good morning ladies and gentlemen our first case for this morning is alarm detection systems against orland fire protection district and also alarm detection systems against  the errors that were permeate both of these cases relate to the failure of the district courts to actually interpret your operative ordinances ordinances to say the  signal directly to a designated remote supervising station in compliance with n f p a seventy two this court went to great lengths in the two eighty cases to interpret what n f p a seventy two met in that context the district courts failed to recognize that and therefore were led astray in interpretating the acts the ordinances to require that the signal be sent and one piece of equipment owned by title to either or under central dispatch or to the north west central dispatch from a standpoint of looking at the case from the sherman act it's quite clear that there is no state action immunity because the operative law is not a law that clearly articulated a policy that would create any trust immunity first order the illinois legislature didn't see it that way the only legislature's pacifically said if you're acting within the scope of chapter eleven you get any trust immunity to the greatest extent possible and you have town of halle saying that if you're in unison palate don't need to satisfy the second you just must send a signal to a specific location well go direct connect no not a direct connect is not a term of art it's not a term in the ordinances that says you must send a signal to the remote supervising station accordance with an appearance seventy two in fact all the alarm companies can send the signals to northwest central dispatch or oral and fire or lead central dispatch without using title equipment they can use the same  processing it in other words dispatching if it's necessary so there's three types of signals alarm suprising trolled you get alarm signal you have to dispatch that signal goes to the ultimately to the dispatcher as we pointed out in our  es in an argument the equipment alarm detection and the other alarm companies can use can send the signal automatically by retransmission directly to the cad which is where the actual dispatching occur municipality's just to be clear i mean they argue quite consistently that they don't want to free transmission and they have thought about it and they think that the direct transmission to t monitoring point from the commercial location is preferable now that may be on wise or may not even be technologically accurate but that seems to be their view their view is not supported by the language of those of the all new and also existing per one system shall be monitored by remote supervising station as designated by the village in accordance with n f p a seventy two right and so when they say a remote supervising station what i understand that to mean is not a central station central station would be the alternative technology a widely used technology i don't doubt that for a second i do the point is and you're in the first opinion from those core it recognizes that automatic retransmission is permitted by n f p a seventy two and does not require the intervention of a central station operator show i understand that and i well remember the the earlier cases but there are some very significant differences between the earlier cases in this case both as a matter of fact and it's a matter of law that the legal issues before the court story under state law that were very important at that point the n t trust claims had not been teed up so they were not present in the case there are a number of significant differences nobody disputes that the standard under the fire code might be met by either a central station or an r a says that these entities chose to go with our assess you know nothing in the standard says they can't do that from a central station operator that doesn't make it preclude in fact the villages only provided that the signal had to get directly to the not directly is not even the right word at the signal had to get to the authority to require the commercial multifamily buildings connect directly to the district's monitoring forward and to do so through wireless radio technology so that's the whole thing it's understood the issue is is it going wirelessly is it going to the orlan central dispatch or northwest central dispatch directly and it is because in every one of these means it goes through a do anything and really any of the three cases by themselves to effect this end result on the contrary they have a plain vanilla requirement which can be easily met in a number of different technologies all of which because the language of the ordinances which i just quoted only require that the signal be sent to the designated remote supervising station we can do that without the intervention of a human contact with the signal and we can do it in this day and age in the same way as everybody else does it with respect to wireless technology but we can do it in a number of different technologies are approved by n f p a seventy two all of which are barred by the way in which their interpret in the ordinance not the way the ordinance is written the orders is very simple in terms of its requirements and for that reason a judge warden response to your  question the municipal code isn't the source of authority because the ordinance itself is neutral it's the implementation of the ordinance by a fire protection district which this court has already ruled does not have authority to take over well that's a different thing the fire protection district in the case is presently in front of us is not doing the monitoring it's not charging people anything the fire protection district has entered into an exclusive contract with tyco and tyco is performing these functions it's tycho's equipment that's in the monitoring station payments are made which i know you challenge but payments are made from tyco to the the operator of that station and so it's really not the fire protection district what we were talking about before