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Coke “Very Pleased” as Judge Dismisses Five Fraud Claims

News, 08 September 2003


Coca-Cola’s fight to clear itself of accounting and marketing fraud allegations has been boosted after a judge threw out half the claims.

Judge Elizabeth Long of Fulton County Superior Court dismissed five of ten charges in a lawsuit filed by ex-Coke employee Matthew Whitley.

Whitley – a senior executive in the company’s fountains division until he was laid off in March this year – launched the suit in May [WAMN: 21-May-03]. Among a host of accusations, he alleged that Coke overstated revenues and gross profits through manipulation of customer marketing allowances.

The suit has already caused considerable embarrassment to the beverage behemoth over the claim that Coke employees rigged a marketing test conducted with Burger King. After an internal investigation, Coke had to admit this allegation was true, prompting a payout of $21 million (€19.2m; £13.3m) to an irate BK [WAMN: 14-Aug-03].

Judge Long dismissed two claims of conspiracy, one of ‘invasion of privacy through false light’ and one of ‘breach of fiduciary duty’. A further claim had already been dropped.

In addition, two claims of ‘tortious interference’ were split – they were dismissed with regard to the company and certain individuals, but can proceed against four executives. The latter quartet includes Coke’s chief financial officer Gary Fayard and former head of the fountains division Tom Moore, who recently stepped down over the BK row [WAMN: 27-Aug-03].

A further accusation that Coke made defamatory comments against the plaintiff was also split. That leaves two claims – one alleging that Coke caused Whitley emotional distress and one for his attorney’s fees – both of which can proceed.

Coke professed itself “very pleased” at the decision. Judge Long’s ruling may influence the thinking of the federal District Court, where the lawsuit has also been filed.

Meanwhile, the accusations are still being investigated by the Justice Department and the Securities & Exchange Commission.

Data sourced from: USA Today; additional content by WARC staff