Coca Cola 2007 Annual Report Download - page 23

judgment that the Company has no obligation to its former subsidiary, Aqua-Chem, Inc., now known as
Cleaver-Brooks, Inc. (“Aqua-Chem”), for any past, present or future liabilities or expenses in connection with any
claims or lawsuits against Aqua-Chem. Subsequent to the Company’s filing but on the same day, Aqua-Chem filed a
lawsuit (Aqua-Chem, Inc. v. The Coca-Cola Company, Civil Action No. 02CV012179) in the Circuit Court, Civil
Division of Milwaukee County, Wisconsin (the “Wisconsin Case”). In the Wisconsin Case, Aqua-Chem sought a
declaratory judgment that the Company is responsible for all liabilities and expenses not covered by insurance in
connection with certain of Aqua-Chem’s general and product liability claims arising from occurrences prior to the
Company’s sale of Aqua-Chem in 1981, and a judgment for breach of contract in an amount exceeding $9 million for
costs incurred by Aqua-Chem to date in connection with such claims. The Wisconsin Case initially was stayed, pending
final resolution of the Georgia Case, and later was voluntarily dismissed without prejudice by Aqua-Chem.
The Company owned Aqua-Chem from 1970 to 1981. During that time, the Company purchased over
$400 million of insurance coverage, of which approximately $350 million is still available to cover Aqua-Chem’s costs
for certain product liability and other claims. The Company sold Aqua-Chem to Lyonnaise American Holding, Inc. in
1981 under the terms of a stock sale agreement. The 1981 agreement, and a subsequent 1983 settlement agreement,
outlined the parties’ rights and obligations concerning past and future claims and lawsuits involving Aqua-Chem.
Cleaver-Brooks, a division of Aqua-Chem, manufactured boilers, some of which contained asbestos gaskets. Aqua-
Chem was first named as a defendant in asbestos lawsuits in or around 1985 and currently has more than 100,000
claims pending against it.
The parties agreed in 2004 to stay the Georgia Case pending the outcome of insurance coverage litigation filed by
certain Aqua-Chem insurers on March 26, 2004. In the coverage action, five plaintiff insurance companies filed suit
(Century Indemnity Company, et al. v. Aqua-Chem, Inc., The Coca-Cola Company, et al., Case No. 04CV002852)in
the Circuit Court, Civil Division of Milwaukee County, Wisconsin, against the Company, Aqua-Chem and 16
insurance companies. Several of the policies that are the subject of the coverage action were issued to the Company
during the period (1970 to 1981) when the Company owned Aqua-Chem. The complaint seeks a determination of the
respective rights and obligations under the insurance policies issued with regard to asbestos-related claims against
Aqua-Chem. The action also seeks a monetary judgment reimbursing any amounts paid by the plaintiffs in excess of
their obligations. Two of the insurers, one with a $15 million policy limit and one with a $25 million policy limit,
asserted cross-claims against the Company, alleging that the Company and/or its insurers are responsible for Aqua-
Chem’s asbestos liabilities before any obligation is triggered on the part of the cross-claimant insurers to pay for such
costs under their policies.
Aqua-Chem and the Company filed and obtained a partial summary judgment determination in the coverage
action that the insurers for Aqua-Chem and the Company were jointly and severally liable for coverage amounts, but
reserving judgment on other defenses that might apply. During the course of the Wisconsin coverage litigation, Aqua-
Chem and the Company reached settlements with several of the insurers, including plaintiffs, who have paid or will pay
funds into an escrow account for payment of costs arising from the asbestos claims against Aqua-Chem. On July 24,
2007, the Wisconsin trial court entered a final declaratory judgment regarding the rights and obligations of the parties
under the insurance policies issued by the remaining defendant insurers, which judgment was not appealed. The
judgment directs, among other things, that each insurer whose policy is triggered is jointly and severally liable for 100
percent of Aqua-Chem’s losses up to policy limits.
The court’s judgment concludes the Wisconsin insurance coverage litigation. The Georgia Case remains subject to
the stay agreed to in 2004.
European Union Parallel Trade Matter
The Company has had discussions with the Competition Directorate of the European Commission (the “European
Commission”) about issues relating to parallel trade within the European Union arising out of comments received by
the European Commission from third parties. The Company has fully cooperated with the European Commission and
has provided information on these issues and the measures taken and to be taken to address them.
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