Coca-Cola to pay $192.5 million to settle discrimination suit

ATLANTA - Coca-Cola Co. said Thursday it will pay a record $192.5 million to settle a racial discrimination suit by black employees and will allow an independent panel to stand watch over its employment practices.

The settlement consists of $113 million in cash, $43.5 million to adjust salaries over the next decade and $36 million for oversight of the company's practices.

''Our goal was to change the Coca-Cola Co.,'' said Cyrus Mehri, the main lawyer for the plaintiffs. ''We think that this company is going to change in dramatic ways.''

The agreement surpassed a $176 million settlement of a discrimination lawsuit against Texaco in 1995. Texaco's agreement also included a watchdog panel and established a model for Coca-Cola.

Plaintiffs' lawyers estimate that each of the roughly 2,200 current and former employees in the case will get an average of $40,000 each, depending on the length of their employment.

''The settlement is meaningful, constructive and equitable to all parties and allows us to move forward,'' Coke chairman and chief executive Douglas Daft said in a memo to employees.

The centerpiece is a seven-person task force that will review the soft drink maker's diversity efforts and human resources operations. Among other things, it will make sure managers receive annual diversity training.

Coke also agreed to hire an ombudsman, who will report to Daft, to investigate complaints of discrimination, harassment and retaliation.

The settlement covers salaried black employees who worked for Coke in the United States between 1995 and 2000.

The plaintiffs can still opt out of the settlement and sue on their own. Larry Jones, a former Coke manager who has led protests against the company, predicted a few dozen might do so.

The 1999 lawsuit accused Coca-Cola of discriminating against black salaried employees in pay, promotions and evaluations. Coke denied the allegations. And in the settlement, it did not admit any wrongdoing.

''I think what this is doing is improving on and making better whatever established business practices there were,'' Daft said. ''Sometimes things happen in an unintentional fashion. And I've made it very clear that can't happen anymore.''

The settlement's main terms have been given preliminary approval by a federal judge. He is expected to review the deal for final approval in the coming weeks.

The company said it will take a $188 million charge in the fourth quarter to cover costs of the settlement. Separately from the settlement, Coke will donate $50 million toward programs in minority communities.

Coca-Cola stock rose 43 cents a share to $61.98 at 4 p.m. on the New York Stock Exchange.

Three members of the watchdog group will be appointed by the plaintiffs' lawyers, and three by Coke. The chairman will be appointed by both sides. The task force will recommend changes and ensure they are carried out; Coke can challenge changes it feels are not financially or technically feasible.

Daft, who assumed control of Coke in December 1999, has been working vigorously to right a company that suffered a series of major embarrassments last year.

Coke suffered substantial losses as Asian economies fell into financial turmoil. It saw its stock price plummet, endured a tampering scare and a product recall in Europe in 1999, and began laying off 5,200 workers in January.

---

On the Net:

Coca-Cola, http://www.cocacola.com

Settlement details, http://www.findjustice.com

Comments

Use the comment form below to begin a discussion about this content.

Sign in to comment