Alarm Detection Systems, Inc. v. Village of Schaumburg

Schaumburg’s 2016 ordinance requires commercial buildings to send fire‐alarm signals directly to the local 911 dispatch center, NWCDS, which has an exclusive arrangement with Tyco. To send signals to NWCDS, local buildings must use Tyco equipment. Schaumburg’s notice of the ordinance referred to connection through Tyco and stated that accounts would be charged $81 per month to rent Tyco’s radio transmitters and for the monitoring service. Tyco pays NWCDS an administrative fee of $23 per month for each account it connects to the NWCDS equipment. Tyco’s competitors filed suit charging violations of constitutional, antitrust, and state tort law. The district court dismissed the case. The Seventh Circuit reversed the dismissal of the Contracts Clause claim against Schaumburg. The complaint alleges a potentially significant impairment, the early cancellation of the competitors’ contracts, and Schaumburg’s self‐interest, $300,000 it stands to gain. The court otherwise affirmed, noting that entities not alleged to have taken legislative action cannot be liable under the Contracts Clause. WIth respect to constitutional claims, the court noted the government’s important interest in fire safety. Rejecting antitrust claims, the court stated that the complaint did not allege a prohibited agreement, as opposed to an independent, legislative decision. View "Alarm Detection Systems, Inc. v. Village of Schaumburg" on Justia Law