4:08-cv-02348-tlw date filed 06/26/2008 entry number1 page...

4:08-cv-02348-TLW Date Filed 06/26/2008 Entry Number 1 of 19

UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH CAROLINA

FLORENCE DIVISION

CITY OF ANN ARBOR EMPLOYEES ' ) Civil Action No.RETIREMENT SYSTEM, Individually and onBehalf of All Others Similarly Situated,

Plaintiff,

CLASS ACTION COMPLAINT FORVIOLATIONS OF FEDERAL SECURITIESLAWS

vs.

SONOCO PRODUCTS CO., HARRIS E.DELOACH JR., and CHARLES J. HUPFER,

DEMAND FOR JURY TRIAL

Defendants.


Plaintiff has alleged the following based upon the investigation ofPlaintiff s counsel, which

included a review ofUnited States Securities and Exchange Commission ("SEC ) filings by Sonoco

Products Co. ("Sonoco Products or the "Company ), as well as regulatory filings and reports,

securities analysts' reports and advisories about the Company, press releases and other public

statements issued by the Company, and media reports about the Company, and Plaintiffbelieves that

substantial additional evidentiary support will exist for the allegations set forth herein after a

reasonable opportunity for discovery.

NATURE OF THE ACTION

1. This is a federal class action on behalf ofpurchasers ofthe common stock of Sonoco

Products between February 7, 2007 and September 18, 2007, inclusive (the "Class Period ), seeking

to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act ).

JURISDICTION AND VENUE

2. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) ofthe

Exchange Act [15 U.S.C. §§78j(b) and 78t(a)] and Rule l Ob-5 promulgated thereunder by the SEC

[17 C.F.R. §240.1Ob-5].

3. This Court has jurisdiction over the subject matter ofthis action pursuant to 28 U. S.C.

§ 1331 and Section 27 of the Exchange Act.

4. Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28

U.S.C. §1391(b). Many of the acts charged herein, including the preparation and dissemination of

materially false and misleading information, occurred in substantial part in this District.

5. In connection with the acts alleged in this Complaint, Defendants, directly or

indirectly, used the means and instrumentalities ofinterstate commerce, including, but not limited to,

the mails, interstate telephone communications and the facilities of the national securities markets.

4:08-cv-02348-TLW Date Filed 06/26/2008

PARTIES

Entry Number 1 of 19

6. Plaintiff City of Ann Arbor Employees' Retirement System, as set forth in the

accompanying certification and incorporated by reference herein, purchased the common stock of

Sonoco Products at artificially inflated prices during the Class Period and has been damaged thereby.

7. Defendant Sonoco Products manufactures industrial and consumer packaging

products, and packaging services primarily in the United States, Europe, and Canada.

8. (a) Defendant Harris E. DeLoach Jr. ("DeLoach ) is, and was at all relevant

times, Executive Chairman, Chief Executive Officer and President of Sonoco Products.

(b) Defendant Charles J. Hupfer ("Hupfer ) is, and was at all relevant times,

Chief Financial Officer and Senior Vice President of Sonoco Products.

(c) Defendants DeLoach and Hupfer are collectively referred to herein as the

"Individual Defendants.

9. During the Class Period, the Individual Defendants, as senior executive officers

and/or directors of Sonoco Products, were privy to confidential and proprietary information

concerning Sonoco Products, its operations, finances, financial condition and present and future

business prospects . The Individual Defendants also had access to material adverse non-public

information concerning Sonoco Products, as discussed in detail below. Because of their positions

with Sonoco Products, the Individual Defendants had access to non-public information about its

business, finances, products, markets and present and future business prospects via access to internal

corporate documents, conversations and connections with other corporate officers and employees,

attendance at management and/or board of directors meetings and committees thereof, and via

reports and other information provided to them in connection therewith. Because oftheir possession

of such information, the Individual Defendants knew or recklessly disregarded that the adverse facts

specified herein had not been disclosed to, and were being concealed from, the investing public.

