e It IN THE SUPERIOR COURT FOR THE DISTRICT OF COLUMBIA Civil Division WATTS WATER TECHNOLOGIES, INC., 815 Chestnut Street North Andover, MA 01845 Case No.: OOO~84 ~'1-1Z Plaintiff, F1LED ~IVIL ACTIONS BRI\WCH JU¡~ 0 (, Z012 SUPEt',:C"~ C'JURT . F THE DISTRICT Or CO~UMDIA WASHINGíQ.~, DC v. SIDLEY AUSTIN, LLP 1501 K Street, NW Washington, DC 20005 SERVE: C T Corponition System 101 5 15th Street, NW Suite 1000 Washington DC, 20005 .. Defendant. COMPLAINT PI~II~lllllllmllllllllll!n COMES NOW, Plaintiff. by and through undersigned counsel, and respectfully submits this Complaint, and for this cause of action states: JURISDICTION 1. This Court has personal jurisdiction over the Defendant, Sidley Austin, LLP ("Sidley") because Sidley resides in the District of Columbia, and this Court has subject matter jurisdiction pursuant to D, C. Code Ann. § 1 i -921. 2. Venue in this Couit is proper because, inter alia, Sidley is a resident of the Distrct of Columbia, and continues to maintain a law office and practice law in this junsdìction.
42
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SIDLEY AUSTIN, LLP JU¡~ 0 (, Z012 - Jenner & Block · This Court has personal jurisdiction over the Defendant, Sidley Austin, LLP ("Sidley") because Sidley resides in the District
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e It
IN THE SUPERIOR COURT FOR THE DISTRICT OF COLUMBIACivil Division
WATTS WATER TECHNOLOGIES, INC.,815 Chestnut StreetNorth Andover, MA 01845 Case No.: OOO~84 ~'1-1Z
Plaintiff,
F1LED~IVIL ACTIONS BRI\WCH
JU¡~ 0 (, Z012
SUPEt',:C"~ C'JURT .F THE DISTRICT Or CO~UMDIA
WASHINGíQ.~, DC
v.
SIDLEY AUSTIN, LLP1501 K Street, NWWashington, DC 20005
61. In or around March 2009, Watts discovered through public reports that another company
had violated the FCP A in its dealings with certain government-owned "design institutes"
in China.
62. Specifically, this company had bribed these government officials to specify the use of the
company's products within ceiiain project specifications.
63. These specifications, in turn, steered the award of the contracts to the company.
64. Watts was entirely unaware of any such payments at its new subsidiar, CWV, or
whether CWV was involved with similar Chinese government-owned design institutes.
65. During the spring of 2009, Watts conducted an anti-conuption and FCPA-coinpliance
training program for certain of Watts's managers in China.
66. Cerain CWV sales personnel attended the training session in the spring of 2009,
67. In July 2009, these employees reported to Watts's management in China that there may
be FCP A violations at CWV based upon the Wiitten Kickback Policy-the same policy
that Sidley received during its legal due diligence, but did not report to Watts.
68. In July 2009, Watts retained Paul Hastings LLP ("Paul Hastings"), another U.S.-based
interational1a\\i finn with offices ~U"ound the world, to conduct an i nvestiiiati on,
9
e e69. Paul Hastings attorneys and outside forensic accountants examined Watts's business
operations in China, including conducting interviews of CWV employees and additional
legal due diligence.
70. During the course of the investigation, Paul Hastings acquired the Changsha Valve legal
due diligence files from Sidley,
71. Paul Hastings then discovered the Written Kickback Policy in Sidley's íìles.
WATTS SELF-REPORTED ITS UNINTENTIONAL FCPA VIOLATIONS TO THE SECAND THE SEC ULTIMA TEL Y IMPOSED A CEASE-AND-DESIST ORDER AND
CIVIL PENAL TIES
72. In August 2009, Paul Hastings notified Watts of the Written Kickback Policy, and the
likelihood that payments made to Chinese govemment officials or offcials of state-
owned entities pursuant to the policy violated the FCPA.
73, Based on Paul Hastings's early assessment of the Written Kickback Policy, Watts
decided to report its potential and unintentional FCPA violations to the SEC and DOl in
order to obtain the benetits of self-disclosure and early reporting.
74. Watts self-reported these violations to the SEC and DOJ on August 6, 2009, and engaged
in a variety of other remedial actions to address FCP A issues.
75. Over the next several months, Paul Hastings continued its investigation and its
communications with the SEC on Watt's behalf.
76. Durìng its investigation, on December 16, 2009, Paul Hastings interviewed Mr. Tang, the
Sidley attomey in charge of Sidley's representation of Watts.
77. During the interview, Mr. Tang admitted that the Written Kickback Peilicy was a "red
flag" indicative of FCP A violations.
10
e e78. He also admitted that Sidley's policy was to include all "signifcant issues" in its Due
Diligence reports, and that if an FCPA or other major issue was discovered, then it should
have been disclosed to the client.
79. Watts continued to cooperate with the SEC and DOJ in their investigations.
80. The SEC and DOJ investigated Watts's potential violations through their Washington,
D.C. offces, and during the course of the investigation, Watts's representatives
communicated and met with the SEC and DOJ in Washington, D.C.
81. On October 13, 2011, the SEC entered an order entitled "Order Instituting Cease-and-
Desist Proceedings Pursuant to Section 21 C of the Securites Exchange Act of 1934,
Making Findings, and Imposing Cease-and-Desist Orders and Civil Penalties" (the "SEC
Order"). A copy of the SEC Order is attached hereto as Exhibit D.
82. As a result of the SEC Order, Watts was required to disgorge profits, pay pre-judgment
interest and pay a civil penalty.
83. Watts paid these penalties to the SEC in Washington, D.C.
84. In or around January 2010, during the SEC investigation, Watts was also forced to sell
CWV at a substantial loss.
COUNT I: PROFESSIONAL NEGLIGENCE
85. Watts incorporates paragraphs 1-83 as ifset foiih here verbatim.
86, Sidley entered into a long term attoniey-client relationship with Watts, and acted as
Watts's CounseL.
87. As a result of this attorney-client relationship, Sidley owed Watts a duty to represent
Watts and protect Watts's interests using a reasonable degree of knowledge, care and
skilL.
11
e e88. Among other things, in the course of the legal due diligence examination of Changsha
Valve, the applicable standard of care required Sidley to (a) review the documents in
Sidley's own fies, (b) to disclose to Watts any significant issues, including FCPA
violations, that were discovered, and (c) to ensure that the statements it made to Watts in
the course of its legal due diligence reporting were coinplete and truthfuL.
89, Sidley's failure to disclose to Watts the Written Kickback Policy that was sitting in
Sidley's o\\'n files violated its own policíes, fell well below the applicable standard of
care, and constitutes actionable professional negligence and malpractice.
90. Sidley's negligence and violation of the standard of care proximately caused Watts to
suffer substantial injuries.
91. By way of example, as a result of Sidley's negligencè, Watt's purchased a company
whose core business operations were built on an express system of paying kickbacks to
government offcials (including design institutes) to obtain or maintain business, which is
a patent FCP A violation.
92. Watts was forced to conduct a detailed investigation, to endure and pay a substantial
judgment to the SEC, and to incur substantial professional and legal fees..
93, Watts was aJso forced to sell CWV at a substantial loss.
94. All of these damages and others were the proximate result of Sidley's negligence,
95. Sidley is liable to Watts for all of the damages proximately caused by Sidley's negligence
in an amount to be determined at triaL.
COl'NT H: BREACH OF CONTRACT
96, Watts incorporates paragraphs 1-95 as if set forth here verbatim.
97, Watts and Sidley entered into an agreement for Sidley to provide legal services to Watts.
12
e e98. This agreement specifically included Sidley's agreement to conduct legal due diligence
for Watts in connection with Watts's assessment of its potential acquisition of Changsha
Valve.
99. The agreement required Sidley to apply the skill and expertise of a reasonable lawyer in
fulfillng its obligations under the agreement, including its obJigatìons to perfol1l1 legal
due diligence in connection with Watts's assessment of its potential acquisition of
Changsha Valve.
100. The agreement also required Sidley to review the documents that it acquired from
Changsha Valve and provide to Watts an accurate report on the contents of those
documents.
