Arrington v. Colortyme, Inc.

• Decision Date: 17 September 2013
• Docket Number: Civil Action No. 12–264E.
• Parties: Leslie ARRINGTON, individually and on behalf of all others similarly situated, Plaintiff, v. COLORTYME, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

972 F.Supp.2d 733

Leslie ARRINGTON, individually and on behalf of all others similarly situated, Plaintiff,

v.COLORTYME, INC., et al., Defendants.

Civil Action No. 12–264E.

United States District Court,

W.D. Pennsylvania.

Sept. 17, 2013.

Frederick S. Longer, Levin, Fishbein, Sedran & Berman, Philadelphia, PA, Andrea S. Hirsch, Herman Gerel, Atlanta, GA, for Plaintiff.

Ansley S. Westbrook II, Dinsmore & Shohl LLP, Pittsburgh, PA, Brian M. Mancos, Burns White LLC, Pittsburgh, PA, William Woodward Webb, The Edmisten

Webb & Hawes Law Firm, Raleigh, NC, for Defendants.

MEMORANDUM AND ORDER

CATHY BISSOON, District Judge.

I. MEMORANDUM

This is a putative class action for the unlawful interception and disclosure of electronic communications pursuant to the Electronic Communications Privacy Act (“ECPA”), 18 U.S.C. § 2511. Plaintiff Leslie Arrington, on behalf of herself and others similarly situated, alleges that Defendants ColorTyme Inc. (“ColorTyme”), the franchisor, and CMG Rentals LLC (“CMG”), the franchisee, from whom she obtained a rent-to-own computer, installed and used “spy” software to intercept and monitor her emails and other private activities. ( See 2d Am. Compl., ECF No. 21.) Plaintiff also brings state-law claims for invasion of privacy, conspiracy and aiding and abetting pursuant to 28 U.S.C. § 1367. She seeks monetary and declaratory relief, as well as attorney's fees and costs. ColorTyme and CMG have filed Motions to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6); CMG also moves to dismiss pursuant to Rules 12(b)(1) and 12(b)(2). (ECF Nos. 22, 24.)

For the reasons discussed below, Defendants' Motions to Dismiss will be denied.

BACKGROUND

The facts set forth below are derived entirely from Plaintiff's most-recently filed pleading, the Second Amended Complaint (hereinafter referred to and abbreviated as the “Complaint”). Plaintiff is a resident of Clarkston, Washington. Plaintiff alleges that, on March 31, 2011, she entered into a rent-to-own (“RTO”) agreement for a personal laptop computer with CMG and ColorTyme at CMG's retail location in Clarkston. (ECF No. 21 at ¶¶ 7, 9, 44.)

Unbeknownst to her at the time she acquired the RTO computer, Plaintiff alleges that CMG and ColorTyme installed on the computer a program called PC Rental Agent, “which could monitor [her] in her home, and intercept her private communications.” ( Id. at ¶¶ 45–47.) PC Rental Agent was manufactured by DesignerWare LLC, a now-defunct Pennsylvania-based company, and was “sold to the ColorTyme Defendants by DesignerWare.” ( Id. at ¶ 31.) Once PC Rental Agent is installed, it is “invisible or generally undetectable to customers and to other end users of ColorTyme RTO computers.” ( Id. at ¶ 32.) Plaintiff alleges that PC Rental Agent:

permits the installer—in this case CMG and the [other as yet unidentified ColorTyme] Franchisees—to remotely ‘install’ or ‘build’ a ‘Detective Mode’ on the RTO computer over the internet and through the PC Rental Agent and/or DesignerWare website. After the Detective Mode has been remotely installed on the RTO computers, the installer is able to choose the various levels of surveillance upon the RTO computer and the computer users. These various levels of surveillance permit the installer to secretly take photographs with the RTO computers' webcams, and capture keystrokes, and screen shots.... At one level of activation, Detective Mode will gather and transmit it to DesignerWare every two minutes that the computer is connected to the Internet for a period of 60 minutes.... If the rent-to-own store wants more information, it can cause Detective Mode to record data every two minutes until prompted to stop doing so. DesignerWare's servers collect this information and transmit it to the franchisee for however long the franchisee leaves the program turned on.( Id. at ¶¶ 33, 34, 36.) Furthermore, because the software automatically logs WiFi hotspot locations and reports those locations to the ColorTyme franchisees, surveillance may be conducted regardless of whether Detective Mode is activated. ( Id. at ¶¶ 39–40.)

