In two recent cases, Alarm Detection Systems, Inc. v. Orland Fire Protection District, and Alarm Detection Systems, Inc. v. Village of Schaumburg, the Seventh Circuit Court of Appeals has affirmed the dismissal of two local dispatch centers in federal civil rights and anti-trust actions filed by private alarm companies.
In the Schaumburg case, a group of private alarm companies sued Schaumburg, Northwest Central Dispatch Center (NWCDS), and Tyco Integrated Systems, Inc., over Schaumburg’s passage of an ordinance that required commercial buildings to send fire alarm signals directly to the local 911 dispatch center, NWCDS. The alarm companies complained that the ordinance excluded them from the marketplace because NWCDS had a decade old exclusive agreement with Tyco to use Tyco’s equipment to receive the fire alarm signals. The alarm companies sued under various federal civil rights and anti-trust theories as well as state law. U.S. District Court Judge Rebecca Pallmeyer denied a preliminary injunction and further dismissed the case for failure to state a plausible claim.
The Seventh Circuit affirmed all but one claim against Schaumburg. The Court found that plaintiffs stated a plausible claim that the ordinance violated Article I, Section 10 of the U.S. Constitution (“Contracts Clause”) and remanded the case on that limited basis. Otherwise, the Court affirmed the dismissal of NWCDS and Tyco. With regard to NWCDS, the Court held that the Contracts Clause – which prohibits the passage of legislation that impairs the obligations of contracts – did not apply to NWCDS because NWCDS did not enact the legislation at issue. The Court also rejected the federal due process claim because the ordinance at issue had a rational basis (public safety), and further rejected the federal anti-trust conspiracy claim, because there was no plausible conspiracy claim alleged.
In the Orland Park case, DuPage Public Safety Systems (DUCOMM) was sued by Alarm Detection Systems, Inc. (ADS). In that case, ADS claimed that DUCOMM had an exclusive agreement with Tyco to provide fire alarm signal monitoring that violated the Illinois Fire District Act. The district court dismissed the claim, and the Appellate Court affirmed. The Court found that the purpose of the District Act was to create fire protection districts and legislate their authority to govern in the public safety area. The purpose of the Act was not to remediate anti-competitive concerns. Therefore, ADS did not fall within the class of protected persons or entities who had a right to sue under the Act.
Both NWCDS and DUCOMM were represented by Mike Bersani and Chuck Hervas.