U.S.

Coke Settles Suit For Record $192.5M

By CBSNews.com staff CBSNews.com staff

November 16, 2000 / 2:09 PM EST / CBS

The Coca-Cola Co. agreed Thursday to pay a record $192.5 million to settle a racial discrimination suit by black workers, who claim they were treated unfairly in pay, promotions and performance evaluations.

The company denied the claims.

The amount includes $113 million in cash, $43.5 million to adjust salaries, $36 million for oversight of the company's employment practices. Coke also will pay $20 million in attorneys' fees.

"This settlement sets a new standard for corporate diversity," Cyrus Mehri, one of the lawyers for the workers, said in a news release. "In short, the 'World of Coke' will be going through a 'World of Change.'"

The soft drinks maker also agreed to have its employment practices reviewed by an outside task force.

Settlement Chronology

April 22, 1999: Four current and former black employees file a lawsuit, accusing Coca-Cola of discrimination in pay, promotions and performance evaluations. Coke denies the allegations.

March 31, 2000: Coca-Cola prepares a response to a settlement offer by plaintiffs, but neither side will discuss it. Meanwhile, the trustee of the New York State Common Retirement Fund, which owns $370 million in Coke stock, encourages the company to take steps to halt the suit's damage to Coca-Cola's reputation and stock price.

April 15-19: Caravan of current and former Coca-Cola employees take part in a "Ride for Corporate Justice," traveling from Atlanta to Washington, D.C., and ending at Coke's shareholders meeting in Wilmington, Del.

May 16: Coca-Cola commits $1 billion over five years to promote business opportunities for minorities and women, but denies the effort is a response to the racial discimination suit.

June 14: Coca-Cola reaches agreement in principle to settle with the plaintiffs. On the same day, Florida lawyer Willie Gary files another discrimination lawsuit on behalf of four additional plaintiffs, alleging Coke management created a hostile and discriminatory work environment for them. Coke denies the allegations.

Oct. 11: Coca-Cola chairman Doug Daft instructs employees nationwide to attend an annual diversity training course.

Nov. 16: Coca-Cola and plaintiffs in the original case announce details of the settlement.

Source: Associated Press

To cover the cost of te settlement, the company will take a $188 million charge in the fourth quarter. The settlement eclipses the previous record $176.1 million settlement in a racial discrimination case by oil-giant Texaco Inc.

Shares of Coca-Cola fell 6 cents to $61.44 in Thursday afternoon trading on the New York Stock Exchange.

The settlement was approved by U.S. District Judge Richard Story, in whose court the suit was filed in April 1999. Details of the settlement will be sent to about 2,000 class members beginning next month.

"The settlement is meaningful, constructive and fair to all parties," Cola-Cola CEO and Chairman Doug Daft said in a prepared video statement released on the company's Web site following the announcement. "Discrimination of any kind whether intended, tolerated or simply overlooked has no place at the Coca-Cola Company."

The settlement covers salaried black employees in the United States who worked for Coke between April 22, 1995, and June 14, 2000.

The seven-member watchdog group, charged with making sure Coca-Cola is fair in pay, promotions and performance evaluations, was a centerpiece of the settlement.

Three members will be appointed by the plaintiffs' lawyers, three by Coke and a chairman jointly appointed by both. The task force will recommend changes and ensure they are carried out. Coke retains the option of challenging changes it feels are not financially or technically feasible.

A toll-free telephone line will be established to receive complaints 24 hours a day.

A newly created ombudsman will investigate all complaints, report to Coca-Cola Chairman Doug Daft and give periodic reviews to the task force.

The agreement also requires Coke's board of directors to monitor the company's progress in meeting its new obligations, including:

Reviewing and changing policies and practices on pay, promotions and performance evaluations as necessary.

Compiling employment data and working with the task force to improve working conditions.

Ensuring managers make fair decisions about employee compensation, including initial salaries, merit increases, bonuses and stock options.

The task force is modeled after a similar group established four years ago in the settlement of a discrimination lawsuit against Texaco.

Coca-Cola's will include former government officials in labor and civil rights, professors, lawyers and diversity consultants.

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