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10. The Individual Defendants are liable as direct participants in the wrongs complained

of herein. In addition, the Individual Defendants, by reason of their status as senior executive

officers and/or directors, were "controlling persons within the meaning of Section 20(a) of the

Exchange Act and had the power and influence to cause the Company to engage in the unlawful

conduct complained ofherein. Because oftheir positions ofcontrol, the Individual Defendants were

able to and did, directly or indirectly, control the conduct of Sonoco Products' business.

11. The Individual Defendants, because oftheir positions with the Company, controlled

and/or possessed the authority to control the contents of its reports, press releases and presentations

to securities analysts and through them, to the investing public. The Individual Defendants were

provided with copies of the Company' s reports and press releases, alleged herein to be misleading,

prior to or shortly after their issuance and had the ability and opportunity to prevent their issuance or

cause them to be corrected. Thus, the Individual Defendants had the opportunity to commit the

fraudulent acts alleged herein.

12. As senior executive officers and/or directors and as controlling persons of a publicly

traded company whose common stock was, and is, registered with the SEC pursuant to the Exchange

Act, and was, and is, traded on the New York Stock Exchange ("NYSE ) and governed by the

federal securities laws, the Individual Defendants had a duty to promptly disseminate accurate and

truthful information with respect to Sonoco Products' financial condition and performance, growth,

operations, financial statements, business, products, markets, management, earnings and present and

future business prospects, and to correct any previously issued statements that had become

materially misleading or untrue, so that the market price of Sonoco Products' common stock would

be based upon truthful and accurate information. The Individual Defendants' misrepresentations and

omissions during the Class Period violated these specific requirements and obligations.

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13. The Individual Defendants are liable as participants in a fraudulent scheme and

course of conduct which operated as a fraud or deceit on purchasers of Sonoco Products' common

stock by disseminating materially false and misleading statements and/or concealing material

adverse facts. The scheme: (i) deceived the investing public regarding Sonoco Products' business,

operations, management and the intrinsic value of Sonoco Products' securities; (ii) allowed

Defendant DeLoach, and other Company insiders to sell 295,730 shares of their personally-held

Sonoco Products common stock for gross proceeds in excess of $12. 3 million; and (iii) caused

Plaintiff and members of the Class (defined below) to purchase Sonoco Products' common stock at

artificially inflated prices.

PLAINTIFF'S CLASS ACTION ALLEGATIONS

14. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a class consisting of all those who purchased the common

stock of Sonoco Products between February 7, 2007 and September 18, 2007, inclusive, and who

were damaged thereby (the "Class ). Excluded from the Class are Defendants, the officers and

directors ofthe Company, at all relevant times, members oftheir immediate families and their legal

representatives, heirs, successors or assigns and any entity in which Defendants have or had a

controlling interest.

15. The members of the Class are so numerous that joinder of all members is

impracticable. Throughout the Class Period, Sonoco Products common stock was actively traded on

the NYSE. While the exact number of Class members is unknown to Plaintiff at this time and can

only be ascertained through appropriate discovery, Plaintiff believes that there are hundreds or

thousands of members in the proposed Class. Record owners and other members of the Class may

be identified from records maintained by Sonoco Products or its transfer agent and may be notified

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of the pendency of this action by mail, using the form of notice similar to that customarily used in

securities class actions.

16. Plaintiffs claims are typical ofthe claims ofthe members ofthe Class as all members

of the Class are similarly affected by Defendants' wrongful conduct in violation of federal law

complained of herein.

17. Plaintiff will fairly and adequately protect the interests of the members of the Class

and has retained counsel competent and experienced in class action and securities litigation.

18. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by Defendants' acts as

alleged herein;

(b) whether statements made by Defendants to the investing public during the

Class Period misrepresented material facts about the business and operations of Sonoco Products;

(c) whether the price of Sonoco Products common stock was artificially inflated

during the Class Period; and

(d) to what extent the members of the Class have sustained damages and the

proper measure of damages.

19. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the

damages suffered by individual Class members may be relatively small, the expense and burden of

individual litigation make it impossible for members ofthe Class to individually redress the wrongs

done to them. There will be no difficulty in the management of this action as a class action.

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SUBSTANTIVE ALLEGATIONS

20. Defendant Sonoco Products describes itself as a "$4.0 billion global manufacturer of

industrial and consumer products and provider of packaging services, with 334 operations in 35

countries, serving customers in some 85 nations.

21. The Company operates in four segments: (i) Engineered Carriers and Paper, (ii)

Consumer Packaging, (iii) Packaging Services, and (iv) Other.

22. The Engineered Carriers and Paper segment designs and develops high-performance

paper and composite engineered carriers, fiber-based construction tubes and forms, and paperboard.

23. The Consumer Packaging segment produces round and shaped rigid packaging, both

composite and plastic, printed flexible packaging, metal and plastic ends and closures.

24. The Packaging Services segment provides products and services like point-of-

purchase displays , packaging fulfillment, and brand management.

25. The "Other segment's products include wooden, metal, and composite reels for wire

and cable packaging, custom-designed protective packaging, machinery manufacturing, and

specialty packaging.

26. The Class Period begins on February 7, 2007. On that date, Sonoco Products issued a

press release announcing its financial results for the fourth quarter and year end of 2006, the period

ended December 31, 2006. For the quarter, the Company reported earnings per diluted share of

$0.39, net sales of $990 million, and net income of $39 .5 million . Defendant DeLoach, commenting

on the results, stated, in pertinent part, as follows:

Base earnings during the fourth quarter of 2006 were above the high end of ourguidance and First Call's mean estimate and just under the unusually robust resultsgenerated in the same period in 2005. Base operating profit increased year over yearas strong productivity and increased selling prices more than offset higher costs oflabor, material, energy and freight; slightly lower volumes; and an unfavorable shiftin the mix of business. However, base earnings were lower in the fourth quarter of2006, compared with the same period in 2005 due to a higher effective tax rate onbase operating profit.

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Sales increased in our Tubes and Core/Paper, Consumer Packaging and PackagingServices segments during the fourth quarter. The overall increase in sales was dueprimarily to higher selling prices and favorable foreign currency translation.

2006 was a strong year for Sonoco. We achieved record sales, net income and cashflow from operations. We produced a third consecutive year of operating marginimprovement driven by strong productivity gains and a continued focus on pricemanagement, cost reductions and the turnaround of under-performing operations.Our initiative to reduce working capital strengthened cash flow, which we used tofurther grow the Company, increase dividends, reduce debt and buy back stock. Wecontinued to grow sales from new products and received a number of awards forpackaging innovation. In addition, our employees developed new initiatives to betterserve the changing needs of our customers. While we are proud of what wasaccomplished in 2006, we remain focused on accelerating top-line growth, furtherimproving margins and building cash flow to help meet our ongoing objective ofproviding shareholders with average annual double-digit total returns.

With regard to the Company's outlook for the first quarter of 2007, the press release stated:

First Quarter 2007 Outlook

Both the upcoming quarter and annual forecasts are given assuming no significantchange in companywide volumes and/or prices due to a change in general economicconditions. Sonoco expects first quarter 2007 base earnings to be in the range of $.47to $.50 per diluted share. The first quarter of the calendar year has historically beenSonoco's weakest quarter of the year. However, as a result of the Company'saccounting calendar, the first quarter of 2007 will benefit from six more calendardays than the same period in 2006. As previously announced, the Company expectsfull-year 2007 base earnings per diluted share to be in the range of $2.28 to $2.31.The Company's earnings guidance reflects an expected effective tax rate ofapproximately 35 percent during the coming year.

