Coca Cola 2008 Annual Report Download - page 25

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 were the subject of the coverage action had
been issued to the Company during the period (1970 to 1981) when the Company owned Aqua-Chem. The
complaint sought 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 sought 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 concluded 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.
The Company is unable to predict at this time with any reasonable degree of certainty what action, if any,
the European Commission will take with respect to these issues.
Chapman
On June 30, 2005, Maryann Chapman filed a purported shareholder derivative action (Chapman v. Isdell, et
al.) in the Superior Court of Fulton County, Georgia, alleging violations of state law by certain individual current
and former members of the Board of Directors of the Company and senior management, including breaches of
fiduciary duties, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment,
between January 2003 and the date of filing of the complaint that have caused substantial losses to the Company
and other damages, such as to its reputation and goodwill. The defendants named in the lawsuit include Neville
Isdell, Douglas Daft, Gary Fayard, Ronald Allen, Cathleen Black, Warren Buffett, Herbert Allen, Barry Diller,
Donald McHenry, Sam Nunn, James Robinson, Peter Ueberroth, James Williams, Donald Keough, Maria
Lagomasino, Pedro Reinhard, Robert Nardelli and Susan Bennett King. The Company is also named a nominal
defendant. The complaint further alleges that the September 2004 earnings warning issued by the Company
resulted from factors known by the individual defendants as early as January 2003 that were not adequately
disclosed to the investing public until the earnings warning. The factors cited in the complaint include (i) a
flawed business strategy and a business model that was not working; (ii) a workforce so depleted by layoffs that it
was unable to properly react to changing market conditions; (iii) impaired relationships with key bottlers; and
23