Coca-Cola Bottling of Elizabethtown v. Coca-Cola Co.

Citation696 F. Supp. 57
Decision Date02 August 1988
Docket Number87-398 (MMS).,Civ. A. No. 81-48 (MMS)
PartiesCOCA-COLA BOTTLING COMPANY OF ELIZABETHTOWN, INC., et al., Plaintiffs, v. The COCA-COLA COMPANY, a Delaware corporation, Defendant.
CourtU.S. District Court — District of Delaware


Edmund N. Carpenter, II, Charles F. Richards, Jr., Jesse A. Finkelstein of Richards, Layton & Finger, Wilmington, Del. (Emmet J. Bondurant, Jane V. Vehko, and Jeffrey D. Horst of Bondurant, Mixson & Elmore, Atlanta, Ga., of counsel), for plaintiffs.

Andrew B. Kirkpatrick, Jr., and Richard D. Allen, of Morris, Nichols, Arsht & Tunnell, Wilmington, Del. (Frank C. Jones, Chilton Davis Varner, and Dwight J. Davis of King & Spalding, Atlanta, Ga., of counsel), for defendant.



There are several motions now pending before the Court in this case (the "Coke case") and in two other cases (C.A. Nos. 83-95 and 83-120, the "diet Coke cases"),1 involving, inter alia, contract claims between The Coca-Cola Company (the "Company") and certain of its bottlers (the "bottlers"). The bottlers brought the Coke case in 1981, charging that the Company had breached its agreements with them by supplying Coca-Cola syrup sweetened with fructose (high-fructose corn syrup or "HFCS") rather than sucrose â without the bottlers' consent. The bottlers also claim the Company has overcharged them for syrup and injured them in other ways.

In part the Coke and diet Coke cases have their genesis in earlier contract litigation between the Company and then-existing "parent" bottlers in 1920 and 1921 (the "1921 litigation"). The parties resolved the 1921 litigation through consent decrees (the "Consent Decrees"), which incorporated as a judgment of this Court the amended contracts between the parent bottlers and the Company and resolved the major issue between the Company and the parent bottlers concerning the term of the contracts. The Coca-Cola Bottling Co. v. The Coca-Cola Co., 269 F. 796 (D.Del.1920). In keeping with the initial ruling of the Court on the plaintiff parent bottlers' preliminary injunction motion and prior to any decision on appeal, the Company accepted the bottlers' position that their contracts were perpetual, rather than terminable at will. The contracts between the parent bottlers and the "actual," or "first-line" bottlers, who were more or less the predecessors of the current plaintiffs, were also amended as a result of the 1921 litigation. The contracts now in force between the plaintiffs and the Company derive from the 1921 contracts, and as a result are perpetual as well. Consequently, this court has acknowledged, and the parties apparently agree, that the Consent Decrees retain vitality despite the intervening years and the gradual acquisition of the parent bottlers by the Company.

However, several questions regarding the enforceability of the decrees by these particular plaintiffs remain. Because of these questions, and because the Court previously has ruled that the plaintiffs in all likelihood lack standing to enforce the decrees as parties, Coca-Cola Bottling Co. of Elizabethtown v. The Coca-Cola Co., (Coke IV), 654 F.Supp. 1419, 1445 (D.Del. 1987), the plaintiffs have renewed their motion to intervene in the 1921 litigation.

Additionally, the Company has moved for summary judgment on certain aspects of the plaintiffs' contract claims. In particular, the Company requests this Court to rule as a matter of law that (1) the plaintiffs are not entitled to any damages under Count One of their amended complaint (the "unjust enrichment" count); (2) the plaintiffs' assertions concerning the construction of the term "standard Coca-Cola Bottling Syrup" in connection with Count Two2 (the "standard syrup" count) be rejected; (3) the applicable statute of limitations bars all or part of the plaintiffs' claims under Count Three (the "market price" count); (4) the plaintiffs are not entitled to any recovery from the fund received by the Company in settlement of sugar industry antitrust litigation (the "Western Sugar" count); and (5) the plaintiffs lack standing to enforce the 1921 consent decrees.

The plaintiffs have cross-moved for summary judgment on the Western Sugar action. Both sides agree that this issue is ripe for decision as if tried on a paper record. Accordingly, that portion of this opinion concerning Western Sugar will constitute the Court's findings of fact and conclusions of law in keeping with Federal Rule of Civil Procedure 52.

This Court has jurisdiction under 28 U.S. C. § 1332(a)(1), (c) (1982).


After more than seven years of pre-trial jousting, the cases brought against the Company by certain of its bottlers (C.A. Nos. 81-48, consolidated with No. 87-398; 83-95, and 83-120) (respectively, the "Coke case," and the "diet Coke cases") have been set for trial commencing on September 21, 1988. To date, the litigation has provided the raison d'etre for no less than nine opinions,3 and this Court's pronouncements alone are beginning to approach the bulk of the Saga of Eric the Red. If the parties' briefs and appendices are included, not to mention the record, the cases take on prodigious dimensions.

Although several of the previous Coke and diet Coke opinions have narrated portions of the history of the Company and its bottlers, at this juncture a full picture of that history is appropriate. The following is a composite of the factual summaries of several previous opinions. Any resemblance to those earlier summaries and to the plaintiff Elizabethtown's brief for class certification Docket Item ("Dkt. 60") is entirely intentional.4

A. The Genesis of the Bottling System

To begin at the very beginning: in 1886, an Atlanta pharmacist, Dr. John Styth Pemberton, developed the formula for Coca-Cola. Soon afterward, Asa G. Candler, also a pharmacist and owner of a wholesale drug company, purchased an interest in the formula and trademark and formed The Coca-Cola Company to market Coca-Cola syrup to drugstores as a fountain beverage.

