Category Archives: In the News

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

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.

I 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 →

Eli Lilly/National Union dismiss Connecticut suit against ADT/Tyco

Eli Lilly and its insurer, National Union, have pulled the plug on the lawsuit against ADT and Tyco, filed recently in federal court in Connecticut stemming from a $60 million pharmaceutical heist. Did they dismiss the lawsuit because they settled out of court? Nope.

Instead, Eli Lilly and National Union allegedly went looking for a more favorable jurisdiction to get around a problem with Connecticut’s statute of limitations (the time within which the law says you must file a lawsuit). They brought a new lawsuit in federal court in the Southern District of Florida, the location of ADT/Tyco’s corporate headquarters. They also added some new allegations (fraud, misrepresentation, interference with contract) and added two individual defendants–Amed and Amaury Villa, the alleged perpetrators of the heist. TycoIS (ADT’s new name) has, again, moved to dismiss the lawsuit. Stay tuned.

Read the new complaint and TycoIS’s motion to dismiss: National Union v Tyco- SD Fla and National Union v Tyco- Mot to dismiss.

ADT moves to dismiss Eli Lilly lawsuit based on subrogation waiver.

As I predicted when I first wrote about the Eli Lilly/National Union v. ADT case (http://wp.me/p3fru5-42), ADT has brought a motion to dismiss the lawsuit based on the subrogation waiver in ADT’s contract. Will the motion to dismiss be successful? Here is a look at how the court will analyze the subrogation waiver. And I have some tips you can take away for use in your own contracts. Continue reading →

Call to action: Minnesota legislature wants to make liability waivers unenforecable.

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Every business in Minnesota that relies on liability waivers (this means you alarm companies!) needs to know that a proposed law is working its way through the Minnesota legislature to severely curtail the enforceability of such waivers. The proposed law would make liability waivers unenforceable for negligent conduct. Currently the law in Minnesota is that liability waivers are only enforceable for negligent conduct (but not for grossly negligent or willful and wanton conduct). Thus, if the law is passed, liability waivers may not be enforceable AT ALL. Before this law is passed, you need to take action to let your legislators know this law is a bad idea. NOW! Continue reading →

New lawsuit alleges ADT security plans shared with burglars in $60 million pharmaceutical heist.

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