BLUE CHIP COULD BITE BUFFETT : BERKSHIRE HATHAWAY SUED BY ACQUIRED COMPANY'S FORMER SHAREHOLDERS.

Byline: Dana Rubin Bloomberg News

A group of investors is trying to turn Blue Chip Stamps into something a lot more valuable than a toaster or a blender - shares of billionaire Warren Buffett's Berkshire Hathaway Inc.

The former Blue Chip shareholders are suing Berkshire because they say they were cheated out of a chance to own its stock - which has since risen astronomically - when their company was sold to the giant holding company back in 1983. Years later, they say, Berkshire gave their shares away as unclaimed property.

``The issue is, they should have dropped me a note and let me know,'' said plaintiff John E. DeWitt, 61, who owns gas stations and delivers petroleum products in South El Monte. ``We've been located in the same spot since 1972.''

A Berkshire spokeswoman declined comment.

Many of the plaintiffs are present or former owners of neighborhood grocery stores and service stations. In the 1960s, some of them bought shares of the Pasadena-based Blue Chip at a discount. Others were given shares as part of the settlement of a Department of Justice antitrust lawsuit against Blue Chip.

In the 1950s and '60s, Blue Chip Stamps were given to customers who bought gasoline or groceries. The stamps, in turn, could be redeemed for free merchandise, such as toasters and blenders.

Blue Chip was bought by Berkshire Hathaway in 1983 for about $154 million.

The plaintiffs say they never received word that Berkshire was buying Blue Chip. They say they had no chance as shareholders to vote on the acquisition, nor did they receive annual reports or any other form of corporate communication that would have let them know they had a stake in the giant holding company.

They were ``completely deprived of their rights and interests as shareholders of Berkshire,'' according to the complaint seeking class-action status filed Tuesday in Los Angeles County Superior Court.

DeWitt, for one, said he had no idea he had owned shares in Blue Chip - much less Berkshire - until he got a call about six months ago from an attorney who told him he had some lost assets that were equivalent to five Berkshire shares, worth about $190,000 today.

The suit is being brought on behalf of about 400 shareholders, mostly in California, whose individual holdings in Berkshire ranged from only a few shares up to 100 shares, said plaintiffs' attorney Tim G. Blood of Milberg, Weiss, Bershad, Hynes & Lerach in San Diego.

``We don't know yet exactly how many total shares are at issue,'' Blood said. ``It could be anywhere from 1,200 on up, or it could be double or triple that.''

In March 1983, when the sale took place, every 13 Blue Chip shares were exchanged for one Berkshire share. Blue Chip traded at about $70 a share.

In 1989, Berkshire began handing over unclaimed shares to states, among them California, Nevada, Massachusetts and Nebraska, under laws providing for the forfeiture of abandoned property. California sold its shares in 1995 for $31,000 a share.

Although they are not listed as defendants, Buffett, his wife, Susan Buffett, and Berkshire Vice Chairman Charles Munger are also named in the complaint.

It was through the purchase of Blue Chip that Berkshire acquired California-based See's Candies. Warren Buffett and Munger joined the Blue Chip board in the mid-1970s and took over its investment committee. They used the float - the money Blue Chip held for unredeemed stamps - to purchase See's and other companies.

Berkshire Hathaway's class A shares fell 300 on Thursday to 37,700.

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