Aarons 2013 Annual Report Download - page 70

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Consumer
In Margaret Korrow, et al. v. Aaron's, Inc., originally filed in the Superior Court of New Jersey, Middlesex County, Law
Division on October 26, 2010, plaintiff filed suit on behalf of herself and others similarly situated alleging that the Company is
liable in damages to plaintiff and each class member because the Company's lease agreements issued after March 16, 2006
purportedly violated certain New Jersey state consumer statutes. Plaintiff's complaint seeks treble damages under the New
Jersey Consumer Fraud Act, and statutory penalty damages of $100 per violation of all contracts issued in New Jersey, and also
claim that there are multiple violations per contract. The Company removed the lawsuit to the United States District Court for
the District of New Jersey on December 6, 2010 (Civil Action No.: 10-06317(JAP)(LHG)). Plaintiff on behalf of herself and
others similarly situated seeks equitable relief, statutory and treble damages, pre- and post-judgment interest and attorneys' fees.
Discovery on this matter is closed. On July 31, 2013, the Court certified a class comprising all persons who entered into a rent-
to-own contract with the Company in New Jersey from March 16, 2006 through March 31, 2011. In August 2013, the Court of
Appeals denied the Company’s request for an interlocutory appeal of the class certification issue. The Company filed a motion
to add counterclaims against all newly certified class members who may owe legitimate fees or damages to the Company or
who failed to return merchandise prior to obtaining ownership. That motion is pending.
Privacy and Related Matters
In Crystal and Brian Byrd v. Aaron's, Inc., Aspen Way Enterprises, Inc., John Does (1-100) Aaron's Franchisees and
Designerware, LLC, filed on May 16, 2011, in the United States District Court, Western District of Pennsylvania (Case No.
1:11-CV-00101-SPB), plaintiffs alleged that the Company and its independently owned and operated franchisee Aspen Way
Enterprises (“Aspen Way”) knowingly violated plaintiffs' privacy in violation of the Electronic Communications Privacy Act
and the Computer Fraud Abuse Act and sought certification of a putative nationwide class. Plaintiffs based these claims on
Aspen Way's use of a software program called “PC Rental Agent.” The District Court dismissed the Company from the lawsuit
on March 20, 2012. On September 14, 2012, plaintiffs filed a second amended complaint against the Company and its
franchisee Aspen Way, asserting claims for violation of the Electronic Communications Privacy Act and common law invasion
of privacy by intrusion upon seclusion. Plaintiffs also asserted certain vicarious liability claims against the Company based on
Aspen Way's alleged conduct. On October 15, 2012, the Company filed a motion to dismiss the amended complaint, and on
February 27, 2013, plaintiffs filed a motion for leave of the Court to file a third amended complaint against the Company. On
May 23, 2013, the Court granted plaintiffs' motion for leave to file a third amended complaint, which asserts the same claims
against the Company as the second amended complaint but also adds a request for injunction and names additional
independently owned and operated Company franchisees as defendants. Plaintiffs filed the third amended complaint, and the
Company has moved to dismiss that complaint on substantially the same grounds as it sought to dismiss plaintiffs' second
amended complaint. That motion remains pending. Plaintiffs filed their motion for class certification on July 1, 2013, and the
Company's response was filed in August 2013. On January 27, 2014, the Magistrate Judge issued recommendations on pending
motions. The Judge recommended that all claims against all franchisees other than Aspen Way Enterprises, LLC be dismissed.
The Judge also recommended that claims for invasion of privacy, aiding and abetting, and conspiracy be dismissed against all
defendants. Finally, the Judge recommended denial of the Company’s motion to dismiss the violation of Electronic
Communications Privacy Act claims. In addition, on January 31, 2014, the Magistrate Judge recommended denial of the
Plaintiffs’ motion to certify the class. These recommendations are subject to objection by either party and will then either be
adopted, in whole or in part, by the District Judge, or modified as the District Judge may determine appropriate.
In Michael Winslow and Fonda Winslow v. Sultan Financial Corporation, Aaron's, Inc., John Does (1-10), Aaron's Franchisees
and Designerware, LLC, filed on March 5, 2013 in the Los Angeles Superior Court (Case No. BC502304), plaintiffs assert
claims against the Company and its independently owned and operated franchisee, Sultan Financial Corporation (as well as
certain John Doe franchisees), for unauthorized wiretapping, eavesdropping, electronic stalking, and violation of California's
Comprehensive Computer Data Access and Fraud Act and its Unfair Competition Law. Each of these claims arises out of the
alleged use of PC Rental Agent software. The plaintiffs are seeking injunctive relief and damages in connection with the
allegations of the complaint. Plaintiffs are also seeking certification of a putative California class. Plaintiffs are represented by
the same counsel as in the above described Byrd litigation. In April 2013, the Company timely removed this matter to federal
Court. On May 8, 2013, the Company filed a motion to stay this litigation pending resolution of the Byrd litigation, a motion to
dismiss for failure to state a claim, and a motion to strike certain allegations in the complaint. The Court subsequently stayed
the case. The Company's motions to dismiss and strike certain allegations remain pending.