Peterson et al v. Aaron's, Inc. et al
Filing
137
ORDER granting in part and denying in part 114 Motion for Sanctions. The Court will also re-open discovery for the limited purpose of the parties conducting another Rule 30(b)(6) corporate representative deposition. If the parties are unable to reach an agreement, the Plaintiffs may file a motion requesting the costs. Signed by Judge Thomas W. Thrash, Jr on 1/25/2017. (ss)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
MICHAEL PETERSON, et al.,
Plaintiffs,
v.
CIVIL ACTION FILE
NO. 1:14-CV-1919-TWT
AARON'S, INC., et al.,
Defendants.
OPINION AND ORDER
The Plaintiffs allege that the Defendant Aspen Way Enterprises, Inc. unlawfully
accessed their computers from a remote location and gained possession of private
information stored therein. It is before the Court on the Plaintiffs’ Motion for
Sanctions [Doc. 114]. For the reasons set forth below, the Plaintiffs’ Motion for
Sanctions [Doc. 114] is GRANTED in part and DENIED in part.
I. Background
The Defendant Aspen Way Enterprises, Inc. – a franchisee of the Defendant
Aaron’s, Inc. – is in the business of, inter alia, leasing and selling consumer
electronics. This case concerns a software program that Aspen Way allegedly installed
on its lease-purchase computers. Specifically, the Plaintiffs allege that Aspen Way
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remotely accessed their computers and captured private information via the software
program – PC Rental Agent (“PCRA”). The software had an optional function called
“Detective Mode.” When activated, Detective Mode could collect screenshots,
keystrokes, and webcam images from the computer. In 2014, the Plaintiffs brought
suit against Aspen Way for invasion of privacy and against Aaron’s for aiding and
abetting Aspen Way.
Pursuant to Federal Rule of Civil Procedure 30(b)(6), the Plaintiffs noticed the
deposition of Defendant Aspen Way’s corporate representative for January 19, 2016.1
The notice identified eighteen topics of examination. The topics ranged from “Aspen
Way’s Use of PC Rental Agent (“PCRA”) and/or Detective Mode (“DM”),” which
had multiple sub-topics, to “Aspen Way’s process and procedure for handling late
payments on computer leases.”2 Aspen Way designated two witnesses to testify on its
behalf: John Pollock, Aspen Way’s former Director of Operations, and Rohnn Lampi,
Aspen Way’s owner and CEO. The parties agreed to divide the topics between
1
In an effort to coordinate with the Aaron’s, Inc, v. Byrd litigation,
pending in the Western District of Pennsylvania, and pursuant to an agreement
between the parties, the Plaintiffs and the Defendant Aaron’s cross-noticed the
depositions in question in both actions. See Pls.’ Mot. for Sanctions, Ex. A.
2
Id.
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Pollock and Lampi based on each witness’s relevant knowledge.3 The depositions
were scheduled over a two day period.
During the second day, Pollock became angry and agitated. The situation
apparently became so volatile that the local police department was called and Pollock
was escorted out of the building by the police.4 The deposition was terminated. Aspen
Way admits that Pollock experienced “some sort of breakdown.”5 Following the
termination of the deposition, the parties met with Magistrate Judge Susan Baxter,
who is handling the Byrd litigation.6 Judge Baxter ordered Aspen Way to determine
whether Pollock would remain as its 30(b)(6) witness.7 Two months later, Aspen Way
notified the court that Pollock would indeed continue as its designee.8
The second deposition was scheduled for August 23, 2016.9 Unfortunately, like
the first deposition, the second deposition ended early due to a disgruntled Pollock.
3
Id., Ex. B (dividing the deposition topics).
4
Id., Ex. C, at 34.
5
Def. Aspen Way’s Resp. Br., at 4.
6
Pls.’ Mot. for Sanctions, Ex. D, at 16.
7
Id.
8
Id., Ex. E.
9
Id., Ex. G.
