Coca Cola 2008 Annual Report Download - page 24

On September 25, 2001, the defendants filed a Motion to Dismiss all counts of the Consolidated Amended
Complaint. On August 20, 2002, the Court granted in part and denied in part the defendants’ Motion to Dismiss.
The Court also granted the plaintiffs’ Motion for Leave to Amend the Complaint. On September 4, 2002, the
defendants filed a Motion for Partial Reconsideration of the Court’s August 20, 2002 ruling. The motion was
denied by the Court on April 15, 2003.
On June 2, 2003, the plaintiffs filed an Amended Consolidated Complaint. The defendants moved to
dismiss the Amended Complaint on June 30, 2003. On March 31, 2004, the Court granted in part and denied in
part the defendants’ Motion to Dismiss the Amended Complaint. In its order, the Court dismissed a number of
the plaintiffs’ allegations, including the claim that the Company made knowingly false statements to financial
analysts. The Court permitted the remainder of the allegations to proceed to discovery. The Court denied the
plaintiffs’ request for leave to further amend and replead their complaint. The fact discovery closed on
March 23, 2007, pursuant to the Court’s order. However, there remained certain unresolved issues relating to
discovery pending before the Court.
In August 2007, the Court heard oral argument on plaintiffs’ motion to certify the class and the Company’s
opposition thereto. In October 2007, the Company filed various motions for summary judgment and related
relief.
On May 23, 2008, the parties reached an agreement in principle to settle this matter for approximately
$138 million, with full releases and no admission of wrongdoing by the Company or the individual parties to the
litigation. On May 26, 2008, the final settlement agreement was signed by the parties and the agreement was
filed with the Court for approval on July 3, 2008. On October 20, 2008, the Court entered its final order
approving the settlement. The settlement amount was covered by insurance and, therefore, the settlement had
no impact on the Company’s consolidated financial statements. This matter is now considered closed.
Aqua-Chem Litigation
On December 20, 2002, the Company filed a lawsuit (The Coca-Cola Company v. Aqua-Chem, Inc., Civil
Action No. 2002CV631-50) in the Superior Court, Fulton County, Georgia (the ‘‘Georgia Case’’), seeking a
declaratory 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
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