IN THE CIRCUIT COURT OF HAMILTON COUNTYS,, CHATTANOOGA, TENNESSEE X Shaun Christopher Bruce, a Tennessee resident; Robert Scott Kelley, a Tennessee resident; ‘Trinity Entertainment, LLC, a Tennessee limited liability corporation; on behalf of themselves and all others similarly situated, Plaintiffs, ve AMERICAN WATER WORKS COMPANY, INC., a Delaware corporation; AMERICAN WATER WORKS SERVICE COMPANY, INC., a New Jersey corporation; TENNESSEE- AMERICAN WATER COMPANY, d/b/a TENNESSEE AMERICAN WATER, a Tennessee corporation; Defendants. | CLASS ACTION COMPLAINT AND DEMAND FOR JURY TRIAL CLASS ACTION COMPLAINT PLAINTIEFS, individually and on behalf of all others similarly situated, based on their personal knowledge, information and belief, for their Class Action Complaint for damages, equitable and injunctive relief allege as follows: NATURE OF THE ACTION 1. Plaintiffs bring the instant civil action, on behalf of themselves and a class of all others similarly situated (the “Class”) to recover damages and all other legally cognizable relief’ stemming from the loss of potable tap water to at least 35,000 connected customers, including Plaintiffs, in September 2019.2. Plaintiffs and Class Members suffered losses as a consequence of the loss of potable tap water service, including but not limited to substantial annoyance and inconvenience, out-of- pocket expenses for replacement water, lost profits and lost wages. 3. On September 12, 2019, on information and belief, many thousands of Chattanooga residents lost their water supply as the result of a foreseeable failure in a distribution pipe out of Defendants’ Wiehl Street Plant (the “Plant”) near downtown Chattanooga (the “Water Loss Incident”). By Defendants’ own admission, this break impacted approximately 35,000 connections to Defendants’ water supply services. 4, Defendants could have prevented or avoided this accident with better precautionary ‘measures, compliance with applicable regulations, and the use of reasonable care. 5. Certain Plaintiffs and Class Members operate businesses that lost revenue because of the water outage. Class Member food service businesses are dependent upon continuous access to potable water across the service area. 6. Certain Plaintiffs and Class Members are wage earners who lost their ability to ‘work due to shutdown of their employers’ facilities, and therefore suffered monetary losses. 7. Plaintiffs and Class Members have suffered annoyance and inconvenience, and have incurred costs for water replacement, travel, and other expenses directly related to the loss of their water supply. 8. _Inaddition to damages, Plaintiffs petition this Court for additional injunctive relief to protect Plaintiffs and Class Members from further risk of loss of potable water. PLAINTIFFS 9. Plaintiffs and Class Members are individuals and/or entities which have suffered ‘economic losses, property losses, and non-economic losses as the result of the Water Loss Incident.Plaintiffs and Class Members have all suffered in common an array of damages from the Water Loss Incident, including Tort Related Claims, Property Related Claims, and Financial Claims. 10, Plaintiff Shaun Christopher Bruce is above the age of majority and lives in Chattanooga, Tennessee. Ms. Bruce has incurred expense and suffered annoyance, aggravation, loss of use, lost wages and inconvenience because of the disruption of his workplace and household caused by the loss of water. 11, Plaintiff Robert Scott Kelley is above the age of majority and lives in Chattanooga, Tennessee. Mr. Kelley has incurred expense and suffered annoyance, aggravation, loss of use, and inconvenience because of the disruption of his household caused by the loss of water. 12, Plaintiff Trinity Entertainment, LLC (“Trinity”) owns and operates a restaurant in Chattanooga, Tennessee. Trinity has suffered and continues to suffer economic damages as a result of the conduct, acts and omissions of the Defendants. Not only did Plaintiff Trinity lose business in the aftermath of the water loss incident, but it also had to incur unexpected costs because of the disruption in the water supply. These factors have added to the labor and managerial costs as Trinity tries to overcome the adverse effects of the water loss incident. Further, Plaintiff Trinity asserts that it faces the potential for a long-term decrease in revenue because of the continuing effect on consumer confidence in the local water supply. DEFENDANTS 13, Defendant American Water Works Company, Inc, (“American Water”) is a Delaware Corporation having its principal place of business in Voorhees, New Jersey. Defendant American Water bears legal responsibility for the damages stemming from the loss of the water supply. Its acts and omissions include its failure to require, capitalize, and fund the development and ongoing maintenance of a reliable water supply and to properly oversee and manage its whollyowned and controlled subsidiaries, Tennessee-American Water Company and American Water Works Services Company, Inc. (“Services”). Defendant American Water exercises full dominion and control over its subsidiaries Defendants Services and Tennessee-American Water Company (“TAW”), and has sufficient contacts with Tennessee to be subjected to jurisdiction in this State, by and through its regular involvement, control and oversight of the business of supplying water to Tennessee residents and businesses. Defendant American Water has purposefully availed itself of the privilege of doing business in Tennessee and is jointly and severally liable to the Plaintiffs for all damages and other relief awarded as a result of this action. 