101. As Watt's long-time attomeys, Sidley was well aware that Watts was relying on Sidley's
performance of its obligation under the paities' agreement in order to assist Watts in
analyzing and ultimately deciding to purchase Changsha Valve.
102. The paities knew and understood that Watts \-vas particularly reliant on Sidley's
contractual performance (n) because of the geographic distance between Watts's
management and the operations in China, lb) because Watts's management team did not
speak or read Chinese and thus were faced with a substantial language barrier in the
communications and documents related to Changsha Valve, and (c) because of Sidley's
professed experise in Chinese law aiid FCPA due diligence.
103. Watts fully performed under the agreement. and paid Sidley for SídJey's services.
104. But Sidley breached its agreement with Watts by, inter alia, (a) failing to apply the skill
and experise of reasonable attorneys, and (b) failing to review the documents that
13
e eChangsha Valve provided to Sidley and/or failing to accurately report to Watts on the
contents of those documents.
105. As a result of Sidley's breaches, Watts suffered significant injuries.
106. These injuries include, but are not limited to, the payments that Watts was forced to make
to the SEC, the legal fees and expenses that Watts incUlTed in investigating and
remedying the FCP A violations, and the losses that Watts suffered when it was forced to
sell CWV at a substantial loss.
107. Sidley is liable to Watts for all of the legally-allowable damages that resulted from
Sidley's breach of contract in an amount to be detennined at triaL.
COUNT III: NEGLIGENT MISREPRESENTATION
108. Watts incorporates paragraphs 1-107 as if set forth here verbatim.
109. During the course of its attol1ey-client relationship with Watts, Sidley was aware that
Watts was relying on Sidley's statements regarding legal due diligence in order for Watts
to make detenninations about whether to purchase Changsha Valve.
110. Sidley made numerous statements to Watts, including in its official Due Dilgence
Repoiis, that Sidley had conducted an extensive investigation of Changsha Valve, and
that Sidley had informed Watts of all of the signiíìcant issues that resulted from Sidley's
investigation ofChangsha Valve.
111. By way of example, Sidley's official Due Diligence reports contained representations
about the types of contracts that Changsha Valve entered with its clients and employees.
112. Sidley stated on multiple occasions in its Preliminary and Final Due Diligence Reports
that Changsha Valve's contracts contained only "standard boiler-plate language" that was
to be expected in contracts of that type.
14
e fi
113. As a further example, in August of 2005, Sidley sent to Watts a detailed analysis of the
contracts between Changsha Valve and its sales agents.
114. This desciiption stated that the sales agents were paid standard commissions, and
Sidley's description of the payments utterly failed to disclose that a portion of their
commissions were actually paid to Chinese government offcials or officials of state-
owned entities, including design institutes, as an ilegal kickback pursuant to the Written
Kickback Policy.
115. At the time it made these representations, Sidley had in fact already discovered the
existence of the Wiitten Kickback Policy.
116. But Sidley did not disclose that fact to Watts at any time.
117. The existence of this Written Kickback Policy rendered Sidley's statements regarding the
outcome of its legaL due diligence investigation and other express representations false.
118. Sidley negligently made these false statements to Watts regarding the Changsha Valve
legal due diligence.
119. In addition, Sidley had a duty to disclose to Watts the existence of the Written Kickback
Policy and Sidley breached its duties to Watts by failng to do so.
120, As Watts's long-time attomeys, Sidley was well aware that Watts was relying on Sidley
to provide complete and accurate statements regarding its legal due diligence in order to
assist Watts in analyzing and ultimately deciding to purchase Changsha Valve.
121. Watts was particularly reliaiit on Sidley (a) because of the geographic distance between
Watts's management and the operations in China, (b) because Watts's management teain
did not speak or read Chinese and thus were faced with a substantial language barrier in
15
e ethe communications and documents related to Changsha Valve, and (c) because of
Sidley's professed expertise in Chinese law and FCPA due diligence.
122. Watts reasonably relied on Sidley's negligent misrepresentations by agreeing to purchase
Changsha Valve according to the tenus ofthe October 26,2005 purchase agreement.
1:23. As a proximate æsultof Sidley's misrepresentations and Watts's reasonable reliance,
Watts suffered significant injuries.
124. These injuries include, but are not limited to, the payments that Watts was forced to make
to the SEC, the legal fees and expenses that Watts incurred in investigating and
remedying the FCPA violations, and the losses that Watts suffered when it was forced to
sell the company at a substantial loss.
125. Sidley is liable to Wans for all of its damages that proximately resulted from Sidley's
negligent misrepresentations in an amount to be detennined at tiiat
16
e eWHEREFORE, Plaintiff Watts Water Technologies, Inc. demands judgment against
Defendant on all Counts in an amount to be determined at tral but believed to be in excess of
one hundred thousand dollars ($100,000.00) in damages, plus costs of this suit and attorneys'
fees, and such other and further relief as this Court deems just and proper.
Dated: June 6,2012
Respectfully submitted,
PAULSON & NACE, PLLC
c.Barry J. a ar No. 130724
Clustopher T. Nace, Bar No. 9778651615 New Hampshire Ave., NWWashington, DC 20009202-463-1999 - Telephone202-223-6824 - [email protected]@paulsonandnace.comCounselfor Plainttff
BONDURANT, MIXSON & ELMORE, LLPH. Lamar Mixson, Georgia Bar No. 514012Pro hac vice pendingJason J. Carter, Georgia Bar No. 14 i 669Pro hac vice pending1201 West Peachtree St., Suite 3900Atlanta, Georgia [email protected]@bm cIa",'. com
Jury Demand
Plaintiff by and through the undersigned counsel and pursuant to Rule 38 of the Distrct
of Columbia Rules of Civil Procedure, hereby demands tral by jury of all issues in this matter.
~17
_ e
EXHIBIT
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SIDLEY AUSTIN BROWN & WOODuiimc mtil'''M.ollO"tl,ll 00
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ww.lldeyAltliltDll ~iMr.
waITU.'S tlTlIl$IOH NIUIURus
FumalJ Mew£e
To Mr. RobertT. McLurinWau Industies 'nc.
Mr. wiiUam C MeCarteryCc
Prom Tang Zbni:uSidley Austin Brown k Wood (ShAghai)
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WU14IHCTÖ1', D,i;. in
WRI'IU'S B.lIAI". ",1.l)ltH~i)'ntlithldlti)'.aoii
Our Ref:
Date l\Jne 7. ZP02 No. of ~ : 4 Undiilp¡1lhlà p"iil
Sua¡eè
Dear Bob:
E02gement Leer tor Wa1ü I,ulnsu, Inc
We ar rileaed t1t you wish to tetAin Sidley Austn Bro & Wood to serVe Il yout counselan Wans Indu$tres lno's PRe investeotsaperiicins 'and relat .matt' subject to
clearace/waver of conflcts ifany.
f'or over i 00 yea, our Firm commenced It re!ationshfp w(t eah new client withoutformaliry. The ~ppeniic Divii:ions 01 thii Supre Cour of the State of 'New Yorkhowever. reert! adopted roles reuiri thp: use of engageent leter in ma sitions.Such roles rcflci bow the praotiCl of law and the professional swdllds gtvmiln¡ It havebei:me locreatigty oomrilex. Al II reulr. we, like oter lare t1~, nOw follow the tltatlceof entring lnro engncm~nt leu wit OUT çlì-mts. (As)' may know, ¡nvestment btnking.
corisùlún,i aeunting and pUttr profesional scl\ice; firrs adopte this pracdce yean aheaof law fis.)
Although we have accepte thî~ measur of formality with ielucee, we have ncvcrhelescome to appreiate that it is prefcnible to hn\" these mattrs understood and agrd to by
our
c\lents at the cotnencte:t of our rere:er1:. A~ordÚlgi)l. we $ubmit for your
approval tle folltilng provisio governing our ~nßngelIeit ftyou ar jn'ag~inent pleasign the enclosed copy ofuils letr in the space provided below. If
you have an question
abut: these provIsions, or If you would liko to diSCUS$ possibl~ módífcailons. do not hesita
to call. Agairi~ wc:lare piea~ to have the opportit to serve yeu.n.. tnuiibsua '~Il ii_ie- "li IIl ~Ibii..blll bitt..lllc r.r 1M 1I~.) ~r.llil IMY "" tMnd..i.liilidllbJlC l" ~-t1t I'Jl~ tft"'. lirt 1101 ii ~il ~.i. t" Ittl~ oøi.lu 1l1l-' wllni fl iw Ii 1l.)' IIUlI li1 relf .ii_.rq l1diin. il i!tAi . r 'l1lIN lI allt b1 b:lo li.r w. lrl'/lI .. ..Y l".llrr lllll'l tM ,,ik rciiløt(l) t1_ ..1 "1Ih' prMlo. or llÐànoli:iriy, Ityu Uff ftV\ illo in_1o0l II iir,1i\t dOl l!ue.dt b ~ tf iÕii e. WI' Aba ndlltllli..ot ii...Llltl~ l..;: tllUIUuil.dD'
f..... . .M'''; ~\" p
TOTFL P.Ø4
e eSmLr:v AuS'tlN BROWN & WOOD
SHANGHAI
,Client and Scope (If Renmel1tS1jotl OUt client in 'tis matt wil be WAttJDdustrltS~ IDC (the "Company") and wr will iidvlse: tho Company in conniictlonwith. Mel the scope of (lur engement and duties to the Company shal ~1B. to theComp'aDY'1i PRe ()pen.tionsJnv~tnietlt! .Dd.rlate matln:. Speoific aspers of
the work rna)' change in the course of iniplementson of Cß prjec de.pi:nding ontho actal tircumstuces and the Compan's n~~ and tnstetions.
1., Tiirm of Engagemeøt. Either of us may ~nnl. thi: ~nsagc:ent at any time for,any reon by writtn notce. subjec on oLlr .par to applicable niles of' J'rofesioniil~ponsibitt). In the evimt that we kmil1a~ the cnuagemcni, we wil tae. sùch steps
ll at reasonably prseticable to pro yoUr interets in th abovl: matter.
Unle$$ prVlOUi\Y teinat. Std1 Au,ti Bro &. Wood's repmentson of thCompany wil termfnat upon. QUt sending you our fial siament for servIce
redmid. Pollowing s\l termination, MY otherise nonwpublie infomation you
bave supptied to Sidley Ausin Brown & Wood which is riaiiied by us wUl be kçptconfidential in llcordana' with applicale roles of professional ~pon$ibility. Lf.
ttpon such temlnatkin, you wis to have any docurnents dellvcred to you, pleae
advise: us. Otherise. an suc dooent$ wUl be tnsfencd to the peson reponsiblefor admini.stèring our record!l reéltlon progr.
, Pòr varous rensons. includln¡ the miniiizon of une:çoss storage expeses wereserve the right te desoy or othe,llsc dispose of MY $uclì documents reined byus. Howcver, we wil gIve you sumdent notice to allow you \. make otherarangement at your QWl i:~st
You 'l engaing Sidley Ausn Brown &. Wood to provide legal serices InèOMi:on with the speeific. feplCent101 as set fort '4bovi:. After completion of
the
rrpresentalon, chsnges may òct:ur in the applicale laws or regulatons that couldhave an impact upon your future rights iud liabilties. Unles YOll actually enga usaftr ¡he completion of the nipt'n~ioll to llfc\ltQe !ditonal advice on tsuesarisini '!m the Tq~ielltatlolÌ SIdley Austin Brown Ii Wood has no coniinutng
'obUgatlón to advise you wit tespe 10 i\bJre lega devtJermen15.
2. Fm and Expeiisg. Unless othçr úi stnctreargcments m: agrd upbetween "the Company and Sidley Ausn Brown & Wood In advacel, (lUI' chares for;my work caied out for th cnmpnny wlU be ca.lcu\aioo on. the bas otthe time spentby the i/lwyers involved. The cum stdi hourly rntllS. subjec to increei~meraHy on 'Ðnnua) bais, for tM attomeys/l"galasslstats who may be ¡nvolv~ inthe Compy's lesa work fr ûm= to 1imei a. as followS:~ l!rJ'i Safe (Usn
i We 'Hiii continue to honor yDùf preferrd blended hourly rate ofUSS300 for our i~i WOlK
011 your resins WFOE projec in SND.i p
e eSIDLEV AUST1N 'BllOWN & WOOD
SHANGHAI
Tang ZhClI¡o:i 450
Da"id lit13 400
etten Llnu""2SQ
Margaret LQ~250
Leo Xfaolnil HI16220
Joe Chen' 120
Julie Chenl 120
Additional 'SuPI:rt may be proided by lawyercgal assistts in our Beijing andHong K'On¡ Qffr;cs BS the rtee aise.
We' wll preáre tmlaons oflegod documents at a. flat hourly rstc ofUSS120.
Oisburentnts wil be ch~ seParaiy frm our service fe. We wil include onQIl blUs ehug for perorming, sei~ such as photcopytng, mesergtf anddelivcr scrvtcc:. ccmputeied reseah, tnvel. Jon¡;.dìsW~ telephone, ieleeopy,
word. prssing, nnd semh and filing fees at the ra at wltlch they ere ç"a: to us.fee ii expcnse of others (suh as consultats, appriser fld local counsel)
genm.lly wil not be paid by us, but wUl be biled d.eetly to you if incurrd witI yourapproval.
We issue Invoice Dn a monthly b~is and 'all aÎunts due undr our invoice shouldbe paid In us Dolla by wire tmfer to our -digred bMk account on tlr; relevantdue date. We win be availabl" at any. timi: to discus any tjuescms with rega to ourbils.
:t ConfUtt!. As )Iou, kncw~ Sidle Austin Brown &. Wood h.as nwnerus client!. Mooy
of these clients ~ly upo the Flni for general rep~tlt)i. Aithough we hope itnever ha~I\:S. ,it is po$$ible thm anisvers l'lat\ònslp (including litIs:atlon) ma:ydcvclóp in the fl're between the Company an one of cur otli:r clients. If Sid!eyAusn Bro &: Wood is not repre(;r¡ting the Company tn1h Platr end the mattrin which the Compay and anoter elient have arvmc: intere Is not substtially
related to om ~preon otthe Coinpay lI desrIbd above. the Compay agres
:i Parter. PRe/US educath¡ualitied with i 1 year' experience of China praee
J CounseL, PRCIUS educa and OS qualified; wit 8 yea' t:periene: of Chinii prac(
.. PRe CORsultnt, PRClK educated and PRe qu:uifed with :3 year. cxperienee orCñlnap~ce .S Aßocliite. Ausia edueaqu2lti,fic:~ ÅSSOeÎAte. lRClS educated 8Jd US qwilífied,1 Lega Asliit. Pl'C quaif1e. .
i Le¡ial As!i.t, PRe qUlUUied ' .:3 ~
e egmLß'l AtiSTfJl 'BROWN & WOOD SWiNOlUl
that 'we may reNlg,iit the other client. (You should l.'1OW !fl, 1n simUarengagementlet with many of' our other clients 'M have asked for. sim i1nr . ageements toprc~Ne 001, abilit to represent yø.)
MealfwhOe. we ,¿mfnrJ you ¡rtal Sidldj Austin Bron.& Wood ho. b~tn approW$rJ anlicensed ny ih~ Jlinis'r' nf Jutfa.QJ a forttgh law fi qua/lfud to proyid 1~t:a1.tervlCfs in PRe, ,l:(Tewl". imde,. ultfng PRe rtguJatla1t. lawrs in 0111' China
o.fe.t; can provide-," Infôrmaiu:m rtardingthe impa/ of 'he PRe IqaT erwil'cnmt't Iibut ~ not psnnitud to ttnditl' ¡annaT opini'oHS in nspeci oJ PRe: law. We would be
høppyto tiú'l you In ohrainin aforinal16ga opi'lio11 from a qualifed PRe c.infe.l if)lcm so request.
Once llilUn. we ar plc!led to have this opportity to work with yoú. If you have anyqUtlrons or comments during'the course of our rereentation, plese can me at (8~2i) 53G62866 or (86-1350 18488(1). .
~~ ti fè ~~ !rlmW !:~fnJ7¿,Aft:f mrnr, î~l~i1HlfÇ3~lEf1Jf Jt~f1.' -'llitID ~t1 ii If.& ~ ~ ÀßH~Ji~ 1 41IH!f~ )f:L~ 1*~ $iJtE m
'14%W,P9Ff£*Jît.l~:t~B\mtM~&*nWJa9~,1iIU:).. ~~
:..'iß¡~3%o' . .... ..,.. ...... ",... w"0.. .b .
