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Washington attorney Cyrus Mehri describes a $192 million race discrimination settlement with the Coca-Cola Co. as “breathtaking.” “These are probably the most sweeping reforms any company has agreed to,” says Mehri who represents plaintiffs in a class action suit against the soft drink company. “These cases are extremely difficult, and the law is stacked and very much in favor of the employer. It’s the rare case that succeeds. It’s the rare case that succeeds to breathtaking levels like this one.” It’s even better than Texaco’s 1997 $176 million settlement of a similar race discrimination suit, he says. The Texaco agreement was hailed at the time as a record settlement of its kind. Tricia “C.K.” Hoffler, a partner of Florida attorney Willie E. Gary, disagrees. “It’s a historic agreement in that it’s pitifully low,” she says. “This is a big public relations sham . . . .” Hoffler is co-managing the Coke litigation. Coke and plaintiffs’ attorneys announced Nov. 16, with great fanfare, that after months of negotiation they had agreed to a historic settlement. Actually, there is only a draft settlement, attorneys for both sides say, and the final settlement still must be approved by U.S. District Judge Richard W. Story of the Northern District of Georgia. According to an executive summary of the settlement agreement Story approved and that was made public last month, the judge had expected both sides to submit the settlement for preliminary court approval by Nov. 26. That timetable “obviously has not been adhered to,” Coke spokesman Ben Deutch says. The draft still has not been released to class members or the public. ACCORD UP TO EMPLOYEES Coke’s African-American employees ultimately will determine whether the company can put charges of racial discrimination behind it. If Mehri and Coke can persuade most of the 2,000 employees eligible to participate in the settlement that it’s a good deal, Coke can close the book on this troublesome chapter in its history. But if employees buy the view of Gary’s firm, the settlement may not allow Coke to lay the discrimination charges to rest. Gary’s firm already represents four Coke employees who were named plaintiffs in the original suit but parted company with Mehri and co-counsel Bondurant, Mixson & Elmore last year. At this point, no separate suit has been filed against Coke on their behalf, although Gary has filed a suit on behalf of four other Coke employees. While the settlement was being negotiated, Gary was under court order not to solicit new clients. Until a formal notice describing the details of the settlement is sent to eligible Coke employees, he must still refrain from taking them on as clients. But he claims to be fielding calls daily from Coke employees who aren’t satisfied with the proposed agreement. If 200 or more of the eligible employees elect not to participate, Coke has the option of canceling the settlement agreement. Coke insists that’s unlikely. But clearly, Gary could continue to keep the company entangled in litigation and battling negative publicity in the important public relations arena. With a settlement in hand, both Coke and the plaintiffs’ lawyers want to persuade employees that the offer is attractive. Mehri’s firm, Mehri, Malkin & Ross and Bondurant, Mixson stand to get $20.6 million from the settlement. Gary’s firm won’t share in this largesse. It stands to reap such generous fees only if Coke employees believe Gary can win them a better deal in separate litigation. Stymied by a federal court order, Stuart, Fla.-based Gary, Williams, Parenti, Finney, Lewis, McManus, Watson & Sperando has filed only one suit so far against Coke. That suit is now in U.S. District Court in Atlanta. This is the second time Coke and plaintiffs’ lawyers have announced a settlement without actually producing a final document. In June, both sides said a settlement in principle had been reached, but that it would take until October to hammer out the details. Deutsch now acknowledges that no monetary amount had been determined at the time of the June announcement. Mehri says both sides agreed on the $192 million figure only the day before he announced it at a Nov. 16 news conference. While plaintiffs’ lawyers say they still hope to send the details of the settlement to prospective class members by the end of this month, Deutsch says Coke is now telling its employees it may not be mailed out until January. Coke is represented by company attorneys, and a team of King & Spalding attorneys led by William A. Clineburg, Jr. that includes Larry D. Thompson, former U.S. Attorney for the Northern District of Georgia. However, Coke has insisted that its public relations staff handle all media inquiries regarding the suit. Both sides are emphatic that the draft settlement is a binding agreement. But they also agree that important details remain to be worked out. The biggest issue is exactly how much cash employees will receive. Mehri has said in a signed column in the Atlanta Journal-Constitution and on his Web site that employees will receive an average of $40,000 each. BACK-PAY FORMULA STILL AN ISSUE Jeffrey O. Bramlett, a partner with Bondurant, Mixson, calls that figure “somewhat misleading.” “It’s going to depend on the circumstances of the individual,” he says. Each of Coke’s salaried African-American employees in the United States — a prospective class that does not include hourly wage-earners — will share $58.7 million in compensatory damages, based on their tenure with the company. But the $40,000 average also is based on an additional $23.7 million in back pay. The actual amount each employee will receive from that back-pay fund will be based on individualized formulas that include experience, current pay, education and wage discrepancies between white and black employees in similar positions. Those formulas still are being computed and will result in individual settlements far below and possibly far above the average, Mehri acknowledges. Part of the back