Peterson et al v. Aaron's, Inc. et al

Filing 34

ORDER granting 10 Motion to Stay. Signed by Judge Thomas W. Thrash, Jr on 1/15/2015. (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 are claiming that the Defendant Aspen Way Enterprises, Inc.
unlawfully accessed their computers from a remote location and gained possession of
private information stored therein. The Plaintiffs are alleging that Aspen Way
accomplished this by means of a program which it installs on the computers before
leasing or selling them to its customers. It is before the Court on the Defendant
Aaron’s, Inc.’s Motion to Stay [Doc. 10]. For the reasons set forth below, the Motion
to Stay [Doc. 10] is GRANTED.

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I. Background
The Defendant Aspen Way Enterprises, Inc. – a franchisee of the Defendant
Aaron’s, Inc.1 – is in the business of, inter alia, leasing and selling personal
computers. This case is about software that Aspen Way allegedly installs on its
lease-purchase computers.2 This software – called PC Rental Agent – allows Aspen
Way to remotely access web-camera photographs, user activity logs, and other private
information stored on the lease-purchase computers.3 Aspen Way allegedly does not
notify its customers that this software is installed on the computers.4
The Plaintiffs Michael Peterson and Matthew Lyons were lease-purchasers of
computers from Aspen Way. They claim that Aspen Way, through the PC Rental
Agent software, remotely accessed their computers and retrieved private information.
They brought suit against Aspen Way and Aaron’s, Inc., asserting state law claims for
(1) invasion of privacy, (2) computers trespass, (3) computers invasion of privacy, and
(4) conspiracy.

1

Compl. ¶ 9.

2

Compl. ¶ 47.

3

Compl. ¶ 41.

4

Compl. ¶ 47.

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II. Discussion
Aaron’s, Inc. argues that the Court ought to stay this action – pursuant to the
first-to-file rule – because a similar action, with similar parties, was filed in the
Western District of Pennsylvania. In that case – Byrd v. Aaron’s, Inc.5 – the plaintiffs
had leased a laptop computer from a store operated by Aspen Way.6 They alleged that
their computer had been “secretly accessed by Aspen Way via the PC Rental Agent
product” and that “Aspen Way . . . [had also] collected personal and private
information from its [other] customers’ laptops on more than 50,000 occasions.”7 The
Plaintiffs moved to certify two classes, one of which was defined as: “All persons who
leased and/or purchased one or more computers from Aaron’s, Inc. or an Aaron’s, Inc.
franchisee, and their household members, on whose computers DesignerWare’s
Detective Mode was installed and activated without such person’s consent on or after
January 1, 2007.”8 The court denied the Motion for Class Certification,9 and the issue
is now before the Third Circuit on appeal. Aaron’s, Inc. now requests a stay of the

5

No. CIV.A. 11-101E, 2014 WL 1316055 (W.D. Pa. Mar. 31, 2014).

6

See id. at *1.

7

Id. at *1-2.

8

Id. at *5 (emphasis added).

9

See id. at *6.

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current action until the Third Circuit has rendered its decision. Aaron’s, Inc. argues
that if the Third Circuit ultimately reverses the District Court’s ruling, then the
subsequent proceedings in Byrd will likely involve fact-finding that will be relevant
to the current action.
Under the first-to-file rule, “[w]here two actions involving [1] overlapping
issues and [2] [overlapping] parties are pending in two federal courts, there is a strong
presumption . . . that favors the forum of the first-filed suit.”10 When “a federal court
is presented with such a duplicative suit, it may exercise its discretion to stay the suit
before it, [or] allow both suits to proceed.”11 The policy behind the rule “is to avoid
the waste of duplication, to avoid rulings which may trench upon the authority of
sister courts, and to avoid piecemeal resolution of issues that call for a uniform
result.”12 In their Response, the Plaintiffs do not dispute that Byrd was instituted prior
to the current suit. The only question is whether the two actions involve parties and
issues that sufficiently overlap. The Court concludes that they do.

10

Manuel v. Convergys Corp., 430 F.3d 1132, 1135 (11th Cir. 2005).

11

Smith v. S.E.C., 129 F.3d 356, 361 (6th Cir. 1997).

