ADT LLC has reached a settlement with groups of device owners in five separate proposed class actions. It was alleged that the home security company deceived consumers about the efficiency of its devices and their vulnerability to hacking. ADT was facing claims by consumers in Illinois, Arizona, Florida and California, with claims in the latter state filed by Michael Edenborough in March alleging ADT violated California’s Consumer Legal Remedies Act (CLRA), Unfair Competition Law (UCL) and fraudulently hid material information from consumers about the hackability of its devices.
U.S. District Judge Jon Tigar dismissed Edenborough’s CLRA and UCL claims in March, but allowed his fraudulent omission claim to proceed. The two sides continued to exchange discovery materials and take part in mediation sessions. According to a joint notice of settlement submitted by Edenborough, that mediation resulted in an agreement to settle, through a nationwide class, the claims alleged in his own suit, along with those filed by lead Plaintiffs Dale Baker, Janet Cheatham, Santiago Hernandez and Patricia Wilson.
At press time, the terms of the deal had not disclosed. Edenborough had alleged that at the time he signed up for ADT’s service in early 2012, the company was fully aware that wireless systems like its own were vulnerable to disruption because they lacked encryption, yet failed to share that information.
Judge Tigar ruled that Edenborough’s complaint “need not specify in detail the exact methods of hacking to which ADT knew its devices were vulnerable,” Judge Tigar partially denied ADT’s dismissal motion. The judge ruled that the “Plaintiff need only generally allege that ADT had knowledge of, and withheld, a material fact: that its devices were unencrypted and vulnerable to hacking.”
The publications cited by Edenborough said that the industry to which ADT belongs knew of wireless device vulnerabilities long before he signed his 2012 contract. His complaint alleged that the manufacturers of ADT’s devices have acknowledged, and disclosed to ADT, that since 2012 its home systems were vulnerable – an acknowledgment ADT itself made in 2016.
Arizona resident Janet Cheatham had made similar claims against ADT in September 2015, and recently sought to certify a class of state consumers she said were deceived by the company since 2012.
Florida resident Santiago Hernandez filed suit against ADT around the same time as Edenborough. CFPB Director Richard Cordray said that the company boasts that it uses the most innovative technology in the market, yet its signals are easily intercepted. The company’s knowing omissions and misrepresentations about its security systems and failure to encrypt or secure its wireless signals is a violation of the Florida Deceptive and Unfair Trade Practices Act, Hernandez said.
The consumers are represented by Mark Chavez and Dan Gildor of Chavez & Gertler LLP, Francis J. Balint Jr. and Andrew S. Friedman of Bonnett, Fairbourn, Friedman & Balint PC, and Tom Zimmerman of Zimmerman Law Offices PC. The case is Edenborough v. ADT LLC, (case number 3:16-cv-02233) in the U.S. District Court for the Northern District of California.