pay may be paid, however, not in cash, but in stock options. Bramlett says an estimated $5 million of the back wages most likely will be in options. Still to be determined are the details of the stock options to compensate employees who should have received them when the company’s stock was more valuable. “In the scheme of things, it’s a relatively minor issue,” says Bramlett. “It happens to be a very complicated issue.” Employees who aren’t satisfied with the back pay they receive can challenge the award in court. But they’ll have to hire their own lawyers and they’ll also forfeit the company’s award of back pay before the litigation begins. The only big payoff for employees is $300,000 set aside for each of the suit’s four remaining named plaintiffs. In addition, every Coke employee who gave an affidavit supporting the suit will get a $3,000 bonus. The cash part of the settlement also includes a $10 million “promotional achievement award fund” that will be distributed over a decade at Coke’s discretion as bonuses to African-American employees who are promoted and succeed in their new jobs. Again, details are still not final. $79 MILLION OF ‘SOFT MONEY’ The cash to employees and lawyers’ fees totals about $113 million. The remainder of the $192 million — about $79 million — is what Coke spokesman Deutsch calls “soft money.” “There’s some obviously soft money here,” he says. “It’s $192 million if you factor in that soft stuff.” The soft money in the settlement includes $43.5 million as the estimated cost to Coke over 10 years of raising the pay of all African-American employees to eliminate differences with white employees in comparable positions. Another $36 million of “soft money” includes fees paid to members of a Diversity Task Force, a diversity ombudsman and two corporate psychologists. Mehri takes issue with the “soft money” label. “There’s cash and there’s hard money. . . . You can’t call the cash soft money. There must be some miscommunication on that.” The Diversity Task Force is one of Mehri’s proudest achievements. Potentially, it has great power. Coke can ignore its recommendations only by going to federal court where it would have to prove they are financially unsound, not feasible or otherwise bad for business. On the other hand, the task force will have access only to “non-privileged and relevant” corporate information, according to the settlement summary. What is privileged and relevant information hasn’t been defined. The task force also will have access to Coke’s human resources department “whenever appropriate,” which is also not specified. But Pamela Coukos, one of Mehri’s partners, cautions, “I wouldn’t get hung up on the non-privilege requirement. Don’t miss the forest for the trees here. The task force can make binding recommendations unless Coke goes to court.” The settlement also requires the Coca-Cola board of directors “to review and remain informed” about the company’s progress in diversifying its work force. Directors will receive formal reports on Coke’s progress in achieving those goals from the Diversity Task Force. “In this settlement the board of directors makes a commitment to change things,” Bramlett says. “From a corporate governance standpoint, when the board makes that commitment, it makes a very clear statement to management of the company right up to the very top. The board takes this very seriously. . . . I don’t know of any settlement of an employment discrimination case where the board is that involved.” Securing a commitment from Coke to change its corporate culture was the real point of the litigation, says Elvenyia Barton-Gibson, a named plaintiff who is now a class representative. She says she is “very pleased” with the settlement. Barton-Gibson, who worked at Coke for four years and was an executive assistant when she left the company, now lives near Houston. “Is it enough for people to retire off of? No,” she says in a telephone conversation monitored by one of her attorneys. “The point was to get fair and equitable distribution of what was due us.” The settlement accomplishes that, she says. “All the people I talked to before the settlement was announced had questions about money,” she says. “Since the settlement was announced, the conversations I’ve had with people are not about amounts of money. They are really pleased we made a mark on a company that really needed to change. To all of us, this was really about justice, about dignity, about respect. This was about getting what we were due. Money is a part of that. It’s not the entire thing. I don’t know of a company that pays $200 million if didn’t do anything [wrong].” Mehri says the settlement has “tremendous support from class members. It’s my belief the vast majority of the class will partake in the benefits of the settlement rather than risk . . . all the uncertainties in doing your own case.” Gregory A. Clark isn’t so sure. Clark was one of the suit’s original plaintiffs. He became disenchanted last April when he says he overheard Mehri and other lawyers privately gloating over the money they would make in what they then believed would be a $250 million settlement, while their clients would get only a fraction of their take. Mehri says Clark either “misunderstood or has chosen to misrepresent what was said on the call.” Clark and several other plaintiffs were dropped as named plaintiffs and told to find another lawyer after they attempted to add Willie Gary to the legal team already in place. “As far as the people are concerned, many of them are disappointed with the amount of cash that the attorneys settled for,” says Clark. “Those who have come to me actually stated that the attorneys have sold the people out. A lot of them stated to me they were disappointed that they had to wait five months for the bad news. The attorneys took most of the money. “Technically, this case settled for $83 million cash if you subtract what the attorneys took,” Clark says now. “We settled for $83 million.”

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