The story continues in 1899, when two Chattanooga lawyers, B.F. Thomas and J.B. Whitehead, bought the rights to receive Coca-Cola syrup at a fixed price for vending in "bottles or other receptacles." Thomas and Whitehead also received certain trademark rights. The rights conveyed to Thomas and Whitehead extended throughout the United States, with some exceptions,5 and were exclusive, i.e., the Company did not reserve the right to bottle Coca-Cola itself, but only retained the right to manufacture syrup for sale to Thomas and Whitehead and for distribution to soda fountains.

Under the terms of the contracts with the Company, Whitehead and Thomas agreed to "establish in the city of Atlanta, as soon as the necessary machinery and buildings can be obtained, a bottling plant for the purpose of bottling a mixture of Coca-Cola syrup preparation with carbonic acid and water." The Coca-Cola Bottling Co. v. The Coca-Cola Co., 269 F. 796, 800 (D.Del.1920) ("Coke 1920" or "Judge Morris's opinion") (quoting 1899 contract). Expenses relating to construction and operation of the plant were to be borne entirely by Whitehead and Thomas. They agreed to "put up in bottles or other receptacles, a carbonated drink containing a mixture of the Cola-Cola Syrup and water charged with carbonic acid gas under a pressure of more than one atmosphere." Id. Under the contract, the syrup was to be mixed with at least one ounce of syrup to eight ounces of water.

Other provisions of the contract obliged Whitehead and Thomas to provide the consumers with a "sufficient quantity" of the drink "to supply the demand in all territory embraced in this agreement," or else forfeit certain of their rights; to buy all the "Coca-Cola syrup necessary to a compliance with this agreement" directly from the Company; to refrain from using substitutes for the syrup or to use the syrup in any way other than that specified; and to sell unbottled syrup only with the written consent of the Company. Id.

Thomas and Whitehead formed Coca-Cola Bottling Company, a Tennessee corporation, in December 1899. Shortly after the formation of the Cola-Cola Bottling Company, Thomas and Whitehead, disagreeing about the terms of the contracts between their company and the bottlers who would actually bottle Coca-Cola (the "actual" or "first-line" bottlers), divided the business. Thomas retained the original bottling company (the "Thomas Co."), along with the bottling business in approximately fifteen states, and conveyed rights to the bottling business in the remainder of the states to Whitehead. Whitehead and a new partner, J.T. Lupton, named their bottling company "The Coca-Cola Bottling Company" (the "Whitehead-Lupton Co."). The Coca-Cola Company, the Whitehead-Lupton Co. and the Thomas Co. joined the "parent bottlers"6 in amending the 1899 agreement to reflect the new bottling company.

The two bottling companies, unable to meet demand themselves and thus fulfill their obligations under the contract,7 contracted with actual bottlers who invested in and operated plants as well as bottled, promoted, and sold Coca-Cola in various exclusive territories assigned to them. By 1920, the amount of the investment in "physical properties" by the actual bottlers outstripped that of the Company by a ratio of five to one. Coke 1920, 269 F. at 801. Manufacture, shipment, and bottling were performed by the Company and the actual bottlers. The parent bottlers' contribution to the process consisted primarily of recruiting actual bottlers and otherwise developing the bottling business.

In 1915, the contracts between the Company and the parents were further modified to accommodate changes in the anti-trust laws brought about by passage of the Clayton Act. The corresponding contracts between the parents and the actual bottlers also were modified.

The Coca-Cola Company was purchased by a banking syndicate in 1919 and became a Delaware...

To continue reading

Request your trial
27 cases
  • Coca-Cola Bottling Co. v. Coca-Cola Co.
    • United States
    • U.S. District Court — District of Delaware
    • 28 d5 Junho d5 1991
    ...Bottling Co. of Elizabethtown v. Coca-Cola Co., 668 F.Supp. 906 (D.Del.1987) ("Coke V at ___"). Coca-Cola Bottling Co. of Elizabethtown v. Coca-Cola Co., 696 F.Supp. 57 (D.Del.1988) ("Coke VI at Judge Schwartz' six published opinions in the diet Coke litigation will hereinafter be cited as ......
  • Alexander v. Cigna Corp.
    • United States
    • U.S. District Court — District of New Jersey
    • 5 d1 Janeiro d1 1998
    ...("no fiduciary relationship exists between franchisors and franchisees under New Jersey law."); Coca-Cola Bottling Co. of Elizabethtown v. Coca-Cola Co., 696 F.Supp. 57, 73 (D.Del.1988) (a company and their bottlers, "although bound together by their common interest in promoting the sale of......
  • In re TMJ Implants Products Liability Litigation, 94-MD-1001.
    • United States
    • U.S. District Court — District of Minnesota
    • 17 d2 Janeiro d2 1995
    ...of increased sales of DuPont's PTFE and FEP does not show a "community of interest" in profits. See, e.g., Coca-Cola Bottling Co. v. Coca-Cola Co., 696 F.Supp. 57, 74 (D.Del.1988) ("the common fortunes of the Company and the bottlers may ride to an extent on the demand for Coca-Cola, but th......
  • Helgeland v. Wisconsin Municipalities
    • United States
    • Wisconsin Supreme Court
    • 7 d4 Fevereiro d4 2008
    ...agreement). 54. Cox Cable Commc'ns, Inc. v. United States, 699 F.Supp. 917 (M.D.Ga.1988). 55. Coca-Cola Bottling Co. of Elizabethtown, Inc. v. Coca-Cola Co., 696 F.Supp. 57, 96 (D.Del.1988). 56. EEOC is further distinguishable from the instant case in that the consent decree at issue in EEO......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT