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Watts Water Technologies v. Sidley Austin

Watts Water Technologies v. Sidley Austin

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Published by Mike Koehler

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Published by: Mike Koehler on Jun 19, 2012
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07/17/2013

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FtLED
"IVllACTIONS
BRI\NCtl
JUN0
i)
Z012
SUPEF~~r~,)URT
I,
FTHEDISTRICTOFCOlUMBIA
I~
WASHlNGiC:".DC
CaseNo.:
000L184~"-12
INTHESUPERIORCOURTFORTHEDISTRICTOFCOLUMBIA
CivilDivisionWAITSWATERTECHNOLOGIES,INC.,815ChestnutStreetNorthAndover,
MA01845
Plaintiff,
SIDLEY
AUSTIN,LLP
]501K
Street,NWWashington,DC20005
v.
SERVE:
CTCorporationSystem)015]
5i.1I
Street,NWSuite1000WashingtonDC,20005Defendant.
COMPLAINT
~!'I~IIIIIW~IIII!I
COMESNOW,
Plaintiff.byandthroughundersignedcounsel,andrespectfullysubmitsthisComplaint,andforthiscauseofactionstates:
JURISDICTION1.
ThisCourt
has
personaljurisdictionovertheDefendant,Sid1eyAustin,LLP
("Sid]ei~)
becauseSidleyresides
ill
theDistrictofColumbia,andthisCourthassubjectmatterjurisdictionpursuanttoD.C.CodeAnn.
§
11-921.
.2.VenueinthisCourtis
proper
because,
interalia,
SidleyisaresidentoftheDistrictofColumbia,andcontinuestomaintainalawofficeandpracticelawinthisjurisdiction,
 
PARTIES
3.Venueisalsoproper
in
this
C0U11
becausea
portionof
theresults
of
Sidley'snegligenceandasubstantialportionofthedamagesthatSidleycausedwereultimatelysufferedintheDistrict
of
Columbia.4.WattsWater
Technologies,
Inc.(hereinafter
referred
toas"Watts")isaDelawarecorporationwithitsheadquartersinNorthAndover)Massachusetts.Watts'ssubsidiariesareengagedinthebusinessofdesigning,manufacturingandsellingwatervalvesandrelatedproductsinNorthAmerica,EuropeandAsia.
5.Prior
to
a
corporate
name
change
in2003,WattswasknownasWatts
Industries.Inc.6.SidleyisaUnitedStates-basedgloballawfinnwith
approximately
1700lawyersin18
offices.
Sidley
isthe
successor-in-interest
to
Sidley,Austin,
Brown
andWood.7.Sidleyclaims°that.
from
thisDistrictofColumbiaOffice,"Ourlawyers...helpourclientsnavigateU.S.and
international
regulatorylawandpublicpolicies
that
affectthewaybusinessisconductedbothhereandaroundtheglobe:'
8.
Sidleyisgoverned
by
aManagementCommittee,atleastonememberofwhichisbasedilltheDistrictofCoJumbiaOffice.
INTRODUCTION
9.Watts'saffiliatedcompanieshavebeendesigningandmanufacturingwatervalvesandotherwater-relatedproductsfornearly140years,andWattsnowhassubstantialbusinessinterestsacrosstheglobe.
10.
WhenWattswasconsideringtheacquisitionofaChinesecompany,WattshiredSidleyasitsattorneys
to
performlegalduediligencewithrespecttothepotentia]acquisitionso
2
 
3
thatWattscouldevaluatethelegalrisksassociatedwitbtheacquisitionanddecidewhether
to
proceed.11.Sidley'slegalrepresentationrequired
its
attorneystothoroughlyinvestigatethetargetcompanyandidentifyallpotentiallegalrisksandliabilitiesthatWattsmightbeexposedtooracquireif
it
purchasedthetargetcompany.12.SidleywasawarethatthesepotentialliabilitiesandlegalriskscouldincludepossibleviolationsoftheForeignCorruptPracticesActof1977,15U.S.C.§§78dd-l,
etseq.
("FCPA").
13.
Inthecourseofitslegalduediligence,Sidleyuncoveredadocumentdemonstrating
that
thetargetcompanyhadawritten"kickback'policy,bywhichthecompanypaidChinesegovernmentofficialsorofficialsofstate-ownedentities(suchasChinese"designinstitutes")inordertosecuregovernmentcontractsforthecompany.14.ThispolicyviolatestheFCPA,andtheSidleypartnerresponsiblefortheduediligencehassubsequentlyadmittedthatthisdocumentwasa"redflag."15.Undoubtedly,SidleyshouldhavedisclosedthekickbackpolicyandthedocumenttoWatts.16.Nonetheless,despiteobviouslydiscoveringthiswrittenpolicy
ill
itslegalduediligence,SidleyneverdiscloseditsexistencetoWattsinanyofSidley'slegaldue.diligencereportsorinanyothercommunication.17.
As
aresultofSidley'sfailure.Wattswasunawareof'thekickbackpolicy.18.Watts
paid
millionsofdollarstopurchasethetargetcompany,
and
Wattsoperated
it
forseveralyears.

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