Young v. Jones

Robert Young and other investors (collectively, the investors) (plaintiffs) deposited more than $500,000 in a South Carolina bank, and the entire amount disappeared. The investors claimed that they relied on an audit letter issued by Price Waterhouse, Chartered Accountants (PW-Bahamas), a Bahamian partnership, when making the deposit. The unqualified audit letter concerned a financial statement that was falsified. The audit letter was printed on Price Waterhouse letterhead, bore the Price Waterhouse trademark, and was signed “Price Waterhouse.” The investors sued PW-Bahamas and Price Waterhouse-United States (PW-US). The investors argued that PW-Bahamas and PW-US operated as partners by estoppel and PW-US was therefore liable for PW-Bahamas’ alleged negligent issuance of the audit letter and could also be used to establish the minimum contacts with South Carolina necessary to give the court personal jurisdiction over PW-Bahamas. The investors argued that Price Waterhouse held itself out as a partnership with offices around the world and that PW-US made no distinction between itself and other Price Waterhouse entities. As evidence, the investors offered a Price Waterhouse brochure stating that Price Waterhouse was a global entity with 400 offices around the world. The investors argued that the brochure, which their counsel had obtained at a litigation seminar, was intended to promote the image of a large international accounting firm rather than independent entities. PW-Bahamas moved for dismissal for lack of personal jurisdiction, and PW-US moved for dismissal for failure to state a viable claim against it or its partners.