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ADT LLC v. Capital Connect, Inc.

United States District Court, N.D. Texas, Dallas Division

April 21, 2017

ADT LLC, ET AL., Plaintiffs,
v.
CAPITAL CONNECT, INC., ET AL., Defendants.

          MEMORANDUM OPINION AND ORDER

          A. JOE FISH Senior United States District Judge.

         Before the court are the motions for partial summary judgment filed by the defendants, Capital Connect, Inc. (“Capital Connect”), John Lee, John Backus, Victor Vega, Trevor McAlees (docket entry 161), and Power Home Technologies, LLC (“PHT”) (docket entry 216); and the motion for summary judgment filed by the defendant, Alliance Security, Inc. (“Alliance”) (docket entry 164). For the reasons stated below, the defendants' motions are granted in part and denied in part.

         I. BACKGROUND

         A. Factual Background

         The plaintiff, ADT LLC (“ADT”), provides electronic security services and equipment to homes and businesses throughout the United States. Complaint ¶ 18 (docket entry 1). ADT U.S. Holdings, Inc. (“ADT Holdings”), also a plaintiff, owns the ADT trademarks. Id. ¶ 1. The defendants seeking summary judgment are three alarm-service companies, Capital Connect, Alliance, and PHT, and four individual alarm-salespersons, John Lee, John Backus, Victor Vega, and Trevor McAlees. See id. ¶¶ 4-5, 7, 9-12. ADT brought this action alleging that the defendants sell alarm systems in unannounced door-to-door sales visits, during which the defendants have made false statements, confusing the homeowners into believing that the defendants were somehow affiliated with ADT. See id. ¶¶ 27-30. ADT contends that the defendants' sales tactics violate the Lanham Act, 15 U.S.C. § 1125(a), and ADT's rights against unfair competition at common law. Id. at 34-41.

         Capital Connect, Alliance, and PHT sell and install alarm systems on behalf of Monitronics International, a direct competitor of ADT. See Brief in Support of Defendants Capital Connect, Inc., John Lee, John Backus, Victor Vega, and Trevor McAlees' Motion for Partial Summary Judgment (“Capital Connect's Brief”) at 3-4 (docket entry 162); Alliance's Motion for Summary Judgment and Brief in Support (“Alliance's Brief”) at 1 (docket entry 164); PHT's Brief in Support of Its Motion for Partial Summary Judgment (“PHT's Brief”) at 3 (docket entry 217). ADT alleges that each of the defendants' sales forces engaged in false and misleading sales pitches during their door-to-door sales visits, which targeted ADT's customers. ADT further claims that the defendants' misleading pitches were designed to convince ADT customers to terminate their contracts with ADT. See Plaintiffs' Memorandum in Opposition to Capital Connect's Motion for Partial Summary Judgment (“Plaintiffs' Capital Connect Response”) at 2 (docket entry 180); Plaintiffs' Memorandum in Opposition to Alliance's Motion for Summary Judgment (“Plaintiffs' Alliance Response”) at 3 (docket entry 179); Plaintiffs' Memorandum in Opposition to PHT's Motion for Partial Summary Judgment (“Plaintiffs' PHT Response”) at 2 (docket entry 242).[1]