was that the fire protection districts did not have under state law the authority to be in the business and to oust others from it but they are because the ordinances don't contemplate an exclusive provider and i beg to differ with you the monitoring is done at or one central dispatch it's being done by or and fire  and they have to get a particular frequency rights that and we have indications from at least judge durcan that dual transmission is not technologically feasible at this point the factual determination and even gave you the opportunity to submit supplemental briefs to support your position a technologically can you have dual transmission and you didn't meet the burden of establishing technologically that is something that could be done that's a very different than saying well you pled it and played it could be done you went to trial before judge stark and they couldn't prove that essential fact no on the contrary do i think you find it in the post trial briefing to you at least as i read is that no one in his opinion read through a transmission has nothing to do with this case the question this case is can we send a signal in the same way wireless were proposing to send these signals to the r s s and the way tyco was sending signals tyco was engaged in what people are all calling a direct connection  and you work you have is your computer's i'd like i'll give you that it's your computer's not a human being because you've made very clear that this can be done by machine but there's an intermediate step would there be no point to having a sexual station failures can send a repairman out you can do all kinds of things so there is this intermediate step there doesn't know before there does not have to be an intermediate step but there is no there doesn't because if we use the same  s and we use the same frequency the gross rightly to the remote supervising station does not go through the central station computer can one get the same frequency from the f c c or is that it appears from the evidence and from judge stephens holding that only one company can get that frequency if another company comes in to get a frequency license you get a different frequency the testimony was that all the alarm companies could use the same frequency to get the signal there without going through a central station that testified that the different alarm companies could get the same frequency from the f c c i don't see that anywhere well that without at least contracting one of wasn't a question of whether we could use their frequency the question was could we do it the same way they're doing it and the answer was by numerous witnesses yes it's done in other jurisdictions but the downside is then trouble and supervisor signals are not being handled they get they go to the dispatcher and the dispatcher has to somehow deal with them so if you use that one frequency as you say you can can you frequency you agree that you cannot perform and you cannot provide monitoring services yes because we don't get the signal so that we can't tell whether the the system is in alarm trouble supervisor then how does that square with your market definition in the anti trust claims which includes monitoring services because we don't get i don't we don't want to be precluded from signal they've created a monopoly in both jurisdictions without authorization by the by the ordinances but by their scheme in orland it's the contract between typo and orleans fire protection district and schomberg it's the contract between northwest central dispatch and tyco and then the notice from the village which says you have to contract with syco after eighty one dollars you have to terminat contract with your with you just in providers and go to to title in north west central dispatch so you agree that your argument that you could use one frequency would not square with your market definition that you not exclusive it's you know that's the nature of the contract this is i mean actually this relates to a lot of parts of this case it's not at all uncommon for municipalities to enter into exclusive dealing arrangements for certain purposes they might have a single company that has a contract to pick up the trash in their area or they might have a single company that has the contract to provide cable t v service or they may have a single contract in this case to provide for monitoring of fire alarms from commercial buildings exclusive dealing arrangements are garden variety and  normally competition for the contract the contract expires they do here every three years every ten years with one year renewal whatever the term is and then you would have the opportunity to bid to be tyco next time around it's not the exclusive provider that so you issue here because the equipment the receiving equipment can receive signals from any sort but you know it somebody has to buy it install it maintain it make sure that it's working properly so i don't quite understand why you get a free ride on their installation of this equipment well that's their business model to take a away from everybody you're not answering my question though you wouldn't you have to pay them some money that's why they have these third party contracts actually well they don't have to be receiving the signal they've chosen to receive the signal they get tax dollars for that purpose and there's no reason for them to get a separate source of revenue which is you wouldn't you agree with me somebody has to procure and pay for the equipment at the mud at the final point that receives the signals that and wouldn't have to be there if they choose to have the signal go there to be monitored by employees of the dispatch center then they've chosen to take it one step further and the question is can they do that exclusion of everybody else it's not an exclusive contract in that sense also you know annoying normally where there's an exclusive arrangement like for garbage collection or water treatment or sewage disposal there's a state statute which  it clearly articulated that it's intended to be anticompetitive