Lawsuit Against TycoIS Over Eli Lilly Warehouse Heist Moves Forward

A civil lawsuit filed by an insurer for Eli Lilly against Tyco Integrated Security will move forward later this month despite motions by the electronic security contractor to have the case dismissed.

NEW YORK – A civil lawsuit against Tyco Integrated Security, in which an insurer for Eli Lilly & Co., claims that a faulty security system led to the 2010 theft of nearly $80 million in pharmaceuticals from Lilly’s distribution facility in Connecticut, will move forward later this month despite motions by the electronic security contractor to have the case dismissed.

The lawsuit, filed by Pittsburgh-based National Union Fire Insurance Co. in 2013, seeks to recover $48 million from TycoIS, then known as ADT Security Services. In the claim, the insurance firm specifically alleges that TycoIS provided a report for Eli Lilly’s warehouse in Enfield, Conn., called a Confidential System proposal, in an effort to sell more security equipment.

The report highlighted faults and blind spots in the security system and detailed the “actual coordinates of every motion detector, beam, roof hatch, intercom, overhead door contact, fixed camera, panic button, card recorder, glass break sensor, control panel and keypad,” according to court filings.

About a month after Tyco performed a security evaluation for Eli Lilly in 2010, two intruders broke into the warehouse and stole $60 million worth of pharmaceuticals, including thousands of boxes of Zyprexa, Cymbalta, Prozac, Gemzar and other pills, according to the suit.

The insurance company claims TycoIS negligently failed to safeguard the proposal, and thus, intruders Amaury and Amed Villa, had “unique and confidential” information about the security system’s weaknesses. Additionally, National Union says the security contractor failed to warn Eli Lilly that multiple invasions had occurred at other facilities using its confidential information.

RELATED: Insurer Sues TycoIS for Compromised Security System

U.S. District Judge Beth Bloom rejected a February attempt by TycoIS to cut the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) claim, finding the company’s alleged misconduct had a sufficient nexus to the state, Law360 reports.

However, on June 25, Bloom granted TycoIS summary judgment on the issue, saying that National Union Fire Insurance Co. of Pittsburgh, Pa.’s damages were consequential, not actual, and that the law therefore did not apply.

To succeed in a claim under the FDUTPA, a plaintiff must prove a deceptive act or unfair practice; causation; and actual damages, according to the court,

Bloom explained that National Union’s contention that it had lost over $60 million through “damage to real property, inventory and other expenses associated with their loss” was an admission that the damages were in lost profits – “quintessential” consequential damages – and were not due to a difference between the value of the TycoIS services as they should have been provided and those delivered, which define actual damages, according to Law360.

The court also ruled Tyco’s subrogation waiver did not ban litigation from moving forward as National Union’s claims fall outside the security company’s contract with Eli Lilly.

RELATED: Even Best Contracts May Not Be Ironclad

Additionally, Bloom ruled that National Union demonstrated sufficient causation to support its negligence claims..

In March 2014, another Florida federal judge rejected Tyco’s argument that Eli Lilly had waived the right of National Union to seek reimbursement for losses from a third party.

The trial is scheduled for July 20.

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