27. On April 20, 2007, Sonoco Products issued a press release announcing its financial

results for the first quarter of 2007, the period ended April 1, 2007. For the quarter, the Company

reported earnings of $0.52 per diluted share, net sales of $956 million and net income of $53.1

million. Defendant DeLoach commented on the results, stating, in pertinent part, as follows:

Approximately half of the increase in sales during the first quarter of 2007 was aresult of the longer quarter, while acquisitions, primarily in our Tubes andCores/Paper and Consumer Packaging segments, added $32 million in revenue. Inaddition, we were pleased to be able to recover much of the materials and other costincreases experienced during the quarter through higher selling prices.

Through manufacturing productivity improvements and attention to costmanagement, we were able to successfully navigate our way through what was a

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volatile first-quarter environment. The price for our largest cost component, oldcorrugated containers (OCC), increased significantly during the quarter.

While OCC prices have declined modestly in April, we expect them to remainelevated and unpredictable . We believe that managing price swings in OCC willlikely be one of our greatest challenges over the next few quarters.

With regard to the Company's 2007 second quarter outlook, Defendant DeLoach added:

Despite spiking OCC costs, we were pleased with our first quarter financial results asbase earnings were well above our previously announced guidance ofbetween $.47to $.50 per diluted share. Sonoco expects second quarter 2007 base earnings to be inthe range of $.55 to $.58 per diluted share, assuming no significant change inCompanywide volumes and/or prices or a change in general economic conditions. Asa result, the Company expects full-year 2007 base earnings per diluted share to be inthe range of $2.36 to $2.40 per share.

28. In response to the Company' s earnings announcement and increased guidance for

2007, the price of Sonoco Products common stock rose $3 . 31 per share , or over 8% , to close at

$43.04 per share, on heavy trading volume.

29. Following this press release , from April 23, 2007 to May 21, 2007, Defendant

DeLoach and other Company insiders collectively sold 217,120 shares of their personally-held

Sonoco Products stock and reaped over $9.3 million in gross proceeds - with knowledge that the

Company would not be able to meet its earnings guidance for the third quarter and year end of2007.

30. The statements referenced above in ¶126-27 were materially false and misleading

when made because they misrepresented and failed to disclose:

(a) that the Company was losing market share to its competitors;

(b) that the Company was having operational difficulties in implementing its next

generation of products;

(c) that the Company was experiencing weaker sales in its Engineered Carriers

and Paper and Consumer Packaging segments , especially in North America;

(d) that the Company was distracted by the loss ofa bid on a large contract, which

resulted in decreased sales and price concessions on current contracts;

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(e) that the Company was having a difficult time in moving its old inventory; and

(f) as a result of the forgoing, the Company had no reasonable basis for its 2007

earnings guidance.

31. On July 20, 2007, the Company issued a press release announcing its financial results

for the second quarter of 2007, the period ended July 1, 2007. For the quarter, the Company

reported earnings of $0.41 per diluted share, net sales of $994 million and net income of $42.4

million. Defendant DeLoach commented on the results, stating, in pertinent part, as follows:

Our quarterly year-over-year sales improvement was primarily the result ofacquisitions in our Tubes and Cores/Paper and Consumer Packaging segments,higher selling prices implemented to offset higher raw materials and other costs, andthe favorable impact of foreign currency rates. These sales gains were partiallyoffset by volume declines in our Tube and Cores/Paper and Consumer Packagingsegments.

Second quarter 2007 base earnings increased due to productivity improvementsthroughout each of our business segments and acquisitions. We also continued tosuccessfully manage our selling price/material cost relationship during the quarter,despite high old corrugated container (OCC) costs. These favorable factors more thanoffset the impacts of lower volume, the mix of business and higher energy, freightand labor costs. In addition, the 2007 quarterly results also benefited from a lowereffective tax rate.

With regard to the Company' s outlook, the press release stated:

Overview and Outlook

"Our second quarter base earnings per diluted share were within the range ofguidance that we had provided, despite lower than expected volumes and achallenging operating environment due to high raw materials and other costs, saidDeLoach. "We expect third quarter 2007 base earnings to be in the range of $.62 to$.65 per diluted share, assuming no significant change in general economicconditions. Our expectation for full-year 2007 base earnings per diluted share isunchanged at $2.36 to $2.40 per diluted share.

