Competition for alarm products and monitoring services is everywhere—the internet, big-box stores, new entrants into the market, and mergers of mega-companies all threaten your business. But could the place in which you conduct business be a threat to you too? In a widely-watched legal case in the Chicago area, that’s what alarm companies have been fighting the last three years—a public entity trying to take over alarm services. It’s a riveting battle that the alarm industry is winning, so far.
The case is ADT Security Services, Inc. et. al. v. Lisle-Woodridge Fire District et. al. in the United States District Court for the Northern District of Illinois Eastern Division. The controversy started in 2009, when the Lisle-Woodridge Fire District–an entity created under Illinois law to provide for fire protection, suppression, and rescue services—passed a new ordinance. The ordinance required that all commercial and multi-family buildings, which are required to have fire alarm monitoring, terminate their contracts with their alarm companies and contract with the Fire District The stated reason for enacting the ordinance was safety—the Fire District claimed that it could respond more quickly and accurately to fire alarms by doing the monitoring itself with wireless equipment it supplied through an exclusive contract with Chicago Metropolitan Fire Prevention Company.
The displaced alarm companies, including ADT Security Services, Inc. and Alarm Detection Systems, Inc. and others, filed suit to stop the Fire District from having a monopoly on the fire alarm monitoring.
The procedural history of this matter is complicated, but the short version is that the alarm companies won the first battle, lost some ground on appeal, then came back for a decisive victory that is currently being appealed again.
In May 2012, Judge Shadur conducted a three-day hearing in which he heard testimony about the Fire District’s monitoring, opinions about its NFPA compliance (incidentally the Fire District was required by Illinois law to comply with NFPA), and the means for improving response time to alarm signals. The result of the evidentiary hearing was a stunning permanent injunction that required the Fire District to cease and desist from any activities related to the fire alarm monitoring business or the selling or leasing of alarm equipment.
The Trial Court’s death-knell ruling on the Fire District’s monitoring was based on the evidence it found of substandard monitoring practices and non-compliance with NFPA. The Fire District has, of course, appealed the ruling to the Court of Appeals. Now, we await what that court will do—affirm or reverse the ruling or find some middle ground. And we won’t know that until next year.
While the Lisle-Woodridge Fire District case is based on Illinois state law and the authority it grants to a fire district—and, of course, every state’s laws are different– the case arguably has much broader ramifications. It establishes a precedent that a public entity can require certain transmission methods for alarms—here it was wireless. Broader than that, if the trial court’s ruling is upheld, it establishes a precedent that public entities should be viewed with extreme scrutiny when attempting to establish monopolies on alarm monitoring service.