Leonard v. Pepsico, Inc.

Leonard v. Pepsico, Inc.
Court	United States District Court for the Southern District of New York
Full case name	John D.R. Leonard v. Pepsico, Inc.
Decided	August 5, 1999
Docket nos.	96-cv-5320; 96-cv-9069
Citation	88F. Supp. 2d116
Case history
Subsequent actions	Affirmed, 210F.3d88(2d Cir.2000) (per curiam)
Court membership
Judge sitting	Kimba Wood

Leonard v. Pepsico, Inc.,88F. Supp. 2d116, (S.D.N.Y.1999), aff'd 210F.3d88 (2d Cir.2000), more widely known as thePepsi Points case,is anAmerican contract lawcase regardingoffer and acceptance.The case was brought in theUnited States District Court for the Southern District of New Yorkin 1999; its judgment was written byKimba Wood.

In 1996,PepsiCobegan a promotionalloyalty programin which customers could earnPepsi Pointswhich could be traded for physical items. Atelevision commercialfor the loyalty program displayed the commercial's protagonist flying to school in aMcDonnell Douglas AV-8B Harrier IIvertical 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 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

AnAV-8 Harrier IIjumpjet,alleged to be owed to the plaintiff.

The Harrier Jet is not yet visible, but the observer senses the presence of a mighty plane as the extreme winds generated by its flight create a paper maelstrom in a classroom devoted to an otherwise dull physics lesson. Finally, the Harrier Jet swings into view and lands by the side of the school building, bombing everything in sight next to a bicycle rack. Several students run for cover, and the velocity of the wind strips one hapless faculty member down to his underwear. While the faculty member is being deprived of his dignity, the voiceover announces: "Now the more Pepsi you drink, the more great stuff you're gonna get."

Wood's statement of facts,Leonard v. Pepsico, Inc.,88 F. Supp. 2d 116

In the mid-1990s, Pepsi faced competition fromCoca-Cola,and sought to attract a younger audience. In March 1996, Pepsi began thePepsi Stuffpromotional campaign, allowing customers to accrue Pepsi Points that could, in turn, be redeemed for items such asT-shirtsand 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 acomputer-generatedPepsi-brandedAV-8 Harrier II,aHarrier jetmanufactured byMcDonnell Douglas.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 bothbreach of contractand fraud. The case was originally brought inFlorida,but eventually heard inNew York.The defendant,PepsiCo,moved for summary judgment pursuant toFederal Rule of Civil Procedure56. 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"to whom the advertisement would allegedly constitute an offer.

Judgment

The court, presided over by JudgeKimba Wood,rejected Leonard's claims and denied recovery on several grounds, including:

1. It was found that the advertisement featuring the jet did not constitute anofferunder theRestatement (Second) of Contracts.
2. The court found that noreasonable personcould have believed that the company seriously intended to convey a jet worth roughly $37.4 million for $700,000, i.e., that it was merepuffery.
3. The value of the alleged contract meant that it fell under the provisions of theStatute of Frauds,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:

In light of the Harrier Jet's well-documented function in attacking and destroying surface and air targets, armed reconnaissance and air interdiction, and offensive and defensive anti-aircraft warfare, depiction of such a jet as a way to get to school in the morning is clearly not serious even if, as plaintiff contends, the jet is capable of being acquired 'in a form that eliminates [its] potential for military use.'

The decision was appealed to theUnited States Court of Appeals for the Second Circuit,which issued a brief,per curiamopinion 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 Pointsand 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, adocuseriesabout the case titledPepsi, Where's My Jet?was released onNetflix.

References

• Morales, Ann C (2000). "Pepsi's Harrier Jet Commercial Was Not a Binding Offer to Contract".Journal of the Academy of Marketing Science.28(2): 318–320.

External links

• Text ofLeonard v. Pepsico, Inc.,88 F. Supp. 2d 116 (S.D.N.Y. 1999) is available from:Google ScholarJustiaClass Caster
• "Pentagon: Pepsi ad 'not the real thing'".Cable News Network, Inc. August 9, 1996. Archived fromthe originalon March 2, 2021.RetrievedOctober 5,2006.
• Leonard v. Pepsico, Inc. Case Brief at Lawnix.com
• Pepsi's Harrier Jet Commercialat YouTube