'Mixed' court ruling in Illinois monitoring case

An appeals court says public entities in the state can monitor fire alarms but can’t displace private companies from market
 - 
Thursday, December 1, 2011

CHICAGO, Ill.—A federal appeals court based here says public fire districts in Illinois have a legal right to be in the fire alarm monitoring business, but can’t displace the private fire market in doing so.

That’s the latest ruling in an ongoing legal dispute in the state over public entities taking control of fire alarm monitoring from private companies. It’s significant because it overturns a lower court ruling this summer that determined state law did not give public fire districts any authority to do fire alarm monitoring.

But because the order issued last week by the 7th U.S. Circuit Court of Appeals lacks a detailed legal explanation of how the opinion was reached, both sides say they’re awaiting that explanation before they can draw firm conclusions about what it means.

“It really is a mixed message in this order,” Kevin Lehan, executive director of the Illinois Electronic Security Association (IESA), which has been closely following the case, told Security Systems News. “What we are awaiting is the full document that gives the explanation.”

The court said it expects to issue a full opinion soon in the case, in which ADT and other alarm companies sued the Lisle-Woodridge Fire Protection District after it adopted an ordinance in 2009 putting itself solely in charge of fire monitoring in the district. The district says that arrangement is safer, something the industry disputes, contending financially strapped public entities just want to displace private companies so they can collect monitoring fees for their own coffers.

The case is being watched by the alarm industry nationwide because it potentially carries implications for other states.

The Lisle-Woodridge fire district invalidated contracts that ADT and the other companies had with commercial and multi-residential customers, and required those customers to contract only with the district for fire alarm monitoring via a wireless radio network implemented by a private vendor with whom the district had contracted, Chicago Metropolitan Fire Prevention Co. of Elmhurst, Ill.

Bob Tucker, ADT’s public relations director, said that company declined to comment on the ongoing litigation.

Chicago Metropolitan Fire is a defendant in the case, along with the fire protection district. Chicago Metro’s attorney, Peter Friedman, a partner with the Chicago law firm of Holland & Knight, said he’s waiting for certain aspects of the appeals court order to be fully fleshed out when the court issues the full opinion.

However, he told SSN, “it appears that the appellate court has reached a conclusion that the only thing that the district is not authorized to do is create a network and a system that displaces other alarm contractors other than the district’s.”

Friedman added, “The order is significant because … the appeals court seems to have concluded that fire protection districts have the authority to require direct-connect radio wireless transmission that they believe is necessary to ensure rapid receipt and response to fire alarm signals. And that is something we think everybody should applaud.”

Last week’s appeals court decision contrasts sharply with the conclusion the trial judge previously reached in the case.

U.S. District Court Judge Milton Shadur last summer found that the Lisle-Woodridge Fire Protection District engaged in “an act of illegal self-aggrandizement” by invalidating the private alarm companies’ fire alarm monitoring contracts with customers and requiring the customers to contract only with the district. Shadur’s decision was appealed to the 7th Circuit Court.

A Nov. 22 order by a three-judge panel of that court concludes that state law “gives the Lisle-Woodridge Fire Protection District … the regulatory authority (a) to require fire alarm systems in the district to be connected directly to a central monitoring facility operated by the district and/or any authorized agent of the district to ensure rapid communication to the emergency dispatch service, and (b) to require such direct connections to be established by wireless radio transmission.”

But the order then states: “This court also concludes, however, that [state law] does not authorize the district to displace the competitive market for fire alarm monitoring services by requiring all affected property owners to contract with only the district for providing alarm equipment and monitoring services.”

Lehan told SSN that IESA is awaiting clarification because “the language seems contradictory.”

When asked if it’s possible the appeals court ruling means that public fire districts will be just another competitor with private companies in the alarm monitoring market, Lehan replied: “That is a possible interpretation. … If that’s the case, where the private alarm industry is able to compete on service and price, then this is a definite win for the industry. … That’s been our point all along: The private alarm industry will provide superior service, superior technology and much more competitive pricing.”