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Byrd v. Aaron's, Inc.

United States District Court, W.D. Pennsylvania

March 31, 2014

CRYSTAL BYRD and BRIAN BYRD, Individually, and on Behalf of all Similarly Situated Persons, Plaintiffs,
v.
AARON'S, INC., et al., Defendants

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For CRYSTAL BYRD, BRIAN BYRD, Individually, and on Behalf of all Similarly Situated Persons, Plaintiffs: Aaron Z. Ahlquist, PRO HAC VICE, Herman Herman & Katz, New Orleans, LA; Andrea S. Hirsch, Edward C. Konieczny, PRO HAC VICE, Herman Gerel, Atlanta, GA; Christopher V. Tisi, Herman Gerel, Washington, DC; Daniel C. Levin, PRO HAC VICE, Frederick S. Longer, Levin, Fishbein, Sedran & Berman, Philadelphia, PA; James F. Green, Michael W. Heaviside, Michelle A. Parfitt, Herman Gerel, Alexandria, VA; John H. Robinson, PRO HAC VICE, Jamieson & Robinson, LLC, Casper, WY; Leonard A. Davis, Herman, Herman, Katz & Cotlar, L.L.P., New Orleans, LA; Maury A. Herman, Herman Gerel, New Orleans, LA.

For AARON'S, INC., Defendant: Neal R. Devlin, Richard A. Lanzillo, LEAD ATTORNEYS, Knox, McLaughlin, Gornall & Sennett, Erie, PA; Jason D. Rosenberg, Kristine McAlister Brown, Thomas C S Pryor, William H. Jordan, PRO HAC VICE, Alston & Bird LLP, Atlanta, GA.

For ASPEN WAY ENTERPRISES, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S INC., Defendant: Anthony J. Williott, LEAD ATTORNEY, James A. McGovern, Marshall, Dennehey, Warner, Coleman & Goggin, Pittsburgh, PA; Michael E. Begley, Michele L. Braukmann, Ross W. McLinden, PRO HAC VICE, Moulton Bellingham PC, Billings, MT; Theodore J. Kobus, III, Marshall, Dennehey, Warner, Coleman & Goggin, Philadelphia, PA.

For DESIGNERWARE, LLC, Defendant: Brian M. Mancos, Burns White LLC, Pittsburgh, PA.

For AH & H LEASING, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., BOXER ENTERPRISE, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., CIRCLE CITY RENTALS, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., CMH LEASING PARTNERS, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., CRAM LEASING, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., DC SALES AND LEASE, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., DW3, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., DWC VENTURES, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., FAIRWAY LEASING, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., FIVE STAR FINANCIALS, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., GNS & ASSOCIATES, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., GREEN RIVER CORPORATION, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., HANSON HOLDING COMPANY, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., HONEY HARBOR INVESTMENTS, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., HOWARD RENTS, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., HPH INVESTMENTS, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., J& L BEACH ENTERPRISES, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., J.R. RENTS, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., JENFOUR, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., JENKINS RENTAL, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., KFJ ENTERPRISES, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., MADISON CAPITAL INVESTMENTS, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., MKW INVESTMENTS, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., NO THREE PUTTS ENTERPRISES, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., N.W. FREEDOM CORP., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., POMONA LANE PARTNERS, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., R & DOUBLE K, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., REBCO INVESTMENTS, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., REX NEAL, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., SHINING STAR, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., SHOWCASE HOME FURNISHINGS, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., SULTAN FINANCIAL CORP., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., TANGLEWOOD MANAGEMENT, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., TDS FOODS, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., TUR, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., WATERSHED DEVELOPMENT CORPORATION, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., WGC, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., Defendants: Steven Edward Bizar, LEAD ATTORNEY, Elizabeth Klaproth, PRO HAC VICE, Buchanan Ingersoll & Rooney, Philadelphia, PA; Landon Y. Jones, Buchanan Ingersoll & Rooney PC, Philadelphia, pa; Matthew H. Meade, Buchanan Ingersoll, Pittsburgh, PA.

For AMG ENTERPRISES GROUP, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., GREAT AMERICAN RENT-TO-OWN, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., J.M. DARDEN AND COMPANY, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., Defendants: Steven Edward Bizar, LEAD ATTORNEY, Buchanan Ingersoll & Rooney, Philadelphia, PA.

For ARONA CORPORATION, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., Defendant: Donald J. McCormick, Mark R. Lane, LEAD ATTORNEYS, Dell, Moser, Lane & Loughney, Pittsburgh, PA; Timothy N. Lillwitz, Todd A. Strother, PRO HAC VICE, Bradshaw, Fowler, Proctor & Fairgrave, P.C., Des Moines, IA.

