UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRUCE R. JOHNSTONE, on behalf of

himself and all others similarly

situated,

Movant-Appellant,

and

LUCIAN B. COX, III, on his behalf

and on behalf of all others similarly

situated; JOSEPH DANIEL JOHNSON;

CERES VANDIVER; DOUGLAS A.

CHURDAR, on behalf of themselves

and all others similarly situated,

Plaintiffs,

v.

ERNST & YOUNG,

No. 96-2219

Defendant & Third Party PlaintiffAppellee,

and

ROSS COSMETICS DISTRIBUTION

CENTERS, INCORPORATED; EUGENE D.

DERRY; ROGER M. ROSENBERG;

BARRY A. BLOOMFIELD; SHASHIKANT

S. SHETH; MICHAEL E. EMERY; JOHN

M. WATERS; ROSS FREITAS;

MAHENDRA SHETH; KIRIT SHETH;

JAMNADAS SHETH; VIRENDRA SHETH;

JAYESH SHETH; S & J PERFUME

COMPANY; STARION INTERNATIONAL

LIMITED; EUGENE H. KARAM,

Defendants,
v.

TRISTAR CORPORATION, a/k/a Starion

International Limited, a/k/a S&J

Perfume Company, a/k/a Jayesh

Sheth, a/k/a Virenda Sheth, a/k/a

Kirit Sheth, a/k/a Mahendra Sheth,

a/k/a John M. Waters, a/k/a

Jamandas Sheth, a/k/a Barry A.

Bloomfield, a/k/a Roger M.

Rosenberg, a/k/a Eugene H. Karam,

a/k/a Michael E. Emery, a/k/a

Eugene D. Derry, a/k/a Ross

Freitas, a/k/a Ross Cosmetics

Distribution Centers, Incorporated,

Third Party Defendant,

PEARL LEVY,

Claimant.

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JOSEPH DANIEL JOHNSON; CERES

VANDIVER; DOUGLAS A. CHURDAR, on

behalf of themselves and all others

similarly situated,

Plaintiffs-Appellants,

and

LUCIAN B. COX, III, on his behalf

and on behalf of all others similarly

situated;

Plaintiff,

v.

ERNST & YOUNG,

Defendant & Third Party PlaintiffAppellee,

No. 96-2220

and

ROSS COSMETICS DISTRIBUTION

CENTERS, INCORPORATED; EUGENE D.

DERRY; ROGER M. ROSENBERG;

BARRY A. BLOOMFIELD; SHASHIKANT

S. SHETH; MICHAEL E. EMERY; JOHN

M. WATERS; ROSS FREITAS;

MAHENDRA SHETH; KIRIT SHETH;

JAMNADAS SHETH; VIRENDRA SHETH;

JAYESH SHETH; S & J PERFUME

COMPANY; STARION INTERNATIONAL

LIMITED; EUGENE H. KARAM,

Defendants,

v.

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BRUCE R. JOHNSTONE, on behalf of

himself and all others similarly

situated,

Movant,

TRISTAR CORPORATION, a/k/a Starion

International Limited, a/k/a S&J

Perfume Company, a/k/a Jayesh

Sheth, a/k/a Virenda Sheth, a/k/a

Kirit Sheth, a/k/a Mahendra Sheth,

a/k/a John M. Waters, a/k/a

Jamandas Sheth, a/k/a Barry A.

Bloomfield, a/k/a Roger M.

Rosenberg, a/k/a Eugene H. Karam,

a/k/a Michael E. Emery, a/k/a

Eugene D. Derry, a/k/a Ross

Freitas, a/k/a Ross Cosmetics

Distribution Centers, Incorporated,

Third Party Defendants,

PEARL LEVY,

Claimant.

Appeals from the United States District Court

for the District of South Carolina, at Spartanburg.

G. Ross Anderson, District Judge.

(CA-92-1706-3,

CA-93-1405-7-3)

Argued: May 6, 1997

Decided: June 16, 1997

Before LUTTIG, WILLIAMS, and MICHAEL, Circuit Judges.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________

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COUNSEL

ARGUED: Stephen T. Gannon, LECLAIR RYAN, Richmond, Virginia, for Appellants. Thomas Lee Riesenberg, Associate General

Counsel, ERNST & YOUNG, L.L.P., Washington, D.C., for Appellee. ON BRIEF: Stanley K. Joynes, III, LECLAIR RYAN, Richmond, Virginia; Steven J. Toll, Daniel S. Sommers, COHEN,

MILSTEIN, HAUSFELD & TOLL, P.L.L.C., Washington, D.C.;

Robin F. Zwerling, Hillary Sobel, ZWERLING, SCHACHTER,

ZWERLING & KOPPELL, L.L.P., New York, New York; Robert P.