SA000824 1$00823
e e
EXHIBIT
c
e e
Sales Channels, Sales Areas, Proportion of Domestic Sales Income and Export SalesIncome, and Pricing lQliey of your Company
The sales channels of the Factory is mainly comprised uf coal-fired power plants, hydropowerplants, large water diversion projects, muncipal water supply projects, iron and steel plants andsmelting plants. The sellng is maiy through the factory's own sales. There are also three salesagents who take par in the sellng, The contract is entered into after the selection by the designinstitute, the invitation to bid and the bid negotiation.
The sales areas cover the whole country, the Japan market (pars and components) and the SouthEast Asia area. The proportion of domestic sales and export sales is 95% and 5%, respectively.The pricing policy for products with caliber ofless than DN1800mm is based on the price of
the
valve industry. The pricing policy for products with caliber of more than DN1800mr is based onthe toiiage, with RMB22, 000 per ton for low pressur (::i.6Mpa) and RMB25, 000 per ton forhigh pressure (? 1.6Mpa). The pricing policy for new products and valves witb specialrequírements wíll be based on the price of similar imported products.
Main Terms of Sales Contract (including Cone~tion Terms, Shelf Life and QualityAssurance Deposit, etc,), Range of Contract Value, Quantity of
ContI' acts Executed Each
Year
Main terms of the sales contract: for coal-fired power plants - 10% advance payment, 80%payment upon delivery of the goods, 10% quality assurance deposit; for hydropower plants-30% advance payment, 30% payment upon delivery of
the goods, 30% payment after accepting
the products, 10% quality assurance deposit Other contracts shall be based on the contracts forcoal-fired power plants. The shelf life is eighteen months afer leaving the factory.
Contract value ranges from (RM)20,OO (Lanzhou Heating Corporation) to (RMB)9,680,OOO
(Harbin Mopan Mountain Water Diversion Project). Total price ranges frm (RMJI,500 to(RMB)3,700iOOO, contract value for 2001 is (RMJ53.049,600. contract value for 2002 is(RMBJ68,271,300, contract value for 2003 is (RMJ71.794,600, contract valu.e though Januaryto September 2004 is (RMB)92,215,500. Contract value for 2005 is (RMBJ85,824,200.
Amount of kickback paid to client and arrangement of accounts, policy regai'dingdeduction of a percentage by internal sales personnel
The amount of the kìckback paid to a client shall be based on the contract price, inclusive of anysales agency fees, return of price difference, consulting fees to design institutes and salesperson's commissions, etc. Sales expenses should b~ limited to 14% of sales income (providedthat the salesperson achieves the sales quota and profit assigned by the supervisor (management).Internal sales personnel will receive 3% (of the contract price).
1900823 I SA000824
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EXHIBIT
D
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UNITED STATES OF AMERICA. Before the
SECURJTIES AND EXCHANGE COMMISSION
SECURITIES EXCHAGE ACT OF 1~4Release No. 65555/ October 13, 2011
ACCOUNTING AND AUDITING ENFORCEMENTRelease No. 3328 / October 13,2011
ADMINISTRATIVE PROCEEDINGFile No. 3.14585
Respondents.
ORlER INSTITUTING CEASE~AND~DESIST PROCEEDINGS PURSUANT TOSECTION 21C OF THE SECURTIESEXCHANGE ACT OF 1934, MAKGFINDINGS, AND IMPOSING CEASE-AND-DESIST ORDERS AND CIVILPENALTIES
In the Matter of,
Watts Water Technologies, Inc. andLeesen Chang,
, l.
The Securities and Exchage Commission ("Commission'~ deems it appropriate thtcease.and~desist proceedings be) and hereby are, instituted. puruant to Section 2 i C of theSecurities Exchange Act of 1934 ('4Exchange Acf') against Watt Water Technologies, Inc. andLeesen Chag (collectively'4Respondents"). '
II.
In anticipation of the institution of these proceedings, Respondents have submittd Offersof Settlement (the 4'Ofers") which the'Commission has determined to accept. Solely for thepurpose of these proceedings an any other prooeedings brought by or on behalf of theCommission, or to which the CommissIon is a par. and without admittng or denying thefindings herein, except as to the Commssion's jurisdiction over themselves and the subjectmatter of these proceedings. which are admitted. Respondents consent to the entr of this Order
Instituting Ceasewand-Desist Proceedings PUTIuant t.o Section 2ie of the Securities ExchangeAct of 1934, Makng Findings, and Imposing Cease-and-Desist Orders and Civil Penalties("Order'.'), as set fort below.
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¡II.
On the basis of this Order and Respondents) Offers) the Commission findsl that:
SummarY
1. Ths matter concern violations of the boöks and records and interal controls
'proVisions ofthe Foreign COmJP.t Practices .Act ('tFCPA'1 by Watts Water Technologies, Inc
("Watts") and Leesen Chang ('.Chang"). The v.iolatiòns took place at Watts Valve ChangshaCo., Ltd" ("CWV") a wholly-ùwned Chinese subsidiar that Watt established in November2005 to purchase the assets and businesses ofCbangsh Valve Works ("Changsha Valve").CWy acquired Changsha Valve in Apnl2006 and Watt sold CWV in Janua2010. CWVproduced and supplied lare valve products for infrastrctue projects in China. Infrastrcture
projects in China are mostly dei.elòpea.) constrcted, and owned by state-owned entities ("ProjectSOEs~). Project SOBs routinely retain state-owred' design institutes to assist in the design andconsction of their proj ects. Employees of CWV made improper payments to employees of
certain design institues. The purose and effect of those payments was to infuence the designinstitutes to recommend CWV valve products to Project SOEs and to create design specificationsthat favored CWV valve products. CWV's improper payments generated profits for Watt ofmore than $2.7 milion,
, 2. The payments were disginsed as sales commssions in CWV's books and records,
t.1er'ty causing Watt' books and records to be inaccurate. Watts failed to devise and maintain asystem of internal accounting controls suffcient to prevent and detect the payments,
3. Respondent Chang, a U.S. citizen' and the former interi general manger of
CWV and vice president of sales for Watt' mangement subsidiar in China, approved many ofthe payments to tle design institutes an knew or should have known that the payments were,improperly recorded on Watts' books as commissions.
ResJ:ondents
4. Watts Water Technologies, Inc. is a Delaware corporation with its headquarersin Nort Andover, Massachusett. Watt designs, manufactures. and sells wate valves andrelated products though its wholly-owned subsidiar Watt Regulator Co., an mantansoperations in North Amenca, Europe, and China. Watts manages its Chiese, subsidiaresthrough Watt (Shanghaì) Management Co., Ltd. e'Watt Chi") headquartered in Shangha.
Watt' common stoç:k is registed with the Commission pursuant to Section 12(b) of theExchange Act ànd is listed on the N ew York Stock Exchange.
The fidings he-rein ar made pursuant to the Respondent's Offers and are not binding 011 any other person
or entity in this or any other proceeding. '
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5. Leesen Chang, age 5l i is a U.S. citienand wa the vice pr~sident of sales atWatt China b'etween November ZOOS and JUne 2009. Chang also served as interim generalmaager of CWV from April to November 20Ó8. Chag maita a resìdence in Los Angeles,California but lives most of the year in China where he is curently'employed"
Other Relevant Entities
6. Watts Valve (Changsha) Co., Ltd. (or as defined above, "CWV") was a wholly
foreign owiied en,terpnse limited liabilty company ('tWFOEI')2 established by Wat in China forthe purpose ofpurchasing'Changsha Valve. CWV purchased Changsha Valve in Apn12006 andoperate as a valve manufactuing subsidiar of Watts unti Januar 2010 when Watt sold thebusiness to a privately-held Hong Kong company. Watt consolidated CWV's book;s andreords into its financial statements and CWV~s revenues accounted fot approximately 1 % ofWarts' gross revenues,
, .
7. Watts (Shangh;ii) :Mnagenient CQ., Ltd. (or as defined above "Watts China"),
. is a Wátt) WFOE headquarered in Shangh tht maDages the operations of Watts'manufacuring subsidiares IQcated in China, including CWV during the period of Watt'ownership. Watt China is solely a management subsidiar and had no ownership interest inCWV. ' .