For BEAR RENTAL PURCHASE, LTD, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., Defendant: Steven Edward Bizar, LEAD ATTORNEY, Buchanan Ingersoll & Rooney, Philadelphia, PA; Gina Zumpella, Paul J. Walsh, III, Walsh, Barnes, Collis, Gill, & Zumpella, P.C., Pittsburgh, PA; Landon Y. Jones, Buchanan Ingersoll & Rooney PC, Philadelphia, pa; Matthew H. Meade, Buchanan Ingersoll, Pittsburgh, PA; Susan A. Kostkas, Walsh, Barnes, Collis & Zumpella, P.C., Pittsburgh, PA.

For DPR ALASKA, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., DPR COLORADO, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., ROYAL ROCKET RETAIL, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., Defendants: Steven Edward Bizar, LEAD ATTORNEY, Buchanan Ingersoll & Rooney, Philadelphia, PA; Landon Y. Jones, Buchanan Ingersoll & Rooney PC, Philadelphia, pa.

For FT GOT THREE, LLC, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., LIFESTYLE FURNITURE LEASING, doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., ROYAL RENTS, INC., doing business as AARON'S SALES AND LEASING, A FRANCHISEE OF AARON'S, INC., Defendants: Paul J. Walsh, III, LEAD ATTORNEY, Gina Zumpella, Walsh, Barnes, Collis, Gill, & Zumpella, P.C., Pittsburgh, PA; Steven Edward Bizar, LEAD ATTORNEY, Elizabeth Klaproth, PRO HAC VICE, Buchanan Ingersoll & Rooney, Philadelphia, PA; Susan A. Kostkas, LEAD ATTORNEY, Walsh, Barnes, Collis & Zumpella, P.C., Pittsburgh, PA; Landon Y. Jones, Buchanan Ingersoll & Rooney PC, Philadelphia, pa; Matthew H. Meade, Buchanan Ingersoll, Pittsburgh, PA.

OPINION

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MEMORANDUM ORDER

Cathy Bissoon, United States District Judge.

This case was referred to United States Magistrate Judge Susan Paradise Baxter for pretrial proceedings in accordance with the Magistrates Act, 28 U.S.C. § § 636(b)(1)(A) and (B), and Rules 72.C, 72.D and 72.G of the Local Rules for Magistrates.

On January 27, 2014, the Magistrate Judge issued a Report and Recommendation (Doc. 318), which gave recommendations on several outstanding motions (Docs. 161, 163, 192, 194, 298, 299, and 300). The Court will address these motions in turn.

A. The Motions, filed by various franchisees, to Dismiss for Lack of Standing (Docs. 192, 194, 298, 299, 300)

The Report and Recommendation recommend the following following motions be granted for lack of subject matter jurisdiction based on Plaintiffs' lack of standing:

(1) The motion to dismiss filed by Defendant Arona Corporation (Doc. 192);
(2) The motion to dismiss filed by Defendants AH& H Leasing, LLC, Bear Rental Purchase, Ltd., Boxer Enterprise, Inc., Circle City Rentals, CMH Leasing Partners, LLC, CRAM Leasing, Inc., DC Sales & Lease, Inc., Dirigo Leasing, Inc., DPR Alaska, LLC, DPR Colorado, LLC, DW3, LLC, DWC Ventures, LLC, Fairway Leasing, LLC, Five Star Financials, LLC, FT Got Three, LLC, GNS & Associates, Inc., Green Fiver Corporation, Hanson Holding Company, Honey Harbor Investments, LLC, Howard Rents, LLC, HPH Investments, LLC, J& L Beach Enterprises, Inc., J.R. Rents, Inc., Jenfour, LLC, Jenkins Rental, LLC, KFJ Enterprises, LLC, Lifestyle Furniture Leasing, Madison Capital Investments, Inc., MKW Investments, Inc., No Three Putts Enterprises, LLC, N.W. Freedom Corporation, Pomona Lane Partners, LLC, R & Double K, LLC, Rebco Investments, LLC, Rex Neal, Inc., Royal Rents, Inc., Royal Rocket Retail,

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LLC, SEI/Aaron's, Inc., Shining Star, Showcase Home Furnishings, Inc., Sultan Financial Corporation, Tanglewood Management, LLC, TDS Foods, Inc., Tur, Inc., Watershed Development Corporation, and WGC, LLC (Doc. 194)
(3) The motions for joinder filed by Defendants Great American Rent-to-Own, AMG Enterprises Group, and J.M. Darden and Company (Docs. 298, 299, and 300).

Service of the Report and Recommendation was made on the parties, and the parties timely filed objections. After a de novo review of the issues raised in the objections, together with the Report and Recommendation, the following Order is entered:

The Motions by the various franchisees for lack of standing (Docs. 192, 194, 298, 299, and 300) are GRANTED. The January 27, 2014 Report and Recommendation of Magistrate Judge Baxter, with regard to these motions is adopted as the Opinion of the District Court.

