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

• Decision Date: 20 July 2011
• Docket Number: No. 10 C 4382.,10 C 4382.
• Citation: 799 F.Supp.2d 880
• Parties: ADT SECURITY SERVICES, INC., et al., Plaintiffs, v. LISLE–WOODRIDGE FIRE PREVENTION DISTRICT, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

799 F.Supp.2d 880

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

v.LISLE–WOODRIDGE FIRE PREVENTION DISTRICT, et al., Defendants.

No. 10 C 4382.

United States District Court, N.D. Illinois, Eastern Division.

July 20, 2011.

Bruce Lee Goldsmith, Dykema Gossett Rooks Pitts PLLC, Lisle, IL, for Plaintiffs.

Martin K. LaPointe, Burke, Warren, MacKay & Serritella, P.C., Martin G. Durkin, Holland & Knight LLC, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

MILTON I. SHADUR, Senior District Judge.

On November 23, 2010 this Court granted a preliminary injunction against defendants Lisle–Woodridge Fire District (“District”) and Chicago Metropolitan Fire Prevention Company (“Chicago Metro”). In the wake of that ruling, which is now before our Court of Appeals for review, Plaintiffs ¹ have filed a motion for partial summary judgment solely against District,² asserting claims for violations of various constitutional rights, antitrust laws and the Illinois law of tortious interference. Plaintiffs also reiterate their argument that District lacked statutory authority for its actions, the issue that triggered the entry of the preliminary injunction.

In Plaintiffs' view, success on those substantive claims entitles them to injunctive and declaratory relief against District in the form of a permanent injunction, as well as damages. Needless to say, District has responded with a vigorous opposition to Plaintiffs' contentions. After careful consideration of both sides' submissions, this Court grants Plaintiffs' motion and orders the issuance of a permanent injunction for the reasons set forth below.³

Summary Judgment Standard

Every Rule 56 movant bears the burden of demonstrating the absence of any genuine issue of material fact ( Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). For that purpose courts consider the evidentiary record in the light most favorable to nonmovants and draw all reasonable inferences in their favor ( Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir.2002)). But a nonmovant must produce more than “a mere scintilla of evidence” to support the position that a genuine issue of material fact exists ( Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir.2008)) and “must come forward with specific facts demonstrating that there is a genuine issue for trial” ( id.).⁴

Ultimately summary judgment is warranted only if a reasonable jury could not return a verdict for the nonmovant ( Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). What follows is a summary of the relevant facts,⁵ viewed of course in the light most favorable to nonmovant District.

Factual Background

Plaintiffs are companies that sell fire and burglar alarm monitoring services to commercial buildings and multifamily residential buildings in the Lisle–Woodridge Fire Prevention District (Compl. ¶¶ 2–6). Plaintiffs monitor those fire alarm systems pursuant to standards promulgated by District, which is organized under the Illinois Fire Protection District Act (“Act,” 70 ILCS 705/1 to 705/24).⁶ All Plaintiffs except ADT transmit fire alarm signals to central stations by means of wireless radio transmitters (P. St. ¶¶ 2, 9). In case of a fire alarm, central station operators alert Dupage Public Safety Communications (“Du–Comm”), which in turn communicates with District to coordinate any necessary emergency response ( id. ¶ 10).

ADT, by contrast, uses a phone-based network that transmits signals to a transmission board at District, which is itself directly connected to Du–Comm's fire alarm board (hence the term “direct connect”) (P. St. ¶¶ 11, 12). ADT does not use wireless technology because a prior ordinance had prohibited central station monitoring outside the Chicago metropolitan area, while all of ADT's central stations are located outside of Illinois ( id. ¶ 11).

Both types of Plaintiffs' systems (wireless and telephonic) were in compliance with national standards and approved by District (P. St. ¶¶ 7, 13). Typically the customers for whom Plaintiffs have agreed to provide fire alarm monitoring services have (or had) contracts of a duration of five to seven years, with provisions for automatic renewal ( id. ¶ 3).

Dissatisfied with the reliability of ADT's phone-based system,⁷ in 2007 District studied the feasability of replacing it with a wireless radio network and concluded that such action would have numerous safety-related and efficiency-related advantages (P. St. ¶ 14; D. St. ¶¶ 11–14). In September 2009 District's Board of Trustees adopted and implemented Ordinance 09–06 (the “Ordinance”), which mandated the use of a direct-connect wireless (as opposed to phone-based) fire alarm monitoring network (P. St. ¶ 34). That wireless radio system was to send signals directly to District and thus eliminate the need for central stations ( id. ¶ 36).

