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US: Coke faces wave of legal action

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The Coca-Cola Co is facing a wave of legal battles.

The company said yesterday (1st August) that one Maryann Chapman has filed a purported shareholder derivative action. A filing with the Securities Exchange Commission says the soft drink group also faces four putative class-action lawsuits.

The filing said that Maryann Chapman had filed the purported shareholder derivative action in the Superior Court of Fulton County, Georgia, alleging violations of state law by certain current and former members of the board of directors of the company, including breaches of fiduciary duties, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment.

The defendants named in the lawsuit include Neville Isdell, the current CEO and chairman, and his predecessor Douglas Daft.

The complaint further alleges that the September 2004 earnings warning issued by the company resulted from factors known by the individual defendants as early as January 2003 and were not disclosed to the investing public until the warning.

Coke said it "intends to vigorously defend its interests in this matter."

It was also disclosed in the SEC filing that on July 8th a putative class-action lawsuit was filed against the soft drink giant in the US District Court for the Northern District of Georgia, alleging violations of antifraud provisions of the federal securities laws. The complaint also alleges false and misleading statements.

Coke said it "believes that it has meritorious defences to this action and will vigorously defend itself."

Coke said that during May, June and July 2005 three similar putative class action lawsuits were filed in the US District Court for the Northern District of Georgia by participants in the company's thrift and investment plan.

The lawsuit alleges breach of fiduciary duties. It says that the defendants failed to exercise the required care, skill, prudence and diligence in managing the plan and its assets.

The plaintiffs are seeking, among other things, declaratory relief, damages for Plan losses and lost profits.

Coke said it "believes that it has meritorious defences in each of these cases and intends to vigorously defend its interests."


Sectors: Soft drinks

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