Aarons 2014 Annual Report Download - page 83

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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.
In Lomi Price v. Aaron's, Inc. and NW Freedom Corporation, filed on February 27, 2013, in the State Court of Fulton County,
Georgia (Case No. 13-EV-016812B), an individual plaintiff asserts claims against the Company and its independently owned
and operated franchisee, NW Freedom Corporation, for invasion of privacy/intrusion on seclusion, computer invasion of
privacy and infliction of emotional distress. Each of these claims arises out of the alleged use of PC Rental Agent software. The
plaintiff is seeking compensatory and punitive damages of not less than $250,000. On April 3, 2013, the Company filed an
answer and affirmative defenses. On that same day, the Company also filed a motion to stay the 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 stayed the proceeding pending rulings on certain motions in the Byrd case. The stay has expired and the plaintiff filed
an amended complaint. The Company has filed a motion to dismiss the amended complaint.
In Michael Peterson v. Aaron’s, Inc. and Aspen Way Enterprises, Inc., filed on June 19, 2014, in the U.S. District Court for the
Northern District of Georgia, several plaintiffs allege that they leased computers for use in their law practice. The plaintiffs
claim that the Company and Aspen Way knowingly violated plaintiffs' privacy and the privacy of plaintiff’s legal clients in
violation of the ECPA and the Computer Fraud Abuse Act. Plaintiffs seek certification of a putative nationwide class. Plaintiffs
based these claims on Aspen Way's use of a software program called PC Rental Agent. The plaintiffs claim that information and
data obtained by defendants through PC Rental Agent was attorney-client privileged. The Company has filed a motion to
dismiss plaintiffs' amended complaint.
Regulatory Investigations
California Attorney General Investigation. The California Attorney General investigated the Company's retail transactional
practices, including various leasing and marketing practices, information security and privacy policies and practices related to
the alleged use of PC Rental Agent software by certain independently owned and operated Company franchisees. The Company
reached a comprehensive resolution of this matter without litigation. The final settlement and consent order were announced on
October 13, 2014.
Pennsylvania Attorney General Investigation. There is a pending investigation by the Pennsylvania Attorney General relating to
the Company's privacy practices in Pennsylvania. The privacy issues are related to the alleged use of PC Rental Agent software
by certain independently owned and operated Company franchisees, and the Company's alleged responsibility for that use. The
Company is continuing to cooperate in the investigation.
Other Matters
Noncompete Dispute. In January 2014, Aaron’s sold its Company-operated RIMCO stores and the rights to five franchised
stores. The acquisition agreement provides that the Company will not compete with the acquiring entity for a specified period
of time in certain geographic locations surrounding the purchased stores. In August 2014, the acquiring entity asserted that
Aaron’s was violating the noncompete covenant in the acquisition agreement. The Company disputes that the noncompete
covenant is being violated, and is engaged in discussions to resolve the dispute. To date, no lawsuit has been filed related to this
matter.
Other Commitments
At December 31, 2014, the Company had non-cancelable commitments primarily related to certain advertising and marketing
programs of $20.8 million. Payments under these commitments are scheduled to be $18.0 million in 2015, $1.7 million in 2016,
$776,000 in 2017 and $363,000 in 2018.