with federally mandated overtime pay. Kellogg denied the accusations and they were able to successfully petition the judge to move the case to arbitration by bringing up the arbitration agreement signed by the employee that required disputes to be handled in arbitration rather than court.

This type of arbitration agreement usually ends up limiting the rights of employees in comparison to the legal rights they would have in the court system. Arbitration also promotes quick and efficient dispute resolution and discourages litigious lawyers’ fighting for plaintiffs. Others claim that the arbitration process limits transparency and removes the right to sue as a class and takes leverage away from employees seeking resolution.

What arbitration means for employees and employees depends on who you ask, but no one can argue that arbitration agreements have become more and more common at U.S. companies in recent years. Thanks to a series of U.S. Supreme Court rulings that quashed attempts to curb them, companies are embracing them more and more actively.

This past May, in a 5-4 ruling, the high court’s Republican-appointed majority held that arbitration agreements that require workers to sign away rights to file a lawsuit as part of a class can be enforced for workplace disputes. Proponents of arbitration insist that this is extremely detrimental to the enforcement of both federal minimum wage and overtime laws. Months later, Kellogg began filing breach of contract claims against former employees that signed onto the overtime lawsuit alleging violations of continued employment agreements that included an agreement that delayed the firing of workers during corporate restructuring in exchange for arbitration of claims.

Kellogg filed suit alleging that the original plaintiff was in breach of contract because he filed an employment claim in court against the company. Kellogg seeks punitive damages and legal costs. Former employees were shocked by Kellogg’s response and their attorneys have sued the company in return alleging that Kellogg’s claims against their former workers are actually illegal because they constitute retaliation as described in the Fair Labor Standards Act.

If you are a victim of retaliation in the workplace or if you need help obtaining overtime pay from your employer, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Is Uber Refusing to Honor the Arbitration Clause in its Terms in Conditions?

More than 12,000 Uber drivers filed a California lawsuit claiming that Uber purposefully delayed arbitration requests. Uber drivers are considered contractors by the company. The drivers claiming that Uber is delaying arbitration requests are making an assortment of complaints, including: minimum wage violations, failure to pay overtime, etc. At the rate the complaints are being processed by the company, it would be a decade before all the complaints were heard.

Uber, like thousands of other companies, requires their drivers to sign an arbitration agreement that limits dispute resolution to company-direct handling instead of going through the court system. Uber’s 21-page terms and conditions does include an option to opt-out of the clause, but it has to be done within 30 days of signing the original agreement and it must be done in writing.

Drivers dealing with the potentially decades long delay are getting fed up with decreasing pay and their questionable status as independent contractors (instead of employees who enjoy more protections through employment law). 12,501 of Uber’s drivers have filed a California lawsuit including allegations that Uber ignored requests for arbitration. According to the suit, there have been 300 pages of partners requesting arbitration and only 47 have been appointed arbiters. Of those appointed arbiters, only six have seen the arbitration process move forward.

Legal counsel involved in the case suggest that this is a typical trend amongst corporations in this situation and has been for decades in the U.S. They insert this type of clause in a mandatory arbitration agreement specifically to block class action lawsuits. When asked about the case, Uber declines to comment. Originally, the case was brought as a class action lawsuit in multiple states addressing driver status as independent contractors vs. employees. Complaints (in numerous states) range from failure to pay overtime, to minimum wage violations, to failure to provide sick leave, etc., which would all be required if the drivers were classified as employees.

If you need to discuss how to qualify for a California class action lawsuit or if you need to file a lawsuit due to overtime violations or minimum wage violations, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Did You Sign an Arbitration Agreement?

Did you know that millions of US workers are currently “barred” from the court system? Did you know that you may be one of them and not even realize it? Approximately 60 million American workers have signed arbitration agreements or arbitration clauses and they may not have even realized they were doing so.

Close to 50% of all non-unionized workers employed at companies in the United States are subject to arbitration agreements (according to the Economic Policy Institute). This number has more than doubled since the early 2000s. Major employers across the nation have adopted them as standard, including: Uber, Google, McDonald’s, Starbucks, Walmart, Macy’s, and more.

The increase in the use of mandatory arbitration agreements is making it increasingly difficult/impossible for employees to seek justice when they are victims of wage theft, discrimination in the workplace, retaliation, harassment, overtime violations, etc. The recent Supreme Court ruling allowing employers to prohibit class-action claims from workers in arbitration only increased the incentive for companies to include arbitration clauses right in their employment contracts for new hires.

The practice was once limited to business to business contract disputes, but it is now extending to legal disputes with employees and consumers. This change occurred after a significant Supreme Court ruling in 2001 related to sexual harassment. In Circuit City Stores Inc. v. Adams, an associate working at a Circuit City store in California sued the company for sexual harassment. The associate’s name was Saint Clair Adams. He said he was harassed by his co-workers because he was gay. He, like all the other employees of Circuit City, had signed an arbitration agreement stating that all disputes with the company must be resolved through private arbitration. The company argued their case in federal court, insisting that Adams was required to move his claim to arbitration due to the agreement.

The judge on the case sided with the plaintiff, Adams, and cited the Federal Arbitration Act. The Federal Arbitration Act allows companies to resolve contract disputes through arbitration but includes a provision that excludes employment contracts. The judge’s ruling was later upheld by the Ninth Circuit Court of Appeals.

The argument didn’t die with the appellate court though. Circuit City took the case to the Supreme Court where the lower court’s ruling was overturned – extending the reach of arbitration clauses to nearly all employment contracts. The justices based their decision on a close reading of the employment exclusion in the Federal Arbitration Act, which reads, “but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in interstate or foreign commerce.” The justices interpreted this to mean that “transportation workers” were exempt from mandatory agreements; and that non-transportation workers would be required to take their claims to arbitration.

Another Supreme Court ruling in May 2018 made it even more difficult for workers to seek justice or force a company to change working conditions. The case was Epic Systems Corp. v. Lewis and the court decided that it is legal for employers in the United States to prohibit employees from joining together to file suit against the company claiming discrimination, wage theft, or other common workplace violations.

Do you have questions about how to deal with workplace violations when there is an arbitration agreement in place? Call one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Some Companies Are Responding to Worker Demands to Limit Arbitration

In response to the social and political climate, some companies are already starting to limit arbitration on their own. Mounting pressure from employees as well as the general public after the #MeToo movement had several Silicon Valley tech giants altering their policy and no longer requiring workers to take their sexual harassment cases to arbitration. The first to make the change were Uber and Microsoft. Google and Facebook announced plans to follow suit not long after.

While the change is heading in the right direction, some employees are still unhappy with the state of affairs. They say the exclusion for sexual harassment claims is nowhere near enough. For example, Google experience major backlash after a recent article in the New York Times offered details about how the tech giant paid out millions in exit packages for male executives who were accused of sexual harassment, while staying silent about the actual harassment.

Anger over this situation only added to the already mounting frustration at Google over ethical and transparency issues. The tension built up to a walkout on November 1st. Over 20,000 Google employees and contractors walked off the job in protest of Google’s method of dealing with sexual harassment claims. Employees demanded that Google executives end forced arbitration for discrimination claims (including sexual harassment, racial discrimination and gender discrimination), amid other demands. The company agreed to some of the employee’s demands a week later, but only agreed to drop mandatory arbitration for claims of sexual harassment and assault.

Organizers of the walkout were glad that Google responded with some positive change, but were disappointed that they ignored completely the opportunity to address widespread racial and gender discrimination claims.

If you need to discuss discrimination or sexual harassment in the workplace, and you aren’t sure where to start, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.