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 an American contract law case regarding offer and acceptance. The case was brought in the United States District Court for the Southern District of New York in 1999; its judgment was written by Kimba Wood.

In 1996, PepsiCo began a promotional loyalty program in which customers could earn Pepsi Points which could be traded for physical items. A television commercial for the loyalty program displayed the commercial's protagonist flying to school in a McDonnell Douglas AV-8B Harrier II 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

Judgment

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

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 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.'[7]"

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."[8]

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 no reasonable person 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.

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 a written agreement between the parties was not fulfilled, so a contract had not been formed.

"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."

court	United States District Court for the Southern District of New York
imagesize	150
full name	John D.R. Leonard v. Pepsico, Inc.
date decided	August 5, 1999
citations	88 F. Supp. 2d 116
docket	96-cv-5320; 96-cv-9069
judge	Kimba Wood
subsequent actions	Affirmed, 210 F.3d 88 (2d Cir. 2000) (per curiam)

Leonard v. Pepsico, Inc.

Background

Procedural history

Judgment

Aftermath

External links

References