Shook Wins Another Judgment for ADT in Unfair Competition Suit

Shook attorneys obtained another multimillion-dollar judgment for electronic security provider ADT in a case involving a competitor’s deceptive trade practices. A federal jury in Florida awarded the client $4 million, finding that Alder Holdings, LLC, violated both the Lanham Act and the state’s unfair competition law. Partners Charlie Eblen and Chip Sander, with Associate Eric Hobbs, represented ADT in federal court. 

In 2015, ADT filed suit against its competitor Utah-based Alarm Protection LLC, alleging that the rival company’s agents had misrepresented themselves to ADT customers. Typically, a sales agent  would persuade an existing ADT residential customer to give him or her access to the residence and install new Alarm Protection equipment in the guise of an “upgrade,” then have the customer sign a new multiyear contract–leaving the customer with contractual obligations to both companies. In May 2017, ADT and Alarm Protection LLC settled the suit and entered into an agreed permanent injunction intended to stop the deceptive practices. 

But immediately after settlement, and even after entry of the injunction, Alarm Protection–which by then had changed its name to Alder Holdings–continued to send its agents to ADT customers and engage in the same practices, resulting in hundreds of new customer complaints to ADT. 

In this action, Shook attorneys explained Alder’s history of deceptive conduct, which included the establishment of multiple business entities to mislead state regulators and avoid accountability to creditors, and claiming that Alder had merged with ADT or that ADT had gone out of business, or that ADT had hired them to service ADT’s customers. The jury rejected a counterclaim by Alder, and found for ADT on a false affiliation claim under the Lanham Act, as well as an unfair competition claim under Florida state law. The jury awarded ADT $3 million in compensatory damages, and $1 million in punitive damages. 

ADT continues to seek a finding of contempt against Alder Holdings for its violation of the permanent injunction. 

The case is ADT, LLC and ADT US Holdings, Inc., v. Alder Holdings, LLC, No. 17-81237 (S.D. Fla.) See also, “Shook Obtains $10 Million Settlement in Deceptive Trade Practices Case,” about ADT’s December 2017 win against Utah-based Vivint, Inc., in a case involving similar issues.