How to protect your alarm business from unfair competition.

KONICA MINOLTA DIGITAL CAMERARivalry among alarm business competitors might be fierce, but it also should be fair and legal.  If your confidential information such as customer lists or pricing data get into the wrong hands, it could spell disaster for your business.  As can a key employee’s departure to a competitor with all the details about your business in hand.  What can you do to protect your business’ confidential information in the first instance? And what are your options if you are subjected to competition that is not fair and legal? Continue reading

Four essential things you need to know about the Cooling-Off Rule for consumer alarm contracts.

file7181281481568Even though it’s been around for many years, there still seems to be confusion over the Federal Trade Commission’s 3-day Cooling-Off Rule, and similar state laws, for home solicitation sales. Reviewing electronic security contracts I am often surprised that some companies do not include the 3-day right to cancel language required by law, simply from oversight or misunderstanding the law.  So, when do you have to comply with the three-day right to cancel? And how do you comply—especially in this age of digital contracts?  Continue reading

Noted alarm industry expert sues ADT and Tyco under the False Claims Act and loses.

If you’re involved in litigation related to the alarm industry, you know–or have heard legend of–Jeffrey Zwirn.  He is a darling of plaintiffs’ attorneys, and seems to be involved in every high profile case involving allegations that a security alarm system failed.   Zwirn has made a living, it seems, by targeting large alarm companies.    But this time did he go too far?

Apparently back in 2010, Zwirn filed a qui tam action against ADT and Tyco.  Qui tam actions are a type of civil lawsuit, allowing a private citizen to bring a claim under the False Claims Act, on the grounds that an individual or a business is defrauding the government.  The private citizen sues to recover funds on the government’s behalf, and a percentage of any recovery goes to the private citizen who brought the claim.

In Zwirn’s lawsuit he claimed that ADT and Tyco made false representations to the government about the alarm systems installed in federal courthouses and judges’ homes concerning their compliance with the law and industry best practices.

The government investigated and declined to intervene in the lawsuit.  The court recently concluded that the allegations are meritless and dismissed the action.   It will be interesting to see if and how this affects Zwirn’s work for the plaintiffs’ bar.

Read the court’s opinion here: US ex rel Zwirn v ADT Sec Services Inc

Standard contract language limiting alarm company’s liability found ambiguous by federal appeals court.

You know that language in your contract–that’s in EVERY alarm contract– that says “Alarm Co. is not liable, but if any liability is imposed it will be limited to $[dollar amount] or a percentage of the annual monitoring charge”?  Well, the United States Court of Appeals for the Sixth Circuit has found that those two provisions (1.  Alarm Co. isn’t liable and 2. if it is liable…) are at odds with each other and make the alarm contract ambiguous.  When a contract is ambiguous, it’s up to a jury to interpret what it means.  Yikes!

The Sixth Circuit is the appellate court for the federal courts in Michigan, Ohio, Kentucky, and Tennessee.    So if your alarm business is in one of those states, you probably need to revise your contract.  Everyone else, beware too.  Even if you don’t do business in one of those states, the Sixth Circuit’s decision is persuasive (but not controlling) authority.

Read the decision here:  Ram Intern Inc v ADT Sec Services Inc

Three important things to know about PERS contracts and sales.

file0001131383239If you’ve decided to enter the vibrant market of selling Personal Emergency Response Systems (PERS) you may be wondering what advice a lawyer would give you on how to protect your business.   Do you need a contract with your customer?  If so, what should it say?  And are there any other special legal considerations for PERS?    Read on to find out.

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BRK files patent infringement suit over Nest Protect smoke/carbon monoxide alarm

The new Nest Labs, Inc. product Nest Protect– a combination smoke and carbon monoxide detector–looks like an innovative addition to the market.  The Nest Protect is sleek looking, user friendly, and it is Wi-Fi connected so that all the Nest Protect units communicate with one another, and the Nest thermostat too.  It is designed to make assessing a danger and silencing nuisance alarms easy (a feature I would have welcomed late last night as I was jolted awake by a misbehaving smoke alarm).

