ADT Sec. Servs., Inc. v. Lisle-Woodridge Fire Prot. Dist.

• Decision Date: 27 February 2012
• Docket Number: No. 11–2905.,11–2905.
• Citation: 672 F.3d 492
• Parties: ADT SECURITY SERVICES, INC., et al., Plaintiffs–Appellees, v. LISLE–WOODRIDGE FIRE PROTECTION DISTRICT, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

672 F.3d 492

ADT SECURITY SERVICES, INC., et al., Plaintiffs–Appellees,

v.LISLE–WOODRIDGE FIRE PROTECTION DISTRICT, Defendant–Appellant.

No. 11–2905.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 17, 2011.Decided Feb. 27, 2012.

Robert L. Hickok, Attorney, Pepper Hamilton LLP, Philadelphia, PA, John A. Leja, Attorney, Polsinelli Shughart, Chicago, IL, A. Christopher Young, Attorney, Pepper Hamilton LLP, Philadelphia, PA, David J. Bressler, Bruce L. Goldsmith (argued), Attorneys, Dykema Gosset, Lisle, IL, for Plaintiffs–Appellees.

Martin K. LaPointe (argued), Attorney, Burke, Warren, MacKay & Serritella, P.C., Chicago, IL, for Defendant–Appellant.

Before WOOD, TINDER, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge.

This appeal presents issues of state law governing the powers of Illinois fire protection districts. Lisle-Woodridge Fire Protection District (the District) adopted an ordinance in 2009 requiring commercial buildings and multi-family residences to have fire alarms equipped with wireless radio technology that would send alarm signals directly to the central monitoring “board” operated by the District. The 2009 ordinance further provided that the District would contract with just one private alarm company to provide and service the signaling equipment. As a result, all commercial and multi-family buildings would have had to become customers of the District, displacing the plaintiffs-appellees in this case, several private fire alarm companies that have competed for these customers' business for many years.

The alarm companies sued the District on claims under the United States Constitution, federal antitrust law, and state law. Without reaching the federal claims, the district court granted summary judgment for the alarm companies on the basis of state law and permanently enjoined the District from implementing the new ordinance. ADT Security Services, Inc. v. Lisle–Woodridge Fire Prevention Dist., 799 F.Supp.2d 880 (N.D.Ill.2011). The District has appealed. We affirm in part and reverse in part. We hold that the District has the statutory authority to require that commercial and multi-family buildings connect directly to the District's monitoring board, and to do so through wireless radio technology. We reverse the district court's injunction to the extent it prohibited implementation of those portions of the 2009 ordinance. But we also hold that the District does not have the authority to displace the entire private market by requiring all customers to buy alarm signaling services and equipment from itself or just one private company. We affirm those portions of the district court's injunction and remand for further proceedings.

I. Factual and Procedural History

In assessing whether the plaintiff alarm companies are entitled to summary judgment, we review the record in the light most favorable to the District, the nonmoving party, drawing all reasonable inferences in its favor. See Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir.2002).

A. The Illinois Fire Protection District Act

The Illinois Fire Protection District Act (the Act) allows two or more local governments to consolidate fire protection and related services by creating a fire protection district. 70 ILCS 705/1 et seq. Such districts operate with their own elected boards that exercise the powers spelled out in the Act. These include the powers to buy or lease firefighting equipment, employ firefighters, and impose civil fines for setting false fire alarms, 70 ILCS 705/6, as well as the authority to tax district residents to pay for the fire protection services in the district. 70 ILCS 705/14.

Illinois law does not grant fire protection districts general home rule powers. Instead, Illinois courts have held that fire protection districts are limited to the powers expressly granted by statute. Wilkes v. Deerfield–Bannockburn Fire Protection Dist., 80 Ill.App.3d 327, 35 Ill.Dec. 551, 399 N.E.2d 617, 622–23 (1979); Glenview Rural Fire Protection Dist. v. Raymond, 19 Ill.App.3d 272, 311 N.E.2d 302, 304–05 (1974). The Illinois General Assembly has amended the Act from time to time to grant fire protection districts specific additional powers. See, e.g., Pub. Act 85–1285, § 1, effective Jan. 1, 1989 (codified at 70 ILCS 705/11g) (services for responding to emergencies involving hazardous materials); Pub. Act 81–1375, § 1, effective Aug. 9, 1980 (codified at 70 ILCS 705/11) (emergency ambulance service); Pub. Act 81–869, § 1, effective Jan. 1, 1980 (codified at 70 ILCS 705/11e) (street-address numbering systems). Particularly important here is section 11 of the Act, which gives certain fire protection districts, including the defendant-appellant, “the express power to adopt and enforce fire prevention codes and standards parallel to national standards.” 70 ILCS 705/11.