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Pollock claimed that he never consented to being Aspen Way’s designee.10 Aspen
Way paints a different picture of the second deposition. It contends that “Plaintiffs’
counsel asked Pollock a series of questions that appeared to sow confusion in
Pollock’s mind as to the distinctions between testifying individually and as a corporate
representative and between appearing voluntarily or by subpoena . . . .”11 Thus, Aspen
Way blames the Plaintiffs for the early termination of the second deposition. It should
be noted that Aaron’s agrees with the Plaintiffs’ description of events and notes that
it never even had an opportunity to question Pollock at either deposition.12
Based on the unsuccessful depositions, the Plaintiffs move for sanctions
pursuant to Federal Rule of Civil Procedure 37. They contend that Aspen Way failed
to produce a willing designee. The Plaintiffs also take issue with Pollock’s
preparedness. They allege that Aspen Way “utter[ly] fail[ed] to properly prepare its
designee to answer the questions identified in the deposition notice.”13 The Plaintiffs
ask the Court to enter the following relief: (1) bar the testimony of John Pollock as
Aspen Way’s 30(b)(6) designee; (2) bar Aspen Way from taking a position at class
10
Id., Ex. C, at 35.
11
Def. Aspen Way’s Resp. Br., at 7.
12
Def. Aaron’s Resp. Br., at 5.
13
Pls.’ Mot. for Sanctions, at 9.
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certification or trial on the topics that Pollock failed to provide testimony and impose
an adverse inference against Aspen Way for each topic; and (3) prohibit Aspen Way
from making any arguments or presenting any evidence regarding the topics.14
As noted above, Aaron’s agrees with the Plaintiffs regarding the facts.
However, Aaron’s differs regarding the appropriate sanction. Aaron’s states that any
adverse inferences against Aspen Way would also prejudice Aaron’s, despite the fact
that Aaron’s and its counsel are not at fault for Pollock’s failed depositions. Thus,
Aaron’s asks the Court to fashion a sanction that would not be unfairly prejudicial to
it. Aaron’s suggests three alternative sanctions: (1) bar reliance on Pollock’s testimony
for any purpose; (2) bar Pollock from testifying at trial; and (3) reopen discovery for
the limited purpose of conducting another 30(b)(6) deposition.15
II. Discussion
Under Federal Rule of Civil Procedure 30(b)(6), “a party may name as the
deponent a public or private corporation, a partnership, an association, a governmental
agency, or other entity.”16 “The named organization must then designate one or more
officers, directors, or managing agents, or designate other persons who consent to
14
Id. at 24.
15
Def. Aaron’s Resp. Br., at 9.
16
FED. R. CIV. P. 30(b)(6).
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testify on its behalf . . . .”17 “Absolute perfection is not required of a Rule 30(b)(6)
witness.”18 Nevertheless, the organization has an affirmative duty to prepare its
designees.19 And this “duty . . . goes beyond matters personally known to that
designee or to matters in which that designee was personally involved. The
[organization] must prepare the designee to the extent matters are reasonably
available, whether from documents, past employees or other sources.”20 “If it becomes
obvious that the deposition representative designated by the corporation is deficient,
the corporation is obligated to provide a substitute.”21 If the named organization fails
to adhere to its 30(b)(6) obligations, Federal Rule of Civil Procedure 37 allows the
Court to impose sanctions.22 Permissible sanctions range “from the imposition of costs
to preclusion of testimony and even entry of default.”23
17
Id.
18
Aldridge v. Lake Cty. Sheriff’s Office, No. 11 C 3041, 2012 WL
3023340, at *4 (N.D. Ill. July 24, 2012).
19
Id.
20
Brazos River Auth. v. GE Ionics, Inc., 469 F.3d 416, 433 (5th Cir. 2006)
(citations omitted).
21
Id.
22
FED. R. CIV. P. 37(d)(1)(A)(i).
23
QBE Ins. Corp. v. Jorda Enters., Inc., 277 F.R.D. 676, 690 (S.D. Fla.
2012) (citing Reilly v. Natwest Mkts. Grp. Inc., 181 F.3d 253, 269 (2d Cir. 1999)).
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It is clear to the Court that Aspen Way failed to provide a consenting designee.
