Coca-Cola Co. aims to put suit on ice

Less than a month after Coca-Cola Co. landed in U.S. District Court, the beverage giant has filed a motion to dismiss the suit.

Bottlers filed suit Feb. 14 against Coca-Cola Co. and its largest bottler, Coca-Cola Enterprises, for allegedly breaking a contractual agreement in their plan to deliver the company’s PowerAde product via warehouse delivery in Coca-Cola Enterprises’ territory.

Bottlers then filed an injunction against Coca-Cola, hoping to prevent – or at least postpone – the implementation of warehouse delivery, which Coca-Cola Enterprises plans to roll out April 1. The independent bottlers fear such activity would set a precedent and say the company would soon require the bottlers to use the warehouse delivery method.

A hearing on the injunction is scheduled for March 28–29 in Kansas City. But if Coca-Cola Co. has its way, there won’t be a need.

Coca-Cola Co. on March 7 filed its motion to dismiss the suit, stating independent bottlers cannot control delivery methods in territories other than their own.

“The contract clearly allows a bottler to choose warehouse delivery within its exclusive territory,” said Coca-Cola spokesperson Dan Schafer. “Each bottler operates under an individual PowerAde contract; there is no one, collective contract.”

The plaintiffs disagree.

Bryan Wade, attorney for Ozarks Coca-Cola Bottling Co., says an all-encompassing contract dictates delivery methods for all territories, including Coca-Cola Enterprises’ territory. And he said that contract prohibits warehouse delivery for every bottler.

Coca-Cola Co.’s motion also states that several plaintiff bottlers don’t have a written PowerAde contract and therefore cannot be part of a lawsuit over the contract.

Coca-Cola Co.’s Schafer said the issue ought to be handled out of court because both sides disagree only on which delivery method is best for business, not which method is legal.

“This is a business issue. It’s not a legal issue, and it should be resolved as a business issue,” he said.

The bottlers argue warehouse delivery will hurt customer relationships and reduce the bottlers’ control over marketing, Coca-Cola Co. officials say they are responding to requests from retailers – including Wal-Mart – who want more control over the products on their shelves.

The bottlers currently use direct-store-delivery and manage all store displays and product shelving for retailers.

“In the end, this is a bottler trying to respond to a request by the customer in which the customer says, ‘I want to sell more’,” Schafer said. “If the bottler sells more, in the end, it benefits the company.”

Sally Hargis, Ozarks Coca-Cola Bottling’s vice president of corporate strategy, said she and fellow bottlers are hopeful the injunction against the warehouse-delivery rollout will be granted, though the lawsuit still could take place and could last up to 18 months.

“The lawsuit will continue regardless of what happens,” she said. “If they grant the injunction, our chances of being successful in the suit will increase, but it certainly won’t be a guarantee.”[[In-content Ad]]