Leonard Vs Pepsico Case: A common man's attempt at screwing over a multi-billion dollar corporation.

In 1996 Pepsi had a promotional campaign called "Pepsi Stuff" in which with each purchase of Pepsi customers would get a Pepsi Point. These Pepsi points can be redeemed for Items from a Pepsi catalogue. The TV commercial for this campaign apart from featuring other items like T-Shirts, Jackets, Sunglasses etc also depicts a McDonnel Douglas AV-8 Harrier II Jet for 7 Million Pepsi points. Apart from buying Pepsi to acquire the points the customer also had an option of topping up their Pepsi Points (somewhat akin to Frequent Flier miles) at $0.10 a point. The plaintiff Leonard had about 15 Pepsi Points and sent the Order form for redemption with a cheque for $700,000 to buy the remaining Pepsi points for the Harrier Jet. Pepsico returned the cheque saying that it was not a serious offer and was meant to be a joke.

Leonard filed a case for specific performance against Pepsico to either deliver a Harrier Jet or pay the difference between the $700,000 and the cost of an actual Harrier Jet which cost about $21 Million ($33 million today).

He first filed the case in Florida on the ground that the commercial was shown in Florida although none of the parties was from Florida. The Florida court seeing that the last act to complete the alleged contract, the defendant's acceptance of the order form and cheque occurred in New York, transferred the case to New York.

The case came before the court of the then New York District Judge Kimba M. Woods who had previously presided over the High profile case Of Michael Milken's "The Junk Bond King" of the 1980s.

Defendant argued that it was 'Humorous Advertising' and that it should not have been taken seriously by Plaintiff. Defendant's counsel stated that a teenage boy is not even legally allowed to Drive a Car let alone fly a jet. The Government would also not allow a civilian to operate a military aircraft let alone land it in a residential area. It was also said that the commercial referred to the catalogue and the Harrier Jet was not in the catalogue. It was a joke and would lead any reasonable person to believe that it was just for humour. The advertisement was not an offer. It was the catalogue where the true offer was and the Harrier jet was not listed in the catalogue.

The court held that,

“In light of the Harrier Jet’s well-documented function in attacking and destroying the 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 are 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.”

On the question of whether the advertisement was an offer for a Harrier Jet. The court held that the commercial was merely an advertisement and not an offer.

The court said that,?

"Plaintiff’s understanding of the commercial as an offer must also be rejected because the Court finds that no objective person could reasonably have concluded that the commercial actually offered consumers a Harrier Jet."

The court also said that

"Plaintiff's insistence, that the commercial appears to be a serious offer requires the court to explain why the commercial is funny. Explaining why a joke is funny is a daunting task. As the essayist, E.B. White has remarked humour can be dissected as a frog can, but the thing dies in the process. The commercial is the embodiment of what the defendant appropriately characterizes as zany humour. In light of the obvious absurdity of the commercial, the court rejects the plaintiff's argument that the commercial was not clearly in jest".

On the fraud charges, the court held that there is no writing between the parties sufficient to satisfy the statute of fraud. Under the New York Statute of Fraud, a contract for the sale of goods for the price of $500 and above should be in writing and signed by the party against whom enforcement is sought.

Leonard challenged the decision in the United States Court of Appeals for the Second Circuit, but the court stood by the original decision.

In the aftermath of the case, Pepsico did not take down the advertisement but increased the points from 7 million to 700 million points and added a disclaimer "Just Kidding" to be safe from any future lawsuits.