In January 2021, Bradley Gayton, then Coca-Cola`s general counsel, urged law firms to create opportunities not only for lawyers of color, but specifically for black lawyers. But Gayton abruptly resigned a few months later, and some industry experts speculated that this was due to his aggressive push for diversity. In a meeting with Coca-Cola`s global legal team, Douglas, the company`s new general counsel, said Coca-Cola was « taking a break for now, » but would likely save parts of the diversity plan, Law.com reported. « The legal question is whether they are actually insisting on a quota, » he said. « One suggestion I`ve made to companies like Coca-Cola is to have a conversation with your law firm or other service providers and say you want to have a report on what they`re doing on the recruitment and retention front to improve diversity. » However, the policy has met with backlash from shareholders threatening legal action, with the American Civil Rights Project (ACRP) calling the demands « brilliant » and violating 1981 USC Section 42, which prohibits unlawful racial discrimination. CEO Daniel Morenoff called the decision « astonishing » that the violation of U.S. civil rights law was not taken into account. Coca-Cola first said last year that it would disrupt and review the diversity program for external consultants announced in January 2021 in a letter to the soft drink company`s external law firms through its former general counsel Bradley Gayton. Zakiyyah Salim-Williams, chief diversity officer at Gibson, Dunn & Crutcher, said the overthrow of Coca-Cola won`t have the deterrent effect others expect. Morenoff`s group also sent threatening letters to Starbucks, Novartis and McDonald`s about illegal race-based contractual requirements.

The American Civil Rights Project, which opposes affirmative action, had threatened to sue Coca-Cola for the policy. The group said the plan constituted unlawful racial discrimination and that Coca-Cola violated its fiduciary duty to investors. McDonald`s has diversity goals for the makeup of its leadership team, Starbucks has diversity goals for employees and suppliers, and Novartis has a preferred program for external law firms committed to diversity minimums, according to the American Civil Rights Project. Fast forward to this week. Bloomberg Law received a letter from Coca-Cola to a group of shareholders — names blackened out — on February 7, 2022, officially rejecting the policy. According to the Bloomberg article, this group of shareholders threatened legal action, saying Gayton`s proposal was an « illegal discriminatory » policy. Subscribe to our daily newsletter to receive the latest legal news and Reuters headlines in your inbox. As Occam`s razor suggests, this is probably because there were no legal problems with politics. That`s why all the smart people involved thought it was okay. Coca-Cola has been faced with questions about the legality of attributing absenteeism to black lawyers facing fines. In his letter, Douglas said Coca-Cola is still « fully committed to promoting justice, diversity and inclusion in the legal profession. » But there were signs that Coca-Cola was taking the threat of a lawsuit seriously and handing over files to Morenoff`s group.

A lawyer from the leading business law firm Wachtell, who advised Coke, was copied from Douglas` letter. « When there is a change in leadership, it takes time for the new leader to review the current state of the team, organization and initiatives, » he said. « Monica is fully committed to the concepts of justice and diversity in advocacy, and we expect her to take the time necessary to carefully consider any plans for the future. » At least one veteran former chief legal officer now working for Coca-Cola has publicly expressed skepticism that corporate lawyers are embracing the social justice concerns that many diversity programs highlight. The proposed requirements « were and are not a policy » at Coca-Cola, General Counsel Monica Howard Douglas said in a Feb. 7 letter to a group of shareholders obtained by Bloomberg Law. The group had threatened the company with a legal dispute over a policy of « unlawful discrimination ». Coke isn`t the only company to have faced legal threats due to efforts to empower people of color and other minorities in U.S. businesses. A conservative law firm beat Uber last year with thousands of legal requests to steer business to black restaurants. Processing cases could cost millions of dollars. Legal executives at companies with little risk appetite could take a more cautious and conservative approach to diversity programs by limiting what they are willing to do or changing the way they structure those policies, Hawkins said. Coke`s new general counsel, Monica Howard Douglas, is fully committed to the notions of justice and diversity in the legal profession, and we expect her to take the time necessary to carefully consider any plans for the future, » the spokesperson wrote.

Coca-Cola Co.`s removal of controversial diversity standards for outside lawyers has raised questions about the future of similar efforts in large corporations. Jean Lee, president and CEO of the Minority Corporate Counsel Association, said she was concerned that Coca-Cola`s about-face could make some legal executives worry that they are too aggressive in promoting diversity coverage to promote their own « watered-down » policies.