The Company's guidance for the remainder ofthe year assumes reduced profitabilityin the Consumer Packaging segment, principally in flexible packaging operations,and lower results in the Packaging Services segment related to the outcome ofrecentbidding activity. This guidance reflects an expected tax rate approximately equal tothat experienced in the first half of the year.

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32. In response to this announcement , shares ofthe Company's common stock fell $6.30

per share, or over 14%, to close at $38.00 per share, on heavy trading volume.

33. Then, on September 18, 2007, the Company issued a press release announcing that it

is reducing its third quarter 2007 base earnings estimate to a range of $0.55 to $0.58 per diluted

share. Defendant DeLoach, commenting on the reduced guidance, stated, in pertinent part, as

follows:

Preliminary results through August 2007 reflect a greater than expected decline involumes across most of our served markets as a result ofweaker market conditions.In addition , raw material and other costs exceeded our projections including higherprices for old corrugated containers (OCC), our most significant raw material.

We are cautious about the remainder of 2007 due to what appears to be a slowing ofgeneral economic activity, primarily in North America. We have been taking actionsto reduce costs to offset some of the near-term shortfall. Sonoco will continuemaking investments that profitably grow our businesses while providing value to ourcustomers with new packaging and services innovations. We remain on solid footingwith healthy cash flow and a strong balance sheet and will continue working tostrengthen operating margins by driving productivity improvements, further reducingour cost structure and improving underperforming operations.

With regard to the Company 's new earnings guidance for 2007, the press release stated:

As a result, Sonoco now expects base earnings for the full 2007 year to be in therange of $2.23 to $2.26 per diluted share. The Company had previously reported inJuly that it expected full-year base earnings to be in the range of $2.36 to $2.40 perdiluted share. For 2006, Sonoco reported annual base earnings of $2.13 per dilutedshare and GAAP earnings per diluted share of $1.92. The Company's new guidancereflects lower than previously projected Companywide volumes and higher rawmaterial and other costs for the remainder of the year. In addition, the revisedguidance for both the third quarter and full year reflect a $.03 per share benefit fromthe release of certain income tax reserves not included in the previous guidance.

34. Upon this news, shares of the Company's stock fell $2.42 per share, or over 7%, to

close at $30.78 per share, on heavy trading volume.

35. The markets for Sonoco Products common stock were open, well-developed and

efficient at all relevant times. As a result of these materially false and misleading statements and

failures to disclose, Sonoco Products' securities traded at artificially inflated prices during the Class

Period. Plaintiff and other members ofthe Class purchased or otherwise acquired Sonoco Products'

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common stock relying upon the integrity ofthe market price of Sonoco Products' common stock and

market information relating to Sonoco Products, and have been damaged thereby.

36. During the Class Period, Defendants materially misled the investing public, thereby

inflating the price of Sonoco Products' common stock, by publicly issuing false and misleading

statements and omitting to disclose material facts necessary to make Defendants' statements, as set

forth herein, not false and misleading. Said statements and omissions were materially false and

misleading in that they failed to disclose material adverse information and misrepresented the truth

about the Company, its business and operations , as alleged herein.

37. At all relevant times, the material misrepresentations and omissions particularized in

this Complaint directly or proximately caused, or were a substantial contributing cause of, the

damages sustained by Plaintiff and other members of the Class. As described herein, during the

Class Period, Defendants made or caused to be made a series of materially false or misleading

statements about Sonoco Products' business, prospects and operations. These material

misstatements and omissions had the cause and effect of creating in the market an unrealistically

positive assessment of Sonoco Products and its business, prospects and operations, thus causing the

Company's common stock to be overvalued and artificially inflated at all relevant times.

Defendants' materially false and misleading statements during the Class Period resulted in Plaintiff

and other members of the Class purchasing the Company's common stock at artificially inflated

prices, thus causing the damages complained of herein.

