Aarons 2014 Annual Report Download - page 82

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Labor and Employment
In Kunstmann et al v. Aaron Rents, Inc., filed with the United States District Court, Northern District of Alabama (Case No.:
2:08-CV-01969-KOB-JEO) on October 22, 2008, plaintiffs alleged that the Company improperly classified store general
managers as exempt from the overtime provisions of the Fair Labor Standards Act (“FLSA”). The case was conditionally
certified as an FLSA collective action on January 25, 2010. Plaintiffs sought to recover unpaid overtime compensation and
other damages. In July 2014, the parties engaged in a successful mediation of this case and reached an agreement in principle to
settle the matter for an immaterial amount. On October 16, 2014, the Court approved the parties’ settlement documents and
order, and the case is now closed.
The matter of Kurtis Jewell v. Aaron’s, Inc., was originally filed in the United States District Court, Northern District of Ohio,
Eastern Division on October 27, 2011 and was transferred on February 23, 2012 to the United States District Court for the
Northern District of Georgia (Civil No.:1:12-CV-00563-AT). Plaintiff, on behalf of himself and all other non-exempt employees
who worked in Company stores, alleged that the Company violated the FLSA when it automatically deducted 30 minutes from
employees' time for meal breaks on days when plaintiffs allegedly did not take their meal breaks. On June 28, 2012, the Court
granted conditional certification of a class, and in August 2014, the parties resumed a previous mediation and reached an
agreement to settle the case. The court approved the settlement and the case is now closed.
In Daniel Antoine v. Aaron’s, Inc., filed in U.S. District Court for the Northern District of Georgia (Civil No.:1-14-CV-02120-
AT-WEJ), on July 3, 2014, plaintiff alleged that the Company violated his rights and the rights of putative class members under
the Fair Credit Reporting Act by refusing to hire plaintiff and other applicants based upon pre-employment background check
reports without first sending such background reports and a pre-adverse action notice to the applicants. In December 2014 the
parties reached an agreement to settle the case. The proposed settlement documents are in process.
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 on 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 has filed a
motion to allow counterclaims against all newly certified class members who may owe legitimate fees or damages to the
Company or who failed to return merchandise to the Company prior to obtaining ownership. That motion was denied by the
magistrate judge on June 30, 2014, but an appeal of that ruling is pending with the District Court.
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
(“ECPA”) 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.” Although the District Court dismissed the
Company from the original lawsuit on March 20, 2012, after certain procedural motions, on May 23, 2013, the Court granted
plaintiffs' motion for leave to file a third amended complaint, which asserts the claims under the ECPA, common law invasion
of privacy, added a request for injunction, and named additional independently owned and operated Company franchisees as
defendants. Plaintiffs filed the third amended complaint, and the Company moved to dismiss that complaint on substantially the
same grounds as it sought to dismiss plaintiffs' prior complaints. Plaintiffs seek monetary damages as well as injunctive relief.
Plaintiffs filed their motion for class certification on July 1, 2013, and the Company's response was filed in August 2013. On
March 31, 2014, the U.S. District Judge dismissed all claims against all franchisees other than Aspen Way Enterprises, LLC.
The Court also dismissed claims for invasion of privacy, aiding and abetting, and conspiracy against all defendants. In addition,
the Court denied the plaintiffs’ motion to certify the class. Finally, the Judge denied the Company’s motion to dismiss the
violation of ECPA claims. Plaintiffs requested and received immediate appellate review of these rulings by the U.S. Third
Circuit Court of Appeals. Oral argument was heard on January 23, 2015, and a decision is pending.