A group of “concerned” Coca-Cola shareholders have sent a letter to the beverage corporation, alleging a recent policy aimed at diversity would actually require law firms that represent the company to violate anti-discrimination law.
Paul Mirengoff, a board member of the American Civil Rights Project (ACRP), reported at Powerline that in January 2021, “the general counsel of Coca-Cola sent a letter to the law firms that represent it. The letter demanded, among other things, that these firms ‘commit that at least 30% of each of billed associate and partner time will be from diverse attorneys, and of such amounts at least half will be from Black attorneys.’”
ACRP responded to the policy with an open letter demanding that Coca-Cola either “publicly retract the discriminatory outside-counsel policies it announced in January” or “provide access to the corporate records related to the decision of Coca-Cola’s officers and directors to adopt and retain those illegal policies,” Mirengoff wrote.
The letter notes that Coca-Cola’s policy “of contracting, refusing to contract, and altering the terms of signed contracts on the basis of the race of Coke’s counterparties, the [directors] have exposed Coke and its shareholders to material risk of liability” for potentially violating anti-discrimination laws.
The letter continues:
The Policies additionally expose the company to potential litigation on other theories, including (without waiving the right to later note more):
(a)the Policies order outside counsel to discriminate on the basis of race, ethnicity, sex, gender, and disability status in hiring, promotional decisions, firing, staffing, and internal compensation structures. In doing so, the Policies order outside counsel to violate Title VII of Civil Rights Act of 1964,Title IX of the Civil Rights Act of 1964, and the Americans with Disabilities Act.
(b)in requiring the disclosure of individual outside-counsel “team member[’]s” disability status, the Policies separately compel the violation of the confidentiality provisions of the Americans with Disabilities Act.
As Mirengoff noted, the letter adds that Coca-Cola knew or should have known the policy it enacted was illegal. In April, famed attorney Boyden Gray wrote an open letter to the company outlining how the new policy was discriminatory, so by now the company should have no questions as to whether the policy is potentially illegal.
Yet, as Daniel Morenoff, leader of the ACRP wrote in the letter to Coca-Cola, on the same day Gray wrote his letter, the company:
[Coke] executed and filed with the SEC a Form 10Q omitting any reference whatsoever to the [illegal contracting] policies or Coke’s related liabilities. Given the total omission of these material liabilities, that document, by all appearances, did not “contain[ ]” or “fairly present[ ], in all material respects, the financial condition…. of the Company.” Thus, [Coke] executed and submitted to the SEC a false “Certification Pursuant to 18 USC Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Even though Coca-Cola didn’t report this new policy, Morenoff wrote, it has retained the policy. Concluding his letter, Morenoff issued a demand to the company:
The Stockholders therefore demand that you immediately publicly retract the Policies in their entirety. If we do not receive a response to these demands within 30 business days, we will understand. . .Coke. . .to have refused to address these matters themselves. At that point, the Stockholders will be forced to seek judicial relief to protect Coke and the Stockholders’ interests in the company from your continued breaches of your fiduciary duties.
I hope that after you have reviewed this letter, you will be in touch to inform us of how Coke will comply with these demands.