Leonard v. Pepsico, Inc.

Leonard v. Pepsico, Inc., 88 F. Supp. 2d 116, (S.D.N.Y. 1999), aff'd 210 F.3d 88 (2d Cir. 2000), more widely known as the Pepsi Points Case, is a contracts case tried in the United States District Court for the Southern District of New York in 1999, in which the plaintiff, John Leonard, sued PepsiCo, Inc. in an effort to enforce an "offer" to redeem 7,000,000 Pepsi Points for an AV-8 Harrier II jump jet (valued at $33.8 million at the time) which PepsiCo had shown in a portion of a televised commercial that PepsiCo argued was intended to be humorous.

Leonard v. Pepsico, Inc.
CourtUnited States District Court for the Southern District of New York
Full case nameJohn D.R. Leonard v. Pepsico, Inc.
DecidedAugust 5, 1999
Docket nos.96-cv-5320; 96-cv-9069
Citation(s)88 F. Supp. 2d 116
Case history
Subsequent action(s)Affirmed, 210 F.3d 88 (2d Cir. 2000) (per curiam)
Court membership
Judge(s) sittingKimba Wood
An AV-8 Harrier II jump jet, alleged to be owed to the plaintiff.

Procedural history

The claim alleged both breach of contract and fraud. The case was originally brought in Florida, but eventually heard in New York. The defendant, Pepsi, 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" to whom the advertisement would allegedly constitute an offer.[1]

Facts

The court described the relevant portion of the televised commercial as follows:

The scene then shifts to three young boys sitting in front of a high school building. The boy in the middle is intent on his Pepsi Stuff Catalog, while the boys on either side are each drinking Pepsi. The three boys gaze in awe at an object rushing overhead, as the military march builds to a crescendo. 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, 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." The teenager opens the cockpit of the fighter and can be seen, helmetless, holding a Pepsi. "[L]ooking very pleased with himself," (Pl. Mem. at 3,) the teenager exclaims, "Sure beats the bus," and chortles. The military drumroll sounds a final time, as the following words appear: "HARRIER FIGHTER 7,000,000 PEPSI POINTS." A few seconds later, the following appears in more stylized script: "Drink Pepsi—Get Stuff." With that message, the music and the commercial end with a triumphant flourish.

The plaintiff did not collect 7,000,000 Pepsi Points through the purchase of Pepsi products, but instead sent a certified check for $700,008.50 as permitted by the contest rules. Leonard had 15 existing points, paid $0.10 a point for the remaining 6,999,985 points, and a $10 shipping and handling fee.

Judgment

The court, presided over by Judge Kimba 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 an offer under the Restatement (Second) of Contracts.
  2. The court found that even if the advertisement had been an offer, no reasonable person could have believed that the company seriously intended to convey a jet worth roughly $23 million for $700,000, i.e., that it was mere puffery.
  3. 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:

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.'[2]

The decision was appealed to the United States Court of Appeals for the Second Circuit, which issued a brief, per curiam opinion concluding, "We affirm for substantially the reasons stated in Judge Wood's opinion".[3]

Aftermath

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.[4] The White House 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.[5]

References
  1. Epstein, David (2006). Making and doing deals : contracts in context (2nd ed.). Newark, NJ: LexisNexis Matthew Bender. p. 55. ISBN 978-0-8205-7044-0. OCLC 64453463.
  2. Leonard v. Pepsico, Inc., 88 F. Supp. 2d 116 (S.D.N.Y. 1999).
  3. Leonard v. Pepsico, Inc., 210 F.3d 88 (2d Cir. 2000).
  4. "1996: Man sues Pepsi for not giving him the Harrier Jet from its commercial". www.cbsnews.com. Retrieved May 23, 2016.
  5. Mikkelson, David. "Pepsi Harrier Giveaway". Snopes. Retrieved May 23, 2016.
  • 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.
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