Katherine Chabolla v. Classpass, Inc.
Not yet reported (2025)
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Rule of Law:
For a 'sign-in wrap' online agreement to be enforceable, the website must provide reasonably conspicuous notice of the terms and the user must perform an action that unambiguously manifests assent, which requires explicitly advising the user that the act of clicking a specific button will constitute assent to those terms.
Facts:
- On January 30, 2020, Katherine Chabolla went to the ClassPass website to purchase a one-month trial subscription for access to gyms and fitness classes.
- The online purchase process required Chabolla to navigate through a landing page and three subsequent screens.
- Screen 1 asked for an email address. Below the 'Continue' and 'Sign up with Facebook' buttons, text stated: 'By clicking ‘Sign up with Facebook’ or ‘Continue,’ I agree to the Terms of Use...'
- Screen 2 asked for the user's name. Above the 'Continue' button, text stated: 'By signing up you agree to our Terms of Use...'
- Screen 3 was a checkout page for payment information. Above the 'Redeem now' button, text stated: 'I agree to the Terms of Use...'
- Chabolla completed all steps of the sign-up and purchase process.
- In March 2020, ClassPass paused its monthly charges due to the COVID-19 pandemic.
- Over a year later, ClassPass resumed charging Chabolla's account for the auto-renewed subscription.
Procedural Posture:
- Katherine Chabolla filed a class action complaint against ClassPass in the U.S. District Court for the Northern District of California.
- ClassPass filed a Motion to Compel Arbitration and to dismiss or stay the court proceedings.
- The district court, as the court of first instance, denied ClassPass's motion.
- ClassPass, as the appellant, filed an interlocutory appeal of the district court's order to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does a multi-page website sign-up process create a binding arbitration agreement where hyperlinks to the terms are in small font near action buttons, but the notices do not explicitly state that clicking buttons labeled 'Continue' or 'Redeem now' constitutes assent to those terms?
Opinions:
Majority - Judge Mendoza
No, the sign-up process does not create a binding arbitration agreement because the user did not unambiguously manifest assent to the terms. Applying the two-part test from Berman v. Freedom Fin. Network, LLC, the court first finds that Screen 1 failed to provide reasonably conspicuous notice because the advisory text was deemphasized and placed outside the user's natural flow of action. While declining to decide if Screens 2 and 3 provided adequate notice, the court holds the process fails the second prong: unambiguous manifestation of assent. The notice on Screen 2 ('By signing up you agree...') was ambiguous because the button said 'Continue,' not 'Sign up.' The notice on Screen 3 ('I agree to the Terms of Use...') was insufficient because the 'Redeem now' button did not explicitly inform the user that clicking it would constitute assent, a defect identified in Berman. The court concludes that three individually faulty notices do not combine to create a valid one, and the website never explicitly advised Chabolla that her clicks would bind her to the terms.
Dissenting - Judge Bybee
Yes, the sign-up process creates a binding arbitration agreement. The majority misapplies precedent and creates uncertainty for e-commerce. Each of the three screens provided reasonably conspicuous notice through legible, blue hyperlinks located directly next to the action buttons, satisfying the first prong of the Berman test. The cumulative effect of these three notices during a 'full registration process' for a continuing relationship makes the notice overwhelming. Furthermore, Chabolla unambiguously manifested assent at each step. Screen 1 explicitly stated, 'By clicking... ‘Continue,’ I agree...,' which is precisely the language suggested as sufficient in Berman. Screens 2 and 3, viewed in context, also clearly linked the user's continuation of the sign-up process with agreement to the terms, even without a perfect match between the notice and button text. The majority's hyper-technical reading is inconsistent with prior cases like Oberstein and Patrick and will force websites into less user-friendly designs.
Analysis:
This decision reinforces and arguably heightens the standard for enforcing 'sign-in wrap' agreements in the Ninth Circuit. It emphasizes that for a user's click to constitute unambiguous assent, the website's text must explicitly and precisely link that specific click to agreement with the terms. The court rejected the idea that context or a multi-page process can cure ambiguity, placing a heavy burden on website designers to use language that leaves no room for interpretation. This ruling will likely push businesses toward more explicit 'clickwrap' agreements (i.e., checking a box that says 'I agree') to ensure enforceability and may make it more difficult for companies to bind consumers to arbitration clauses through streamlined sign-up flows.
