Summary
The Ninth Circuit affirmed the district court's denial of a motion to compel arbitration in a class action alleging violations of California consumer protection laws regarding auto-renewed subscriptions. The panel held that the defendant's website constituted a sign-in wrap agreement that failed to provide reasonably conspicuous notice of its Terms of Use or obtain an unambiguous manifestation of assent from the plaintiff during the multi-page checkout process. Consequently, no binding arbitration agreement was formed.
Topics
Practice areas
Questions Presented
- Whether ClassPass's online sign-in-wrap process provided reasonably conspicuous notice of its Terms of Use.
- Whether Chabolla unambiguously manifested assent to the Terms of Use and their arbitration clause by proceeding through the ClassPass website.
- Whether the district court properly denied ClassPass's motion to compel arbitration.
Holdings
- Under California contract-formation principles, a sign-in-wrap agreement is enforceable only when the website provides reasonably conspicuous notice of the terms and the consumer takes an action that unambiguously manifests assent. ClassPass's website did not satisfy that requirement because the landing page and screen 1 lacked reasonably conspicuous notice, while screens 2 and 3 did not provide an unambiguous manifestation of assent.
- ClassPass was not entitled to compel arbitration because Chabolla did not agree to be bound by the arbitration clause in the Terms of Use.
Key quotations
“a sign-in wrap agreement may be an enforceable contract based on inquiry notice if (1) the website provides reasonably conspicuous notice of the terms to which the consumer will be bound; and (2) the consumer takes some action, such as clicking a button or checking a box, that unambiguously manifests his or her assent to those terms.” (11)
“Reasonable conspicuousness alone is not sufficient to bind a user—a user must agree to the terms, not merely see them.” (18)
“Viewed in total, we do not think a reasonably prudent internet user unambiguously manifests assent to the Terms of Use by working her way through ClassPass’s multi-page website.” (22)
Factual background
Chabolla purchased a one-month ClassPass subscription online on January 30, 2020, subject to monthly renewal at the standard rate. To complete the purchase, she moved through a landing page and three additional screens containing hyperlinks to ClassPass's Terms of Use, but no screen required her to affirmatively check an agreement box or expressly state that a particular action would constitute assent. ClassPass later resumed charging her after pausing charges during the COVID-19 pandemic, and she brought claims concerning the renewed charges.
Procedural history
Chabolla filed a putative class action in the Northern District of California alleging violations of California's Automatic Renewal Law, Unfair Competition Law, and Consumers Legal Remedies Act. ClassPass moved to compel arbitration based on an arbitration clause in online Terms of Use. The district court denied the motion, and ClassPass appealed under the Federal Arbitration Act.