The Clerk of Courts is kindly directed to terminate the following as parties to this action: AH& H Leasing, LLC, AMG Enterprises Group, LLC, Arona Corporation, Bear Rental Purchase, Ltd., Boxer Enterprise, Inc., Circle City Rentals, CMH Leasing Partners, LLC, CRAM Leasing, Inc., DC Sales & Lease, Inc., Dirigo Leasing, Inc., DPR Alaska, LLC, DPR Colorado, LLC, DW3, LLC, DWC Ventures, LLC, Fairway Leasing, LLC, Five Star Financials, LLC, FT Got Three, LLC, GNS & Associates, Inc., Great American Rent-to-Own, Inc., Green Fiver Corporation, Hanson Holding Company, Honey Harbor Investments, LLC, Howard Rents, LLC, HPH Investments, LLC, J& L Beach Enterprises, Inc., J.R. Rents, Inc., J.M. Darden & Company, Jenfour, LLC, Jenkins Rental, LLC, KFJ Enterprises, LLC, Lifestyle Furniture Leasing, Madison Capital Investments, Inc., MKW Investments, Inc., No Three Putts Enterprises, LLC, N.W. Freedom Corporation, Pomona Lane Partners, LLC, R & Double K, LLC, Rebco Investments, LLC, Rex Neal, Inc., Royal Rents, Inc., Royal Rocket Retail, LLC, SEI/Aaron's, Inc., Shining Star, Showcase Home Furnishings, Inc., Sultan Financial Corporation, Tanglewood Management, LLC, TDS Foods, Inc., Tur, Inc., Watershed Development Corporation, and WGC, LLC.

B. Motion to Dismiss for Failure to State a Claim, filed by Aaron's (Doc. 163)

The Report and Recommendation recommended that the motion to dismiss filed by Defendant Aaron's, Inc. (Doc. 163) should be granted in part and denied in part. Service of the Report and Recommendation was made on the parties, and the parties timely filed objections. After a de novo review of the issues raised in the objections, together with the Report and Recommendation, the following Order is entered:

The motion to dismiss filed by Defendant Aaron's, Inc. (Doc. 163) is GRANTED IN PART AND DENIED IN PART. The Report and Recommendation with regard to this motion is adopted as the Opinion of the District Court, with the following modification:

Plaintiffs' claim of Conspiracy to violate the ECPA (contained in Count III) will be dismissed. The January 27, 2014 Report and Recommendation concluded, without analysis, that Plaintiffs' claim for conspiracy to violate the ECPA still survived.[1] However, secondary liability no

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longer exists under the current statutory structure of the ECPA. See, e.g., Shefts v. Petrakis, 954 F.Supp.2d 769, 776-77 (C.D. Ill. 2013); Kirch v. Embarq Mgmt. Co., 702 F.3d 1245, 1246-47 (10th Cir. 2012); Peavy v. WFAA-TV, Inc., 221 F.3d 158, 169 (5th Cir. 2000). Accordingly, Defendants cannot be held liable for a claim of conspiracy to commit violations of the ECPA. As such, Count III of Plaintiff's claim, for conspiracy to commit an ECPA violation, will be dismissed.[2]

With regard to the only remaining claim, Count I, for violation of the ECPA, the Court notes that Aaron's has raised persuasive objections about whether there has actually been an " interception" of an " electronic communication," as required under the ECPA. See Doc. 322. However, the Court finds that Judge Baxter's opinion properly addressed Aaron's concerns in the Report and Recommendation, and the Court agrees that in this stage of the litigation, Plaintiffs have sufficiently pled a claim for direct liability under the ECPA. See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). (" [S]tating ... a claim requires a complaint with enough factual matter (taken as true) to suggest the required element. This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element." ). Whether an actual interception of an electronic communication took place will be born out through discovery, and Aaron's is free to raise these arguments again on a more developed record, as a motion for summary judgment.

C. Motion to Dismiss for Lack of Personal Jurisdiction, filed by Aspen Way (Doc. 161)

The Report and Recommendation recommended that the motion to Dismiss filed by Defendant Aspen Way Enterprises (Doc. 161) should be denied. Service of the Report and Recommendation was made on the parties, and the parties timely filed objections. After a de novo review of the issues raised in the objections, together with the Report and Recommendation, the following Order is entered:

The motion to Dismiss filed by Defendant Aspen Way Enterprises (Doc. 161) is DENIED. The Report and Recommendation with regard to this motion is adopted as the Opinion of the District Court, with the following modification:

As described above, the Court has found that secondary liability cannot exist under the ECPA, and accordingly, has dismissed Plaintiffs' only remaining conspiracy claim. In light of this, the Court is now doubtful

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of the applicability of the absent co-conspirator doctrine of personal jurisdiction in this case. See Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 102, n. 8 (3d Cir. 2004) (finding it unnecessary to address the conspiracy theory of personal jurisdiction because the plaintiff had not alleged an actionable conspiracy).