14, Defendant American Water Works Service Company, Inc. (“Services”) is a New Jersey corporation and wholly-owned subsidiary of Defendant American Water, having its principal place of business in Vorhees, New Jersey. Defendant Services has sufficient contacts with Tennessee to be subjected to jurisdiction in this State, by regularly performing management, engineering, and water quality services on behalf of American Water for Defendant Tennessee- ‘American Water Company. In negligently performing these services, Defendant Services breached duties it owes to Plaintiffs and bears legal responsibility for the damages stemming from the Water Loss Incident. Defendant Services has purposefully availed itself of the privilege of doing business in Tennessee and is jointly and severally liable to Plaintiffs for all damages and other relief awarded as a result of this action. 15. Defendant Tennessee-American Water Company, d/b/a Tennessee American Water (“TAW”), is a Tennessee corporation with its principal place of business in Chattanooga, Tennessee. Defendant TAW is a subsidiary of Defendant American Water. Defendant TAW bears legal responsibility for the damages stemming from the water loss incident. Defendant TAW isjointly and severally liable to the Plaintiffs for all damages and other relief awarded as a result of this action, ALLEGATIONS 16. On September 12, 2019, a 36-inch concrete water main located on the banks of the Tennessee river upstream of Chattanooga, Tennessee, suffered a “serious break about 20 feet” from where crews manned by Defendants’ employees or authorized contractors were working on “planned maintenance project,” according to Defendants. 17, Defendant TAW owns and operates this water main and uses the water main to supply water to paying customers, each of whom has entered into a contractual relationship with Defendants for these services. 18. The break caused outages and inadequate water pressure to at least 35,000 TAW connections and approximately 80,000 Chattanooga residents and businesses, resulting in a breach of Defendants’ contractual obligations to provide continuous availability of potable water to its water customers. 19. Defendant TAW released the following maps which show the areas affected by the water outage:20. Repairs were undertaken and Defendant TAW worked to isolate and repair the leak, and to restore the system. But after 36 hours of repairs, still just more than half of the affected connections had regained some degree of water pressure, with many thousands of Defendants" customers left entirely without water. 21. During this period of time, many local businesses, including restaurants, were forced to close their doors due to the lack of a supply of potable or any water. Local hotels were unable to adequately service guests. The Tennessee Department of Agriculture asked any food manufacturers or preparers to suspend their services until sanitary hot water could be re- established.22. Local news media reported that the chairman of the Chattanooga Convention and Visitors Bureau stated on September 13 that in his nearly 40 years in the City, he had never seen such a sustained widespread water outage in the downtown area. 23. As of Monday, September 16, 2019, it was reported that water service had been restored to the 35,000 connections affected by the water main break, after being down in some cases for as long as 70 hours. 24. As water service was slowly restored in the days following the main break, Defendant TAW recommended that its customers boil water intended for consumption, and recommended conservation measures, including going without a shower and refraining from watering plants or lawns. Even when service was reported as being restored, as of September 16, some areas remained under a boil advisory. 25. Upon information and belief, Defendants’ employees and authorized contractors conducting the maintenance project on the concrete water main where the break occurred, did not exercise reasonable care in ensuring that their work did not jeopardize the safety and operability of the surrounding water supply infrastructure and piping. 26. Further, upon information and belief, engineers at Defendant American Water and Defendant Services responsible for oversight and implementation of the planned maintenance project failed to use reasonable care in addressing issues that the maintenance might present to the ongoing safety and operability of the surrounding water supply infrastructure and piping. The transmission main that failed was or should have been known to Defendants to be prone to failure with catastrophic consequences. Other American Water subsidiaries have experienced water main failures of the type that occurred in the Water Loss Incident. Engineers at American Water and Services retain engineering judgment over the planning process and failed to plan for timelyreplacing the faulty pipes, and in this instance, failed to ensure that TAW and its contractors could ‘guard against a water main break and the interruption in service that would almost surely ensue. 