In September of 2009, the Lisle-Woodridge Fire Protection District (the District) passed an ordinance that changed the way in which commercial fire alarms were to be monitored within the boundaries of the District. Several alarm companies, including ADT and Alarm Detective Services, Inc., brought suit against the District, and its choice of alarm vendor, on multiple legal theories.
Pursuant to the Fire Protection District Act (70 ILCS 705/1 et seq.) the District is authorized to adopt a fire prevention code that parallels national standards. Accordingly, the District adopted the nationally recognized standards promulgated by the NFPA. For some time, and relying on these standards, the District had required that certain commercial and multi-family residential buildings within the boundaries of the District maintain approved fire alarm monitoring systems. Under this requirement, once a private alarm company installs a new fire alarm system, the District reviews and approves the plan. The majority of alarm companies servicing the District monitored their alarms by use of a central station, whereby their own systems transmit fire alarm signals to the central station, either by phone, radio, or digital dialer. Once an alarm is received by the central station, the operators would then call DuComm, the 911 call center used by the District. DuComm would then dispatch the necessary emergency vehicles from the District.
Seeking to improve the safety and efficiency of their emergency response system, the District adopted its Ordinance 09-06 (the Ordinance). Under the Ordinance, the District was to take over alarm monitoring and require all customers within the District to utilize a wireless radio system to transmit signals directly to the District. Additionally, the Ordinance required all customers to enter into contracts with the District. Initially, the District sent a notice seeking to nullify the contracts between customers and the alarm monitoring companies. Soon thereafter, a second notice was sent which changed the conditions of the Ordinance. Under this revision, the customers were to finish their respective contracts with the alarm companies. When the monitoring contracts expired, the customers were then required to enter into an agreement with the District.
Following the passing of the Ordinance, the District entered into a five-year agreement to purchase the necessary wireless equipment from Chicago Metropolitan Fire Prevention Company. This vendor was to be the sole provider of the equipment for all of the Districtís new contracts. In order to comply with the Ordinance, customers were required to switch over their fire alarm monitoring to the District, sign contracts with the District, have their former alarm company or Chicago Metro remove the existing transmission devices, and finally install the new wireless radios. Many occupants in the District made the transfer.
ADT, ADS, and other alarm monitoring companies filed a federal lawsuit against the District. In the course of the case, the alarm companies attempted to immediately stop the District from implementing its Ordinance by seeking a protective order. In the federal district court, the Honorable Judge Milton Shadur found that the District did not have the authority to pass this Ordinance and entered an injunction, prohibiting the District from executing and/or enforcing the Ordinance. In reaching this decision, the judge noted that the District had no express authority under the Fire Protection District Act (the FPD Act) to engage in the fire alarm monitoring business. The court noted that the FPD Act was ďreplete with provisions that provide specific grants of authorityĒ and specifically bars the District from charging a fee to its residents for any services. The court found the fire alarm monitoring fee was in direct contravention of that provision (70 ILCS 705/11f(b)). The district court invalidated all contracts between the District and customers who terminated their previous contracts because of the Ordinance. It ordered the District to refund the fees charged and to cease and desist from any activities relating to providing fire alarm monitoring activity.
The District appealed the lower courtís order late last year. The United States Appellate Court for the Seventh Circuit issued a preliminary order on December 19, 2011, noting that a formal opinion and judgment would follow. The Seventh Circuit affirmed the lower courtís injunction in part and vacated it in part. The Seventh Circuit reviewed the Act and found the District has the regulatory authority to require fire alarm systems in the District to be connected directly to a central monitoring facility operated by the District to ensure rapid communication to the emergency dispatch service. Additionally, the court noted that it may be possible for the District to require the direct connections to be established by wireless radio transmission. The ultimate determination on this issue has yet to be decided. In the meantime, the court stated the District may require all fire alarm systems currently using wireless radio technology to direct-connect to the central station. But, the District may not require any conversion to wireless radio technology for any alarm company not currently using it. The court went on to find that the District could not displace the competitive market. In other words, the District could not operate a monopoly by requiring all affected property owners to contract with only the District for providing the alarm equipment and monitoring services.
Currently, the case still hangs in the balance with several unresolved issues. What can be gleaned from the proceedings to this point are important notions. The FPD Act grants fire protection districts with certain powers; however, the court has rejected the contention that the FPD Act is so broad as to transform the District into a general legislative body. The courts perceived a violation of fundamental principles by the District upon on the rights of private alarm security providers. Consequently, this led the lower court to enter a judgment against the District. It is clear that a fire protection district may retain its fire prevention and code enforcement powers, but displacing the competitive market is not authorized under the FPD Act.
Fire protection districts are encouraged to provide competent, efficient and secure emergency services to the people they serve. Part of this responsibility includes passing necessary ordinances and procedures to ensure the promotion of fire protection and fire prevention. However, the reach of this authority is not limitless. Districts must be sure to stay within the bounds of authority granted by the Fire Protection District Act to avoid legal challenges to the proper scope of lawful powers granted to fire protection districts. If you have any questions about the scope of authority in the FPD Act or any other question, please do not hesitate to contact your fire districtís legal counsel. We will continue to track new developments in this case as they arise.