The Court is not at all persuaded that the Plaintiffs provoked Pollock’s lack of consent
during the second deposition. The Plaintiffs merely questioned whether Pollock
consented to being a 30(b)(6) witness and attempted to ensure that he understood the
difference between testifying as himself and testifying as Aspen Way.24 The Court
also finds that Aspen Way failed to properly prepare Pollock. There is no indication
that Pollock interviewed any relevant witnesses or reviewed a significant amount of
Aspen Way’s internal documents. To be sure, Pollock testified during his first
deposition that he reviewed the deposition testimony of Aspen Way employees, Aspen
Way’s discovery responses, and some electronically-stored information.25 He also
testified that he met with Aspen Way’s counsel for a few hours the night before the
deposition.26 But based on the topics noticed, this was not sufficient preparation to
testify as Aspen Way’s designee.
On topic 2(k), Pollock testified that Aspen Way did not know whether
communications occurred with customers at the time of lease/sale regarding Aspen
24
Def. Aspen Way’s Resp. Br., Ex. C., at 34-44.
25
Id., Ex. B, at 22-26.
26
Id.
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Way’s use of PCRA/Detective Mode.27 He said the majority of the testimony he
provided on the topic “was answering as myself, what I knew. And as far as Aspen
Way, what Aspen Way, I don’t know. I don’t know.”28 And on topic 2(g)/(j), Pollock
could not recall whether Aspen Way told customers about the functionality of
Detective Mode.29 On topic 2(e), Pollock could not specifically name any general
managers that were given direct access to confidential information collected by
Detective Mode.30 On topic 2(j)(i), Pollock did not know whether Aspen Way
provided any written policies or instructions to its employees as to how to inform
customers about PCRA. Pollock testified: “I don’t – I don’t – I don’t know
specifically, I mean other than the document that Mr. Lampi produced, I don’t know,
besides me, who he produced that to.”31 As the Plaintiffs correctly point out, Aspen
Way could have interviewed employees who handled computer lease/sale closings and
confidential PCRA information to prepare Pollock on these topics.
27
Id. at 69.
28
Id.
29
Id. at 73-74, 340-41, 413-14.
30
Id. at 130.
31
Id. at 343.
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On topic (2)(l), Pollock did not know important details about the end user
license agreement between Aspen Way and DesignerWare. Pollock did not know who
negotiated the agreement, or who first placed Aspen Way’s order for PCRA.32 More
importantly, Pollock did not review the agreement, so he was unable to testify about
its terms.33 In response, Aspen Way argues that Lampi had more knowledge about the
topic and, therefore, was the more appropriate witness for it. Nevertheless, Aspen
Way agreed to the topics and the division of the topics between the two designees.
The topic concerning “Aspen Way’s agreement(s) and understandings with
DesignerWare regarding the use of PCRA/DM” was assigned to Pollock.34 Thus, it
was Aspen Way’s responsibility to prepare him on it.
On topic 17, the Plaintiffs inquired about Chastity Hittinger’s employment
history. Ms. Hittinger was a key witness at a preliminary injunction hearing in the
Byrd matter. However, Pollock said he did not review any documents or interview any
witnesses with regard to Hittinger’s relationship with Aspen Way.35 Pollock did not
know key facts such as when she was terminated, what kind of performance reviews
32
Id. at 176-177.
33
Id.
34
Pls.’ Mot. for Sanctions, Ex. B.
35
Def. Aspen Way’s Resp. Br., Ex. B, at 355.
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she received, or who her general manger was while she was a sales manager.36 Aspen
Way counters that Pollock’s testimony regarding his personal knowledge of
Hittinger’s employment is sufficient. However, it is the Defendant’s responsibility to
prepare its witness “to the extent matters are reasonably available.”37 Aspen Way
clearly failed to fulfill that duty with regard to Hittinger’s employment history.
Aspen Way should have prepared Pollock to testify on its behalf for each of the
Rule 30(b)(6) topics. “Defendant does not contend that the information on these topics
was not known or was inaccessible when [Pollock] testified at the 30(b)(6)
deposition.”38 Aspen Way simply does not provide a reason as to why Pollock was not
prepared to testify for all assigned topics. In addition, because the depositions ended
prematurely, Pollock did not provide any testimony on the following topics: 2(n),
2(o), 2(q), 4(b), 4(c), 5, 13, and 15. This leads the Court to the conclusion that Aspen
Way’s failure to provide a consenting and prepared witness “is tantamount to a failure
36
Id. at 356, 372.
37
Brazos River Auth. v. GE Ionics, Inc., 469 F.3d 416, 433 (5th Cir. 2006).
