''Leonard v. Pepsico, Inc.'', 88 F. Supp. 2d 116, (
S.D.N.Y. 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 comprises the states of Connecticut, New York and Vermont. The court has appellate jur ...
2000), more widely known as the Pepsi Points case, is an
American contract law case regarding
offer and acceptance
Offer and acceptance are generally recognised as essential requirements for the formation of a contract, and analysis of their operation is a traditional approach in contract law. The offer and acceptance formula, developed in the 19th century, id ...
. The case was tried in the
in 1999; its judgment was written by
Kimba Wood
Kimba Maureen Wood (born January 21, 1944) is a Senior United States district judge of the United States District Court for the Southern District of New York. Wood has presided over many high-profile cases involving such figures as "Junk Bond Kin ...
.
In 1996,
PepsiCo began a promotional
loyalty program
A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program. Today, such programs cover most types of commerce, each having varying features and ...
, where customers could earn
Pepsi Points; these points could, in turn, be traded for physical items. A
television commercial
A television advertisement (also called a television commercial, TV commercial, commercial, spot, television spot, TV spot, advert, television advert, TV advert, television ad, TV ad or simply an ad) is a span of television programming produce ...
for the loyalty program displayed the commercial's protagonist flying an
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 ...
Harrier jet to school, valued at $37.4 million at the time, which could be redeemed for 7,000,000 Pepsi Points. The plaintiff, John Leonard, discovered a loophole in the promotion, allowing him to purchase Pepsi Points at 10¢ per point. Leonard promptly delivered a check for $700,008.50 to PepsiCo, attempting to purchase the jet. PepsiCo initially refuted 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
Facts
In the mid-1990s, Pepsi faced competition from
Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlant ...
, 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 b ...
promotional campaign, allowing customers to accrue Pepsi Points that could, in turn, be redeemed for items such as T-shirts and leather jackets. These points could be earned through the purchase of Pepsi products, with labels attached to the boxes of such products.
The campaign was the largest in Pepsi's history to that point.
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 manufactured by
McDonnell Douglas
McDonnell Douglas was a major American 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 merger with Boeing in 1997, it pro ...
.
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, 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 inclusion was to create a "humorous and entertaining ad".
Procedural history
The claim alleged both
breach of contract and fraud. The case was originally brought in
Florida
Florida is a state located in the Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia, to the east by the Bahamas and Atlantic Ocean, and to ...
, but eventually heard in
New York. The defendant,
PepsiCo, moved for summary judgment pursuant to
Federal Rule of Civil Procedure 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 brai ...
" 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 a Senior United States district judge of the United States District Court for the Southern District of New York. Wood has presided over many high-profile cases involving such figures as "Junk Bond Kin ...
, 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
Offer or offers may refer to:
People
* Ofer Eshed or Offer Eshed (1942-2007), Israeli basketball player
* Offer Nissim (born 1964), Israeli house DJ
* Avner Offer, economic historian
* Dick Offer, English rower
* Jack Offer, English rower
* Steve ...
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 an ...
''.
#The court found that even if the advertisement had been an offer, no
reasonable person
In law, a reasonable person, reasonable man, or the man on the Clapham omnibus, is a hypothetical person of legal fiction crafted by the courts and communicated through case law and jury instructions.
Strictly according to the fiction, it i ...
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
In everyday language, puffery refers to exaggerated or false praise. Puffery serves to "puff up" what is being described. In law, puffery is usually invoked as a defense argument: it identifies futile speech, typically of a seller, which does ...
.
#The value of the alleged contract meant that it fell under the provisions of the
Statute of Frauds, but the statute's requirement for 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 prize 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 comprises the states of Connecticut, New York and Vermont. The court has appellate ju ...
, which issued a brief, ''
per curiam
In law, a ''per curiam'' decision (or opinion) is a ruling issued by an appellate court of multiple judges in which the decision rendered is made by the court (or at least, a majority of the court) acting collectively (and typically, though not ...
'' 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", which, in the case of the Harrier, would have included stripping it of its ability to land and take off vertically.
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?'' was released on
Netflix
Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fi ...
.
References
*
External links
*
*
Leonard v. Pepsico, Inc. Case Brief at Lawnix.comPepsi's Harrier Jet Commercialat 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
United States lawsuits
Customer loyalty programs