12

Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 603 (5th Cir.
1999) (internal quotation marks omitted).
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First, the two actions involve overlapping parties. To be clear, for the rule to
apply, the parties in both actions need not be identical.13 As the Fifth Circuit Court of
Appeals has noted, “[t]he crucial inquiry is one of substantial overlap.”14 Additionally,
“in the context of class action lawsuits . . . it is the class, not the class representatives,
that are relevant for purposes of the first-to-file rule.”15 The Northern District of
California explained:
If the first-to-file rule were to require a strict comparison only of the
named plaintiffs in the two actions, the rule would almost never apply in
class actions. This result would be in direct conflict to the purposes of
the first-to-file rule because class actions are frequently complex affairs
which tax judicial resources–the very cases in which the principles of

13

See Manuel, 430 F.3d at 1135; Certified Restoration Dry Cleaning
Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 551 (6th Cir. 2007) (“[W]hen actions
involving nearly identical parties and issues have been filed in two different district
courts, the court in which the first suit was filed should generally proceed to
judgment.”) (internal quotation marks omitted); Adoma v. University of Phoenix, Inc.,
711 F. Supp. 2d 1142, 1147 (E.D. Cal. 2010) (“It has been held that the first-to-file
rule does not require strict identity of the parties, but rather substantial similarity.”).
14

Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 950 (5th Cir. 1997)
(internal quotation marks omitted).
15

In re TFT-LCD (Flat Panel) Antitrust Litig., No. C 10-3517 SI, 2011 WL
1399441, at *4 (N.D. Cal. Apr. 13, 2011); see also Adoma, 711 F. Supp. 2d at 1147
(For a first-to-file analysis, “the classes, and not the class representatives, are
compared.”); Askin v. Quaker Oats Co., No. 11 CV 111, 2012 WL 517491, at *4
(N.D. Ill. Feb. 15, 2012) (for a first-to-file analysis, “the class members are the proper
focus of this inquiry.”).
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avoiding duplicative proceedings and inconsistent holdings are at their
zenith.16
And “courts routinely look to the similarities of the proposed classes even where the
court has not yet ruled on the certification question.”17 Here, the Plaintiffs do not deny
that the Defendants in this action are also defendants in Byrd. However, the Plaintiffs
argue that there is insufficient overlap between the putative classes in both actions. As
noted earlier, the Byrd class relevant to this motion is defined to include:
All persons who leased and/or purchased one or more computers from
Aaron’s, Inc. or an Aaron’s, Inc. franchisee, and their household
members, on whose computers DesignerWare’s Detective Mode was
installed and activated without such person’s consent on or after January
1, 2007.18
The Plaintiffs in this action have defined their putative class to include:
(a) All persons who leased and/or purchased one or more computers
from Aspen Way on which PC Rental Agent was installed without such
persons’ consent on or after June 6, 2008; (b) All household members (as

16

Sheehy v. Santa Clara Valley Transp. Auth., No. 5:14-CV-01325-PSG,
2014 WL 2526968, at *2 n.12 (N.D. Cal. June 4, 2014).
17

Askin, 2012 WL 517491, at *4 (emphasis added); see also Adoma, 711
F. Supp. 2d at 1147 (“[Several] district courts . . . have held that the first-to-file rule
applies to similar proposed group actions before certification.”); Letbetter v. Local
514, Transp. Workers Union of Am., No. 14-CV-00125-TCK-FHM, 2014 WL
4403521, at *5 (N.D. Okla. Sept. 5, 2014) (“In determining whether the parties are
substantially similar . . . the intent behind the first-to-file rule necessitates a
comparison of the putative classes, not the individual parties.”).
18

Byrd, 2014 WL 1316055, at *5.

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defined by the U.S. Census Bureau) of persons identified in subsection
(a); and (c) All employees of such persons identified in subsection (a).19
The Plaintiffs argue that the putative classes do not sufficiently overlap because the
putative Byrd class includes persons who obtained computers on which “Detective
Mode” was installed whereas the putative class in this action includes persons who
obtained computers on which “PC Rental Agent” was installed. But the Plaintiffs
acknowledged in their Amended Complaint that Detective Mode is simply a feature
of PC Rental Agent: “Once PC Rental Agent is installed on a Lease-Purchase
computer, it permits the installer . . . to remotely install and[/]or activate over the
Internet the ‘Detective Mode’ feature . . . [and] [a]fter Detective Mode is activated, it
permits the installer to choose among various levels of surveillance.”20 In fact, the
Plaintiffs also made clear that the Detective Mode feature is relevant to this litigation:
“Defendants have received data captured by Detective Mode via electronic mail.”21
Thus, as Aaron’s, Inc. points out,22 there is significant overlap between the putative
classes because the proposed Byrd class is, by definition, a subset of the Plaintiffs’

19

Compl. ¶ 20.

