Coca-Cola’s has officially walked back a proposal requiring the company’s outside law firms to have a quota of Black attorneys and lawyers from other underrepresented groups working on its cases. The policy, introduced by then-general counsel Bradley Gayton, was initially announced in January 2021 but was paused after Gayton was replaced as general counsel in March 2021.
In announcing the policy, Gayton explained that Coke’s previous efforts to increase racial diversity were “not working,” and he announced that, going forward, the company will require its outside law firms to meet racial quotas in staffing Coca-Cola matters. If a law firm fails to comply, it faces a non-refundable 30% reduction in fees and may be shut out entirely.
But, as C. Boyden Gray explained in a letter on behalf of the Project for Fair Representation to incoming Coke general counsel Monica Douglas, such a policy of discrimination is illegal:
Since the Civil Rights Act of 1866 (codified at 42 U.S.C. § 1981), federal law has prohibited all forms of racial discrimination in private contracting. As the late Justice Ginsburg noted last year, § 1981 is a “‘sweeping’ law designed to ‘ break down all discrimination black men and white men’ regarding ‘basic civil rights.'” And decades of case law have held that—no matter how well intentioned—policies that seek to impose permanent racial balancing are prohibited.
Racial discrimination should have no place in private contracting, and Coca-Cola should act swiftly to publicly undo this destructive legacy of Mr. Gayton’s tenure. If it does not, it’s only a matter of time before Coke finds itself having to defend its illegal racial discrimination to a federal court.
There are indications Coke took the possibility of illegality seriously. In her letter withdrawing the policy, Douglas said Coke is still “fully committed to advancing equity, diversity, and inclusion in the legal profession.” But Douglas clarified that the policy had never been implemented and copied corporate law firm Wachtell on the letter.
The Project on Fair Representation is a not-for-profit legal defense fund program that is designed to support litigation that challenges racial and ethnic classifications and preferences in state and federal courts. Boyden Gray & Associates is a boutique litigation and public policy firm, continuing C. Boyden Gray’s decades of service as counselor to presidents, business leaders, legislators, and regulators on matters of constitutional law, regulatory policy, and international affairs.