Coca Cola 2014 Annual Report Download - page 24

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ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings, including the proceedings specifically discussed below. Management believes
that the total liabilities to the Company that may arise as a result of currently pending legal proceedings will not have a material
adverse effect on the Company taken as a whole.
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 of 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, which also insures Aqua-Chem for some of its prior and future 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 approximately
40,000 active 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 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 insurance 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 Company and Aqua-Chem continued to pursue and obtain coverage agreements for the asbestos-related claims against
Aqua-Chem with those insurance companies that did not settle in the Wisconsin insurance coverage litigation. The Company
anticipated that a final settlement with three of those insurers (the “Chartis insurers”) would be finalized in May 2011, but the
Chartis insurers repudiated their settlement commitments and, as a result, Aqua-Chem and the Company filed suit against them in
Wisconsin state court to enforce the coverage-in-place settlement or, in the alternative, to obtain a declaratory judgment validating
Aqua-Chem and the Company’s interpretation of the court’s judgment in the Wisconsin insurance coverage litigation.
In February 2012, the parties filed and argued a number of cross-motions for summary judgment related to the issues of the
enforceability of the settlement agreement and the exhaustion of policies underlying those of the Chartis insurers. The court
granted defendants’ motions for summary judgment that the 2011 Settlement Agreement and 2010 Term Sheet were not binding
contracts, but denied their similar motions related to plaintiffs’ claims for promissory and/or equitable estoppel. On or about