Facts
A. CWV's Acquisition of Changsha Valve
8. CWV completed its acquisition of Cbangsha Valve in April 2006. AlthoughWatts had significant operations in Chia prior to CWV's purchase of Chagsha Valve, CWVwas Watts' first experience with a Chinese subsidiary tht conducted business preominantlywith SOBs. Watts' other Chinese subsidiares are pnmarly engaged in the manufactu ofproducts destied for sale or dis.tibuton to non~governenta entities in Cruna, the U.S. andEurope. .
. 9. ' Watts failed to implement adequate interal controls to address the potential
FCPA problems posed by hs ownership of CWV - a subsidiar that sold its products almostexclusively to SOEs, In addition~ although Watt implemented an FCPA policy in October 2006,Watt faied to conduct adequate FCPA trining for its employees.ín China until July 2009.
2 .The WFOE,corporate stcture under Chese law pen,ts foreign investors to establish and operate
business enterrises in China that are capitalized exclusively with foreign fuds, In addition, foreign investors whoestablish a WFOE in China can exercise control over tb,e management and day4o..ay op~rations of their WFOE.
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B. CWV Made Improper Payments 'to Design Institutes
1 0, During the period of Watts' o'Wership, CWV sales personnel made payments to
employees of cerin design intitutes to influence the design institute to recommend CWVproducts to Project SOEs and to include specifications in their design proposals that wouldincrease the likelihood that Project SOEs would select CWV products.
11. The ìmproper.payments were faciltated by a sales incentive policy created byChangsha Valve prior to its acquisition by CWV, and adopted by CWV in December 2006 (the"CWV Sales PoliciJ.' The CWV Sales Policy provided; among other thigs, that al sales-r~jated expenses, including trvel, meals, entertaimnent, and paymen1 of "conSulÍíng fees" todesign insttutes, would be borne by the CWV sales emplpyees out of their conuissions, whichwer equal to 7% to 7:5% of the contrct ,price, depending on the size orthe contract,' The ewvSales Policy fuer provided that sales peronntl at CWV could utilze thei commissions to
make payments to design institutes of up to 3% of the tota contract amount As a result, thepayments to design institutes were improperly recorded in Watt' bo~ks and records as salesct;uDmissions. The CWV Sales Policy was never transIated into English-or submitted to Watts'management in the U.S.
, C. Chang~s Role in ~e Violations
12.. As vice prsident of sales at Watt China and interim general manger ofCWV,Chang waS among those responsible 'for maintang and enforcing Watt' policies and
procedur, including the company's general prohibition against ìmproper payments to SOBs:
Nonet1ieless, C.hang approved commission payments to CWV sales personnel that he knewincluded payments to design institutes. In fact, Chang signed commission payment approvfÙrequests tliat explicitly itemized payments of 3% to design insttutes. Chag.also knew thàtWatt' management in the U.S, was unaware of the CWV Sales Policy that faciltated theimproper paymeits and he resisted at least one attempt by several of his colleagues at Watt.China to have the polìcy translated and submitted to' Wati' senior management for approval. Inan email discussing this issue" Chag stated that '~China sale policy should sty. in control withChina regional operationl' because involving Watts' management in the U.S. might cause CWVto ~.lose many flexibilty (sicJ on worldng with sale, sale agent and end buyer." Accordiigly,Chag knew or should have 1moWl that, pursuant to the CWV Sales Policy, payments to designinstitutes were recorded in Watt' books and records as sales conuissions. In addition, Chang'sresistace to' efforts to have the Sales Policy translated and submittd to Watts' management inthe U.S. was a cause of Watts' internal con.trol violations, since it prevented the parent companyfrom discovering the improper payments.
D. Discover., liiteinal Investigath:m and Self Reportng
, 13. ¡n March 2009, Watts' General Counel leared of a Commission enforcement
action against another company that involved unlawfl payments to employees of Chiesedesign institutes. Because Watts' senior management in the U.S. knew that CWV's customersinêluded Project SOEs, Watt implemented anti-corrption and FCPA training for its Chlnesesubsidiaríes. This trning took place staing in the Spring of2009. In July 2009, following
FCPA training sessions for certain management of Watt China, Watt ,China's in-house
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corporate counsel became awae of potential FCP A víolations at CWV though conversationswith CWV sales personnel who were paricipating in the trainig.. Shorly thereafter) the in-house lawyer notified Watts' management in the U.S. of the potential violations.
14. On July 21, 2009, Watt reted outside counsel to conduct an internalínvestigation ofCWV's sales practices. Watts' Qutside counel subsequently retaned forenicaccountats to assist with the investigation.
15. On August 6, 2009) Watts self-repórted its interl investgation to the staff. Asthe internal investigation progressed, Watts shared the reS)lts of the, investigation with its outsideauditors and the stff though periodic reprt, and underook the remedial measurs descnbedbelow.
E. Watts' Remedial Measures. ,16. Since July 2009 when the .conduct was discovered, Warts has taen the following
remedial steps. At the stofits interal investigation, Watts diected all ofits sales and finance
employees at CWV and W. att China to st?P aU payments of any kind to SOBs. While the'interal investigation was ongoing, Watt elimínated commissionwbased compensation at CWVto ensure that nq fuer improper paYments Were made by CWV sales personnel and disclosedthe inteal investigation ín its August 7,20'0 Fonn 1 O~Q. In addition,.Watt retained additional
outside counsèi to dra and implement enhanced anti-conuption polícies and'procedurs~including an enhanced Anti-Briber Policy, a Business Couresy Policy designed to ensure that
any payments made to customers comply with the FCP A, an enhanced Travel and Enterent
Expense Reimbursement Policy for its Chinese subsidiaries, and enhced intemedia duedilgence proc,edures.
17. In conjunction with its intern investigation, Watts conduct a worldwide anti-
conllption audit. As par of its anti-corrption audit, Watts conducted additional FCPA and anti-cOn1iption trainng for Watts China and the company's locations,in Europe, conducted a riskassessment and anti-corrption compliance review of Watts' inten~atiohal operations in Europe,Cliii, imd l:y U,S. location with jntemationa1 salesl and conducted anti-conuption teatìig at
sevøn interrational Wfltts sites, including e.ach of the manufacting and sales locations in China.In an effort to ensure FCPA compliance and trainig gOlng foiwara~ Watt contraoted with anonle global trainiiig organization to provide reg:lar anti-comiption trg' and hired ~ .
Pirector of Legal Compliancef a now Fosltion tht reports to Watt' General Counsel TOSm'c:ng
isimes iqer the Code of CClnduct anqAntH3riber Policy.,
Leg~1 st~~dttdsan~Vlolations
A. Standard for the Issuance of a Cease-and Desist Order
i 8. . Under Secti on 21 C( a) of the Exchange A:ct, the CommissIon may lmpose a cease-and-desist order upon ,any person who is violating, has violated, or is about to violate anyprovision of the ;Exchange Act or any me or regulation thereimder~ and upon any other personthat is) was, or would be a cause of the violati0n, due to an act or omission the person mew orshould have known would contribute to such viólation.
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B. The RequirementS of Sections 13(b)(2)(A) and 13(b)(2)(B) of theExchange Act and Rule 13'b2-1 tbereund~r
19. The FCPA, enacted'ÌIl1977~ added Section,13(b)(2)(A) to the Exchange Act toreqtûre public companies to make and keep books, records, and accoimts, which, in reasonabledetail, accurately and fairly reflect the tranactons anddìspositions of the assets of the issuer.
15 U.S.C. § 78m(b)(2)(A).
20. The FCPA also added Section 13(b )(2)(B) to the Exchange Act to require publiccompanies toi among other thngs, devise and maintain a system of inteal acounting controls
sufficient to provide reasonable assurances that transåctions: (i) are executed in accordance withmangement's geneml or spedfic authorization; and (ii) åre recorded as necessar to perit ,preparation of finacial statements in confònnity with generally accepted accounting principles
("GAA") or any other criteria applicable to such statements, and to maintain accountabilty forassets. 15. U.S.C. § 7~m(b)(2)(B).
21. Rule 13b2- i prohibits a person from~ directly or in,directly, falsifying or causingto be falsified any book~ record, or account subject to Section 13(b)(2)(A) of the Exchange Act.17 CFR § 240.l3b2-L.