20

Compl. ¶¶ 40-41.

21

Compl. ¶ 43.

22

Aaron’s, Inc.’s Reply Br., at 4-5.

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proposed class.23 Even more, the Plaintiffs do not dispute that if the Third Circuit
ultimately reverses the Western District of Pennsylvania in Byrd – and class
certification is granted – the Plaintiffs would be class members in that litigation unless
they opt-out.
In addition, both actions involve overlapping issues. Many of the allegations
underlying the claims in Byrd are relevant to this litigation. For example, both cases
rely, in part, on the allegations that Aspen Way (1) installed PC Rental Agent on the
lease-purchase computers without notifying its customers, (2) remotely accessed its
customers’ computers, and (3) transmitted and stored private information retrieved –
via Detective Mode – from its customers’ computers. In response, the Plaintiffs argue
that the parties in both suits rely on different causes of action. They point out that the
Byrd plaintiffs are pursuing a claim under the Federal Electronic Communications
Privacy Act, whereas they are simply asserting claims under Georgia law. But
“regardless of whether or not the suits here are identical, if they overlap on the

23

The Court notes that even though the Plaintiffs have framed their class
to be broader than the Byrd class – it would include all persons who obtained
computers with PC Rental Agent from the Defendants, not just those persons on
whose computers Detective Mode was actually activated – it is unclear whether the
Plaintiffs’ class would ultimately have more members with viable claims. For
example, the Plaintiffs do not explain whether surveillance can take place without
activation of the Detective Mode feature, and, if so, whether this was the type of
surveillance that took place on their computers.
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substantive issues,” the Court must defer to “the jurisdiction first seized of the
issues.”24 As the Northern District of Illinois explained: “[W]hether cases are
substantially similar is a question of substance rather than form . . . [a]s long as the
underlying facts are the same . . . the fact that the two complaints allege violations of
different . . . laws is not enough to render them substantially dissimilar for purposes
of the first-to-file analysis.”25 Indeed, “[f]inding an insubstantial overlap because of
the fact that the claims are asserted under different . . . laws would defeat the judicial
efficiency rationale undergirding the first-filed rule.”26 Thus, because the Byrd suit is
largely based on the same alleged conduct underlying the Plaintiffs’ claims here, the
Court will stay this case until the Third Circuit has rendered its decision on the class
certification issue in Byrd.
24

Mann Mfg., Inc. v. Hortex, Inc., 439 F.2d 403, 408 n.6 (5th Cir. 1971).

25

Askin v. Quaker Oats Co., No. 11 CV 111, 2012 WL 517491, at *4 (N.D.
Ill. Feb. 15, 2012); see also Williamson v. American Mastiff Breeders Council, No.
308-CV-336-ECR-VPC, 2009 WL 634231, at *3 (D. Nev. Mar. 6, 2009) (“While the
elements of the claims are distinct in part, resolution of the claims will turn on similar
determinations of fact . . . [d]ue to the related nature of the underlying factual disputes,
the issues involved in the various claims seem substantially similar.”); Youngevity
Int’l, Inc. v. Renew Life Formulas, Inc., No. 14CV1605 AJB KSC, 2014 WL
4379099, at *4 (S.D. Cal. Aug. 13, 2014) (“Although the claims in the two actions are
brought under a variety of labels–Lanham Act, common law unfair competition, and
state unfair competition laws (Florida or California), the key issues remain the
same.”).
26

Worthington v. Bayer Healthcare, LLC, No. CIV.A. 11-2793 ES, 2012
WL 1079716, at *6 (D.N.J. Mar. 30, 2012).
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III. Conclusion
For these reasons, the Court GRANTS the Defendant Aaron’s, Inc.’s Motion
to Stay [Doc. 10].
SO ORDERED, this 15 day of January, 2015.

/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge

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