Chabolla v. ClassPass is a 2025 decision of the Ninth Circuit about whether a subscriber was bound by the terms of use of an online subscription service. ClassPass, which sells packaged access to gyms and fitness classes, tried to move a class action over auto-renewed charges into individual arbitration under its terms of use. The Ninth Circuit held that its sign-up pages did not create an agreement to arbitrate.[1] The service is not licensed software, but the opinion applies the test used for SaaS and other subscription sign-up flows and concerns an automatic renewal claim.
Background
Katherine Chabolla bought a one-month ClassPass subscription on 30 January 2020 at a discounted rate, subject to monthly renewal at the standard rate: a 45-credit plan at $39 for the first month, then $79 monthly. ClassPass paused charges when the COVID-19 pandemic closed gyms in March 2020 and resumed them a little over a year later. She sued on behalf of California consumers charged for an auto-renewed subscription, alleging violations of California’s Automatic Renewal Law, Unfair Competition Law and Consumers Legal Remedies Act. The billing practices were not at issue in the appeal.[1]
ClassPass moved to compel arbitration, relying on its Terms of Use, which state in the second paragraph that they contain a binding arbitration agreement and class action waiver and include an arbitration section. The district court denied the motion and ClassPass appealed.[1]
The dispute
Chabolla passed through a landing page and three screens. The landing page said nothing about terms. Screen 1 asked for an email address; below the “Continue” button and a “Sign up with Facebook” button, in the smallest font on the page, was the line “By clicking ‘Sign up with Facebook’ or ‘Continue,’ I agree to the Terms of Use and Privacy Policy”, with the document names in blue. Screen 2 asked for a name and carried “By signing up you agree to our Terms of Use and Privacy Policy”. Screen 3, the checkout, carried “I understand that my membership will automatically renew to the [$79] per month plan plus applicable tax until I cancel. I agree to the Terms of Use and Privacy Policy” beneath a gift card question and above a “Redeem now” button.[1]
The court treated the website as a “sign-in wrap”: it links to the terms and indicates that some action may bind the user, but does not require the user to review them. Following earlier Ninth Circuit decisions, it applied a two-part test: the site must give reasonably conspicuous notice of the terms, and the user must take an action, such as clicking a button, that unambiguously shows assent to them.[1]
Notice. The court found the context of the transaction neutral. The purchase was described as a plan and a membership, but the page also said “never locked in”, “no commitments” and “cancel anytime”, the user was not asked to create an account, and the offer could be seen as a one-time purchase of credits. On screen 1 the notice was placed below the Facebook option, away from the natural flow of action, in small grey text, and was “deemphasized by the overall design of the webpage”. For screens 2 and 3 the court declined to decide conspicuousness, noting that on screen 3 a reader could assume the notice concerned gift cards.[1]
Assent. Because screen 1 gave inadequate notice, clicking “Continue” there could not count as assent, and the court refused to infer that she agreed on screen 1 to a notice she had not yet seen on screen 2. It also rejected combining the conspicuousness of three screens and the actions of three different buttons into a single manifestation of assent, holding that the court must find notice of the terms together with an unambiguous manifestation of assent.[1]
Decision or outcome
On 27 February 2025 the Ninth Circuit, in an opinion by Judge Mendoza, affirmed the denial of the motion to compel arbitration, holding that Chabolla did not agree to the arbitration clause. Judge Bybee dissented, taking the view that the three screens gave three conspicuous notices and three unambiguous assents. The court’s opinion is a ruling on contract formation only; it does not decide whether the renewal charges violated California law.[1]
Significance for software licensing and SAM practice
Subscription software and SaaS are often bought through self-service pages like the one in this case, and the same four labels from the opinion (browsewrap, clickwrap, scrollwrap and sign-in wrap) describe how those terms are presented. The court noted that courts consistently decline to enforce browsewraps and routinely enforce clickwraps, and placed the sign-in wrap between them.[1] For a vendor, the case shows that a link to the terms near a button is not a substitute for presenting them as the thing being agreed. For a buyer, it is a reminder that the terms of use for a subscription are often a contract that may include arbitration and class waivers, and that whether they bind depends on the sign-up design.
The case is a decision under California law about a consumer subscription. It is also a forum ruling: it decides where the dispute is heard, not whether auto-renewal terms are valid. See United States v. Adobe for a software subscription cancellation case and Sgouros v. TransUnion for the Seventh Circuit’s approach to click-through assent.
Lessons learned
- Conspicuous means placed, sized and coloured to be seen. The court found the screen 1 notice, in small grey text below a social login button, faded into the page.[1]
- Notice and assent are separate. A user must be told that an action means agreeing to the terms, and each screen is read for what it shows.[1]
- Marketing wording can cut against binding terms. “No commitments” and “cancel anytime” made the purchase look like a one-time credit purchase.[1]
- Keep screenshots of the flow. The court decided the case on screenshots the vendor supplied of the pages as they appeared in January 2020, so versions of the sign-up flow are evidence.[1]