ClassPass’ Petition for Rehearing Will Tell the Future of Sign-In Wrap Agreements on the Internet

On April 14, 2025, ClassPass, a web-based company offering subscription services to third-party fitness classes, petitioned for rehearing en banc of the Ninth Circuit’s Chabolla v. ClassPass decision, which held that ClassPass’ users were not bound by the terms of ClassPass’ “sign-in wrap” agreement. The ruling has significant consequences for online companies using sign-in wrap agreements and for online contract formation and enforcement more generally. A sign-in wrap is a type of online agreement in which the agreement is hyperlinked on the website, but the user is not required to access, review, confirm an understanding, or otherwise affirmatively “assent” to be bound. If the Ninth Circuit does not grant ClassPass’ request and issue a new ruling in Chabolla, this case may signal the death knell for sign-in wraps, resulting in significant disruption, friction, and ultimately lower conversion for online companies who will be forced to redesign their sign-up flows to be click-wrap agreements (online agreements that require the user to affirmatively accept a company’s terms of use by clicking an assent box or button). Short of that, this decision increases business risk given that there are now conflicting opinions both within the Ninth Circuit and between the various Circuits.

This case arose in January 2023, when ClassPass user Katherine Chabolla filed a putative class action complaint against ClassPass. ClassPass sought to enforce the arbitration clause in its online terms of use that ClassPass claimed Chabolla agreed to when she registered for ClassPass by and through a sign-in wrap agreement.

Online companies have long preferred sign-in wraps because of the ease in which users can register and the low friction it creates in the shopping and user-interface funnel. These same companies have disfavored click-wraps, which the industry feels results in lower user conversion. While courts have been increasingly skeptical of sign-in wraps, favoring click-wraps instead, they have nevertheless enforced sign-in wraps so long as the user has adequate notice. Over the years, courts have required companies to make their sign-in wraps clearer and more prominent to ensure such notice. Thus, while sign-in wraps have survived judicial muster, courts have increasingly scrutinized everything in the sign-up flow from font size, to location, to color choice of the notice.

In Chabolla, a split Ninth Circuit concluded that ClassPass’ sign-in wrap was not enforceable because 1) it did not provide conspicuous notice of the terms of use the user would be bound to; and 2) the action buttons (the button the user clicks on to “sign up” or indicate “I agree”) did not unambiguously manifest the user’s assent to the terms. The Court so held even though Chabolla encountered notices to the terms of use on three separate and consecutive webpages in the sign-up flow. The Court explained that the notice on the first page was not conspicuous because the action button was located above the notice, and therefore it was outside of the user’s line of vision. Also, the font and size of the notice, when compared to other images and words on the page, made the notice seem irrelevant. The Court had other critiques of the second and third pages, including the fact that ClassPass used the terms “continue” or “redeem now” on the second and third pages of its sign-up flow instead of consistently using “sign-up,” which the Court said led to ambiguity and confusion.

Judge Jay Bybee issued a scathing dissent, saying the majority’s ruling will cause uncertainty and disarray for sign-in wrap agreements throughout the digital industry. Bybee believed that the ClassPass sign-up flows were clear and used prominent font. He observed that internet users in this modern day and age “would [not] just breeze past this notice.”

ClassPass filed a request for rehearing en banc earlier this month, arguing that: 1) the majority opinion will lead to inter-circuit conflict as it disregards over a decade of internet law regarding sign-in wrap agreements; 2) the majority ignored the repetition of screens that Chabolla had to navigate through to manifest assent; the three screens together enhanced constructive notice, and the Court errored in analyzing whether Chabolla had notice based on any single screen alone; and 3) the law has never required “magic words” such as “sign up” to manifest assent or otherwise required there be an exact match in verbiage across various screens in the sign-up flow.

What does this mean for you?

• Conflicting rulings both within the Ninth Circuit and with other Circuits raise the potential for uncertainty for businesses using sign-in wrap agreements. Businesses structure their products and sign-up flows to match or meet national trends in laws. If the Chabolla ruling stands, companies may have to use bespoke sign-up flows solely for users with internet connections in the Ninth Circuit, leading to extra expense and friction.
• If Chabolla stands, it will call into question the enforceability of nearly all sign-in wraps in use on the internet. Companies will have to examine their current flow and redesign it or otherwise move to a click-wrap, which may increase cost and friction and result in lower user yield.
• The Court in Chabolla was particularly concerned by the fact that the sign-up flow did not adequately put Chabolla on notice of the recurring or monthly fees she was ostensibly bound to. Companies with monthly subscriptions or recurring fees may be advised to reconsider their sign-up flow and whether their disclosures are sufficient.

As Judge Bybee stated in his dissenting opinion, the majority’s opinion will force businesses to “guess whether any nuance at all in its sign-in wrap will be held against it. The result is one of caveat websitus internetus (roughly translated as “internet websites beware!”).”