To implement that wireless network, the Ordinance specified that District would purchase the necessary equipment and a company of its choice would operate it (Compl. Ex. B). Subscribers were required to enter into five-year contracts and pay fees for the provision of that service ( id.). District's motivation in passing the Ordinance was self-described as an “effort to provide better protection against fire” ( id.). District later entered into a five-year contract with Chicago Metro to install and then maintain the wireless network (P. St. ¶ 36; D. St. ¶ 22).⁸ Thus District agreed to purchase radios from Chicago Metro and took out a significant loan to cover the cost of purchasing, maintaining and monitoring the network (D. St. ¶¶ 22, 26).

District sent a notice in December 2009 to all affected customers of fire alarm services, informing them that their current contracts with other fire alarm companies (hence with any Plaintiff) were superseded and thus “null and void” (P. St. ¶ 40). That notice was accompanied by a written contract under which the subscriber would have to pay District $66 each month in monitoring fees (D. St. ¶ 27). In January 2010 District sent a second notice modifying the first, so that alarm monitoring contracts that were currently in force would be allowed to expire before the subscriber was required to join the network (P. St. ¶ 41). As of June 2010 ADT had lost all of its commercial accounts in the District, and ADS reported that “several” accounts had been labeled as terminated by the subscribers before the expiration of their contracts ( id. ¶¶ 48, 50). District, for its part, had over three hundred accounts as of the time of the Preliminary Injunction order ( id. ¶ 52).

In July 2010 Plaintiffs filed this action against District and Chicago–Metro for preliminary and injunctive relief. This Court granted a preliminary injunction on November 23, 2010, and in doing so suspended implementation of the Ordinance, reinstated the customer contracts that had previously been in place and permitted Plaintiffs to resume fire alarm monitoring services. ⁹

Legal Authority

At base this action turns on whether District, an entity whose limited powers are granted to it by the General Assembly, has legal authority to engage in the fire alarm monitoring business. That determination depends on a close inspection of the Act, the enabling legislation that establishes all such fire protection districts in Illinois. In that respect District contends that the necessary authority is conferred by Act § 1—the statutory preamble:

It is hereby declared as a matter of legislative determination that in order to promote and protect the health, safety, welfare and convenience of the public, it is necessary in the public interest to provide for the creation of municipal corporations known as fire protection districts and to confer upon and vest in the fire protection districts all powers necessary or appropriate in order that they may engage in the acquisition, establishment, maintenance and operation of fire stations, facilities, vehicles, apparatus and equipment for the prevention and control of fire therein and the underwater recovery of drowning victims, and provide as nearly adequate protection from fire for lives and property within the districts as possible and regulate the prevention and control of fire therein; and that the powers herein conferred upon such fire protection districts are public objects and governmental functions in the public interest.

As District would have it, the plain meaning of that section authorizes it to engage in the alarm monitoring business because it is “necessary or appropriate” to “acqui[re]” fire alarm monitoring equipment to “provide as nearly adequate protection from fire....” Indeed, District goes on, it has a legal obligation to do so, for it has determined that the Ordinance would provide more effective fire protection than the privately-owned systems that it seeks to displace.

Any such all-encompassing reading of the Act's preamble is wholly unpersuasive. As this Court stated orally on October 6, 2010 and again in its December 22, 2010 Preliminary Injunction order, Act § 1 is not the last—or even the first—word on the scope of District's actual authority. It is not a blanket source of power, but instead simply authorizes the creation of fire districts (as its title “Creation authorized” suggests) and states a general legislative purpose.

And consistent with what one might call the “classic” structure of statutes that establish different municipal entities, each possessing limited defined powers, specific grants of authority are then enumerated in separate sections following the preamble. Indeed, the clearly more appropriate (and normal) reading of such a preamble is that it sets out a general policy statement, while it is left to the sections that follow to define specifically what the General Assembly deems “all powers necessary and appropriate” to carry out that policy—the preamble itself does not perform that definitional function.

If District's approach to...