Frutkin, SAVETT, FRUTKIN, PODELL & RYAN, P.C., Philadelphia, Pennsylvania; James W. Johnson, Goodkind Labaton, RUDOFF

& SUCHAROW, L.L.P., New York, New York; Alfred G. Yates, Jr.,

ALFRED G. YATES, JR. & ASSOCIATES, Pittsburgh, Pennsylvania, for Appellants. Kathryn A. Oberly, General Counsel, ERNST &

YOUNG, L.L.P., Washington, D.C.; Michael J. Crane, Assistant General Counsel, ERNST & YOUNG, L.L.P., New York, New York;

Ellis M. Johnston, II, Jesse C. Belcher, HAYNSWORTH, MARION,

MCKAY & GUERARD, Greenville, South Carolina, for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Bruce R. Johnstone and the members of a decertified class appeal

from the decertification order entered by the district court on July 25,

1996. The district court concluded that the class should be decertified

because of the inadequacy of both class counsel and the class representatives. In particular, the district court objected to class counsel's

26-month-long failure to provide notice to the class members, to class

counsel's failure to adequately investigate and satisfy claims made by

class members in a parallel proceeding, and to the class representatives' failure to attend depositions despite repeated notice. Johnstone

also appeals from the district court's denial of his motion to intervene.

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The underlying facts may be briefly stated. Ross Cosmetics was a

Delaware corporation, traded on the NASDAQ, with its principal

office in South Carolina. On June 12, 1992, Ross Cosmetics disclosed

the majority ownership interest of two families, both named "Sheth,"

from Dubai, United Arab Emirates. The Sheth families also had a significant interest in a principal supplier of Ross Cosmetics, S & J Perfume Co. of London. After disclosure of the Sheth families' interests,

the stock price of Ross Cosmetics fell in heavy trading from $14.50

per share to $5 per share. Afterwards, the board of directors of Ross

Cosmetics appointed a Special Committee to investigate the nondisclosure. The Special Committee reported that Ross Cosmetics was

"a legitimate business operation," and that nondisclosure of the Sheth

ownership interests was "remarkable in its apparent senselessness."

As a result of the report, Ross Cosmetics regained some ground, and

its shares reached the $11 to $12 per share range. Nevertheless, in

September 1995, the Securities and Exchange Commission brought

enforcement proceedings, and most of the wrongdoers consented to

the charges.

Two primary civil class actions resulted. One, against Ross Cosmetics, was a consolidation of thirteen virtually identical class action

lawsuits filed almost immediately after disclosure of the Sheth families' interests. This consolidated class action was settled in September, 1993, for $9.5 million. During the pendency of the class action

against Ross Cosmetics, however, the same group of law firms

involved in the litigation against Ross Cosmetics filed a separate lawsuit against Ernst & Young, alleging that Ernst & Young had fraudulently and negligently misrepresented Ross Cosmetics' financial

statements in a 1991 opinion letter. The district court certified the

lawsuit against Ernst & Young, at issue here, as a class action on

April 24, 1994.

As the case against Ernst & Young unfolded, the district court

became increasingly dissatisfied with the performance of class counsel. The district judge was particularly troubled to learn that on June

20, 1996, twenty-six months after the class had been certified and

after the case finally had been docketed for trial, class counsel still

had not made provision for notice to the class members. The district

court also made clear its concern that class counsel had not diligently

disbursed the settlement proceeds in the related litigation against Ross

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Cosmetics. Accordingly, the district court decertified the class on July

25, 1996. Afterwards, the representative plaintiffs settled their individual claims with Ernst & Young. Because there was no longer a

class and no longer any individual class representatives, the district

court dismissed the action against Ernst & Young on August 5, 1996.

Our scope of review is narrow. When the district court refuses to

certify, or decertifies based on a determination of inadequate representation, that decision is "within the discretion of the district court

and will be reversed only upon a showing of abuse of that discretion."

Boley v. Brown, 10 F.3d 218, 223 (4th Cir. 1993). We have also

explained that "[t]his Court, in reviewing the class certification decisions of district courts under Rule 23, has generally accorded great

deference to the district court's determinations." Simmons v. Poe, 47

F.3d 1370, 1380 (4th Cir. 1995). We have alternatively phrased the

test as allowing reversal "only if we are convinced that the court was

`clearly wrong'" in the certification ruling. Central Wesleyan College

v. W.R. Grace & Co., 6 F.3d 177, 185 (4th Cir. 1993) (quoting

Windham v. American Brands, Inc., 565 F.2d 59, 65 (4th Cir. 1977)

(en banc)). We have reviewed the record, briefs, and pertinent case

law in this matter, and we have had the benefit of oral argument. Our

review persuades us that the district court did not abuse its discretion

in decertifying the class based on the inadequacy of class counsel. We

also conclude that the district court did not abuse its discretion in

denying Johnstone's motion to intervene in the action. See Hazardous

Waste Treatment Council v. South Carolina (In re Sierra Club), 945

F.2d 776, 779 (4th Cir. 1991) (district court's intervention decision is

reviewed under an abuse of discretion standard). Accordingly, we

affirm on the reasoning set forth in the district court's opinions.

Johnson v. Ernst & Young (In re Ross Cosmetics Security Litigation),

C/A No. 7:93-1405-3 (D.S.C. July 25, 1996) (order decertifying

class); Johnson v. Ernst & Young (In re Ross Cosmetics Security

Litigation), C/A No. 7:93-1405-3 (D.S.C. Aug. 6, 1996) (order denying Johnstone's motion to intervene).

AFFIRMED

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