C. Watts Violated Sections 13(b)(2)(A) and 13(b)(2)(B)
22. Watts' subsidiar, CWV, made improper payments to'design insttutes. The
payments were improperly recorded in CWV's books and records as sales commissions. 'CWV'sbooks iid records were consolidated into Watts' books and records. Acoordingìy. as a result ofthe misconduct of its subsidiar, Watt faled to make ~d kee books, records, and aCcOlUlts
which, in reasonable detail. accurately and farly reflect its tractions and the disposition of its
assets as requIred by Section 13(b)(2)(A) of the Exchange Act. '
23. As evidenced by the extent ~d duration of the improper, payments and the fat
that Wiitts management was unaware t!fthe CWV Sales Policy tht faciltaed the :tprope~ .
payments~ Watts failed to devise and maintan a syste of internal accountig controls sufficient
to provide reasonable assuraces that it maintained accountabilty for its assets~ and that itstransactions were executed in accordance with mangement's authonzation and recorded asnecessa to' perit the preparatìo:r of financial sttements in confom:ity with GAA. Wattiif¡O failed to implement an FCP A compliance and training program commensurate with theexteni of its International operations and its ownership of CWV 1 a subsidiar tht sold its
¡3'HP!an2C Aci. .' .... .' .,'i . '.. ., L .....~ . " " 'D. Chang Violated Rule 13b2~1 and Was a Cause of Watts' Violations of
Sections 13(b )(2)(A) and 13(b ) (2)(B)
24. Chang knew that CWV sales personnel made payments to design institutes out oftheir sates commissions puruant to the CWV Sáles,Policy and he signed conuission paymentapproval requests that explicitly itemiied payments of3% to design institutes. Under these
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. .circumtaces, Chang loew or should- have known tbat the saes commission payments beapproved contaied payments to design institutes that were improperly recorded in Watt' booksand records as sales con:ssions. Accordingly) Chang was a cause of Watts) failure to makeand keep books, records, and accol.nts which) in reasonable detail) accurately and fairly refectthe transactons an dispositons of the assets of the company as required by Section 13(b )(2)(A)
of the Exchange Act. By this same conduct, Chang was a cause of Watts' failure to maintain'accurate books and recQrds aId thereby violated Exchange Act Rule 13b2-L '
25. As described ltore fully above, Chang knew that Watts' senor maagement was
unaware of the CWV Sáles Policy that faciltated the fasifications of its books and records andhe resisted attempts by his colleagues at Watts Chia to have the, CWV Sales Policy.transltìtedand submittd to Watt' senior management for approval. By these acûons and others describedherein, Chang was 'a cause of Watts' fäi1ure to devhie and maintan a suff~ient system of internalaccountia controls as required by Section 13(b)(2)(B) of the Exchange Act.
Commission Consideration ofWatts' Remedial Efforts and Cooperation
26. In determinng to accept Watts! Offer of Settlement, the Commíssion considered
remedial acts promptly underten by Watts and the cooperation aforded the sta.
iv.
In view of the foregoing, the Commission deems it appropriate to impose the sanctionsagreed to in Respondents Offers of Settlement.
AccordingLy, it ìs hereby ORDERED that:
A. Pursuant to Section 2 i C of the Exchange Act:
1. Respondents Watts and Chg ceae and deist from commttg or causing anyviolations and any futur violations of Sections 13(b)(2)(A) rod 13(b)(2)(B) of
Qie Exchange Act;
2. Respondimt Chang cease and deslst from committing or causing anyviolations and any futue violations of Exchange Act Rule 13b:!-1.
B. Within foi.en days of the entr of this Order:
1. Respondent Watt shall pay to the United States 11'easùry dísgorgement of$2,755,815, prejudgrent interest of $820.791 and a civil money penalty of$200)000; and ' "
2. Respondent Chang shall pay to the United States Treasur a civil moneypenalty of $25,000.
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If tiely 'payment is not made, additíona1 interest shal accrue pursuant to SEC
Rule of Practce 600 and 311:.S.C. § 37'7. :rayment shall be: (A) made byUinted States posta money order, certfied check, ban cas1úer's check, or banmoney order; (B) made payabi~ to the StCurities and Exchmge Commission; (C)hand-delivered or mailed to the Office of Financial Maagement, Securities andExchage Conisíon, 100 F St., NE, Stop 6042, Wasngtn, DC 20549; and '(D) submitted under cover óf a letter that identies the pe.yer as a Respondent inthese proceedings, the fie number ofth(fse proceedings, a copy of which cover
lettr and money order or ch,eck shall be: sent to Antonia Chi on, AssociateDirecor, Division of Enforcement, Securities and Exchange Commission,100 F St.. NE, Washington, DC 20549., '
C, Respondent Watts acknowledges that the Commission' is not imposing a cívilpenalty in excess of $200,000 based upon its cooperation in a Commssioninvestigation. If at any time folløwig the entry of the Order, the Division ofEnforceent ("Diviion") obtains inonhation indicatig that Respondentknowingly provided rnaterilly false or rnisleading inormtion or mateals to theCommssion or in a related proceeding, the Division maYi at its sole discretionand without prior notice to the Respondçmt, petition the Commission to reopenthis matter and seek an order directing that the Respond.nt pay an additional civilpenalty. Respondent may not, by way of defense to any resultig administrativeproceeding: (1) contest the findings in the Order; or (2) asser any defense toliabìlty or remedy, including) but not liinited to, any statute of limitations,defense. . '
By the Commission.
~ìi,?h~Elizabeth M. MurhySecretary
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Service List. 'Rile 141 of the Commssion's Rules of Practice provides that the Secetary, or
,another duly authorized offqer of the Conussion, shal sere a copy of the OrderInstituting Cease.and-Desist Proceedgs Pursuant to Section 21 C of the SecuritiesExchange Act of 1934, Making Findings, and Imposing Cease-and-Desist Orders andCSvil Penalties ("Order'), on the Respondents and their legal agent.
The attached Order has been sent to the following pares and other personsentitled to notice:
Honorable Brenda P. MuryChief Adminstrtive Law JudgeSecurities and Exchånge Commission100 F Street, N.E.Washigton, DC 20549.2557
patrck 1.. FeeIlB~, ~~uirepiysióii pfEnforcementSepurities and Exchange Commìssioii
100 F sil'~et, N..E. 'WeishinRton, nç 20549~S71SB
Mr. pavid J. CoghlanPresi\leiit and Chief Exeoutivø OffCicrWatW Ware Teclmologiesriø Thomas Ze.coaro, EsquireFaul Hustlrisii LLPSl5 SQVtl P1Dwer Streei
'lSiity-Fiftll FloorLos Angeles, CA 90071
Mr. Leesen Changc/o Eobert Collns, Esquire~37 Mirabay BoulevarApollo Beach, FL 33572
RoblSrt Collns, Esquire
437 Mirabay BoulevardApollo Beiich, FL 33572
Thomas Zaccar, EsquirePaul Hastings LLP515 South Flower StreetTwenty-Fift Floor
Los Angeles, CA 90071
e ItSuperior Court of the District of Columbia
CIVL DIVSION500 Indiana AYeDUP, N.W., Suite 5000
Washington, D.C. 20001 Telephone: (202) 879.1133
Watts Water Technologies, Inc.Plaintiff
vs. Case Numberrf'OA,QAi-i2. Lt í il '-, ~! .i
Sidley Austin, LLPDefendant
SUMMONSTo the above named Defendant:
You are hereby summoned and required to serve an Answer to the attached Complaint, eitherpersonally or through an attorney, \vithin twenty (20) days after service of this summons upon you, exclusive
of the day of service. If you are being sued as an officer or agency of the United States Govemment or theDistrict of Columbia Governent, you bave sixty (60) days after servîce of this summons to serve yourAnswer. A copy of the Answer must be mailed to the attorney for the party plain1iffwho is suing you. Theattorney's name and address appear below. If plaintiff has no attorney, a copy of the Answer must be mailedto the plaintiff at the address stated on this Summons. '
You are also required to file the original Answer with,the Court in Suite 5000 at 500 Indiana Avenue,
N.W.. between 8:30 a.m. and 5:00 p.m., Mondays through Fridays or between 9:00 a.m. and 12:00 noon onSaturdays. You may file the original Answer with the Court either before you serve a copy of the Answer onthe plaintiff or within five (5) days after you have served the plaintiff. If you fail to file an Answer, judgmentby default may be entered against you for the relief demanded in the complaint.
