A jury in the Southern District of Florida awarded security firm ADT $4 million in damages in the culmination of its deceptive trade practices lawsuit against Alder Holdings, Inc. ADT's dispute with Alder dates back to around 2012 when ADT first accused Alder of encouraging sales staff to falsely present themselves as ADT employees.
ADT accuses Alder of "bait and switch" sales tactics
ADT's second amended complaint accused Alder of "selling alarm systems to ADT customers by using false representations of affiliation" that led customers to believe they were, in fact, ADT employees "visiting to upgrade the customers' existing ADT alarm systems." According to the complaint, Alder employees would visit the homes of customers who had ADT signs on their front lawn and gain access under the guise of providing an upgrade to their ADT product. Then, they would sign ADT's customers to new five-year contracts with Alder.
Over several years, ADT reportedly received numerous complaints from customers concerning deceptive sales practices by Alder. Moreover, the latest case is not the first time ADT has filed suit. The parties settled a similar claim in 2017.1 In ADT's most recent complaint, they alleged that in the eight weeks following the 2017 settlement the company received 118 reports of continued deceptive sales practices by Alder.
ADT's Lanham Act claim
Based on complaints made directly to ADT by customers and reports on Alder's page of the Utah Better Business Bureau, ADT accused Alder of trading on its goodwill and defrauding ADT customers.
ADT's claim relied on Section 43(a)(1)(A) of the Lanham Act, which prohibits, among other things, false representations of fact which are likely to cause confusion or mistake as to the affiliation, connection, or association between two businesses.2
Although the four-million-dollar verdict did not meet ADT's demand for damages, the company characterized the result as a necessary deterrent against deceptive conduct within the industry. Moreover, it serves as a reminder that businesses have the right to defend their reputation and goodwill.
1 See ADT LLC v. Alarm Protection LLC, No. 9:15-cv-80073 (S.D. Fla. May. 9, 2017).
2 15 U.S.C. §1125(a)(1)(A).