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Former Employees Sue Coca-Cola Over 401(K) Stock Investment

Posted on: Thursday, 14 July 2005, 09:00 CDT

Jul. 14--Four former Coca-Cola employees have sued the company, claiming executives shouldn't have encouraged employees to put Coke stock in 401(k) retirement accounts.

The latest of three separate but similar suits was filed last week in U.S. District Court in Atlanta by ex-employee Brenda Jackson. She is seeking unspecified damages based on accusations that Coke executives used the company's stock as a component of 401(k) accounts, despite their knowledge of a host of problems.

The suit is similar to two others.

The first was filed in federal court in Atlanta on May 11 by plaintiff Elaine Pedraza. The second, filed by Lynetta Shamery and Inger Eberhart, dates to June 7.

Typically, similar suits are eventually folded together so they can proceed through court as one issue.

The claims in the Jackson suit are based heavily on other lawsuits, news stories and findings by the Securities and Exchange Commission, which in April said Coke previously misled investors by failing to disclose a program intended to artificially boost revenue in Japan.

Jackson cited the SEC's findings, plus claims from suits filed by former Coke fountain unit auditor Matthew Whitley, who in 2003 settled with the company.

Jackson claims that current and former Coke executives "knew or should have known that Coca-Cola was an imprudent investment" for participants in the company's 401(k) plan. The suit doesn't involve Coke's pension plan.

"The company fostered a positive attitude toward the company's stock and/or allowed participants in the plan to follow their natural bias towards investment in the equities of their employer by not disclosing negative material information," the suit said, according to court filings.

Coke spokesman Ben Deutsch called the claims "ridiculous.""It is absurd to suggest otherwise, when our associates can choose among more than 25 investment options for their 401(k) contributions," he said.

The exception is that Coke's matching contribution is solely comprised of shares of company stock.

As of the end of 2004, Coke's 401(k) plan was valued at $1.37 billion. Of that amount, 60 percent was in Coke stock.

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Source: The Atlanta Journal and Constitution

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