38
Strategic Decisions, LLC v. Martin Luther King, Jr. Center Nonviolent
Social Change, No. 1:13-cv-2510-WSD, 2015 WL 2091714, at *9 (N.D. Ga. May 5,
2015) (citing Rainey v. American Forest & Paper Ass’n, Inc., 26 F. Supp. 2d 82, 94
(D.D.C. 1998)).
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to appear that is sanctionable [as a nonappearance] under Rule 37(d) of the Federal
Rules of Civil Procedure.”39
As noted above, the Plaintiffs propose multiple sanctions, including imposing
an adverse inference against Aspen Way on the topics Pollock did not or could not
provide testimony. The Court finds that Aspen Way’s failure to produce an adequate
30(b)(6) designee is not sufficiently egregious for the Court to impose an adverse
inference.40 The Plaintiffs also ask the Court to bar Aspen Way from taking a position
or presenting evidence on the topics at issue. The Court finds it would be inequitable
to Aaron’s to order such outcome determinative sanctions. As Aaron’s correctly
asserted at the class certification hearing, by barring Aspen Way from presenting
evidence, the Court would effectively penalize Aaron’s. Indeed, such sanctions would
likely establish Aspen Way’s liability, which would also establish a key element of
the Plaintiffs’ aiding and abetting claim against Aaron’s. The Court finds this scenario
39
Id. (quoting Black Horse Lane Assoc., L.P. v. Dow Chem. Corp., 228
F.3d 275, 304 (3d Cir. 2000)).
40
See In re Brican Am. LLC Equipment Lease Litig., No. 10-md-02183SEITZ, 2013 WL 5519969, at *12 (S.D. Fla. 2013) (“[T]he failure of Defendant
NCMIC to produce an adequate 30(b)(6) deponent is not sufficiently egregious for the
Court to issue an order in limine as to ‘beneficial’ inferences requested by the
Plaintiffs . . . .”).
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to be unfairly prejudicial to Aaron’s, an innocent party in the deposition mishap.41 As
a result, the Court finds that lesser sanctions are appropriate.
The Court concludes that the appropriate remedy is to bar any party from using
Pollock’s testimony and to bar Pollock from testifying at trial.42 The Court will also
re-open discovery for the limited purpose of the parties conducting another Rule
30(b)(6) corporate representative deposition.43 The deposition topics will be limited
to those originally noticed by the Plaintiffs and assigned to Pollock at his first
deposition.44 Finally, Aspen Way shall bear the following costs: (1) one-half of the
court reporter/videographer fees for Pollock’s first deposition; (2) one-half of the
Plaintiffs’ lodging expenses for Pollock’s first deposition; (3) the Plaintiffs’ attorney
fees, court reporter/videographer fees, and travel expenses for Pollock’s second
41
See Bonilla v. Volvo Car Corp., 150 F.3d 88, 93-94 (1st Cir. 1998)
(“Codefendants cooperate all the time, but that does not mean that one defendant is
automatically responsible for misconduct of another – of which it may have no
knowledge or as to which it may have play no role, active or passive.”).
42
The Plaintiffs also asked that Pollock’s testimony be barred from use at
the class certification stage. However, briefing for all parties on the Motion for Class
Certification was finished prior to the Plaintiffs filing their instant Motion. The Court
will not ask the parties to re-brief the Plaintiffs’ Motion for Class Certification.
43
The Defendant Aspen Way has already identified Clint Welch as a
substitute 30(b)(6) witness. Aspen Way states that it has already begun preparing Mr.
Welch for a possible deposition. See Def. Aspen Way’s Resp. Br., at 24-25.
44
See Pls.’ Mot. for Sanctions, Ex. B.
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deposition; and (4) the Plaintiffs’ attorney fees associated with bringing this Motion
for Sanctions. Aspen Way and the Plaintiffs must meet and confer in an effort to reach
an agreement upon the appropriate costs. If the parties are unable to reach an
agreement, the Plaintiffs may file a motion requesting the costs. In addition, the
Plaintiffs must submit evidence, such as receipts and time records, with their motion
to support the amount of costs sought.
III. Conclusion
For these reasons, the Court GRANTS in part and DENIES in part the
Plaintiffs’ Motion for Sanctions [Doc. 114].
SO ORDERED, this 25 day of January, 2017.
/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge
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