What the Synnex case means

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					 w w w. s e c u r i t y s y s t e m s n e w s . c o m                                                                                                       SECURITY SYSTEMS NEWS • APRIL 2007

What the Synnex case means
          closely watched New in New Jersey. Synnex wanted                           up would have enabled ADT to           ability provisions in the contract       enforcing limitation of liability
          Jersey appellate case aris- ADT to install a system at the new             confirm that the system remained        were not legal under the state’s         provisions in security contracts.
          ing from a multi-million warehouse and to incorporate the                  operational during an attempted        1998 alarm licensing law. (Before        The trial judge also missed the fact
dollar burglary could dramati- radio back-up from the existing                       burglary.                              1998, New Jersey courts enforced         that ADT’s monthly monitoring
cally impact the ability of alarm system at its other warehouse.                        Synnex also contended that          similar clauses in alarm contracts       fee was grossly disproportionate
companies in New Jersey, and Synnex also wanted the new sys-                         ADT was aware burglars exploited       limiting the liability of alarm com-     to the potential liability it would
possibly elsewhere, to limit claims tem to include cellular back-up.                 systems that relied solely on          panies for negligence.)                  be undertaking without their
by subscribers. In the                              ADT installed the new            cellular back-up in exactly the           The trial judge placed sig-           contractual limitations clauses.
case, Synnex v. ADT, a                              system but the existing          way that the burglars had at the       nificant importance on a recent           Courts in other states, most no-
New Jersey trial judge                              radio backup was incom-          Edison warehouse: breaking in          appeals court decision holding           tably New York, have recognized
refused to enforce the                              patible and ultimately,          to trigger the alarm, cutting the      that home inspectors, licensed           this principal in cases that have
alarm company’s con-                                never incorporated.              telephone line, destroying the cel-    under a state law passed on the          focused on keeping security ser-
tract terms limiting its                               Nine months after Syn-        lular back-up, hiding until police     same day as the alarm licensing          vices affordable.
liability to its subscrib-                          nex signed the ADT con-          left, then re-entering the premises    law, were deemed to be “profes-             Based on my review of the
ers, holding that the                               tract, burglars entered the      unimpeded.                             sionals” under the new state law         briefs, there are several valid
state’s alarm licensing                             Edison facility, tripping           Before the case went to trial,      and, therefore, could not legally        grounds on which the appeals
statute rendered the                                detectors that transmitted       ADT asked the court to enforce         limit their liability. The trial judge   court can overturn the trial court’s
clauses un-                Eric Pritchard                    signals to ADT’s        the indemnity and exculpatory          reasoned that alarm contractors,         decision. I suspect there will be a
enforceable.                                                 central station.        clauses in its contract. ADT ar-       licensed under the “Alarm Profes-        reversal on at least one of these
Following               G            C
                          UEST OMMENTARY                     The burglars cut        gued that Synnex should indem-         sionals Law,” likewise could not         grounds. If not, the allocation
trial, the jury                                              the telephone           nify ADT against the claims of its     limit their liability.                   of risk among alarm companies
found the alarm company negli- lines and destroyed the cellular                      insurer and that ADT’s liability          There are dramatic differences        and subscribers will change dra-
gent and awarded the subscriber’s back-up, effectively disabling the                 was limited by the express terms       between a residential home in-           matically in New Jersey and could
insurer more than $4 million.             system. According to Synnex,               of the contract. The trial court,      spection, where a homeowner              signal the beginning of a trend in
   ADT appealed the decision ADT alerted police and then con-                        however, refused to enforce the        cannot insure against a botched          other states. If so, only the larg-
and the New Jersey appeals court tacted a Synnex employee, telling                   agreement because ADT’s con-           home inspection, and a com-              est and most financially sound
scheduled oral argument for him that he did not need to go to                        tract required written approval by     mercial alarm subscriber that can        providers are likely to survive in
May 1.                                    the facility unless ADT heard back         ADT’s authorized representative,       and should obtain insurance to           the long term.
   The facts of the Synnex case are from police. The burglars made                   who failed to sign the contract.       protect against loss. There is also a
complicated. Here’s a thumbnail off with more than $7 million in                     Although the parties executed          big difference between consumer             Eric Pritchard is a lawyer at Klein-
sketch from my review of some equipment from the facility.                           riders for additional services and     transactions and transactions            bard Bell & Brecker LLP in Phila-
of the appellate briefs filed by the         Synnex’s insurers covered the            equipment, which expressly af-         between sophisticated, multi-na-         delphia where he chairs the firm’s
parties:                                  company’s loss and then insti-             firmed the terms of the original        tional companies. But what was           electronic security practice. He can
   Synnex, a multi-billion dollar tuted a lawsuit against ADT. Syn-                  contract and which were signed         most surprising about the judge’s        be reached at epritchard@kleinbard.
information technology provider, nex claimed that radio back-up                      by Synnex and ADT’s authorized         decision was that he ignored             com. Pritchard did not participate in
contracted with ADT to provide would have enabled the system                         representative, the court refused      well-settled New Jersey case law         the Synnex v. ADT litigation.
security at a new warehouse in to transmit signals even if the tele-                 to enforce the contract.
Edison, N.J., where Synnex stored phone lines and cellular back-up                      The trial court also held that,                              CORRECTION
equipment. ADT serviced a sys- had been breached. In addition,                       even if the ADT contract were              In our Central Station sourcebook, published in February,
tem at another Synnex warehouse Synnex claimed, a radio back-                        enforceable, the limitation of li-       we printed some incorrect information. Alarm Central LLC
                                                                                                                              can be contacted at 877-532-1500, has a range of monthly