B. Fire Alarm Technology and the 2009 Ordinance

A fire alarm system consists of three basic parts: (1) smoke and heat detectors; (2) an alarm panel in the protected building that receives signals from those detectors; and (3) a communication device that transmits the signals to a receiver “board” at a central location for dispatch of firefighting personnel and equipment. These signals may be transmitted either through telephone wires or by wireless radio technology. Prior to 2009, most of the plaintiff alarm companies operated systems that communicated, whether by wireless radio or by telephone wire, with central monitoring stations operated by the private companies themselves. In fire alarm industry lingo, this type of system is known as a “central station service” system. When a private alarm company's central station receives an alarm or trouble signal, the company then relays that signal to the appropriate local dispatching agency.

Plaintiff ADT Security Services has a different system. An earlier ordinance adopted by the District prohibited central station monitoring if the central station was outside a specified four-county area in the Chicago area. Unlike the other plaintiffs, ADT is not based in Illinois and has no central stations located within the state. It therefore provided for communication through dedicated telephone lines connected directly to an alarm board maintained at the District, which then forwarded the signals to the District's local dispatching agency, which is known as Du–Comm (a portmanteau for DuPage Public Safety Communications).

The District became dissatisfied with ADT's telephone-based system, and on review of summary judgment, we treat as true the District's claim that it was concerned about safety and efficiency. In 2007, the District began to study the feasibility of implementing a uniform wireless radio network and concluded that such a system would be advantageous. The District solicited bids from six fire alarm companies, including plaintiffs ADT and Alarm Detection Systems, Inc. (ADS). In their bids, ADT and ADS proposed central station service systems, that is, ones in which signals would be sent to their own central stations rather than directly to the District. Two other vendors—Fox Valley Fire and Safety and Chicago Metropolitan Fire Prevention Company (Chicago Metro)—each proposed setting up a single wireless alarm monitoring network in which the District itself would own and operate its own supervising station, and all customers' alarm signal transmitters would communicate directly with the District's board there. In other words, Fox Valley and Chicago Metro proposed cutting out the middlemen of multiple alarm companies' central stations. In the fire alarm industry, this arrangement where the government agency's station is the nerve-center is called a “remote supervising station” system. The District determined that this was the superior model and eventually selected Chicago Metro as the winning bidder.

The District adopted the 2009 ordinance requiring all commercial properties and multi-family residences to join the District's new wireless monitoring network. See Lisle–Woodridge Fire Protection District, Ill., Ordinance 09–06 §§ 1.3, 1.6 (Sept. 22, 2009) (the Ordinance). The Ordinance noted that the District had already entered into a contract with Chicago Metro “for the purpose of providing and maintaining a state-of-the-art wireless radio monitoring system that will transmit alarm and trouble signals to the District's communications center via a Keltron radio transmitter.” Id. at 2. In the contract with Chicago Metro, the District agreed to require all current and future subscribers to “direct-connect” so that all alarm and trouble signals would be communicated directly to the District's communications center via one particular type of equipment, the Keltron radio transmitter. The Ordinance accordingly provided: “The method of connecting directly to the remote supervising station shall be by the LWFPD Keltron Wireless Alarm Network, or other alternate connection means as approved by the Fire Prevention Chief.” Id. § 1.6.

This direct-connect requirement imposed a substantial change on customers whose alarms are connected to the central stations of the plaintiff private alarm companies. The Ordinance provided that such subscribers would be “provided with a radio transceiver that replaces their current monitoring connection arrangement to the remote supervising station.” Id. § 1.3. The District would be “the owner of all equipment associated with the LWFPD Keltron Wireless Alarm Network.” Id. The Ordinance also required all subscribers to sign up for five-year “leasing” contracts for use of the equipment and to pay monitoring fees to the District. Id. § 1.8. “The installation and the annual and necessary maintenance ... of the radio transceiver at the subscriber's premise will be completed solely by a fire alarm company of the [District's] choice,” namely Chicago Metro. Id. § 1.4 (emphasis added). The chosen contractor would thus be the exclusive provider of the transmitter...