Pepsi Points Case
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''Leonard v. Pepsico, Inc.'', 88 F. Supp. 2d 116, (
S.D.N.Y. The United States District Court for the Southern District of New York (in case citations, S.D.N.Y.) is a federal trial court whose geographic jurisdiction encompasses eight counties of the State of New York. Two of these are in New York Cit ...
1999), aff'd 210 F.3d 88 (
2d Cir. The United States Court of Appeals for the Second Circuit (in case citations, 2d Cir.) is one of the thirteen United States Courts of Appeals. Its territory covers the states of Connecticut, New York, and Vermont, and it has appellate jurisdict ...
2000), more widely known as the Pepsi Points case, is an American contract law case regarding
offer and acceptance Offer and acceptance are generally recognized as essential requirements for the formation of a contract (together with other requirements such as consideration and legal Capacity (law), capacity). Analysis of their operation is a traditional appro ...
. The case was brought in the
United States District Court for the Southern District of New York The United States District Court for the Southern District of New York (in case citations, S.D.N.Y.) is a federal trial court whose geographic jurisdiction encompasses eight counties of the State of New York. Two of these are in New York Ci ...
in 1999; its judgment was written by
Kimba Wood Kimba Maureen Wood (born January 21, 1944) is an American judge who is a senior district judge of the United States District Court for the Southern District of New York. Wood received her undergraduate education at Connecticut College before ...
. In 1996,
PepsiCo PepsiCo, Inc. is an American multinational corporation, multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase, New York, Purchase. PepsiCo's business encompasses all aspects of the f ...
began a promotional
loyalty program A loyalty program or rewards program is a marketing strategy designed to encourage customers to continue to shop at or use the services of one or more businesses associated with the program. Single-company vs. coalition programs Loyalty progr ...
in which customers could earn Pepsi Points which could be traded for physical items. A
television commercial A television advertisement (also called a commercial, spot, break, advert, or ad) is a span of television programming produced and paid for by an organization. It conveys a message promoting, and aiming to market, a product, service or idea. ...
for the loyalty program displayed the commercial's protagonist flying to school in a
McDonnell Douglas AV-8B Harrier II The McDonnell Douglas (now Boeing) AV-8B Harrier II is a single-engine ground-attack aircraft that constitutes the second generation of the Harrier family, capable of vertical or short takeoff and landing (V/STOL). The aircraft is primari ...
vertical take off jet aircraft, valued at $37.4 million at the time, which could be redeemed for 7,000,000 Pepsi Points. The plaintiff, John Leonard, discovered these could be directly purchased from Pepsi at 10¢ per point. Leonard delivered a check for $700,008.50 to PepsiCo, attempting to purchase the jet. PepsiCo initially rejected Leonard's offer, citing the humorous nature of the offer in the advertisement. Leonard then sued PepsiCo, Inc. in an effort to enforce the offer and acceptance perceived by Leonard to be made in the advertisement. In her judgment, Wood sided with PepsiCo, noting the frivolous and improbable nature of landing a fighter jet in a school zone that was portrayed by the protagonist. PepsiCo would re-release the advertisement, valuing the jet at 700,000,000 Pepsi Points.


Background

In the mid-1990s, Pepsi faced competition from
Coca-Cola Coca-Cola, or Coke, is a cola soft drink manufactured by the Coca-Cola Company. In 2013, Coke products were sold in over 200 countries and territories worldwide, with consumers drinking more than 1.8 billion company beverage servings ...
, and sought to attract a younger audience. In March 1996, Pepsi began the
Pepsi Stuff Pepsi Stuff was a major loyalty program launched by PepsiCo, first in North America on March 28, 1996 and then around the world, featuring premiums — such as T-shirts, hats, denim and leather jackets, bags, and mountain bikes — that could be ...
promotional campaign, allowing customers to accrue Pepsi Points that could, in turn, be redeemed for items such as
T-shirt A T-shirt (also spelled tee shirt, or tee for short) is a style of fabric shirt named after the T shape of its body and sleeves. Traditionally, it has short sleeves and a round neckline, known as a '' crew neck'', which lacks a collar. T-shir ...
s and leather jackets. These points could be earned through purchasing Pepsi products, with labels attached to the boxes of such products. The campaign was the largest in Pepsi's history. To advertise the promotion, Pepsi released a series of television commercials; one of these commercials showcased a computer-generated Pepsi-branded
AV-8 Harrier II The McDonnell Douglas (now Boeing) AV-8B Harrier II is a single-engine ground-attack aircraft that constitutes the second generation of the Harrier family, capable of vertical or short takeoff and landing (V/STOL). The aircraft is primaril ...
, a
Harrier jet The Harrier, informally referred to as the Harrier jump jet, is a family of jet-powered attack aircraft capable of vertical/short takeoff and landing operations (V/STOL). Named after the bird of prey, it was originally developed by British ...
manufactured by
McDonnell Douglas McDonnell Douglas Corporation was a major American Aerospace manufacturer, aerospace manufacturing corporation and defense contractor, formed by the merger of McDonnell Aircraft and the Douglas Aircraft Company in 1967. Between then and its own ...
. The commercial, which offered the jet for 7,000,000 Pepsi Points, caught the attention of John Leonard, a 21-year-old business student. In place of a label, the promotion allowed Pepsi Points to be directly purchased for 10¢ per point, a detail noticed by Leonard, who convinced five investors to lend him a total of $700,000. Leonard sent a check for $700,008.50 (including $10 for shipping and handling), and 15 labels, per promotion rules. The offer was refused by Pepsi, who referred to the promotion of the Harrier jet in the commercial as "fanciful" and stated its intention was to create a "humorous and entertaining ad".


