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.”
In response to this outrageous policy, the American Civil Rights Project (of which I am a board member) has sent a letter to the company on behalf of concerned Coca-Cola shareholders. The letter demands that the Coke either (1) publicly retract the discriminatory outside-counsel policies it announced in January or (2) provide access to the corporate records related to the decision of Coca-Cola’s officers and directors to adopt and retain those illegal policies.
The letter is signed by Daniel I. Morenoff, who heads the American Civil Rights Project. You can read the full text here.
The letter points out to Coke that “by adopting Policies 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 unlawful race discrimination under 42 U.S.C. Section 1981.
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.
The letter states that, at the time of its January announcement, Coke knew or should have known that the policies it set forth are illegal. In the unlikely event that Coke didn’t know this, it was so informed by critics and certainly by Boyden Gray in an open letter to the company in April.
Yet, on the same day it received Gray’s letter:
[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.
The letter concludes with this demand:
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.
The letter is dated June 11, 2021. The clock is ticking.