and can be exclusive there's no contract that deals with monitoring well i don't think i'm going to just say yes i'm familiar with the statutes that you're talking about that it's also the case that exclusive dealing arrangements are not another way of saying monopoly their contracts turn over every so often and they require investment on the part of the company that's providing the services so that's why you get this period of exclusiv requirement you're challenging is their choice of our assess no r s s is fine if they want signals to go there we'll send signals there we can send them automatically and we can do it either  without getting the opportunity to also monitor or we're going to do it with the ability to monitor by automatic retransmission either way we can comply with the ordinance and that's the real rub here because there are so what is it what is it illegal well the contract between oral and fire protection district and title creates a contract in restraint of trade beats so the exclusive contracts that were entered into are what violate the law what's exclusive in those contracts is the transmission equipment and the sending of and the servicing of those transmitters so we're just aren't this report this court held in eighty one that the transmission end of the system is the subject of the choice of the owner of the property and so when you cross the line and you take away that choice you're creating monopolistic activity we did not say anything the right to choose the transmission equipment and the service provider that choice has been eliminated even though both all three of these ordinances say they're subject and be a seventy two and make no exclusionary requirements th e missing link here is how did we get from the point where you had to send a signal to a remote supervising station and that you had to get tyco to provide the transmitters only one time send that and provide the service and a super competitive fee for that privilege and that's where the that's where the disconnect is none of the ordinances say that you have to use a single provider know the order in the say that you have to buy one type of  takes away all innovation in the industry which is moved on to cellular an ip and there's all kinds of technology out there and we're saying that he has transmitters they immediately present evidence of that technology every one of these systems has to transfer through many links before they get to the end place so in the a f system there's a bunch of radios and radios communicate with each other in the in the system then goes to an ip link then it goes to additional equipment then it goes to the receiver at the dispatch center and then the dispatcher has to type it into the cab for dispatch in the system we're talking about eliminates the need to get it to the receiver it goes directly t cad you do not need new equipment and in the context of that the owner of the premises has a right to choose a provider as a right to choose the type of equipment and has a right to pay a competitive price instead of a super competitive price for that purpose all right if you would like to save some rebuttal time i would if i sued as i would like to go in time to do that on to argue that the decisions of judge palmyra and judge durcan should be a farm on the substantive antitrust grounds my colleagues who represent the other police will take three remaining time to address the constitutional state action and state law class takeover would rest on its briefs on the constitutional and state law issues this case involves a decision by local governments acting through elected officials and fire safety professionals to enact local ordinances requiring a particular system a fire alarm monitoring that system's direct connect monitoring and implement the system through exclusive dealing contracts with private alarm companies to worry about mr goldsmith's technical point that he just closed with that there really is no such thing in today's world as direct connect if i even made a phone call to you from sitting right here requirement similar like the law would rich case in which signals would go from the commercial businesses will be called the commercial accounts directly to the remote supervising station technologically yes radios communicate with themselves they bounce from one place the other for the important part with religious intent that those signals come directly uninterrupted to the remote supervising station which in orland was a world dispatch center in s north west central dispatch center so how important is it to your theory that there is or is not a human agent in that intermediate stop that's also red herring your honor when you get back officials who are politically accountable decided to do they decided they wanted at the recollection they did not want signals to go up some other place to a central station and then balance over to the remote supervising station whether it's rational or not but that the bottom line is that was their decision their elected officials politically accountable to their constituents they made that decision and once they made that decision your honour's the question for this court and the claims that the ordinances the way they should which by the way mr goldsmith didn't mention if it was of record before judge durkin that the arguments that a d s made today about what they can do how they came that ordinance is neutral and that they can that a central station is a remote supervising station and please designate us as a remote supervising station that can receive the signals were all made before this  trial and the villages response was no we prefer the way it's being done right now so you can argue over the interpretation of it was your money in the early case let me tell you one of my impressions that kind of follows from what you're saying that if the direct connect choice is a lawful choice in several places in judge durkin's opinion i read him to saying it necessarily follows that there has to be exclusiv because of the technological and perhaps