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Desai v. ADT Sec. Sys., Inc.

United States District Court, N.D. Illinois, Eastern Division

January 30, 2015

VISHVA DESAI and PHILIP J. CHARVAT, on behalf of themselves and others similarly situated, Plaintiffs,
v.
ADT SECURITY SYSTEMS, INC., Defendant/Third Party Plaintiff,
v.
TOLMAN, et al., Third Party Defendants. SAFE STREETS USA, LLC, as successor to EVERSAFE SECRUITY SYSTEMS, INC., Third Party Defendant/Cross-Claimant,
v.
DIRECT SAVINGS USA, INC., et al., Third Party Defendants/Cross-Defendants

Page 897

For Vishva Desai, on behalf of hereself and others similarly situated, Plaintiff: Alexander Holmes Burke, LEAD ATTORNEY, Burke Law Offices, LLC, Chicago, IL; Matthew Mccue, LEAD ATTORNEY, PRO HAC VICE, Law Office Of Matthew Mccue, Natick, MA; Brian Kevin Murphy, Murray Murphy Moul Basil LLP, Columbus, OH; Edward A. Broderick, Broderick Law, P.C., Boston, MA; John W. Barrett, Jonathan Rehe Marshall, Bailey & Glasser Llp, Charleston, WV; Matthew Mccue, PRO HAC VICE, Law Office Of Matthew Mccue, Natick, MA.

For Philip J. Charvat, on behalf of themselves and others similarly situated, Plaintiff: Matthew Mccue, LEAD ATTORNEY, PRO HAC VICE, Law Office Of Matthew Mccue, Natick, MA; Alexander Holmes Burke, Burke Law Offices, LLC, Chicago, IL; Brian Kevin Murphy, Murray Murphy Moul Basil LLP, Columbus, OH; Jonathan Rehe Marshall, Bailey & Glasser Llp, Charleston, WV.

Mark Fitzhenry, Plaintiff, Pro se.

For ADT Security Services, Inc., Defendant: Charles Sanders McNew, PRO HAC VICE, McNew P.A., Boca Raton, FL; Jason Lawrence Pyrz, Polsinelli Shughart, P.C., Chicago, IL; John W. Barrett, Bailey & Glasser Llp, Charleston, WV; John A. Leja, Polsinelli Shughart PC, Chicago, IL; Michael E Baughman, PRO HAC VICE, Robert L. Hickok, Pepper Hamilton LLP, Philadelphia, PA.

For The Elephant Group, Inc., Third Party Defendant: Daniel W. Pisani, LEAD ATTORNEY, Sessions Fishman Nathan & Israel, Chicago, IL; Howard L. Teplinsky, Beermann Pritikin Mirabelli Swerdlove LLP, Chicago, IL; James Kevin Schultz, Sessions Fishman Nathan & Israel LLP, Chicago, IL.

For ADT Security Services, Inc., ThirdParty Plaintiff, Third Party Defendant: Jason Lawrence Pyrz, Polsinelli Shughart, P.C., Chicago, IL; John W. Barrett, Bailey & Glasser Llp, Charleston, WV; John A. Leja, Polsinelli Shughart PC, Chicago, IL; Michael E Baughman, Robert L. Hickok, Pepper Hamilton LLP, Philadelphia, PA.

For Christopher Long, Mr., Third Party Defendant: Saman Behnam, PRO HAC VICE, Law Office Of Saman Behnam, Long Beach, CA.

For Safe Streets USA, LLC, successor Eversafe Security Systems, Inc., Eversafe Security Systems, Inc., ThirdParty Plaintiffs: Lorne T Saeks, LEAD ATTORNEY, Much Shelist, P.C., Chicago, IL; Quintin F. Lindsmith, LEAD ATTORNEY, Bricker & Eckler, Columbus, OH.

For Safe Streets USA, LLC, Eversafe Security Systems, Inc., Cross Claimants: Lorne T Saeks, LEAD ATTORNEY, Much Shelist, P.C., Chicago, IL; Quintin F. Lindsmith, LEAD ATTORNEY, Bricker & Eckler, Columbus, OH.

Page 898

MEMORANDUM OPINION AND ORDER

Elaine E. Bucklo, United States District Judge.

After receiving unsolicited, pre-recorded telemarketing calls promoting ADT Security Services, Inc.'s (" ADT" ) products and services, Vishva Desai filed a class action lawsuit against ADT in March 2011 alleging violations of the Telephone Consumer Protection Act of 1991 (" TCPA" ), 105 Stat. 2394, 47 U.S.C. § 227. ADT, in turn, sued various individuals and entities that allegedly made prohibited telemarketing calls to the putative class.

In June 2013, I granted final approval to a $15 million settlement between ADT and a class comprised of all persons or entities that received a " covered call" at any time between January 1, 2007 and the date of the settlement. See Dkt. No. 243 at ¶ 6 (defining " covered call" ).

ADT has recovered $7 million in contribution or indemnification from third parties. ADT seeks to recover the remaining $8 million paid to the class and over $2 million in attorney's fees and costs from The Elephant Group, Inc. (" EG" ) under either of two indemnification provisions in the ADT-EG contract.

ADT and EG have filed cross motions for summary judgment on ADT's contractual indemnification claim. I grant ADT's motion in part and deny EG's cross motion for the reasons stated below.

I.

The following facts are undisputed unless stated otherwise. As reflected in their Local Rule 56.1 statements, the parties agree on the facts, but disagree about the legal conclusions that should be drawn from those facts.

A.

ADT sells home security services, both directly to consumers and through a network of ADT Authorized Dealers. In May 2008, EG signed a contract with ADT to generate sales leads for ADT Authorized Dealers. See Dkt. No. 282-2 (" Agreement" ). The Agreement called for EG to " acquire referrals through a variety of marketing channels that include: partnerships, direct marketing and internet marketing as approved in writing by ADT." Id. at Ex. B. Although the contract expressly contemplated marketing partnerships between EG and third parties, EG was prohibited from transferring or assigning any of its contractual duties without ADT's express written consent. Id. at ¶ 17.

The Agreement also imposed restrictions on EG's ability to engage in " Telemarketing Services" of ADT's products and services. Id. at ¶ 23.A.[1] As relevant

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here, EG could not " make any unsolicited outbound telephone calls as part of a plan, program, or campaign directly or indirectly through telemarketing agents or others on behalf of ADT to any person, including but not limited to ADT Customers or Leads." Id. at ¶ 23.A.

The only telemarketing EG could engage in consisted of " responding by telephone to consumer inquiries regarding ADT or ADT Dealer goods or services received via internet, telephone, e-mail, or other electronic means" subject to several additional restrictions. Id. For example, when making outbound telemarketing calls, EG agreed to (1) comply with the TCPA and similar laws; (2) refrain from using pre-recorded messages without ADT's consent; and (3) " scrub" all phone numbers against ADT's do-not-call list. Id. at ΒΆ 23.A.1. Upon request, EG also agreed to provide ADT with its outbound calling records; remove numbers from its calling lists; and present " documentary proof of its and its telemarketing agents' compliance" with the TCPA and ...


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