Procedural history

The claim alleged both
breach of contract Breach of contract is a legal cause of action and a type of civil wrong, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other part ...
and fraud. The case was originally brought in
Florida Florida ( ; ) is a U.S. state, state in the Southeastern United States, Southeastern region of the United States. It borders the Gulf of Mexico to the west, Alabama to the northwest, Georgia (U.S. state), Georgia to the north, the Atlantic ...
, but eventually heard in
New York New York most commonly refers to: * New York (state), a state in the northeastern United States * New York City, the most populous city in the United States, located in the state of New York New York may also refer to: Places United Kingdom * ...
. The defendant,
PepsiCo PepsiCo, Inc. is an American multinational corporation, multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase, New York, Purchase. PepsiCo's business encompasses all aspects of the f ...
, moved for summary judgment pursuant to
Federal Rule of Civil Procedure The Federal Rules of Civil Procedure (officially abbreviated Fed. R. Civ. P.; colloquially FRCP) govern civil procedure in United States district courts. They are the companion to the Federal Rules of Criminal Procedure. Rules promulgated by the ...
56. Among other claims made, Leonard claimed that a federal judge was incapable of deciding on the matter, and that instead the decision had to be made by a jury consisting of members of the "
Pepsi Generation The Pepsi Generation, is the theme of an advertising campaign for Pepsi-Cola, a US brand of soft drink, that launched in 1963 as the result of a slogan contest. A new car was awarded to the writer of the winning slogan. The contest was the brainc ...
" to whom the advertisement would allegedly constitute an offer.


Judgment

The court, presided over by Judge
Kimba Wood Kimba Maureen Wood (born January 21, 1944) is an American judge who is a senior district judge of the United States District Court for the Southern District of New York. Wood received her undergraduate education at Connecticut College before ...
, rejected Leonard's claims and denied recovery on several grounds, including: #It was found that the advertisement featuring the jet did not constitute an offer under the ''
Restatement (Second) of Contracts The Restatement (Second) of the Law of Contracts is a legal treatise from the second series of the Restatements of the Law, and seeks to inform judges and lawyers about general principles of contract common law. It is one of the best-recognized and ...
''. #The court found that no
reasonable person In law, a reasonable person or reasonable man is a hypothetical person whose character and care conduct, under any ''common set of facts,'' is decided through reasoning of good practice or policy. It is a legal fiction crafted by the courts an ...
could have believed that the company seriously intended to convey a jet worth roughly $37.4 million for $700,000, i.e., that it was mere
puffery Puffery is undue or exaggerated praise. Puffery serves to "puff up" what is being described. In law, puffery is usually invoked as a defense argument: it identifies general praising speech, typically produced by a seller, which is not expected ...
. #The value of the alleged contract meant that it fell under the provisions of the
Statute of Frauds The Statute of Frauds ( 29 Cha. 2. c. 3) (1677) is an act of the Parliament of England. In its original form it required that certain types of contracts, wills, and grants, and assignment or surrender of leases or interest in real property mu ...
, but the statute's requirement for a written agreement between the parties was not fulfilled, so a contract had not been formed. In justifying its conclusion that the commercial was "evidently done in jest" and that "The notion of traveling to school in a Harrier Jet is an exaggerated adolescent fantasy," the court made several observations regarding the nature and content of the commercial, including: *"The callow youth featured in the commercial is a highly improbable pilot, one who could barely be trusted with the keys to his parents' car, much less the prized aircraft of the United States Marine Corps." *"The teenager's comment that flying a Harrier Jet to school 'sure beats the bus' evinces an improbably insouciant attitude toward the relative difficulty and danger of piloting a fighter plane in a residential area." *"No school would provide landing space for a student's fighter jet, or condone the disruption the jet's use would cause." The court also stated that: The decision was appealed to the
United States Court of Appeals for the Second Circuit The United States Court of Appeals for the Second Circuit (in case citations, 2d Cir.) is one of the thirteen United States Courts of Appeals. Its territory covers the states of Connecticut, New York (state), New York, and Vermont, and it has ap ...
, which issued a brief, ''
per curiam In law, a ''per curiam'' decision or opinion (sometimes called an unsigned opinion) is one that is not authored by or attributed to a specific judge, but rather ascribed to the entire court or panel of judges who heard the case. The term is La ...
'' opinion concluding, "We affirm for substantially the reasons stated in Judge Wood's opinion."


Aftermath

Pepsi never cashed the check, so there was no case for fraud. Pepsi continued to air the commercial, but it updated the cost of the Harrier Jet to 700 million Pepsi Points and added a clarifying "Just Kidding" disclaimer. The Pentagon stated that the Harrier Jet would not be sold to civilians without "demilitarization". On November 17, 2022, a
docuseries Television documentaries are televised media productions that screen documentaries. Television documentaries exist either as a television documentary series or as a television documentary film. * Television documentary series, sometimes called d ...
about the case titled ''
Pepsi, Where's My Jet? ''Pepsi, Where's My Jet?'' is an American Netflix original docuseries directed by Andrew Renzi. Its story explores the ''Leonard v. Pepsico, Inc.'' court case. It premiered on Netflix on November 17, 2022. Background In the mid-1990s, PepsiCo ...
'' was released on
Netflix Netflix is an American subscription video on-demand over-the-top streaming service. The service primarily distributes original and acquired films and television shows from various genres, and it is available internationally in multiple lang ...
.


References

*


External links

* *
Leonard v. Pepsico, Inc. Case Brief at Lawnix.com

Pepsi's Harrier Jet Commercial
at YouTube {{PepsiCo PepsiCo 2000 in United States case law United States contract case law United States Court of Appeals for the Second Circuit cases United States District Court for the Southern District of New York cases Customer loyalty programs