ADT unfair competition suit advances in Florida

WEST PALM BEACH (CN) - A lawsuit in which home security giant ADT says a competitor stole its customers with false sales pitches will move forward, a federal judge ruled.

Although U.S. District Judge Daniel Hurley granted defendant Vision Security's motion to dismiss a state claim of deceptive and unfair trade practices, he declined to toss common law unfair competition claims, or those that ADT has made under the Lanham Act.

ADT accuses Vision Security, an agent of Security Networks, of tricking its customers into signing contracts with its longtime competitor, according to the ruling.

Vision agents locate houses with ADT signs, pretend to be an alarm manufacturer technician "doing business with" ADT, and claim to be giving the homeowner a free alarm system upgrade before telling them that the manufacturer prefers Security Networks over their existing provider, ADT says.

"As planned, the homeowner then enters into a contract with Security Networks," the ruling states.

ADT first sued Vision and Security Networks in October 2012 but the case was dismissed after an August 2013 settlement agreement between the parties. ADT sued again just months after the settlement, claiming Vision agents had resumed their unfair practices.

Judge Hurley dismissed ADT's claims under a Florida unfair trade practices law, ruling that state law does not apply because Vision's alleged misconduct occurred in multiple states.

"Although as pure economic loss, the injury most likely occurred in ADT's headquarters in Florida, the injury also occurred where ADT alleged it lost customers, such as Texas, California, and Virginia," Hurley wrote. "In sum, Florida does not have the most significant relationship to either the parties or to the occurrence."

But the court ruled in favor of ADT's unfair competition claim.

"Because Vision's sales agents have represented a relationship with ADT, and used that relationship to procure business for Vision, Vision has committed false endorsement under the Lanham Act," Hurley wrote. "While Vision's false endorsement may not be as systemic as its false advertising, ADT has not failed to state a claim."

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