Coca-Cola Co. agreed yesterday to pay a record $192.5 million to settle a racial-discrimination lawsuit brought by black workers and agreed to make significant changes in the way it manages, promotes and treats its minority employees.

The company admitted no wrongdoing but agreed to pay $113 million to thousands of black employees and spend $43.5 million to adjust its salaries and $36 million for programs to monitor its employment practices. It will also pay $20 million in attorneys' fees.

The world's largest soft-drink maker also agreed to set up a watchdog group to review the company's diversity efforts and order changes in its employment policies and practices.

The settlement is the largest ever in a U.S. race-discrimination lawsuit, according to the U.S. Equal Employment Opportunity Commission, which did not comment on the case because it was not a party to the lawsuit.

"Today we are closing a painful chapter in our company's history," wrote Coca-Cola's chairman and chief executive, Douglas N. Daft, in a memo to employees released publicly yesterday.

"This is a watershed event and hopefully will serve as a wake-up call to other companies," said Pamela Coukos of Mehri, Malkin and Ross, the D.C. firm that represented the employees. The agreement covers about 2,200 black salaried employees and former employees who worked for the company in the United States between April 1995 and June 2000. Plaintiffs' lawyers estimated that the employees will get an average of $40,000 each, depending on the length of their employment. The original four plaintiffs have resigned from Coca-Cola as part of the settlement.

In the suit the employees accused Coca-Cola of discriminating against black salaried employees in pay, promotions and evaluations. The company denied the allegations.

The suit began in April 1999 after four black employees came forward with their stories, and it took on the tone of a civil rights crusade earlier this year when 45 current and former employees organized a "bus ride for justice" from the company's Atlanta headquarters to Washington, and the Rev. Jesse Jackson called for a consumer boycott of Coke products.

For plaintiffs such as Linda Ingram, who worked for nine years as a senior information analyst for the company in Atlanta, the experience was painful and personal. Ingram said she first sought legal advice in 1998 after a manager insulted her, using what she described as a racist remark.

"I was appalled that in this time I was presented with something like this. I think I was in a state of disbelief," Ingram, 43, recalled during a telephone interview yesterday.

Ingram said the comment devastated her, and she had to run out of the office to "compose herself" after the encounter. She said she reported the incident to the company's equal employment opportunity manager, who took no immediate action.

However, Ingram said, the supervisor was later let go for other reasons. That only made matters worse, she said, since her white co-workers had heard of her complaints. "As an African American in an all-white group, you automatically are targeted because people think that you're the person who caused this [supervisor] to lose their job," she said.

The lack of support from her colleagues added to Ingram's self-doubt, she said, and she began to question her own judgment. "You ask yourself a million questions. . . . If you're doing the right thing, number one," Ingram said, "and if you heard the comment exactly as it was meant to be."

Elvenyia Barton-Gibson, who joined Coca-Cola in 1996 in the marketing department of its Minute Maid subsidiary, said she joined the suit after watching all eight of her African American colleagues leave the department.

"I saw people either quit in frustration or be systematically eliminated from the company," said Barton-Gibson, who believed her managers had withheld pay raises and promotions she deserved. Like Ingram, Barton-Gibson said she complained to superiors outside her department, but they did nothing.

"One of the key theories of our case was that Coke was failing to monitor its managers and the decisions that they were making," said Coukos.

The settlement is among a growing number of such agreements that go beyond monetary compensation by forcing companies to make systemic changes in management and policy. Texaco Inc.'s $176.1 million settlement in a racial-discrimination suit in 1997 required the oil company to create a diversity task force. In 1998 a landmark sexual harassment settlement by Mitsubishi Motor Manufacturing of America Inc. included the creation of a three-person panel of outside monitors to ensure the effectiveness of policies banning sexual harassment.

The Coca-Cola panel is to be made up of seven individuals: three to be appointed by the plaintiff's attorneys, three by the company and one to be named jointly.

Cyrus Mehri of Mehri, Malkin and Ross called the agreement a "sister settlement" to the Texaco agreement--the two share similar provisions--but one that has far more power. The Coca-Cola panel will not only perform independent audits of the company's performance but also will have power to mandate changes in its human resources and management practices. The panel's recommendations are binding unless the company can successfully challenge them in court by proving that they are, say, financially impossible to implement.

According to the language of the settlement, Coca-Cola has agreed to set a "gold standard" in diversity among Fortune 500 companies.

To that end, its board of directors will form a Public Issues and Diversity Review Committee, which will oversee the entire company's equal employment opportunity efforts and in part tie executive compensation to the success of those efforts.

African American employees make up about 16 percent of the company's U.S.-based workforce, according to plaintiffs' attorneys.

Coca-Cola's stock closed yesterday at $61.94 on the New York Stock Exchange, up 43 cents.

The company announced it would take a one-time charge of $188 million in the fourth quarter because of the settlement, but some industry watchers said the suit has not affected the company's sales overall.

"Not only has [Coke] spent over 100 years selling soft drinks, it's also spent a ton of time and energy and money on human relations and community relations. . . . That reputation that Coke has worked hard to build and develop over decades is and will remain key to how the company is perceived," said John Sicher, editor of Beverage Digest.

But Coke has lost a few sales. "I do not buy it, and I do not drink it," said Barton-Gibson, who has started her own consulting business. Ingram, who has opened a store and a Web site that sells women's clothing, is one of her clients.

Settling Up

Coca-Cola's settlement of a racial bias case was more than $16 million larger than the previous record settlement.


Company Date of settlement including attorneys' fees

Coca-Cola yesterday $192.5 million

Texaco March 1997 $176.1 million

Shoney's April 1989 $132.5 million


Stores July 1999 $33 million


Transportation Jan. 1999 $25 million

SOURCE: Plaintiffs' attorneys, Post research