On February 27, 2025, the U.S. Court of Appeals for the Ninth Circuit issued a decision in Chabolla v. ClassPass, Inc., addressing the enforceability of arbitration agreements presented through online “sign-in wrap” agreements – an agreement where users are informed that by proceeding with registration, they agree to the terms, typically via a hyperlink rather than an explicit acknowledgment like a checkbox.
Katherine Chabolla subscribed to ClassPass in January 2020. ClassPass is an online service that offers access to various fitness facilities and classes to allow users to try out different exercise experiences without a formal commitment with that facility. Due to the COVID-19 pandemic, ClassPass temporarily suspended billing consumers, but then resumed billing in 2021.
Ms. Chabolla filed a class-action lawsuit against ClassPass alleging that the resumption of charges violated California consumer protection laws, including the Automatic Renewal Law, Unfair Competition Law, and the Consumers Legal Remedies Act. ClassPass sought to compel arbitration in accordance with its online Terms of Use. ClassPass argued that that by signing up for the service, Ms. Chabolla agreed to these terms through a sign-in wrap agreement.
The Court of Appeals applied a two-pronged analysis to determine the enforceability of ClassPass’s arbitration agreement. First, the Court considered whether the consumer, Ms. Chabolla, was provided with a reasonably conspicuous notice of its Terms of Use. The Court reviewed the website’s design and overall clarity and found that the Terms of Use were not sufficiently clear or conspicuous. Next, the Court examined whether the consumer had manifested clear assent to the Terms of Use. Here, there was no clear assent to the arbitration clause because ClassPass did not sufficiently inform Ms. Chabolla that proceeding with the sign-up would constitute agreement to the Terms of Use, including the arbitration clause.
As a result, the Court affirmed the lower court’s decision and refused to compel arbitration as Ms. Chabolla did not clearly agreed to the Terms of Use and ultimately the arbitration provision.
This decision underscores the limitations of sign-in wrap agreements and the necessity for businesses to provide clear and conspicuous notice of contract terms. While clickwrap agreements (where users actively agree to terms) are typically enforceable, sign-in wrap agreements require careful design and disclosure to ensure users are properly informed. Moving forward, entities must ensure that users receive explicit notice and have an opportunity to clearly manifest assent to online terms—especially when including mandatory arbitration provisions.
Chabolla v. ClassPass, Inc., 2025 S.O.S. 23-15999 (9th Cir. Feb. 27, 2025)