27. Upon information and belief, Defendants knew or should have known that failures of this water main could take days to repair because of the size of the main and its other characteristics. 28. Upon information and belief, Defendants knew or should have known that this transmission main supplied approximately 35,000 customers and that no alternative supply existed through which to furnish tap water to its customers in the event of an extended outage. 29. Upon information and belief, Defendants knew or should have known that they did not have water storage in the areas served by this main to maintain continuous tap water service to customers during an extended outage of the main. 30. Upon information and belief, Defendants knew or should have known that deferred maintenance led to the need for improvements necessary to fulfill their legal and contractual obligations to customers to ensure adequate and continuous service. 31. Upon information and belief, Defendants willfully neglected their legal and contractual obligations to its customers to ensure that ongoing maintenance and infrastructure upgrades existed so that adequate service may be reasonably maintained at all times. 32. Defendants also have violated a number of regulations imposed by the Tennessee Public Utility Commission (“PUC”) which bear upon the contractual relationship between Defendants and their customers. 33. Specifically, Defendants have violated their responsibility imposed by the PUC that the design and construction of their water plan conform to good standard engineering practice andbe designed and operated so as to provide reasonably adequate and safe service to its customers. Tenn. Comp. R. & Regs 1220-04-30-.25(1). 34, Defendants have further violated their responsibility imposed by the PUC that they make all reasonable efforts to prevent interruption of service. Tenn. Comp. R. & Regs 1220-04- 03-4202). 35. Defendants have also violated their responsibility imposed by the PUC that they exercise reasonable diligence to furnish a continuous and adequate supply of water to their customers and to avoid any shortage or interruption of delivery thereof. Tenn. Comp. R. & Regs 1220-04-03.43(1). 36. Defendant TAW’s website informs its customers, “You have a right to high-quality drinking water every time you tum on your faucet.” See https://amwater.com/tnaw/customer- service-billing/rights-responsibilities (last checked September 17, 2019). It is precisely this right which Plaintiffs were denied as the result of Defendants’ fault as described herein. CLASS ACTION ALLEGATIONS 37. Plaintiffs seek to represent the following class of individuals and businesses: All ‘persons and businesses who lost water service provided by Tennessee-American Water Company during the Water Loss Incident, or who suffered monetary losses as the result of not being able to earn wages during the Water Loss Incident. 38. Excluded from the Class are the Defendants and their officers, directors, and employees, as well as the Court, its personnel, and undersigned counsel and their immediate families. 39, Plaintiffs and all others similarly situated are entitled to have this case maintained as a class action pursuant to the Tennessee Rules of Civil Procedure for the following reasons:40. (1) The prerequisites for a class action under Tennessee Rule of Civil Procedure 23.01 are met. The class is so numerous that joinder of all persons is impracticable. Well in excess of 35,000 people were adversely affected. The exact number of Class Members can be readily determined from the records of Defendant TAW and the United States Census Bureau (2) There are common issues of law and fact, including: (a) whether Defendants are liable to individuals and businesses in the class for breach of contract for failing to furnish a continuous and adequate supply of water and for negligently causing loss of water service; and (b) the scope of damages caused by the Defendants’ conduct. These and other common issues of law and fact relate to and affect the rights of Plaintiffs and Class Members. Plaintiffs’ claims are typical of the class. Plaintiffs reside and were present within the affected area. All experienced loss of water and even as water service was restored, were advised by Defendants to conserve and boil water. 41. Plaintiffs have suffered annoyance and aggravation as well as economic losses and business losses that are typical of the experience of the Class Members. Plaintiffs’ interests are identical to and aligned with those of other Class Members. 42. Plaintiffs who reside in households who suffered a water outage as a result of the Water Loss Incident (“Residential Plaintiffs") have all suffered common damages from the loss of the use of water. This loss of use is common to all such Residential Plaintiffs and affected them similarly. 