Additional Scienter Allegations

38. As alleged herein, Defendants acted with scienter in that Defendants knew that the

public documents and statements issued or disseminated in the name of the Company were

materially false and misleading; knew that such statements or documents would be issued or

disseminated to the investing public; and knowingly and substantially participated or acquiesced in

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the issuance or dissemination of such statements or documents as primary violations of the federal

securities laws. As set forth elsewhere herein in detail, Defendants, by virtue of their receipt of

information reflecting the true facts regarding Sonoco Products, their control over, and/or receipt

and/or modification of Sonoco Products' allegedly materially misleading misstatements , and/or their

associations with the Company which made them privy to confidential proprietary information

concerning Sonoco Products, participated in the fraudulent scheme alleged herein.

39. Defendants were further motivated to engage in this course of conduct in order to

allow Defendant DeLoach, and other Company insiders to sell 295,730 shares of their personally-

held Sonoco Products common stock for gross proceeds in excess of $12. 3 million. The insider

shares sold during the Class Period are set forth more fully in the following chart:

Insider Date Shares Price ProceedsJIMMY BOWEN 2/9/2007 11,582 $38.00 $440,116

2/9/2007 5,000 $38.05 $190,2502/9/2007 5,000 $38.06 $190,3002/9/2007 5,000 $38.10 $190,500

2/12/2007 11,900 $38.00 $452,2002/13/2007 14,618 $38.00 $555,4842/13/2007 10,000 $38.05 $380,5002/13/2007 5,000 $38.06 $190,3002/13/2007 5,000 $38.11 $190,5502/13/2007 1,900 $38.01 $72,219

75,000 $2,852,419

FITZ LEE COKER 4/23/2007 13,200 $42.48 $560,736

HARRIS DELOACH 5/18/2007 10,000 $43.04 $430,4005/18/2007 10,000 $43.22 $432,2005/18/2007 8,700 $43.10 $374,9705/18/2007 5,000 $43.00 $215,0005/18/2007 5,000 $43.01 $215,0505/18/2007 5,000 $43.05 $215,2505/18/2007 5,000 $43.11 $215,5505/18/2007 5,000 $43.14 $215,7005/18/2007 5,000 $43.20 $216,0005/18/2007 1,300 $43.26 $56,2385/21/2007 15,000 $43.20 $648,0005/21/2007 10,000 $43.00 $430,0005/21/2007 10,000 $43.14 $431,4005/21/2007 10,000 $43.15 $431,5005/21/2007 10,000 $43.21 $432,1005/21/2007 10,000 $43.23 $432,3005/21/2007 5,000 $43.06 $215,300

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5/21/2007 5,000 $43.12 $215,6005/21/2007 5,000 $43.16 $215,8005/21/2007 5,000 $43.32 $216,6005/21/2007 5,000 $43.11 $215,5505/21/2007 5,000 $43.32 $216,600

155,000 $6,687,108

BERNARD KASRIEL 2/13/2007 1,334 $37.99 $50,6792/13/2007 798 $38.04 $30,3562/13/2007 600 $38.00 $22,8002/13/2007 200 $38.01 $7,6022/13/2007 100 $38.03 $3,803

3,032 $115,240

KEVIN MAHONEY 5/18/2007 4,000 $43.00 $172,0005/18/2007 3,600 $42.95 $154,6205/18/2007 3,500 $43.16 $151,0605/18/2007 500 $43.05 $21,5255/18/2007 400 $43.00 $17,200

12,000 $516,405

MARTY PIGNONE 4/26/2007 1,000 $42.38 $42,3804/26/2007 620 $42.42 $26,3004/26/2007 500 $42.39 $21,1954/26/2007 300 $42.37 $12,7115/2/2007 3,000 $42.95 $128,850

