The Coke Machine - Michael Blanding [56]
Despite their ridicule, behind the scenes the soda companies weren’t finding the threat silly at all. The public anger over soda—especially sold to the captive audience of kids in schools—was too palpable to risk in a jury trial. Sometime in the fall of 2005, Pepsi general counsel Robert Biggart quietly approached Gardner about putting this mess behind them. The first face-to-face came in December 2005 in Washington, including Jane Thorpe, a lawyer with Alston & Bird who represented Coke, as well as Patricia Vaughan, general counsel for the American Beverage Association, on one side, and lawyers from CSPI and PHAI on the other.
From the beginning, the soda reps made it clear they were willing to agree to some kind of settlement to get soda out of schools—but only if the lawyers held off in bringing a lawsuit. The other side reluctantly agreed—since, unbeknownst to the soda companies, they were having trouble finding plaintiffs anyway. They’d made their decision to file in Massachusetts, a state with strong consumer protection laws, but where most schools had already canceled soda contracts. The lack of a stick to hold over Coke’s head, however, put the anti-obesity lawyers at a disadvantage.
In meetings throughout the winter, the two sides hashed out an agreement, with sugary soda being the first to go, followed by sports drinks—noncarbonated beverages like Coke’s Powerade that have almost as much sugar as an equivalent amount of soda. Diet soda, after some debate, stayed. But the real sticking point was advertising—with the companies balking at removing all of those brightly lit logos on the sides of their vending machines that preserved that all-important early brand recognition, and arguing for half-measures like stickers with nutritional information placed on the machines. Finally, the anti-soda advocates thought they were able to prevail on the issue. On March 30, 2006, their lawyers drew up a confidential document summarizing their understanding of the proposed settlement. It included a promise from Coke to “refrain from all product marketing and advertising in school buildings, or on the school campus,” as well as an outline to get rid of all beverages with more than 10 calories per bottle (with the exception of milk and fruit juices) by the beginning of the 2009-2010 school year.
“Somewhere in there, the stalling began in earnest,” says soda activist Simon, who watched negotiations unfold. “We didn’t hear from them to schedule a meeting, and I got nervous and said something was going on.” As it turned out, she was right. Coke was barraged by negative publicity that spring, and even Governor Rell bowed to public opinion, supporting a new bill in Connecticut to ban sugary soft drinks, and diet drinks and Powerade. Coke threatened to pull school scholarships if the ban passed, prompting state attorney general Richard Blumenthal to decry Coke’s “unconscionable practices” and announce an investigation of the Coca-Cola Foundation for violation of its nonprofit status. Despite Coke’s threats, the state legislature passed the bill in April 2006.
Coke had had enough, calling a press conference a week later along with other soft drink companies to announce its surrender. Reporters from The New York Times, The Washington Post, and other newspapers assembled to hear the details, when Bill Clinton, former president of the United States, strode to the podium. By his side was Arkansas governor Mike Huckabee, the American Beverage Association’s Neely, and Coca-Cola North America president Don Knauss. “I don’t think there are any villains here,” said Clinton with his patented earnest delivery, going on to call the soda companies “courageous” for dealing with the obesity issue head-on. Then with great fanfare, he announced new guidelines that the industry had agreed to limiting soda in schools, which had been negotiated by the Alliance for a Healthier Generation, a partnership between the Clinton Foundation and the American Heart Association.
The agreement—which had been in the works since fall 2005