1043. Plaintiffs who are hourly wage-earners who work in industries particularly affected by the loss of water and therefore lost wages as a result (“Wage Loss Plaintiffs”) were affected similarly. 44, Plaintiffs who are businesses that lost profits (“Business Plaintiffs") because they had to shut down during the duration of the water loss were affected similarly. 45. Plaintiffs will fairly and adequately represent and protect the interests of the class because: (1) Plaintiffs have retained counsel experienced in the prosecution of class action litigation who will adequately represent the interests of the class. Undersigned counsel have successfully resolved litigation similar to the present case and other significant class action cases; (2) Plaintiffs and their counsel are aware of no conflicts of interest between Plaintiffs and absent Class Members or otherwise that cannot be managed through the implementation of available procedures; (3) Plaintiffs have, or can acquire, adequate financial resources to assure that the interests of the class will be protected; and (4) Plaintiffs are knowledgeable concerning the subject matter of this action and will assist counsel in the prosecution of this litigation. 46. Further, any denial of liability and defenses raised by the Defendants would be applicable to all claims presente by all members ofthe class or can otherwise be managed through available procedures. 47. Defendants’ conduct presents predominant common factual questions. Fundamentally, all of the Plaintiffs’ claims arise out of a single course of conduct by Defendants ulthat caused the Water Loss Incident. Although this was an incident that affected a sizeable geographic area and many individuals and businesses, it can be traced back to actions made jointly and severally by Defendants. Plaintiffs, whether Residential Plaintiffs, Business Plaintiffs or ‘Wage Loss Plaintifis, will present common liability proof that is the same for each member of the Class. All Plaintiffs’ common proof of Defendants’ liability will involve the same cast of characters, events, discovery, documents, fact witnesses, and experts. 48. The need for proof of Plaintiffs’ and Class Members’ damages will not cause individual issues to predominate over common questions. Losses suffered by Plaintiffs and the Class can be efficiently demonstrated either at trial or as part of routine claims administration through accepted and court-approved methodologies with the assistance of court-appointed personnel, including Special Masters. Certain types or elements of damage are subject to proof using aggregate damage methodologies or simply rote calculation and summation. 49. A class action is superior to maintenance of these claims on a claim-by-claim basis ‘when all actions arise out of the same circumstances and course of conduct. A class action allows the Court to process all rightful claims in one proceeding. Class litigation is manageable considering the opportunity to afford reasonable notice of significant phases of the litigation to Class Members and permit distribution of any recovery. The prosecution of separate actions by individual Class Members, or the individual joinder of all Class Members in this action, is impracticable and would create 2 massive and unnecessary burden on the resources of the courts and could result in inconsistent adjudications, while a single class action can determine, with judicial economy, the rights of each member of the class or subclasses, should that be determined to be appropriate. 1250. The conduct of this action as a class action conserves the resources of the parties and the court system, protects the rights of each member of the class, and meets all due process requirements, 51. Certification of the Class with respect to particular common factual and legal issues concerning liability and comparative fault, as well as the necessary and appropriate quantum of punitive damages, or ratio of punitive damages to actual harm, is appropriate under Tennessee Rule of Civil Procedure 23.03(4). 52. The particular common issues of liability, comparative fault, and the quantum of punitive damages or ratio of punitive damages to actual harm, are common to all Class Members no matter what type of harm or injury was suffered by each Class Member. CAUSES OF ACTION ‘Count One - Breach of Contract 53. Plaintiffs re-allege each and every allegation set forth in all preceding paragraphs as if fully restated herein. 54. A contract existed between the Plaintiffs and Defendants whereby the Defendants would provide safe and adequate drinking water and water for other uses. On information and belief, Plaintiffs’ contracts are a matter of public record and on file with the Tennessee PUC and are otherwise in the possession of Defendants. 55. Defendants breached their contract with the Plaintiffs when they failed to supply usable tap water to approximately 35,000 connections, including Plaintiffs and other Class Members, during the Water Loss Incident. 1356. As detailed in paragraphs 33 through 35, above, Defendants also violated a number of regulations imposed by the Tennessee PUC which bear upon the contractual relationship between the parties. 