Suit over stock sale jars two prominent New Orleans families
A federal jury here recently awarded nearly $4.6 million to shareholders of the Louisiana Coca-Cola Bottling Company who claim that former company officials ``hid the truth'' to buy millions of dollars in outstanding stock which was later resold at a higher price. The case has prompted great attention in New Orleans because it involves legal fireworks between two of the city's most prominent families: the Freeman family, composed of the late Richard Freeman and his two sons, Richard Jr. and Louis, who own more than 80 percent of the state's Coca-Cola business; and the Wisdom family, composed of Mary Freeman Wisdom, her daughter Betty, and her daughter-in-law Helen, who said they were misled into selling their stock to the Freemans for $950 a share in February 1983.
In the summer of 1984, Atlanta-based Coca-Cola announced it would buy Louisiana Coca-Cola for $148.8 million, resulting in a new price per share that in some cases almost doubled the Wisdoms' investment.
Mary Freeman Wisdom had sold her shares of Louisiana Coca-Cola back to the Freeman-run business for $6 million in 1983. But according to Mrs. Wisdom's suit, if she had sold the stock directly to the Atlanta company, they would have been worth $42.9 million.
On Dec. 17, eight people and the estate of a deceased woman - all shareholders in the Louisiana Coca-Cola Company - were awarded a judgment against the Freeman family. Several days before Christmas, three more shareholders also filed suit against the Freemans, and the Freeman family's attorneys said they will appeal US District Judge Martin Feldman's $4.6 million decision.
``It's clear that the jury confirmed our client's belief that they were, in fact, treated unfairly,'' said attorney Robert Kerrigan, who represented the plaintiff. ``It's truly unfortunate that this matter could not be resolved between parties, and our clients regret the need to go into a public forum, but we were given no alternative.''
Going into a public forum was a dramatic step for both legal parties - the Wisdom and the Freeman families are both members of New Orleans social and financial establishment. Between them, the two families have supplied the New Orleans Mardi Gras celebration with two Rexes and three queens of Carnival - the most prestigious slots of the annual season.
Both families have heavily supported such local institutions as the new A.B. Freeman School of Business at Tulane University, the Richard Freeman Institute at Ochsner Hospital, and the New Orleans Chamber of Commerce.
Both the Wisdoms and the Freemans hold a variety of important and highly visible civic positions in New Orleans - a cousin, Adelaide Wisdom Benjamin, served as board president of the New Orleans Symphony. Louis Freeman is on the board of directors of Tulane University, and his brother, Richard Jr., is a director of Hibernia National Bank.
Although both families have traditionally worked together in community endeavors, the lawsuit has prompted divisive feelings and accusations.
The federal verdict, which said that the Freemans committed fraud, aided and abetted security law violations, and breached their duty to inform the plaintiff about the value of Louisiana Coca-Cola, has received differing reactions among the New Orleans economic community.
``I don't think it will have any impact on the value of investments in other companies in the Louisiana area,'' says Lee Gary, education manager with the New Orleans Chamber of Commerce. ``It was an inner-company affair that was properly solved by the courts. In fact, I think it's a positive development, because investors had a problem that has now been fully addressed. Instead of this thing lingering or festering, it's been resolved.''
But Timothy P. Ryan, a professor of economics at the University of New Orleans, sees things differently: ``The Freeman family and the Wisdom family are very important families in New Orleans, both from a monetary and philanthropic point of view. It's never desirable for a community to have two such families have a squabble that must be settled in court. It may ultimately end up as something that has unfortunate ramifications for the local economy.''