Introduction
Leonard vs. PepsiCo is a very popular case in American contract law. It is primarily based on offers and acceptance, particularly in the context of company promotions (Conklin, 2022). Pepsi initiated a promotion in 1996, urging consumers to purchase Pepsi Cola in exchange for Pepsi points. They could later use these points to redeem several real-world items. The ad claimed that anyone who accumulated the required points would be awarded a Harrier jet. Considering the criteria for getting the jet, John Leonard decided to earn enough points to approach PepsiCo and become the owner of a decommissioned military jet.
Facts
The ad showed a teenager flying a Harrier jet to school. The advertisement claimed a Pepsi consumer could acquire the jet in exchange for 7 million Pepsi points (Conklin, 2022). Leonard took advantage of a loophole in the promotion, purchasing Pepsi points at 10 cents each. He delivered a $700,000 check to PepsiCo, requesting the jet as advertised.
Leonard claimed that as long as he accumulated the necessary points, Pepsi had to comply with their claims in the ad. The promotional offer stated that customers could redeem various items using their Pepsi points. The plaintiff, therefore, assumed that the jet fell under the same category and that if he achieved the milestone set by PepsiCo, he would receive the jet.
PepsiCo refused to award Leonard the jet, stating that the ad was a joke. Consequently, Leonard sued PepsiCo in a Florida court, attempting to force them to comply with their offer. The plaintiff insisted that Pepsi did not indicate the joke in the offer at any point.
The fact that Pepsi used the jet as the core part of the TV ad could be considered a legitimate jet offer to the customer who accumulated 7 million points. Leonard claimed that the rejection by PepsiCo constituted fraud and a breach of contract. However, PepsiCo pointed to its promotional catalog, indicating that the jet did not appear there (Conklin, 2022). The defendant stated that the Harrier jet offer was never genuine and that the plaintiff was not justified in expecting the company to comply with his demands.
Procedure
Leonard initially appealed the decision to move the case to New York but lost. He stated there was a lack of personal jurisdiction to oppose the move to New York. PepsiCo dismisses Leonard’s claims, stating that the New York court is best placed to deliver a judgment.
The move to the New York court was determined because of the lack of a relationship between the state of Florida and the case. The decision to move to New York was based on the court’s determination of whether the commercial was considered an offer. Nonetheless, the defendant claims that the promotional campaign was not an order, and since no agreement was reached with the plaintiff, the New York court was best placed to rule on the matter.
PepsiCo requested that the court issue a summary judgment based on Federal Rule of Civil Procedure 56 (Conklin, 2022). These rules govern civil matters in US District Courts. When setting forth a motion for summary judgment, the involved party must present facts to indicate a genuine issue to be tried.
“The court cannot try issues of fact; it can only determine whether there are issues to be tried” (Donahue v Windsor Locks Bd. of Fire Comm’rs (2d Cir. 1987)). The decision to request a summary judgment was contentious, with the plaintiff seeking a trial by jury instead. The court, however, determines the validity of the request and rules in favor of PepsiCo.
Issue
The court noted that summary judgment is justified, depending on the wording of the contract and the reasonable expectation that an offer is legitimate. Based on several precedents, the court determined that PepsiCo did file the summary judgment motion correctly and proceeded to give a ruling on the matter—Donahue v Windsor Locks Bd. Of Fire Comm’rs, Anderson v Liberty Lobby Inc., Krumme v Westpoint Stevens Inc., and Celotex Corp, among others, were used as precedents to determine the validity of the summary judgment. The court ruled that PepsiCo had complied with the requirements of a summary judgment and dismissed the plaintiff’s request for a jury trial. Consequently, the court delivers a ruling on the Harrier jet offer.
Holding
Justice Kimbra Wood is appointed to provide a ruling on the case. Judge Kimbra ruled in favor of PepsiCo on three key matters: the advertisement did not constitute an offer, any reasonable person would not have considered the commercial as a genuine offer, and the contract did not satisfy the Statute of Frauds in New York (Conklin, 2022). Justice Kimbra Wood noted that the advertisement was a joke that any reasonable person would deduce. She noted that the contents of the TV ad were clearly presented in an exaggerated manner, which any person would recognize as a joke. Furthermore, PepsiCo did not claim to be offering its customers any goods. Ultimately, the plaintiff’s claims did not violate the statute of fraud in New York.
Reasoning
The Harrier jet presented in the ad was worth an estimated $37.4 million. Therefore, the idea that the plaintiff thought the advertisement was worth $700,000 was further evidence that it was a joke. The court claimed that the military capabilities of the Harrier jet should have been an obvious clue that the offer was not serious (Conklin, 2022).
Specifically, Justice Wood pointed to the content of the TV advertisement, in which a teenager is shown flying the jet recklessly in school. First, she stated that teenagers are inherently irresponsible and would not be trusted with a fighter jet. Second, the teenager’s inexperience in flying a jet used for military activity indicated the exaggeration of the promotion (Conklin, 2022).
Legal Research
The case is very popular in contractual law in the US. Its main contentious issue was whether the TV promotion accounted for a genuine contractual offer between the company and its customers (Conklin, 2022). PepsiCo expected that consumers would understand the humor behind the advertisements. Nonetheless, after the conclusion of the case, PepsiCo continued to run the ad, but with a “Just Kidding” disclaimer. Therefore, it might seem that PepsiCo knew the ad was a joke but did not provide any warnings to its USA consumers. The plaintiff wanted the case tried by a jury of members from the “Pepsi Generation,” claiming that they all considered the promotion a legitimate offer.
Conclusion
Leonard v PepsiCo was a landmark case in contractual law in North America. However, PepsiCo won the case, setting a precedent for interpreting future offers and promotions. PepsiCo may have won the case, but they had to include disclaimers in their future advertisements to indicate when the offer was serious and when it was meant as a joke. The matter remains highly controversial and was featured in a recent Netflix documentary, “Pepsi: Where Is My Jet?”. Companies and advertising agencies need to clarify whether they consider their offers real or just an exaggeration to boost their business.
Bibliography
Conklin, M. (2022). Pepsi’s harrier jet commercial: A class activity covering contract formation and more. SSRN Electronic Journal. Web.