economic limitations that exclusivity went to tycho here is that correct i mean in other words is that a correct reading of i mean he seems to hang a lot on exclusivity just follows like you know night follows day the moment direct connect is required yes that's what his analysis was and it was a proper analysis based on the record the trial record contained  lot of evidence about the practice of the wreck connect an exclusive contracting in this industry in the greater chicago area over the last thirty years i mean you've seen it in the hinsdale decision you've seen in this court in eighty one and eighty two that's a that that was important to him because once the ordinance is passed and the authorities haven't jurisdiction the villages decide they want that direct connection to the remote supervising station they comes to it almost by definition has to be exclusive or at least that's the way these elected officials have the side of best the best way to implement to a bay that law if you will looking at it under the fisher analysis now and talk to me look at the price difference because if i'm remembering your briefs you admit that the direct connect is something in the eighty dollars per unit and the central station is much cheaper you know that fifty fifty some odd dollars so you know why what explains that and why isn't that sound evidence that there is anti competitive that to video footage what two things it's comparing apples to oranges as judge durkin found they are two products kressley let me explain the difference because it was important distinction made at trial and judge burton got it central station paco for example has i think the number that was used in the briefs was four million customers i'm not sure that's true  the million customers five central stations each additional customer the equipment is there and you don't have additional costs for each i don't want customers central station direct connect were a remote supervising station requires tycho at the outset of that contractual relationship to take the equipment that costs not as much of central station but it's expensive and put that single piece of equipment building or the commercial building is that equipment also owned by tyco yes ok and the point i was making your honor was just that you have a much more limited amount of customers using that expensive equipment that the  orlin for example there are six hundred fifty five commercial customers as opposed to maybe a million that would go into a central station so it's more expensive cost wise is more expensive but you don't have to put in new equipment to this yes that's exactly the point you're on yes so not so that's why it's the price is different it's a different model i'll be very close but you also have to understand too when we when counsel says it's eighty nine dollars to take the charges that super competitive twenty three fifty is a village fee that goes to work and that's another issue for we're going to address but so now you're down like a charge of sixty five dollars and fifty cents and the point  antitrust economists expert made to try out the judge durcan was that when you looked at take those prices on average in non mandated jurisdictions which were jurisdictions in which the customer the personal businesses had the choice to go either central station or remote supervisor take those charge was sixty eight dollars so was it was not super competitive at all which most of the point and there was a lot of argument you asked mr goldsmith what is the real challenge what are you challenging what is the strength and it's it's gone back and forth as we've gone through four years of litigation judge durkin appropriately analyzed the ordinance under fisher and found that it was  section two judge durkin also found that unilateral government action in this case granting exclusive contract does not rise to the level of the acquisition or maintenance of monopoly power so unilateral concepts is still there in other words he defense or bork would argue that the most durable monopoly power of all is that which is supported by government regulation i think judge posture might have said something along those lines as well and judge pos recently two years ago in the methodist hospital case well echoed your point judge with that exclusive dealing contract he said what's more common than exclusive dealing contracts they're illegal they're common and to the extent a d s tries to argue that you should look at or judge durkin should have looked at the exclusive contract as a hybrid restraint that just minutes misconstrues fisher and judge perkins analysis if you're going to slowly look at the exclusive contract now you're into methodist hospital and now you're into rule reason analysis and easily passes muster under the rule reason for five important written for important reasons one that we just discussed take those prices aren't super  other places in the greater chicago area that had people who'd won the contract of title yes so there were other companies who participated in these kinds of bid processes and  commercial businesses in the greater chicago area so that's where we are but the district judge never nails down with the geographic market is if they're going to finding a fact that the geographic market is the greater chicago area then you would have an ironclad argument that only that the area of the scope of the exclusive contract which doesn't make sense because if that was truly the wall then every exclusive contract would create a monopoly that violates section two and that is not laws judge pozner recognized two years ago in methodist hospital but you know the point that i think this underscores lease with foreclosure and there was no testimony by the way that any private alarm company only competed in orland so so and there was no testimony that any private alarm has and it competitor who competes for exclusive contracts would they have an opportunity when the contract expires to compete against the promenade you actually have these third party contracts we're sure