Be a nosy neighbor
                                                                                     introduction of new Ethernet             monitoring fees from $4 to $6, and should have been listed
                                                                                     based products, they realize that at     as being 5-Diamond certified, with UUFX, billing services, a
                                                                                     any time they may be called upon         dealer program, and financing options. The Security Center
Continued from previous page                  is the regulatory body respon-         to add new network products              can be contacted at 800-437-4635.
   The more complex the system,               sible for managing unlicensed          while maintaining the current              Also in our February issue, in the story “UL SQ 561 Con-
the more important it will be to              spectrum (ISM bands). The hard         systems already in place.                fuses in Canada,” David Currie was mistakenly identified as
have real-time access to a wire-              truth is that if your neighbor has       For example, installing a high-        David Curry.
less network expert with the right            installed an FCC-approved radio        powered frequency-hopping prod-
tools and training for the job. For           transceiver that is transmitting       uct can consume the entire ISM         current DSL and Cable offerings.         the current state of the art, and in
example, mesh networks, while                 RF energy into your property and       band at your property; thereby         However, these technologies are          order to improve upon this, design
powerful and flexible can be                  interfering with your wireless de-     preventing you from installing a       in licensed bands, have limited          engineers will have to devise new
more of a challenge to maintain               vices, there is very little recourse   new wireless product down the          upload speeds, required monthly          technologies not yet conceived to
than simple hub-and-spoke mul-                available to you. However, if          road. Manage your spectrum             subscriptions, and so are not            squeeze more data through a fixed
tipoint or point-to-point backhaul            they have installed illegal power      wisely now, and you will be able to    easily applicable to the require-        amount of spectrum.
systems.                                      amplifiers, and you can measure         install next-generation products       ments of wireless security devices.         Until this happens, our unli-
   Finally, include in the project            and document this overpowered          without rendering your current         Therefore, it appears that for the       censed ISM bands will become
budget a few spares of critical               signal, you do have the right to       investment obsolete.                   foreseeable future most wireless         increasingly crowded. Therefore,
components to have on hand in                 file a petition with the FCC to                                                security and surveillance products       like any finite resource on our
the event of an outage. Be sure               have these disconnected and the           New wireless networking             are very likely to be limited to the     planet, we must all be disciplined
to also include items such as                 offender fined.                         technologies, but will these           unlicensed ISM bands.                    and only design and implement
lightning arrestors, cabling and                                                     help? In the past several years,          Shannon’s Theorem defines the          systems that are efficient in their
connectors that might become                    Protecting your investment/          tremendous advances have been          maximal amount of data that can          use of this limited spectrum and
damaged during storms or power                future-proofing your network           made in the field of wireless          be carried by a given RF channel.        hence play well with others.
surges.                                       The most sophisticated wireless        wide area networking. For ex-          For example, a 1MHz-wide slice
                                              network designers today very           ample, WiMAX and 4G cellular           of spectrum (say between 900-               Ray Shilling is the vice president
   Defending the RF spectrum at               carefully manage the unlicensed        networks will provide homes,           901 MHz) can be modulated to             of sales and marketing at AvaLAN
your location As discussed in Part            spectrum in their domain. Be-          businesses and mobile users with       transmit approximately 800,000           Wireless. He can be reached at
I, in the United States the FCC               cause of the rapid growth in the       a broadband alternative to the         bits of data per second. This is         rshilling@avalanwireless.com.

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