However, the March 20, 2012 Order (Doc. 95), which found the purposeful availment prong lacking, has since been vacated. See Doc. 338. Accordingly, regardless of whether the absent co-conspirator theory of personal jurisdiction can still apply, the Court still has personal jurisdiction over Defendant Aspen Way under a specific jurisdiction theory. Id.

IT IS SO ORDERED.

OPINION

SUSAN PARADISE BAXTER, United States Magistrate Judge.

MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION on Defendants' Motions to Dismiss the Corrected Third Amended Complaint

I. RECOMMENDATION

It is respectfully recommended that:

- The motion to dismiss filed by Defendant Aspen Way Enterprises [ECF No. 161] should be DENIED;

- The motion to dismiss filed by Defendant Aaron's, Inc. [ECF No. 163] should be GRANTED IN PART AND DENIED IN PART.

It is further recommended that the following motions be granted for lack of subject matter jurisdiction based on Plaintiffs' lack of standing:

- The motion to dismiss filed by Defendant Arona Corporation [ECF No. 192] be GRANTED ;

- The motion to dismiss filed by Defendants AH& H Leasing, LLC, Bear Rental Purchase, Ltd., Boxer Enterprise, Inc., Circle City Rentals, CMH Leasing Partners, LLC, CRAM Leasing, Inc., DC Sales & Lease, Inc., Dirigo Leasing, Inc., DPR Alaska, LLC, DPR Colorado, LLC, DW3, LLC, DWC Ventures, LLC, Fairway Leasing, LLC, Five Star Financials, LLC, FT Got Three, LLC, GNS & Associates, Inc., Green Fiver Corporation, Hanson Holding Company, Honey Harbor Investments, LLC, Howard Rents, LLC, HPH Investments, LLC, J& L Beach Enterprises, Inc., J.R. Rents, Inc., Jenfour, LLC, Jenkins Rental, LLC, KFJ Enterprises, LLC, Lifestyle Furniture Leasing, Madison Capital Investments, Inc., MKW Investments, Inc., No Three Putts Enterprises, LLC, N.W. Freedom Corporation, Pomona Lane Partners, LLC, R & Double K, LLC, Rebco Investments, LLC, Rex Neal, Inc., Royal Rents, Inc., Royal Rocket Retail, LLC, SEI/Aaron's, Inc., Shining Star, Showcase Home Furnishings, Inc., Sultan Financial Corporation, Tanglewood Management, LLC, TDS Foods, Inc., Tur, Inc., Watershed Development Corporation, and WGC, LLC [ECF No. 194] be GRANTED.

- The motions for joinder filed by Defendants Great American Rent-to-Own, AMG Enterprises Group, and J.M. Darden and Company [ECF Nos. 298, 299, and 300] be GRANTED.

The Clerk of Courts should be directed to terminate the following as parties to this action: AH& H Leasing, LLC, AMG Enterprises Group, LLC, Arona Corporation, Bear Rental Purchase, Ltd., Boxer Enterprise, Inc., Circle City Rentals, CMH Leasing Partners, LLC, CRAM Leasing, Inc., DC Sales & Lease, Inc., Dirigo Leasing, Inc., DPR Alaska, LLC, DPR Colorado, LLC, DW3, LLC, DWC

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Ventures, LLC, Fairway Leasing, LLC, Five Star Financials, LLC, FT Got Three, LLC, GNS & Associates, Inc., Great American Rent-to-Own, Inc., Green Fiver Corporation, Hanson Holding Company, Honey Harbor Investments, LLC, Howard Rents, LLC, HPH Investments, LLC, J& L Beach Enterprises, Inc., J.R. Rents, Inc., J.M. Darden & Company, Jenfour, LLC, Jenkins Rental, LLC, KFJ Enterprises, LLC, Lifestyle Furniture Leasing, Madison Capital Investments, Inc., MKW Investments, Inc., No Three Putts Enterprises, LLC, N.W. Freedom Corporation, Pomona Lane Partners, LLC, R & Double K, LLC, Rebco Investments, LLC, Rex Neal, Inc., Royal Rents, Inc., Royal Rocket Retail, LLC, SEI/Aaron's, Inc., Shining Star, Showcase Home Furnishings, Inc., Sultan Financial Corporation, Tanglewood Management, LLC, TDS Foods, Inc., Tur, Inc., Watershed Development Corporation, and WGC, LLC.

II. REPORT

A. Relevant Procedural History


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