         According to ADT, the defendants' sales forces arrived unannounced at the homes of ADT customers, falsely stated that they were affiliated with ADT, and that the customers' ADT alarm equipment was out of date and needed to be upgraded. See, e.g., Plaintiffs' Capital Connect Response at 6-7 (citing Declaration of Annie May Edwards at 1-2 (docket entry 7-6)); Plaintiffs' Alliance Response at 7 (citing Declaration of Patricia Belcher-Wuchte at 1-2 (docket entry 179-15)); Plaintiffs' PHT Response at 6-7 (citing Deposition of Gladys Walker at 216-17 (docket entry 243)). As a result, ADT's customers signed contracts with the defendants and agreed to the removal of ADT's alarm equipment and the installation of the defendants' equipment. See Plaintiffs' Capital Connect Response at 6-7 (citing Declaration of Annie May Edwards at 1-2 (docket entry 7-6)); Plaintiffs' Alliance Response at 7 (citing Declaration of Patricia Belcher-Wuchte at 1-2 (docket entry 179-15)); Plaintiffs' PHT Response at 6-7 (citing Deposition of Gladys Walker at 216-17 (docket entry 243)). After receiving complaints, ADT often returned to its customers' homes to reinstall ADT equipment in place of the defendants' equipment. See Plaintiffs' Capital Connect Response at 2 (citing Declaration of Marcia Gold at 5 (docket entry 7-2)); Plaintiffs' Alliance Response at 3 (citing to same); Plaintiffs' PHT Response at 2 (citing to same). The plaintiffs have documented over 700 incidents committed by Capital Connect's sales force, see Plaintiffs' Capital Connect Response at 2; numerous incidents committed by Alliance's sales force, see Plaintiffs' Alliance Response at 3; and at least 135 incidents committed by PHT's sales force, see Plaintiffs' PHT Response at 2.

         The defendants have been aware of the conduct of their sales forces for years. See Capital Connect's Brief at 4; Alliance's Brief at 2-3; PHT's Brief at 4. In fact, on August 26, 2013, the plaintiffs entered into a settlement agreement which released all claims against the defendants as of the date of the agreement. Capital Connect's Brief at 4; Alliance's Brief at 2-3; PHT's Brief at 4. However, nearly all of the incidents at issue in the present case occurred after the August 26, 2013 settlement agreement. See Plaintiffs' Capital Connect Response at 12 (citing Complaint at 9-18); Plaintiffs' Alliance Response at 9 (citing Complaint at 27-31); Plaintiffs' PHT Response at 12 (citing Complaint at 19-24).

         B. Procedural Background

         ADT filed this suit against the defendants on July 7, 2015. See Complaint. On the same day, ADT filed a motion for a preliminary injunction against Capital Connect, seeking to enjoin Capital Connect from engaging in false sales pitches. See generally Plaintiffs' Motion for a Preliminary Injunction (docket entry 4). On October 28, 2015, this court granted the plaintiffs' motion for a preliminary injunction. Memorandum Opinion and Order Granting the Plaintiffs' Motion for Preliminary Injunction (docket entry 82).

         On January 17, 2017, Capital Connect, John Lee, John Backus, Victor Vega, Trevor McAlees, and Alliance filed the instant motions. Capital Connect, Inc., John Lee, John Backus, Victor Vega, and Trevor McAlees' Motion for Partial Summary Judgment (docket entry 161); Alliance's Motion for Summary Judgment (docket entry 164). On February 7, 2017, the plaintiffs filed responses. Plaintiffs' Capital Connect Response; Plaintiffs' Alliance Response. On February 21, 2017, Capital Connect, John Lee, John Backus, Victor Vega, and Trevor McAlees filed a reply to ADT's response to their motion for summary judgment. Reply in Support of Capital Connect, Inc., John Lee, John Backus, Victor Vega, and Trevor McAlees' Motion for Partial Summary Judgment (“Capital Connect's Reply”) (docket entry 209). On February 23, 2017, Alliance filed a reply. Alliance's Reply to Plaintiffs' Response to Its Motion for Summary Judgment (“Alliance's Reply”) (docket entry 220). Also on February 23, 2017, PHT filed its motion for partial summary judgment. PHT's Motion for Partial Summary Judgment (docket entry 216). On March 15, 2017, the plaintiffs timely filed a response to PHT's motion. Plaintiffs' PHT Response. The motions are now ripe for decision.