about it a t s and there was testimony this trop if a d s has a customer that it wants to keep in orland it it can all just enters into an agreement might take up to that and there's liability reasons as to why take up who's receiving this these signals wants to have a touch with that commercial business which you inspections the maintenance on the systems that the commercial businesses on and by the way you know at trial there was testimony about that that of the six hundred fifty five accounts that take a has that are coming directly into point regarding the issue of standing judge dirk and promptly granted our motion for summary judgment due to the fact that there's no pride for a right of action under the district act that's not really a standing point that's  action under the district act for a third party alarm company well for a competitor yes ten he didn't rule out the possibility of a private right of action for a customer perhaps or i mean is somebody else say in the business itself and there was an issue under state law about that it's just sort of a magic fix for you to just enter into an extensive contacts with somebody else and then announce we're not in the business well no of course not quite  be served by the fire protection district they're all independent different board to trustees different legal representatives after they heard all the information they need the chairman a should enter into an ordinance that mandates connect so that he is that it's a village ordinance not something from the fire protection district except your honor it's not something that the fire district just made up on their own and went into this contract it's a mandate from the village south and under the village supervising station and direct connect are interchangeable terms so when a orn and say and also the village manager the war on tartan army hills also testified that they wanted to reckon that that they need consolidated appeal i mean as counsel for tycho it indicated i'm going to be addressing the issues of state action immunity and the constitutional claims based on the a political law and those like it was contained in our proofs in those addressed by counsel it's clear that the the rationale behind the book for you get to the rationale and how much deference you have to consider the burden and it did she do that in her analysis either at the top the sex or the motion to reconsider and if so can you identify i don't think she did it in great detail your honor i think she initially looked at you know the substantial current issues moved past that and we're going to look at what was the legislative judgment what impact should that have that she didn't legislative judgment in terms of the necessity and reasonless of the particular measure they took judge paul or specifically noted that a municipality may enact legislation that affects the right to contract where it's reasonably necessary to secure the public health and safety general where the community and she specifically noted the village of hinsdale case that that rejected a contract clause claim which you know they to what extent are you read lying on a distinction between actually breaking existing contract and nonrenewable of a contract in to what extent are you if it all relying on the fact that even after the hard stop which is coming up pretty soon in twenty nineteen there was a possibility of extension out some additional years but that was actually part of our argument as to whether there was an actual substantial impairment on the contract itself because the orders did not require an terminations so yes we think that's a an adequate basis  hinsdale case isn't talking about breaking contract it's talking about it's ok to have direct connect and it's ok did you know take certain steps correct which which goes to both in the country clause issue and in the state action towards the foreseeability of the action itself i guess i have a hard time seeing why there wasn't a contract clause claims stated i understand the arguments you might have you know on the merits of it but just looking at the four corners of the complaint but in the the law of the contracts causes that you have to look at you have to look at you know the severity of the impairment visa v you know the as to the cation being put forward for it so it's a bit of a tailoring analysis you know that needs to go on well and i don't know how you can do that within the four corners of the complaint one justice homer correctly held that the four corners of the complete did not include the requisite allegations to meet that burden and she indicated specifically that that the ordinance contains those necessary justifications the rationale for public safety reliability eliminating signals transmission delays faster response times that those those but did she hold that the allegations weren't  to meet this apparently or that based on what was alleged there was a rational basis for what the village head i'm not sure there's quite a distinction i think what judge palmer held was that the allegations  the complaint the specific allegations in the complain including you know the exhibits attach them to the ordinance and the justifications did not meet that pleading requirement but doesn't the context clause require a bit of a different analysis  just got to just point out more of a tailoring based on what the substantial burden alleged is yes your honour's but given the justifications just palmer took that into consideration and she she she balance analyzed that those justifications the presumption there validity overcame that burden on the the pleadings failed to overcome that burden to establish a valid contract clause and again i want to point  other defense counsel here so i just want to emphasize a few points if i may ask her to come judge durkin correctly and in summary judgment not only because there is no private cause of action on the district act but also to comms role in receiving and processing and dispatching fire alarm signals is consistent with the illinois law consistent with the