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

• Citation: 724 F.3d 854
• Decision Date: 31 July 2013
• Docket Number: 12–2981.,Nos. 12–2925,s. 12–2925
• Parties: ADT SECURITY SERVICES, INC. et al., Plaintiffs–Appellees, v. LISLE–WOODRIDGE FIRE PROTECTION DISTRICT and Chicago Metropolitan Fire Prevention Company, Defendants–Appellants, and DuPage Public Safety Communications, Intervening–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

724 F.3d 854

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

v.LISLE–WOODRIDGE FIRE PROTECTION DISTRICT and Chicago Metropolitan Fire Prevention Company, Defendants–Appellants,andDuPage Public Safety Communications, Intervening–Appellant.

Nos. 12–2925, 12–2981.

United States Court of Appeals,Seventh Circuit.

Argued April 22, 2013.

Decided July 31, 2013.

Robert L. Hickok, A. Christopher Young, Pepper Hamilton LLP, Philadelphia, PA, John A. Leja, Polsinelli Shughart, Chicago, IL, Bruce L. Goldsmith (argued), Dykema Gossett PLLC, Lisle, IL, for Plaintiffs–Appellees.

Martin K. LaPointe (argued), Attorney, LaPointe Law, Northbrook, IL, Christopher W. Carmichael, Attorney, Holland & Knight LLP, Chicago, IL, for Defendants–Appellants.

Stephen H. DiNolfo (argued), Attorney, Ottosen, Britz, Kelly, Cooper & Gilbert, Naperville, IL, for Intervening–Appellant.

Before WOOD, TINDER, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge.

In this case we revisit factual and legal issues concerning the Illinois law establishing fire protection districts and one district's effort to shut down the private market in fire alarm monitoring services by substituting for it a less safe and less reliable system operated by just one chosen vendor.

In 2009 the Lisle–Woodridge Fire Protection District passed an ordinance under which it took over fire alarm monitoring for all commercial properties in the District. The private alarm companies that had previously provided those services in the District sued, alleging that the ordinance interfered with their business, created an illegal monopoly for the District, violated their constitutional rights, and exceeded the District's statutory powers. In an earlier appeal from the district court's first order permanently enjoining the District from implementing the ordinance and granting summary judgment for the alarm companies, we affirmed in part, reversed in part, and remanded, finding on review of summary judgment that the District had the authority to enforce parts of the 2009 ordinance. We remanded for the district court to revise its permanent injunction. ADT Security Svcs., Inc. v. Lisle–Woodridge Fire Protection District, 672 F.3d 492 (7th Cir.2012).

On remand the district court held a four-day evidentiary hearing. The district court issued a modified permanent injunction that was based on new factual findings that are more detailed and differ somewhat from the limited summary judgment record upon which we based our 2012 decision. The District now appeals from the revised permanent injunction order with a long list of objections, but it argues primarily that the revised permanent injunction conflicts with our 2012 decision.

In our 2012 decision, we preserved much of the District's authority to enforce its ordinance. But the evidentiary hearing following our remand showed that many material facts are actually different from what we had to assume when we reviewed the grant of summary judgment, particularly with regard to the statutory authority for and the motivation and efficacy of the District's plan. We therefore find, with a few minor exceptions, that the modified permanent injunction was a sound exercise of the district court's discretion. We affirm the injunction with a few modifications.

I. Factual and Procedural BackgroundA. The Parties and Alarm Signaling and Monitoring

Appellant Lisle–Woodridge Fire Protection District (“the District”) is a specific type of municipal entity established by the Illinois Fire Protection District Act (“the Act”), 70 Ill. Comp. Stat. 705/1 et seq. The District provides fire protection services to residents in the villages of Lisle and Woodridge, Illinois, and other unincorporated parts of DuPage County. Under the Act, the District has the power to set fire codes and to establish standards for fire alarm and dispatching services. 70 Ill. Comp. Stat. 705/6(i), 705/11. The District funds its work through taxes and is governed by a board of trustees. See 705/14.

The District does not receive fire alarms directly. Rather, fire alarms within the District are received and dispatched by intervening appellant DuPage Public Safety Communications, also known as “Du–Comm.” Du–Comm is an inter-governmental entity made up of 28 member police and fire agencies in DuPage County, including the District. Du–Comm provides emergency dispatch services to those member agencies.