         II. ANALYSIS

         A. Legal Standard

         Summary judgment is proper when the pleadings, depositions, admissions, disclosure materials on file, and affidavits, if any, “show[ ] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), (c)(1).[2] A fact is material if the governing substantive law identifies it as having the potential to affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue as to a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.; see also Bazan ex rel. Bazan v. Hidalgo County, 246 F.3d 481, 489 (5th Cir. 2001) (“An issue is ‘genuine' if it is real and substantial, as opposed to merely formal, pretended, or a sham.”). To demonstrate a genuine issue as to the material facts, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Electric Industrial Company v. Zenith Radio Corporation, 475 U.S. 574, 586 (1986). The nonmoving party must show that the evidence is sufficient to support the resolution of the material factual issues in his favor. Anderson, 477 U.S. at 249 (citing First National Bank of Arizona v. Cities Service Company, 391 U.S. 253, 288-89 (1968)).

         When evaluating a motion for summary judgment, the court views the evidence in the light most favorable to the nonmoving party. Id. at 255 (citing Adickes v. S.H. Kress & Company, 398 U.S. 144, 158-59 (1970)). However, it is not incumbent upon the court to comb the record in search of evidence that creates a genuine issue as to a material fact. See Malacara v. Garber, 353 F.3d 393, 405 (5th Cir. 2003). The nonmoving party has a duty to designate the evidence in the record that establishes the existence of genuine issues as to the material facts. Celotex Corporation v. Catrett, 477 U.S. 317, 324 (1986). “When evidence exists in the summary judgment record but the nonmovant fails even to refer to it in the response to the motion for summary judgment, that evidence is not properly before the district court.” Malacara, 353 F.3d at 405.

         B. Application

         1. Alliance's Evidentiary Objections

         Before considering the merits of Alliance's motion for summary judgment, the court must address its objections to evidence cited in the plaintiffs' summary judgment response. The court will consider only the evidentiary objections specifically raised by Alliance. See Eguia v. Tompkins, 756 F.2d 1130, 1136 (5th Cir. 1985) (“Documents presented in support of a motion for summary judgment may be considered even though they do not comply with the requirements of Rule 56 if there is no objection to their use.”).

         a. Alliance's Objections to the Plaintiffs' Exhibit 12

         Alliance objects on several grounds to the plaintiffs' exhibit 12 (docket entry 179-12) attached to the plaintiffs' response to Alliance's motion for summary judgment. Alliance's Reply at 1-2. However, “because the court did not find it necessary rely on this evidence in support of its decision, these objections are overruled as moot.” Detgen ex rel. Detgen v. Janek, 945 F.Supp.2d 746, 753 (N.D. Tex. 2013) (Fish, J.), aff'd, 752 F.3d 627 (5th Cir. 2014).

         b. Alliance's Objections to the Plaintiffs' Exhibits 15 and 16

         Alliance objects to the plaintiffs' exhibits 15 and 16 (docket entries 179-15 and 179-16) attached to the plaintiffs' response to Alliance's motion for summary judgment, contending that the exhibits (1) fail to meet the requirements of 28 U.S.C. § 1746(2); (2) fail to meet the requirements of Fed.R.Civ.P. 56(c)(4); and (3) contain unsupported speculation and are replete with hearsay. Alliance's Reply at 2-3. Exhibit 15 is the declaration of ADT customer Patricia Belcher-Wuchte (docket entry 179-15) and exhibit 16 is the declaration of ADT customer Phyllis Conlon (docket entry 179-16).

         As to Alliance's first objection, 28 U.S.C. § 1746 requires that declarations “substantially” follow the requirements of the statute.[3] See 28 U.S.C. § 1746. Here, both declarations were signed, dated, and end with the following statement: “I understand that false statements made herein are made subject to the penalties of [section 1746].” Declaration of Patricia Belcher-Wuchte at 4 (docket entry 179-15); Declaration of Phyllis Conlon at 4 (docket entry 179-16). The court concludes that the declarants have substantially adhered to the requirements of section 1746. Therefore, Alliance's first objection is overruled.

         As to Alliance's second objection, Rule 56(c)(4) requires that

[a]n affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or ...

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