Alarm Detection Systems, Inc. v. Village of Schaumburg
24-3163
| 7th Cir. | Jul 25, 2025Background
- In 2016, the Village of Schaumburg adopted an ordinance requiring all commercial and multifamily properties to route fire alarm signals directly to its regional emergency-dispatch center, shifting from a model using private alarm company supervising stations.
- Multiple alarm companies (Alarm Detection Systems, Illinois Alarm Service, Nitech Fire & Security, SMG Security Systems) previously operated in Schaumburg using the now-prohibited supervising station model.
- The new ordinance had the effect of consolidating alarm services under Tyco/Johnson Controls, due to NWCDS's exclusive contract with Tyco and the requirement for direct connect using Tyco’s proprietary radio frequency.
- The alarm companies claimed loss of all their Village business, asserting higher prices and poorer service for consumers under Tyco.
- The plaintiffs sued arguing the ordinance violated the Contracts Clause and constituted tortious interference with contract and prospective economic advantage; the district court granted summary judgment for the Village, finding insufficient evidence of contract breaches induced by the ordinance.
- On appeal, the Seventh Circuit affirmed summary judgment for the Village, finding the alarm companies failed to provide necessary proof under both Contract Clause and state tort theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contracts Clause Violation | Ordinance forced breach of existing contracts with customers. | No evidence customers breached existing contracts due to ordinance. | No violation; plaintiffs presented no proof of contract breach. |
| Tortious Interference with Contract | Ordinance intentionally caused contract breaches with existing customers. | No intent or evidence of actual breaches, only nonrenewals or terminations. | No viable claim; only nonrenewals, not breaches, shown. |
| Tortious Interference with Prospective Economic Adv. | Ordinance purposefully and unjustifiably interfered with business expectancies. | Ordinance motivated by safety/finance, not intent to harm plaintiffs. | No actionable intent to harm; policy goals justified ordinance. |
| Sufficiency of Summary Judgment Evidence | Verified complaint and nonrenewal letters adequate evidence. | Allegations are conclusory without facts; nonrenewals not contract rights. | Insufficient evidence; summary judgment for Village affirmed. |
Key Cases Cited
- Alarm Detection Sys., Inc. v. Orland Fire Prot. Dist., 929 F.3d 865 (7th Cir. 2019) (addressed a similar local fire alarm market dispute between private companies and a public entity)
- ADT Sec. Servs., Inc. v. Lisle-Woodridge Fire Prot. Dist., 724 F.3d 854 (7th Cir. 2013) (examined municipal regulation of fire alarm monitoring and competition concerns)
- Sveen v. Melin, 584 U.S. 811 (2018) (articulates modern Contracts Clause analysis).
- Cody v. Harris, 409 F.3d 853 (7th Cir. 2005) (at-will contracts do not form the basis for tortious interference claims in Illinois)
- Voyles v. Sandia Mortg. Corp., 751 N.E.2d 1126 (Ill. 2001) (Illinois law elements for tortious interference with prospective economic advantage)