Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Attorney fees awarded in action over fire district’s alarm monitoring monopoly, (Feb 18, 2015)

By Linda O’Brien, J.D., LL.M.

A group of alarm companies were entitled to recover attorney fees and costs from a fire protection district and a competing alarm company in their action over the enactment of an ordinance that allowed the district to contract with only one private alarm company for the provision of their alarm monitoring equipment, the federal district court in Chicago has ruled (ADT Security Services, Inc. v. Lisle-Woodridge Fire Protection District, February 17, 2015, Shadur, M.).

The Lisle-Woodridge Fire Protection District adopted an ordinance that required commercial buildings and multi-family residences to install fire alarms equipped with wireless radio technology that would send alarm signals to a central monitoring location operated by the District. The ordinance also provided that the District would contract with one private alarm company to provide the signaling equipment. Subsequent to the award of the contract to Chicago Metropolitan Fire Prevention, Inc., several private alarm companies filed suit against the District and Chicago Metro, alleging that the ordinance violated federal antitrust laws by creating a monopoly and precluding competition for alarm monitoring services.

After an evidentiary hearing, the court issued a permanent injunction barring the District from enforcing the ordinance. The alarm companies continued to litigate the damages claims until the defendants tendered the amount to which the plaintiffs would have been entitled to had they prevailed. Subsequently, the alarm companies filed a motion for attorneys’ fees.

The court found that the alarm companies were entitled to attorney fees and expenses under the Clayton Act. Section 15 of the Clayton Act allows a private party to sue for damages and recover an award of attorneys’ fee upon a showing of injury. Section 26 of the Clayton Act mandates an award of attorneys’ fees to any plaintiff who substantially prevails in an action for injunctive relief, the court explained.

Under the plain language of Section 26, the alarm companies won a permanent injunction and therefore were prevailing parties, according to the court. The plaintiffs prevailed by (1) obtaining a permanent injunction that blocked the defendants’ monopolization of the fire alarm monitoring business and (2) obtaining the injunctive relief that they sought. The defendants’ argument that their tender of damages to the plaintiffs undid the alarm companies’ status as prevailing parties was rejected. The court noted that the defendants could not defeat the plaintiffs’ status as a prevailing party by taking steps to moot the case after the plaintiffs obtained the relief that they sought.

In determining the factors affecting the calculation of the fee award, the court noted that the plaintiffs “obtained excellent results”—winning a sweeping injunction that gave them the equitable relief they sought and thereafter receiving all of the damages that the alarm companies demanded. Thus, the alarm companies were presumptively entitled to recover the full compensatory fee, including the time spent litigating the issue of fees. However, they are not entitled to recover fees for time spent litigating constitutional and antitrust theories of relief that received no final adjudication. Thus, the plaintiffs were entitled to receive the amount of fees and expenses requested, reduced by ten percent to reflect the court’s consideration of the alarm companies contentious conduct in litigating certain aspects of the case. Finally, the court exercised its discretion to apportion the fee award and allocated liability between the defendants — the District (80 percent) and Chicago Metro (20 percent) — given the different level of success that the alarm companies obtained against each defendant.

The case is No. 10 C 4382.

Attorneys:  A. Christopher Young (Pepper Hamilton LLP) for ADT Security Services, Inc. Bruce Lee Goldsmith (Dykema Gossett Rooks Pitts PLLC) for Alarm Detection Systems, Inc., DMC Security Services, Inc., Illinois Alarm Services, Inc., and SMG Security Systems, Inc. Martin K. LaPointe (LaPointe Law, PC) for Lisle-Woodridge Fire Protection District. Christopher W. Carmichael (Holland & Knight LLP) for Chicago Metropolitan Fire Protection, Inc.

Companies: ADT Security Services, Inc.; Alarm Detection Systems, Inc.; DMC Security Services, Inc.; Illinois Alarm Services, Inc.; SMG Security Systems, Inc.; Chicago Metropolitan Fire Protection, Inc.

Cases: Antitrust IllinoisNews