Barry J. Nace
Name of Plaintiffs Attorney
Paulson & Nace f PLLC
Address1615 New Hampshire Ave, Washington DC 20009
Clerk of the Caul'l
By . \ YvÃ~Deputy rk
202-463 -1999Date o J( l-i( 2 Q Q
Telephonej¡o~IJ¡¡,ìiHTitì' (2Q2) 879.4826 Veuillez appeler au (202) 879-4828 pourune traduction Ðê có 1ln( bài dich, liây ilni (202) 879.4828
IMPORTANT: IF YOU FAIL TO FILE AN ANSWER WITHIN THE TIME STATED ABOVE, OR IF, AFTER YOUANSWER, YOU FAIL TO APPEAR AT ANY TIME THE COURT NOTIFIES YOU TO DO SO, A JUDGMENT BY DEFAULTMAYBE ENTERED AGAINST YOU FOR THE MONEY DAMAGES OR OTHER RELIEF DEMANDED IN THECOMPLArNT. IF THIS OCCURS, YOUR WAGES MAY BE ATTACHED OR WITHHELD OR PERSONAL PROPERTY ORREAL ESTATE YOU OWN MAYBE TAKEN AND SOLD TO PAY THE JUDGMENT. IF YOU INTEND TO OPPOSE THISACTION, DO NOT PAlL TO ANSWER WrrHIN THE REQUIRED TIME,
r f you wish to talk to a lawyer and feel that YOlt cannot afford to pay a fee to a lawyer, promptly contact one 0 t the offces of theLegal Aid Society (202-628-1 i 61) or the Neighborhood Legal Services 002.179-5100) for help or come to Suite 5000 at 500Iiidí¡ma A venue~ N.W " for more information concerning places where you may ask for stich help.
See reverse side for Spanish translationVea al dorso la traducCÍón aJ españoJ
e eTRIBUNAL SUPERIOR DEL DISTRITO DE COLUMBIA
DIVSIÓN CIVIL500 Indiana Avenue,:N.W., Suíte 5000
Washington, D.C. 20001 TCIéfono: (202) 879.1133
Demandantecontra
Núinero de Caso:
Demandado
CITATORIOAI susodicho Demandado:
Par la presente se Ie eita a comparecer y se Ie requiie entregar una Contestacíón a la Demanda adjunta, sea enpersona 0 por medio de lin abogado, en el plazo de veinte (20) días contc1dos después que iisted haya recibido este
citatorio, excluyendo el día mísmo de la eiitrega del cítatorìo. Si listed está siendo demandado en calidad de oficial ûagente del Gobiemo de los Estados Unidos de Norteamérica 0 del Gobiemo del Dìstrito de Columbia, tiene ustedsesenta (60) días contados después que usted haya recibido este Citatorio, para entregar su Contestación. Tiene queenviade por oorreo una copia de su Contestación al ahûgado de la parte demandante. £1 Hombre y direccíón delabogado aparecen al final de este documento. 8i el deinandado notiene abo
gad 0, tiene que enviarle al deinandante una
copia de la Contestación por coneo a la direccìón que aparece en f)ste Citatorio.
A usted tambíéii se Ie require presentar la Contestación original oj Tribunal en la Oficina 5000, sito en 500Indiana Avenue, N.W., entre las 8:30 a.m. y 5:00 p.m" de lunes a viemes 0 entre las 9:00 a.m. y las 12:00 del inediodíalos sábados. Usted puede preseiitar la Contestación original ante eJ Juez ya sea antes que Usted Ie entregue atdemal\dante unaco~i.a.de1a Cont~~tación 0 en el'Plazo de cinco (5) dias de haberle liecho la entre~a al demandul1te. Sîusted incumple ëÓì(pi'es~ntaòinIlCoritestàción, podríá dictarse Un fulla en rebeldíjl contra Llsted parll que se hagaefectivo el desagravlo que se busca en In demanda.' "
SECRETARJO DEL TRIBUNAL
Nombre deJ abogado del Demandante
POl':
SubseeretarioDirecci611
Feêha';\~~~ ,~lfnl~.illritil (202) 8'79-182$ Veulliez appeler aLl (202) 879-4828 pour, une traducliøn Dê en niôl bàí d¡ch. My gQ! (202) 81904828
IMPO~TANTE: SL \.STED INCUMPLE CON PRE SENTA R UNA CONTESTACiÓN ENEL PLAZO, ANTESMENCIONADO, 0, SILUEGO DE CONTESTAR, USTED NO COMPARECE CUANDO LE AVISE £L JUZGADO, PODRiADlCTARSE UN FALLO EN REBELDÍA CONTRA USTED PARA QUE'SE LE COBRELOS DAÑOSY PERJUICiOS U OTRODESAGRA VIa QUE SE BUSQUE EN LA DEMANDA. 81 E8TO OCURRE, PODRÍAN RETENERLE SUS rNGRESOS, 0PODRÍAN TOMAR SUS BJENES PERSONALES 0 RAIcES Y VENDERLOS PARA PAGAR EL FALLO, S1 USTEDPRETENDE OPONERSE A ESTA ACCIÓN, NO DElE DE CONTESTAR LA DEJi1ANDA DENTRO DEL PLAZa EX/GIDO.
si desea converser con un abogado y Ie parece que no puede afrontar elcosto de uno, Jlame pronto a una de nuestras oficinas delLegiil Aid Society (202-628-1161) 0 el Neighborhood Legal Services (202-279-5 JOO) para pedir ayuda 0 venga ala Ofîcina 5000
del 500 Indiana Avenue, N.W., para inforinarse de otros lugares donde pue~e pedir ayuda al respecto.
Vea al dorsa el original en inglésSee reverse side for English original
CASUM,dDC
e eSuperior Court of the District of Columbia
CIVIL DIVISION - CIV!L ACTIONS BRANCH
INFORMATION SHEET
vs
Case Number: () n Û 4 8 4 7 ~ '1 2
Date: 06/06/2012
Watts Water Technologies, Inc.
Sidley Austin, LLP o One of the defendants is being suedin their offcial capacity.
Name: (please print) Relationship to LawsuitBarry J. Nace !i Attoiney for Plaintiff
Fin11 Name:Paulson & Nacei PLLC
o Self (Pro Se)
Other:Telephone No.: Six digit Unified Bar No.:
202-463-1999 130724
TYPE OF CASE: 0 Non-JuryD~maiid:$ exces~ ~f $ 100,000.00
!i 6 Person Jury
Other:
o 12 Person Jury
PENDING CASE(S) REl.A TED TO THE ACTION BEING F1LEl)Case No.: Judge: Calendar #:
Case No.: Judge: Calendar #:
NA TlJRt; OF SJJlT: (Check ()ne tJq.r Only) ,
ic, ':, h '.,'..
A. CONTRACTS ' , " " QQI-LECTION CAS~S
lJ 01 ßrltlch c.t COn1mpi tJ 07 personal lrQpert
dp '14 lJl\d~I' $25,000 rltf. Grantii Ci.n:ient
0 02 Qrelich pfWaraTlÌ)' ,'. i: ,09 ReAl Pl'opel1Y~Real E~tate o 16 Under $25,000 Consent Denied
0 (l6 Ne~otiabie Instrqment 0 12 Specific Perfonnance o 17 OVER $25,000 Pltf. Grants Consent
0 15
B. PROPERTY TORTSo 01 Autpmobile o 03 Destnictíon of Prívatè Propert o 05 Trespass
C. PERSONAL TORTSo 01 Abuse of Process o 09 Harassment o 17 Persopallnjury - (Not Automobile,
o 02 Alienation of Affection o \ u lnvasion of Privacy : No, M¡)lpJ'OCiic~)
o 03 Assault and Batterv o 11 Libel and SJandel' 018 Wrongful Death (Not malpractice)o 04 Automobile-Perso;1al Jnjll~ o J 2 Malicious lnterfei'ence o 19 Wrongful Evictiono 05 Deceit (Misrepresentation) o 13 Malicious Prosecution 020 Friendly Suito 06 False Accusation !i 14 Malpractice Legal 02J Asbestoso 07 False Arrest o 15 Malpractice Medical ,iud\ld;,,r wm"~i;,1 do:oi,,) 022 Toxic/Mass Tortso 08 Fraud o 16 Negligence~(Not Àutomobile, 023 Tobacco