57. Defendants breached their contract with their customers, including Plaintiffs, and their customers are entitled to all contract damages, including damages associated with the breach, and all foreseeable consequential damages including but not limited to damages for annoyance and inconvenience, out-of-pocket expenses and loss of wages and lost profits. Count Two Negligence 58. Plaintiffs re-allege each and every allegation set forth in all preceding paragraphs as if fully restated herein. 59. Under the common law, Defendants have a duty to exercise reasonable care in their undertakings. 60. The conduct, acts and omissions of the Defendants violated duties owed to Plaintiffs and the Class. 61. Defendants failed to exercise reasonable care in at least the following ways: through their failure of design, maintenance and construction; through their indifference to the needs of their customers whom they left dependent on a large water main which would require extended repair time in the event of a break; through maintaining inadequate reinforcements or redundancy, with inadequate storage reserves and with no alternative means of supplying water to those customers. 62. Defendants’ conduct was further in violation of industry standards and in violation of regulations imposed by the Tennessee PUC, and therefore was unreasonable per se. 463. Defendants’ negligence proximately caused damage to Plaintiffs and the Class. As a proximate result of Defendants’ negligence, Residential Plaintiffs experienced water loss, Wage Loss Plaintiffs were unable to work and earn regular wages, and Business Plaintiffs experienced lost profits. 64. The conduct of Defendants as set forth herein was reckless and wanton. Plaintiffs also seek punitive damages for Defendants’ calculated indifference to the risks it was creating for its customers, through the actions described in detail above. Count Three - Equitable Remedy of Piercing the Corporate Veil Against the American Water Defendants 65. Plaintiffs re-allege each and every allegation set forth in all preceding paragraphs as if fully restated herein. 66. The following factors support piercing the corporate veil in this case against Defendants American Water, Services, and TAW: (1) There was a clear failure on the part of Defendant American Water to adequately capitalize the Defendant TAW; 2) Defendant American Water used the corporate vehicle as a mere conduit to operate Defendants TAW and Services; (3) Defendant American Water ultimately owns all of the stock of Defendants ‘TAW and Services; (4) Defendant American Water shares the same address in Vorhees, New Jersey with its wholly-owned subsidiaries, Defendants TAW and Services; (5) Defendant American Water reports consolidated financials that include the financial results of Defendants TAW and Services; and 15(© Defendant American Water failed to adequately mandate and capitalize an alternate water supply which Defendant TAW should have created which would have mitigated or averted the current crisis. PRAYER FOR RELIEF AND JURY DEMAND 1. WHEREFORE, the Plaintiffs respectfully pray for a Jury Trial and for the following relief: (1) An Order certifying this action to proceed as a Class Action, authorizing Plaintiffs to represent the interests of the Class or subclasses as appropriate and appointing undersigned counsel to represent the Class; (2) An award of damages for Class Members who suffered wage loss or business or economic losses as a result of Defendants’ conduct, acts, or omissions; (3) An award of damages or mechanism for recovery for Class Members who incurred any out-of-pocket expenses as a result of the Defendants’ conduct, acts, or omissions; (4) An award of damages or mechanism for recovery to compensate for loss of use and enjoyment of property, annoyance and inconvenience; (5) An award of punitive damages for all Class Members; (© Prejudgment and post-judgment interest; (7) Damages for lost wages; (8) That the Court order the Defendants to pay for the costs of this proceeding, including reasonable attorneys’ fees and costs, including, but not limited to, costs of class notice and administration; and (9) Such other relief as the Court or Jury may deem appropriate. 16a Respectfully Submitted this_7 day of September, 2019: By Counsel, re (#015958) 850 Fort Wood Street Chattanooga, TN 37403 Telephone: (423) 266-0605 Facsimile: (423) 266-0687 lee@davis-hoss.com Vay Van Bunch, Esquire (#012874) BONNETT FAIRBOURN FRIEDMAN & BALINT PC 2325 E. Camelback Road, Suite 300 Phoenix, Arizona 85016 Telephone: (602) 274-1100 Facsimile: (602) 274-1199 vbunch@bffb.com Stuart Calwell, Esq. L. Dante’ diTrapano, Esq. Alex McLaughlin, Esq. CALWELL LUCE DITRAPANO PLLC Law and Arts Center West 500 Randolph Street Charleston, WV 25302 (304) 400-6558 (304) 344-3684 (facsimile) scalwell@cldlaw.com dditrapano@eldlaw.com amelaughlin@cldlaw.com P. Rodney Jackson, Esq. LAW OFFICES OF ROD JACKSON 401 Fifth-Third Center 700 Virginia Street, East Charleston, West Virginia 25301 (843) 780-6879 mile: (304) 345-7258 prodjackson27@yahoo.com Counsel for Plaintiffs 17