Shurgard Settles One Class-Action Suit as More Appear

SEATTLE-A potential class action securities lawsuit was filed against Shurgard Storage Centers and another is under investigation. The news comes one month after the locally headquartered self-storage REIT announced a tentative settlement for a nationwide wage and hour class action lawsuit against the company.A proposed securities class action was filed by two law firms in the United States District Court for the Western District of Washington against Shurgard and one or more of its officers and/or directors by two separate law firms. The filings are related to Shurgard’s May 17, 2004, announcement that it was restating its financial results after a re-audit of its financial statements for the years ended December 31, 2001 and 2002 and for the first three quarters of 2003. Shurgard indicated that its new auditors, PricewaterhouseCoopers, had identified accounting errors affecting prior periods that had to be restated. The actions charge that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period, which statements had the effect of artificially inflating the market price of the Company’s securities. The law firms behind the suits are Baltimore-based Charles J. Piven PA and Hartford-based Schatz & Nobel PC. “We do not believe that the claims in the lawsuit have any merit and we will defend the company vigorously against the suit,” said Shurgard VP and general counsel Jane A. Orenstein in a prepared statement. As well, Seattle-based Keller Rohrback LLC announced it is investigating a potential class-action against the company for violations of the Employee Retirement Income Security Act of 1974. The investigation focuses on investments in company stock by the Shurgard Employees Retirement Savings Plan between May 9, 2001 and the present.The two potential class-action lawsuits come one month after Shurgard announced it had reached a tentative agreement to settle an alleged nationwide wage and hour class action lawsuit filed in the United States District Court for the Northern District of California, entitled Scura, et.al. vs. Shurgard Storage Centers Inc. Pursuant to the proposed settlement agreement, it is anticipated that $3 million in payments to participating class members (together with attorney fees and other litigation costs) will be made in the first half of 2005. “We were surprised to obtain a quick settlement of this lawsuit, which we were not anticipating for at least another year,” said Shurgard president/COO David Grant in a prepared statement last week. “We are satisfied that settlement of this lawsuit is in the best interests of Shurgard, its shareholders, and other stakeholders including our employees.” Notwithstanding the proposed agreement, and as an express part thereof, Shurgard continues to deny all allegations of wrongdoing raised by the lawsuit. Shurgard estimates that the proposed settlement will result in a charge in the fourth quarter of approximately $.06 per share for Earnings per share and Funds from Operations. As a result of the proposed settlement, the company lowered its guidance for Funds from Operations (FFO) given in its press release dated November 10, 2004, by that amount.