According to the Complaint, once DesignerWare obtains the information through Detective Mode, it “then forwards the data via e-mail to the licensee who activated the program ... unencrypted, directly to the email accounts designated by the ColorTyme franchisees,” which are purportedly maintained on ColorTyme's servers. ( Id. at ¶¶ 11, 36, 37.) DesignerWare also allegedly provided the franchisees with routine customer service and support. ( Id. at ¶ 14.) All of this was supposedly made possible by ColorTyme, the national franchisor, who “provided its Franchisees access to DesignerWare via a link on its message board, as well as Email transmitted through ColorTyme intranet and/or corporate server.” ( Id. at ¶ 11; see also ¶ 38.) Plaintiff alleges that she never gave her consent or authority to CMG or ColorTyme to use this software but that it was installed on her computer anyway, and that upon information and belief, images were taken of her remotely by the webcam and her private communications were stolen, “all via PC Rental Agent.” ( Id. at ¶¶ 46, 47.) All of the information allegedly obtained from the RTO customers' computers, as well as the knowledge of where that information may have been sent after it was allegedly acquired, lies entirely within the custody of CMG and ColorTyme. ( See id. at ¶ 27(a).)

Plaintiff initiated this putative class action on October 25, 2012, on behalf of herself and all others “who have purchased, leased, rented or rented to own ColorTyme computers and people who used said computers whose electronic communications and/or images were intercepted, accessed, monitored, and or transmitted by [PC Rental Agent] without authorization or permission, wherever they may reside” in the United States. ( Id. at ¶ 1.) She also has named 100 “John Doe” ColorTyme franchisees who, like CMG, allegedly have used PC Rental Agent to spy on their customers.

ANALYSIS

Both ColorTyme and CMG move to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), and CMG also moves for dismissal pursuant to Rules 12(b)(1) and 12(b)(2). Because CMG's arguments under Rules 12(b)(1) and 12(b)(2) address the Court's jurisdiction, they will be addressed first. See Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir.1991) (“[the] court must assume jurisdiction over a case before deciding legal issues on the merits”).

A. Jurisdiction

1. Subject–Matter Jurisdiction Under Rule 12(b)(1)

Federal Rule of Civil Procedure 12(b)(1) permits a defendant to move for dismissal of a complaint if the court lacks subject-matter jurisdiction to hear the case. Among other things, a defendant may challenge the court's subject-matter jurisdiction based on the plaintiff's lack of standing. ACLU–NJ v. Township of Wall, 246 F.3d 258, 261 (3d Cir.2001). For the purposes of constitutional standing, a plaintiff must show: (1) that he or she has suffered an injury in fact—that is, an invasion of a legally protected interest which is concrete and particularized, and actual or imminent rather than conjectural or hypothetical; (2) that there is a causal connection between the injury and the conduct complained of, such that the injury fairly is traceable to the challenged action of the defendant, rather than the result of an independent action of some third party not before the court; and (3) that it is likely the injury will be redressed by a favorable decision of the court. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Absent standing, and by extension subject-matter jurisdiction, the court does not possess the power to decide the case, and any disposition it renders is a nullity. Int'l Ass'n of Machinists & Aerospace Workers v. Nw. Airlines, 673 F.2d 700, 711 (3d Cir.1982).

A defendant may challenge the court's subject-matter jurisdiction with either a facial or factual attack. Gould Electronics Inc. v. U.S., 220 F.3d 169, 176 (3d Cir.2000). In a facial attack, the defendant contests the sufficiency of the well-pleaded allegations insofar as they provide a basis for the court's exercise of subject-matter jurisdiction; as under Rule 12(b)(6), the court must treat the complaint's well-pleaded jurisdictional facts as true and view them in the light most favorable to the plaintiff. NE Hub Partners, L.P. v. CNG Transmission Corp., 239 F.3d 333, 341 (3d Cir.2001); Cunningham v. Lenape Regional High Dist. Bd. of Educ., 492 F.Supp.2d 439, 446–47 (D.N.J.2007). Dismissal pursuant to a facial attack “is proper only when the claim clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or is wholly insubstantial and frivolous.” Kehr Packages, 926 F.2d at 1408–1409 (internal quotes omitted).

In a factual attack, on the other hand, the defendant challenges the factual basis underlying the court's subject-matter jurisdiction with extrinsic evidence, essentially making the argument that the allegations supportive of jurisdiction are not true. Cunningham, 492 F.Supp.2d at 447. Because this Court must be satisfied at all times that it has the power to hear the case, it “may consider evidence outside the pleadings” “to resolve factual issues bearing on jurisdiction.” Gould Electronics, 220 F.3d at 176;Gotha v. U.S., 115 F.3d 176, 179 (3d Cir.1997); Int'l Ass'n of Machinists, 673 F.2d at 711. Once the defendant presents extrinsic evidence contesting the jurisdictional facts set forth in the complaint, the court must permit the plaintiff to respond. Gould Electronics, 220 F.3d at 177. “The court may then determine jurisdiction by weighing the evidence presented by the parties,” “ evaluating for itself the merits of the jurisdictional claims.” Id.;Mortensen v. First Federal Sav. and Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977) (emphasis added). In making this evaluation, no presumption of truthfulness attaches to...