5,420 $231,436

MANCIL SANDERS 4/23/2007 10,500 $42.50 $446,2504/23/2007 5,000 $42.14 $210,7004/23/2007 5,000 $42.17 $210,8504/23/2007 5,000 $42.51 $212,5504/23/2007 3,000 $42.54 $127,6204/23/2007 300 $42.60 $12,7804/25/2007 2,700 $42.56 $114,912

31,500 $1,335,662

BARRY SAUNDERS 8/31/2007 578 $36.01 $20,814

295,730 $12,319,820

Loss Causation/Economic Loss

40. During the Class Period, as detailed herein, Defendants engaged in a scheme to

deceive the market and a course ofconduct which artificially inflated the prices of Sonoco Products'

common stock and operated as a fraud or deceit on Class Period purchasers of Sonoco Products'

common stock by failing to disclose that the Company had no reasonable basis for its 2007 earnings

guidance since it was experiencing weaker sales and losing market share to its competitors, among

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other things . When Defendants ' prior misrepresentations and fraudulent conduct were disclosed and

became apparent to the market, the price of Sonoco Products' common stock fell precipitously as the

prior artificial inflation came out. As a result oftheir purchases of Sonoco Products' common stock

during the Class Period, Plaintiffand the other Class members suffered economic loss, i. e., damages,

under the federal securities laws.

41. By failing to disclose that the Company had no reasonable basis for its 2007 earnings

guidance since it was experiencing weaker sales and losing market share to its competitors, among

other things, Defendants presented a misleading picture of Sonoco Products' business and prospects.

Defendants' false and misleading statements had the intended effect and caused Sonoco Products'

common stock to trade at artificially inflated levels throughout the Class Period, reaching as high as

$44.89 per share on June 4, 2007.

42. As a direct result of Defendants' disclosures on July 20, 2007 and September 18,

2007, the price of Sonoco Products common stock fell precipitously, falling by a collective $8.72 per

share, or over 21%. This drop removed the inflation from the price of Sonoco Products common

stock, causing real economic loss to investors who had purchased Sonoco Products common stock

during the Class Period.

43. The more than 21% decline in the price of Sonoco Products common stock after these

disclosures came to light was a direct result of the nature and extent of Defendants' fraud finally

being revealed to investors and the market. The timing and magnitude ofthe price decline in Sonoco

Products common stock negates any inference that the loss suffered by Plaintiff and the other Class

members was caused by changed market conditions, macroeconomic or industry factors or

Company-specific facts unrelated to the Defendants' fraudulent conduct. The economic loss, i.e.,

damages, suffered by Plaintiff and the other Class members was a direct result of Defendants'

fraudulent scheme to artificially inflate the prices of Sonoco Products common stock and the

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subsequent significant decline in the value of Sonoco Products common stock when Defendants'

prior misrepresentations and other fraudulent conduct were revealed.

Applicability of Presumption of Reliance:Fraud on the Market Doctrine

44. At all relevant times , the market for Sonoco Products ' common stock was an efficient

market for the following reasons, among others:

(a) Sonoco Products common stock met the requirements for listing, and was

listed and actively traded on the NYSE, a highly efficient and automated market;

(b) as a regulated issuer, Sonoco Products filed periodic public reports with the

SEC and the NYSE;

(c) Sonoco Products regularly communicated with public investors via

established market communication mechanisms, including regular disseminations ofpress releases

on the national circuits ofmajor newswire services and other wide-ranging public disclosures, such

as communications with the financial press and other similar reporting services; and

(d) Sonoco Products was followed by several securities analysts employed by

major brokerage firms who wrote reports which were distributed to the sales force and certain

customers of their respective brokerage firms. Each of these reports was publicly available and

entered the public marketplace.

45. As a result ofthe foregoing, the market for Sonoco Products common stock promptly

digested current information regarding Sonoco Products from all publicly available sources and

reflected such information in the prices of the stock. Under these circumstances, all purchasers of

Sonoco Products common stock during the Class Period suffered similar injury through their

purchases of Sonoco Products common stock at artificially inflated prices and a presumption of

reliance applies.

