KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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More comment on customer changing alarm company / central station webinar series announced
June 25 2020
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Advanced notice:
Central Station* 2020 webinar series starts July 13, 2020. K&K will be hosting webinars by central stations, one at a time, who will address "why you should be using our central station". Each webinar will be approximately 20 minutes and then Q&A opportunity. See what your central station has to offer or what others offer, enabling you to choose the right central station for you.
* only central stations on The Alarm Exchange will be invited to participate
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More comment on customer changing alarm company from June 19, 2020 article
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Ken,
I just want to add an additional comment to Robert Kleinman’s response about whether or not the fact that a customer calls an alarm company (as opposed to the company calling the customer) is sufficient to shield the company from a tortuous interference action.
While I don’t believe that it is incumbent on a company to investigate each prospect to determine if it has a contract with another company, if you have reason to believe that they do, and that you could possibly be interfering with that contractual relationship, be very careful. Account poaching is an issue.
I have provided litigation support to national and regional companies that have been the victims of organized efforts by unscrupulous competitors to steal their customers. While I have never seen an instance of a company asserting a tortuous interference claim of a single incidence of poaching, when a pattern develops, companies get very concerned, and rightly so. Very few companies are magically blessed with a parade of customers coming to them from a competitor. If this happens, make certain that not only have you not done something to engineer this miraculous stampede, but that you haven’t contributed to it (unscrupulous salesperson or referral agent), or that there isn’t the appearance that you have (advertising that clearly targets a competitor).
Even though you may be acting in good faith, and not violating the law, you are operating in the real world, not in a law book, take steps to ensure that you have “clean hands” or you may run the risk of a very expensive legal action. Remember that ethical companies have in-house attorneys, not because they want to make trouble, but because they want to end trouble. Don’t be the trouble that a company with much greater resources than yours seeks to end. Mr. Kleinman is a very good attorney, and he is paid by the year. Don’t put yourself in a position of having to respond to Mr. Kleinman, or one of his contemporaries at another company, with an attorney that you have to pay by the hour.
Mitch Reitman
Reitman Consulting Group
Fort Worth, TX
817-698-9999
http://www.reitman.us
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Response
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Mitch, when your usual sage advice wanders into the legal world you leave yourself open to comment. I indicated in my prior response that proving a claim for tortious interference with contract is an uphill battle, not to mention expensive. When your company is being targeted by a competitor you will have no choice but to take action or watch your account base dwindle. There have been lawsuits between large companies [and I’ve written articles on several] and even lawsuits between small companies, though we don’t get to hear about those for the most part.
Draw a line, left to right. On the left we have no basis for a tortious interference claim and on the right we have an excellent claim for tortious interference claim. Look at it as a continuum. As more and more facts tending to show tortious interference is gathered the pointer moves farther and farther to the right. As some point it crosses over to a good cause of action for tortious interference. That’s not the end of the analysis however. Now you need a new calculation for damages, which may or may not be sufficient to justify a lawsuit for tortious interference. That’s the problem with one or two lost accounts.
A potential customer calling you would not move the needle to the right. If you don’t ask about current alarm service you don’t move the needle. If you get to the premises and see an alarm system, that does not move the needle.
You mention an organized effort to attack a competitor’s account base. That scenario assumes a bunch of facts that would move the needle past the half way mark. The attack could be designed to reduce the chance that a tort claim could arise, which doesn’t mean you can’t get sued anyway. For example, it’s probably OK [or to sound like a lawyer, “not actionable”] if an ad runs encouraging customers serviced by ABC company who are no longer under contract term to call XYZ company for service. Most likely the ad could say better and cheaper service.
If the ad claims that ABC has gone out of business, or is about to, and better call XYZ for continued service, well that brings the needle all the way to the right. But not even a company with in-house counsel would be dumb enough to do that without knowing it would be sued.
You next mention in-house counsel. They are not always there to “end” problems; sometimes they are just there and sometimes they can make problems. And, where did you get the information to call Mr. Kleinman “a very good attorney”?
Finally, and I think this set the tenor of my response, what’s wrong with having to pay an attorney by the hour?
On a more serious note, let me conclude this way. Tortious interference actions are generally hard to prove [your lost account is not anxious to cooperate with you], the damages are probably insufficient to justify the expense of the lawsuit [you will likely be limited to the term of the contract without renewal, less your cost of performance], costly to litigate [you’re going to be paying – to put it the way Mitch did, “by the hour”].
This is not to say that you should never consider this lawsuit. You may have to because of the actions of your competitor.
Another thing, Mr. Kleinman is in fact a “very good attorney”; at least quite capable of drafting a lawsuit for defamation [only kidding, sort of].
One other item, and one that Mr. Kleinman is really good at. There is a difference between a claim for tortious interference and a claim for converting another alarm company’s property. In my prior response I cautioned that using another alarm company’s property will leave you open to a conversion action. Conversion is taking over property, belonging to another, to the exclusion of that other party. If the alarm system on the subscriber’s premises is leased then it’s not the subscribers, and it sure isn’t yours; you can’t use it, wire and all. If you do, you can be sued for conversion.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com
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