According to an article dated January 16, 2008, a panel of the 11th U.S. Circuit Court of Appeals has upheld the dismissal of a two-year-old securities fraud case against The Coca-Cola Co. The 2005 class action complaint contended that then-Coke CEO Douglas Daft and other top executives made false and misleading statements about Coke's business and financial standing that artificially inflated the price of Coke stock. U.S. District Judge Richard W. Story dismissed the suit in 2006, saying that most of the alleged misrepresentations were mere "puffery" -- vague, sunny statements on which reasonable investors don't rely -- while other allegations weren't stated specifically enough in the complaint. The unpublished, unsigned opinion issued Jan. 10 by the panel of 11th Circuit Judges Stanley F. Birch Jr. and Ed Carnes and Senior 11th Circuit Judge Emmett Ripley Cox generally adopted the "well-reasoned" opinion written by Story. The panel paused only to clarify that one of Coke's arguments noted in the district court opinion -- about the plaintiffs' claim that Coke had violated accounting principles -- was too "fact-based" to support a motion to dismiss.
On March 23, 2007, the Court entered the Judgment dismissing the case with prejudice and the civil case was terminated. On April 16, 2007, the Plaintiff filed a Notice of Appeal. The Appeal is currently pending in the U.S. Court of Appeals for the Eleventh Circuit.
According to the Company’s FORM 10-Q for the quarterly period ended September 29, 2006, in May and July 2005, two putative class action lawsuits (Selbst v. The Coca-Cola Company and Douglas N. Daft and Amalgamated Bank, et al. v. The Coca-Cola Company, Douglas N. Daft, E. Neville Isdell, Steven J. Heyer and Gary P. Fayard) alleging violations of the anti-fraud provisions of the federal securities laws were filed in the United States District Court for the Northern District of Georgia against the Company and certain current and former executive officers. These cases were subsequently consolidated, and an amended and consolidated complaint was filed in September 2005. On November 21, 2005, the Company and the individual parties filed a motion to dismiss the amended and consolidated complaint. The plaintiffs filed their response to that motion on January 27, 2006. On September 29, 2006, the Court entered its order granting the Company's motion to dismiss the amended complaint in its entirety and granted the plaintiffs 20 days from its date of entry within which to seek leave to file a second amended complaint to attempt to correct deficiencies noted therein. On October 23, 2006, plaintiffs advised the court that they would not seek leave to file a second amended complaint thereby concluding this matter.
The original complaint charges Coke and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Coke manufactures, distributes and markets non-alcoholic beverage concentrates and syrups, including fountain syrups, throughout the world. Specifically, the complaint alleges that during the Class Period, defendants made false and misleading statements regarding Coke's business and prospects. The true facts, which were know to defendants but concealed from the investing public, were as follows: (i) Coke's business strategy was flawed and its business model was not working; (ii) Coke's relationships with its key bottlers were impaired and harming Coke's economic performance; and (iii) as a result of the above, Coke's earnings going forward would be diminished. The complaint further alleges that on or around September 15, 2004, Coke revealed that its second half 2004 financial results would be below forecasted levels. Coke's stock declined on this news.