A new lawsuit filed against ADT and Tyco alleges that less than one month after ADT prepared a detailed security assessment at an Eli Lilly warehouse in February 2010, $60 million worth of pharmaceuticals were stolen from the warehouse by burglars with inside knowledge of the security assessment. The lawsuit’s facts read like a movie script. Burglars broke into the facility through one tiny area on the rooftop that was directly above the security alarm’s control panel–an area that ADT had noted was a security risk. They cut a 2 x 2 hole in the roof and rappelled down into the warehouse at exactly the spot ADT’s assessment noted would be undetectable by the alarm system’s motion detectors. They then disabled the system and the cellular backup, and loaded up a semi-truck–parked in the one bay that was outside of security camera view, which was also noted in the ADT assessment.
The suit alleges that unlike a previous security assessment done in 2004, this one contained detailed information about the exact equipment that was installed and its location, as well as detailed information about security weaknesses. And it alleges that there were several other warehouse burglaries committed with inside knowledge that should have been disclosed to Eli Lilly and should have put ADT on notice that its confidential security assessments were being compromised.
The legal allegations in the complaint include failure to safeguard confidential information, failure to warn, fraudulent inducement, breach of the covenant of good faith and fair dealing, negligence (including gross negligence), and deceptive trade practices.
The suit is for subrogation– Eli Lilly’s insurer, National Union, is trying to recoup the $42 million it paid for the loss. It will be interesting to see whether ADT moves to dismiss based on subrogation waiver provisions in its contract.
This will be one to watch!
Also, it should cause any alarm company to pause and think about how effectively it secures its customer’s confidential information. I am a proponent of keeping detailed records of the customer’s alarm system and what could be done to improve it– so that, if you need to, you can later prove what was installed and what you recommended to a customer but the customer declined. This seems to be exactly what ADT did here. But this lawsuit certainly shows the need to safeguard that information.
Read the full complaint here: