Alarm Detection Systems, Inc. v. Village of Schaumburg
24-3163
| 7th Cir. | Jul 22, 2025Background
- In 2016, the Village of Schaumburg enacted an ordinance requiring commercial and multifamily properties to route fire alarm signals directly to a regional emergency-dispatch center, instead of through private alarm companies’ monitoring stations.
- The shift was justified by the village as a means to reduce fire department response times, better monitor system outages, and secure significant cost savings via an exclusive contract with Tyco/Johnson Controls.
- Private alarm companies previously using the supervising station model (including the plaintiffs) lost all business in the village, as only Tyco’s system was compatible with the required direct-connect model.
- Plaintiffs alleged the ordinance caused existing customers to breach contracts and claimed the new system was more expensive and less effective.
- The district court granted summary judgment for the Village, finding plaintiffs offered no admissible evidence of contract breaches or improper intent by the Village, and the appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contracts Clause - Substantial Impairment | Ordinance forced premature breach of existing contracts. | No proof of premature breaches; only non-renewals occurred. | No evidence of breaches; claim fails. |
| Tortious Interference with Contract | Ordinance intentionally caused customers to breach contracts. | No admissible evidence of intentional interference or actual breaches. | No evidence of intent or breach; claim fails. |
| Tortious Interference with Prospective Advantage | Ordinance was intended to harm alarm companies’ business relationships. | Ordinance was adopted for safety and financial reasons, not malice. | No intent to harm; claim fails. |
| Evidence at Summary Judgment | Verified complaint allegations and customer nonrenewal letters suffice. | Plaintiffs must offer specific, admissible evidence, which they did not. | Evidence insufficient; summary judgment proper. |
Key Cases Cited
- Alarm Detection Sys., Inc. v. Orland Fire Prot. Dist., 929 F.3d 865 (7th Cir. 2019) (challenges to municipal fire alarm ordinances can implicate contract rights, but proof of impairment is required)
- ADT Sec. Servs., Inc. v. Lisle-Woodridge Fire Prot. Dist., 724 F.3d 854 (7th Cir. 2013) (summarizes public safety justifications for fire alarm regulations)
- Alarm Detection Sys., Inc. v. Vill. of Schaumburg, 930 F.3d 812 (7th Cir. 2019) (plaintiff must show ordinance caused breach, not just nonrenewal, of contracts)
- Sveen v. Melin, 584 U.S. 811 (2018) (articulates standards for Contracts Clause violations)
- HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 545 N.E.2d 672 (Ill. 1989) (sets requirements for tortious interference with contract under Illinois law)