district act consistent with this court's decisions in the light of woodridge litigation and the hinsdale decision to calm the records very clear is not involved in the transmitting and of the of the network there are only involved in the receiving that do come doesn't own radio transmitters located the premises does not contract with an and users or businesses that contract with their own fire alarm companies to come does not charge any fees to end users at all in the bloomingdale territory in particular when dale passed an ordinance litigation concluded that allowed commercial premises to choose whatever fire alarm private fire alarm vendor they wanted to choose and also allow signals to be sent either by central stations or to remote supervised stations but ultimately that the signal come back to do come which of course is is consistent with illinois law in this court's decisions that judge durkin i think found in the first dismiss order that he entered correctly their community communications dispatch centers can function like like to come in northwest for that matter can function as remote supervising stations consistent with the illinois law of the fee charged in the fe it's for the use of the spaces for the services that do come provides and in processing the signals to come is helping tyco in a sense by processing the signals by deciding what to do with any particular report right right yeah they d that's not the case here there is no such ordinance in this case whatsoever this is this is a contractual arrangement that has a financial term like any other contractual arrangement so that he's talking instead of right i mean it's not like they're getting this for free that they pay tyco for the entrance that's right that's right as to northwest central dispatch judge palmyra correctly dismissed the complaint i think that the the allegations contract between tyco and northwest is is independently relevant to the proceeds they keep talking about the implementation of the arrangement is supposed to say the ordinance or the contract or whatever they're saying as units would like to see legislatively northwest is not involved in the legislation itself nor could it have any input on the actual you know legislative decision so there's nothing alleged in this like to start with your first question of the morning and then move from there you asked where the article level gave the authority for this theory and both your stiction to the answer is that after boulder between isn't it it's not like boulder where they just said we're home rule city ergo we have immunity no it's not like waste where there's a particular provision in the illinois code saying you can have a monopoly of waste calling it's in between it says and we're going to weed the legislature of illinois i want our municipalities to have as much any trust immunity as possible when they're exercising authority under chapter eleven actually it says with respect to did not say there it is not having a does not designate any activity that's clearly i know that only talks about safety and under that authority municipalities for example have fire departments but it deals with all kinds of activities and right as i'm saying this ordinance is in the middle it's not just we're home rule that's the end of it it's not specific it's in the middle well i don't know how a state legislature  exempt a broad range of functions without any directors or nation of the function and that's an excellent question people have debated the wisdom of parker versus brown since the minute it was decided but the supreme court has about state action immunity there was not in boulder but over the hill specifically with the dealt with cable t v with yes but in the context of action is any activity that they may have authority under any statute i mean it is incredibly broad range of i remember it's broad yeah but and i think the this court needs to put some limits on that because monitoring isn't referred to anywhere in in any in article levon or anywhere else in the municipal code and it's not the municipality that's doing this and that's where there's a big disconnect misspell you just said send your signals remotes to run station wirelessly and i don't want to beat that too hard but it's very clear that that's the case i want to go to some of the other trust arguments there were if we use rule reason analysis there was no competition or bidding for the contract and in either community in fact there's no evidence so that the witness for cycle was unable to define a geographic market for competing for exclusive contracts and the testimony before judge durkin was not only was there no pro competitor benefit but it had a significant adek competitor benefit because they're not paying sixty five fifty they're paying eighty nine dollars  different type of service when you have an ira says but there's no evidence to support that that these are different fact as you point out it's the same product is fire said they were close substitute said they're interchangeable from the standpoint in fact in their own test our central station operator beat their wireless system by a second judge dirk and rejected those arguments no he didn't reject the argument he made it when he found that made the factional fighting about what the village intended well it couldn't have adapted your arguments and made that fit that factual determination but it was intent how can you have a factual determination of the intent when in fact who statute which is the case law says should be interpreted by its plain meaning the ordinance in this case clearly says just send your signal to a room designated remote supervising station all that testimony is irrelevant to  the decision is in oral and with respect to summary judgment or contrary to what was established during that time this court has already found strike that correctly the contract clause or any of the other pleadings found deficiencies that didn't exist because if we read it light most favorable to the plaintiff they wouldn't have been decided and denied