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No Safe Harbor

46. The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this Complaint.

Many ofthe specific statements pleaded herein were not identified as "forward-looking statements

when made. To the extent there were any forward-looking statements, there were no meaningful

cautionary statements identifying important factors that could cause actual results to differ materially

from those in the purportedly forward-looking statements. Alternatively, to the extent that the

statutory safe harbor does apply to any forward-looking statements pleaded herein, Defendants are

liable for those false forward-looking statements because at the time each ofthose forward-looking

statements were made, the particular speaker knew that the particular forward-looking statement was

false, and/or the forward-looking statement was authorized and/or approved by an executive officer

of Sonoco Products who knew that those statements were false when made.

COUNT I

Violation of Section 10(b) ofthe Exchange Act Against and Rule 10b-5

Promulgated Thereunder Against All Defendants

47. Plaintiffrepeats and realleges each and every allegation contained above as iffully set

forth herein.

48. During the Class Period, Defendants disseminated or approved the materially false

and misleading statements specified above, which they knew or deliberately disregarded were

misleading in that they contained misrepresentations and failed to disclose material facts necessary

in order to make the statements made, in light ofthe circumstances under which they were made, not

misleading.

49. Defendants: (a) employed devices, schemes, and artifices to defraud; (b) made untrue

statements ofmaterial fact and/or omitted to state material facts necessary to make the statements not

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misleading; and (c) engaged in acts, practices, and a course of business which operated as a fraud

and deceit upon the purchasers of the Company' s common stock during the Class Period.

50. Plaintiff and the Class have suffered damages in that, in reliance on the integrity of

the market, they paid artificially inflated prices for Sonoco Products common stock. Plaintiff and the

Class would not have purchased Sonoco Products common stock at the prices they paid, or at all, if

they had been aware that the market prices had been artificially and falsely inflated by Defendants'

misleading statements.

51. As a direct and proximate result of Defendants' wrongful conduct, Plaintiff and the

other members ofthe Class suffered damages in connection with their purchases of Sonoco Products

common stock during the Class Period.

COUNT II

Violation of Section 20(a) ofthe Exchange Act Against the Individual Defendants

52. Plaintiffrepeats and realleges each and every allegation contained above as iffully set

forth herein.

53. The Individual Defendants acted as controlling persons of Sonoco Products within the

meaning of Section 20(a) of the Exchange Act as alleged herein. By reason of their positions as

officers and/or directors of Sonoco Products, and their ownership of Sonoco Products stock, the

Individual Defendants had the power and authority to cause Sonoco Products to engage in the

wrongful conduct complained of herein. By reason of such conduct, the Individual Defendants are

liable pursuant to Section 20(a) of the Exchange Act.

WHEREFORE, Plaintiff prays for relief and judgment, as follows:

A. Determining that this action is a proper class action, designating Plaintiff as Lead

Plaintiff and certifying Plaintiff as a Class representative under Rule 23 ofthe Federal Rules ofCivil

Procedure and Plaintiff' s counsel as Lead Counsel;

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B. Awarding compensatory damages in favor of Plaintiff and the other Class members

against all Defendants, jointly and severally, for all damages sustained as a result of Defendants'

wrongdoing, in an amount to be proven at trial, including interest thereon;

C. Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this

action, including counsel fees and expert fees; and

D. Such other and further relief as the Court may deem just and proper.

JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury.

DATED: June 26, 2008 HOPKINS & CAMPBELL, LLPWILLIAM E. HOPKINS, JR.

s/William E. Hopkins, Jr.WILLIAM E. HOPKINS, JR.1122 Lady Street, Suite 1010Columbia, South Carolina 29201Telephone: 803.256.6152803.256.6155 (fax)

COUGHLIN STOIA GELLERRUDMAN & ROBBINS LLPSAMUEL H. RUDMANDAVID A. ROSENFELDMARIO ALBA JR.58 South Service Road, Suite 200Melville, NY 11747Telephone : 631/367-7100631/367-1173 (fax)

Attorneys for Plaintiff

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