Not Malpractice)024 Lead Paint
SEE REVERSE SIDE AND CHECK HERE 0 (f USED
C\7..490/0ctc).btr 201 n
e eINFORMATION SHEET) Continued
D. OTHERS1.
o 10 TR.O.llnjunction o 25 Liens: TaxfWater Consent Granied
o 0 1 Accountingo 1 i Writ of Replevin o 26 Insurance/Subrogation
o 02 AIL Before Judgmento 12 Enforce Mechanics Lkn Under $25,000 Consent Denied
o 04 Condemnation (Emin, DomaiuJo 16 Declaratory Judgment o 27 Insurance/Subrogation
o 05 Ejectmento 17 Merit Personnel Act (OEA) Over $25,000
o 07 Insurance/Subrogation(D.C. Code Title i, Chapter 6) o 28 Motion to Confimi Arbitration
Under $25,000 Pltfo 18 Product Liability Award (Collection Cases Only)
Grants Consent o 24 Application to Confin, Modify, o 26 Merit Personnel Act (OHR)
o 08 Quiet TitleVacate Arbitration Award o 30 Liens: TaxlWater Consent Denied
o 09 Special WritJalTants(D,C. Code § 16-4315)
DC Code § 11-941
II.o OJ Change of Name o 15 Libel ofInfonnation D 21 Petition for Subpoena
006 Foreign Judgment o 19 Enter Administrative Order as (Rule 28-I (b)J
013 Correction of Birth Certifkate Judgment (D.C. Code § D 22 Release Mechancs Lien
014 Correction of Marriage 2- 1 802.03(h) or 32-15 J 9(a)J o 23 Rule 27 (a)(l)
Cerii fic ate o 20 Master Meter tD,C Code § (Perpetuate Testimony)42-3301, et seq,)
For individuals not represented by an attorney: ( ) I acknowledge receipt of the Civil Actions Pro Se Handbook.
'u-
ljl!dLDate
06/06/2012
CV-zI9ó/Octeili~r 2() 1 0
e faSUPERIOR COURT OF THE DISTRICT OF COLUMBIA
CIVIL DIVISION
WATTS WATER TECHNOLOGIES, INC.Vs.
SIDLEY AUSTIN, LLPC.A. No. 2012 CA 004847 M
INITIAL ORDER AND: ADDENDUM
Pursuapt to D.C. Code § 11-906 and DistrIct of Columbia Superior Court Rule of Civil Procedure
("SCR Civ") 40-1, it is hereby ORDERED as follows: '
(1) EffectIvethis date, this case has assigned to the individual calendar designated below. All future filingsin this case shall bear the calendar number and the judge's name beneath the case number in the caption. Onfiling any motion or paper related thereto, one copy (for the judge) must be delivered to the Clerk along with theoriginaL.
(2) Within 60 days of the fiing of the complaint, plaintiff must fie proof of serving on each defendant:copies of the Summons, the Complaint, and this Initial Ord~r. As to any defendant for whom such proof ofservice has not been fied, the Complaint will be dismissed without prejudice for want of prosecution unless thetime for serving the defendant has been extended as provided in SCR Civ 4(m).
(3) Within 20 days of service as described above, except¡as otherwise noted in SCR Civ 12, each defendantmust respond to the Complaint by fiing an Answer or other responsive pleading. As to the defendant who hasfailed to respond, a default and judgment will be entered unless the time to respond has been extended asprovided in SCR Civ 55(a).
(4) At the time and place noted below, aU counsel and unrepresented paries shall appear before theassigned judge at an Initial Scheduling and Settlement Conference to discuss the possibilties of settlement andto establish a schedule for the completion of all proceedings, including, normally, either mediation, case
evaluation, or arbitration. Counsel shall discuss with their clients prior to the conference whether the clients areagreeable to binding or non-binding arbitration. This order 'i the only notice that parties and counsel wil
receive concerning this Conference. '
(5) Upon advice that the date noted below is inconvenient for any pary or counsel, the Quality ReviewBranch (202) 879-1750 may continue the Conference once, with the consent of all paities, to either of the twosucceeding Fridays. Request must be made not less than six business days before the scheduling conference date.No other continuance of the conference wil be granted excepÚipon motion for good cause shown.
(6) Paries are responsible for obtaining and complying With aU requirements of the General Order for Civilcases, each Judge's Supplement to the General Order and the 'General Mediation Order. Copies of these ordersare available in the Courtroom and on the Court's website http'://ww.dccourts.gov/.
'Chief Judge Lee F. Satterfield
Case Assigned to: Judge GREGORY E JACKSONDate: June 6, 2012
Inital Conference: 9:30 am, Friday, September 07, 2012Location: Couroom 100
500 Indiana Avenue N.W.WASHINGTON, DC 20001 Caio.doc
e eADDENDUM TO INITIAL ORDER AFFECTING
ALL MEDICAL MALPRACTICE CASES
In accordance with the Medical Malpractice Proceedings Act of2006, D.C. Code § 16-2801,et seq. (2007 Winter Supp.), ll(aJfter an action is filed in the cour against a healthcare provideralleging medical malpractice, the cour shall require the paries to enter into mediation, withoutdiscovery or, if all parties agree(,J with only limited 4iscovery that wil not interfere with thecompletion of mediation within 30 days of the Initial Scheduling and Settlement Conference
, (IlISSC"), prior to any furher litigation in an effort to teach a settlement agreement. The earlymediation schedule shall be included in the Scheduling Order following the iSSC. Unless atIparies agree, the stay of discovery shall not be more than' 30 days after the ISSC. It D.C. Code § 16-2821.
To ensure compliance with this legislation, on or ~efore the date of the ISSC, the Court witnotify all attorneys and pro se parties of the date and time of the early mediation session and thename of the assigned mediator. Information about the early mediation date also is available overthe internet at https:/lww:dccours.gov/pa/. To faciliate this process, all counsel and pro sepaities in every medical malpractice case are required; to confer, jointly complete and sign anEARL Y MEDIATION FORM, which must be fied no later than ten (10) calendar days prior to theISSC. Two separate Early Mediation Forms are aVallable. Both forms may be obtained atww.dccours.gov/medmalmediation. One fonn is to be. used for early mediation with a mediatorfrom the multi-door medical malpractice mediator roster; the second form is to be used for earlymediation with a private mediator. Both forms also :are available in the Multi-Door DisputeResolution Offce, Suite ios, 515 5th Street, N.W. (erter at Poliee Memorial Plaza entrance).
Plaintiffs counsel is responsible for eFiling the form an~ is required to e-mail a courtesy copy [email protected]. Pro se Plaintiffs who elect not to eFiLe may fie by hand in the Multi-DoorDispute Resoli.tiol1 Offce, '
A r.oster qf medical malpractice mediators ilVailab:le through the Courtls Multi-Door DisputeResolution Division) with biographical information a.bout each mediator, can be found atWW,qccourts,gov/iiedmiilmediation/mediato'rprofiles, tllinqlviclutlls 0ll the rosterare j\.qges orlawyers with at least 10 yeai's of significant experience in :medical malpracticelitigatlQn, D.C. Code§ 16-2823(a). if fhe parties cannot agree on a mediator,; the Court wil appoint one. D.C. Code §lQ-~823(b). '
The following persons are required by statute tó attend personally the Early MediationConference: (1) a11 parties; (2) for paries that are not intlividuais, a representative with settlemimt
authority; (3) i.ieases involving an insurance company, a representative of th~ company withsett¡:ment authority; and (4) attorneys representing eac~ party with primary respqnsibilty for thecase. D.C. Code § 16-2824. i
No later than ten (l0) days afer the early mediation session has terminated, Plaintiff must
eFile with the Court a repórt prepared by the mediator, including a private mediator, regarding: '0)attendance; (2) whether a settlement was reached; or, (3) if a settlement was not reached, anyagreements to narrow the scope of the dispute, limit discovery, facilitate future settlement, holdanother mediation session, or otherwise reduce the cost ~nd time of trial preparation. D.C. Code §16-2826. Any Plaintiff who is pro se may elect to fie ¡the report by hand with the Civil Clerk'sOffce. The forms to be used for early : mediation reports are available atww.dccours.gov/inedmalmediation. '