The plaintiff-appellees are private alarm companies that provide alarm and monitoring services to commercial properties in the District. For example, a warehouse, office building, or apartment complex may contract with an alarm company to install and monitor a building-wide alarm system. That system receives a fire alarm signal at the building's main alarm board from a smoke detector in the building and then transmits that signal to the local dispatcher to send emergency services. The alarm companies also provide monitoring services: in addition to fire alarm signals, the alarm boards also send “trouble” and “supervisory” signals, which indicate to the alarm companies either that the alarm board is not functioning or that someone at the premises has interfered with the system ( e.g., shut off a water valve supplying the sprinkler system). The alarm companies receive the signals at “Central Stations,” which need not be geographically close to the customer's premises. Often an alarm company will have one company-wide Central Station that it uses to receive and send dispatch signals for all of its customers.

Prior to this litigation, the plaintiff alarm companies provided alarm and monitoring services to their customers as follows: smoke and fire detectors in a building would send a signal to the alarm panel in the building, the alarm panel's communication device would send a signal to the alarm company's Central Station, and an operator at the Central Station would make a telephone call to Du–Comm for dispatching. An alternative to this “Central Station” model for fire alarm systems is the “Remote Supervising Station” model in which fire alarm and monitoring signals are transmitted from buildings to a facility other than a Central Station, such as a municipal dispatch board.

B. The 2009 Ordinance

In September 2009, the District passed an ordinance that attempted to overhaul alarm signaling and monitoring in the District. The ordinance required all commercial property owners to terminate their contracts with private alarm companies and instead to adopt and pay for an alarm and monitoring system provided by the District. Under the new system, alarm boards at commercial properties would be equipped with wireless transmitters owned by the District that would transmit alarm, trouble, and supervisory signals to a receiving unit located at the District's Fire Station 3. The receiving unit at Station 3 would automatically transmit the signals to another receiving unit at Du–Comm, which would then dispatch the relevant emergency response.

The District claimed that it switched to this system, which the District deemed a Remote Supervising Station system, because it was experiencing outages and other problems with the plaintiffs' private monitoring through Central Stations, including that alarm notifications were delayed and trouble signals indicating outages did not trigger prompt responses. DC–360 at 3; Freeman 265.¹ District officials claimed that the new system would provide two main advantages over the signaling and monitoring provided by the private alarm companies: (1) it was entirely wireless and automated, eliminating the need for a human-operated telephone call from a Central Station to Du–Comm and decreasing the time it took to respond to alarms, and (2) it connected all signals directly to the District's own board, allowing the District to monitor all signals and to ensure that all outages were addressed.

The District took bids from several companies to set up the system and provide the wireless transmitters. It settled on a company called Chicago Metropolitan Fire Prevention Company—also a defendant and appellant here. Chicago Metro would supply the transmission equipment: AES/Keltron-manufactured wireless radio transmitters for all the properties, the District's receiving unit at Station 3, and the second receiving unit at DuComm. (AES and Keltron radios are synonymous. Coveny 367.) The District sent a notice to all commercial property owners in the District, informing them that the new ordinance had been adopted and that they would now be charged $66 per month for the alarm and monitoring services and for the radio transmitter and its maintenance. The notice also boldly informed subscribers: “If you are under contract for monitoring with another vendor, our ordinance now supersedes those contracts and makes them null and void.”

C. Proceedings Before the District Court

The alarm companies quickly filed suit in the Northern District of Illinois, alleging that the ordinance violated federal antitrust laws and federal constitutional guarantees of equal protection, due process, and the right to contract, and that the District did not have the legal authority to enact the ordinance under the Illinois Fire Protection District Act. On July 20, 2011, the District Court granted the alarm companies' motion for partial summary judgment, and on August 16, 2011 entered a permanent injunction enjoining the District from enforcing and implementing the Ordinance. The District and Chicago Metro appealed both the summary judgment order and the permanent injunction.

D. This Court's 2012 Opinion

On February 27, 2012, we issued an opinion (“ADT I ”), reversing in part and remanding for further proceedings. See 672 F.3d 492 (7th Cir.2012). We held that the District was authorized under the Act to require buildings to be connected directly to its dispatching center and to require that the transmission network be wireless, but we found that the District was not authorized under the Act to be the...