ADT must answer new lawsuit

Thursday, March 11, 2004

March 11, 2004

DENVER - Another lawsuit has been filed against ADT Security Systems charging that the company breached its contract with authorized dealers. The nationwide class-action lawsuit was filed on behalf of Advantek Pro, a former ADT authorized dealer.

The complaint, submitted in Colorado district court on Feb. 10, alleges dealers were owed significant compensation from ADT when the security giant instituted changes to its dealer program. According to the complaint, alterations were made to the dealer agreement after Tyco International purchased the business in July 1997.

At the center of the lawsuit are accusations surrounding ADT’s implementation of a connection fee, charged to dealers to cover administrative costs absorbed by the company.

“We think that those alleged administrative expenses and associated costs were fictional,” said John Fognani, an attorney at Fognani Guibord & Homsy who represents Advantek. “That this was just an opportunity for ADT to gain greater profit.”

Also playing a major part in the lawsuit are revisions ADT made to its dealer contract in 1998 that eliminated growth bonuses.

“ There are lots of complications and problems with the way ADT has handled these contracts with the dealers,” Fognani said.

For more on this story, see the April issue of Security Systems News.