It didn’t take long for Nest to find itself in the cross-hairs of industry stalwart BRK Brands, Inc.–the maker of First Alert® smoke and carbon monoxide alarms.  BRK recently filed suit against Nest in federal court in Illinois, claiming that the Nest Protect infringes on six of its patents.  Read the Complaint here:  BRK Complaint.

Georgia Supreme Court denies review of $8.4 million verdict against Monitronics

Yesterday, the Georgia Supreme Court denied Monitronics’ Petition for Writ of Certiorari.  This means it has refused to review the Georgia Court of Appeals’ decision, which upheld an $8.4 million jury verdict against Monitronics and invalidated exculpatory language in Monitronics’ alarm contract.  That Court of Appeals’ decision, which I wrote about last month (http://wp.me/p3fru5-8u), stands and is the law in Georgia.

This is a bad development for alarm companies in Georgia, and it could influence courts in other states when they are determining the validity of exculpatory contract language.

If your business is located in Georgia or does business in Georgia, you need to have an attorney review your contract to ensure the exculpatory language (i.e., limitations of liability and damages) is explicit, prominent, clear and unambiguous.

This is good advice for alarm companies in other states as well.  Make sure your contracts contain plain language, not legal mumbo-jumbo.  And make sure your limitations of liability are clear and prominent.  Don’t hide them on the back page in a small font.

As I said in my previous post on this matter, you stand a better chance of having these limitations enforced in court if they are front and center, stand out from the rest of the contract, and are plainly written.

 

 

North Carolina Attorney General sues alarm company over robocalls

The North Carolina Carolina Attorney General filed suit yesterday against now-defunct alarm company ISI Alarms NC, Inc. and its owner, seeking civil penalties for automated calls (a/k/a “robocalls”) the company made to consumers.

The AG alleges that more than 1,000 North Carolina consumers contacted his office to complain after receiving robocalls that claimed that the authorities, including the FBI, had received reports of recent break-ins in the area.  The automated message prompted consumers to press a certain number to learn more about recent crimes in their area.  Consumers were then transferred to a call center operated by ISI Alarms and heard a pitch for the company’s home alarm system and alarm monitoring services. The automated message gave listeners the option to press a different number to stop the calls, which consumers said did not work.

The Complaint alleges that thousands of such calls were placed to North Carolina home and cell telephone numbers on behalf of ISI Alarm during the past two years, and that the company saw its sales quadruple as a result.

Many consumers who reported getting these unwanted calls had listed their phone numbers on the Do Not Call Registry.   Under both state and federal laws, it’s illegal to make most commercial telemarketing calls to home and mobile telephone numbers listed on the Do Not Call Registry.  North Carolina law also makes sales calls that use recorded messages illegal even if the call recipients haven’t joined the Registry.

The Complaint also alleges that the AG’s office contacted the alarm company about the complaints, but that the calls continued.  And, the alarm company refused to disclose the contact information for its lead generators, who actually placed the calls on the company’s behalf.

The AG has asked the court to award $500 for the first violation, $1,000 for the second, and $5,000 for all successive violations of the North Carolina Telephone Solicitations Act; or $5,000 for each violation of the state’s Deceptive Trade Practices Act.

Read the complaint here:  ISI-Alarms-Filed-Complaint.

Monitronics asks Georgia Supreme Court to Review $8.4 million judgment.

file000453200083I have been in denial, but, given that it is October, and the weekend weather forecast for my hometown of Minneapolis is quite chilly, it seems I need to face reality: summer is over. So, then, is my summer vacation from blogging.

I will re-start blogging with the big-money case coming out of Georgia against Monitronics.   The latest in this legal battle over millions of dollars is Monitronics’ attempt to get the Georgia Supreme Court to review the court of appeals’ opinion, which took Monitronics to task, invalidated its contract, and upheld an $8.4 million verdict against Monitronics.

The case epitomizes the saying bad facts make bad law.  In case you missed hearing about it, here are the facts and more about the court of appeals’ opinion and Monitronics’ attempt at Georgia Supreme Court review. Continue reading