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"Pepsi no-show in court is costly"

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October 29, 2009 – Comments (3)

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Company asks judge to vacate $1.26 billion ruling

By Paul Gores of the Journal Sentinel

Posted: Oct. 28, 2009

When PepsiCo Inc. didn't show up in Jefferson County Circuit Court to defend itself against accusations it hijacked the idea of two Wisconsin men to sell water in bottles, a judge decided against the soft-drink maker and handed the pair one big gulp of a damage award - $1.26 billion.

Now PepsiCo, alarmed by the enormous default judgment, is pushing hard to have the award rescinded.

Although the case was filed in April and the damage award was handed down by Circuit Judge Jacqueline R. Erwin on Sept. 30, PepsiCo contends the proper people in the company didn't even know about it until Oct. 5 because of a series of miscues.

PepsiCo did not immediately respond to a Journal Sentinel request for comment, but company spokesman Joe Jacuzzi told the Associated Press the company feels it has been denied due process and wants the opportunity to defend itself, although it acknowledges an "internal process issue."

One of the reasons for PepsiCo's delayed response, according to court documents, was that a secretary in PepsiCo's legal department was so busy she did not tell anyone about a letter regarding the case or enter it into a log that tracks such matters.

The case was filed by Charles A. Joyce of Juneau and James R. Voigt of Cleveland, who allege that in 1981 they entered into confidentiality agreements with an executive of Watertown-based Pepsi products distributor Wis-Pak Inc. and an executive of Carolina Canners Inc. of Cheraw, S.C., about their idea for a new product.

Joyce and Voigt contend that Wis-Pak and Carolina Canners breached their confidentiality agreement with them because Pepsi began making and distributing its purified bottled water product Aquafina. The lawsuit argues that PepsiCo used information it knew was secret when it began selling Aquafina years later.

Pepsi is asking the judge to vacate her $1.26 billion award, saying the plaintiffs didn't properly serve PepsiCo with the complaint and that the soft-drink maker acted diligently once it became aware of it.

PepsiCo's local attorney, Robert W. Roth, of Menomonee Falls, contends the judgment is "unprecedented" and that the company has "strong defenses" against it.

"The sole basis for the plaintiffs' claims - the confidentiality agreements - are nearly 30 years old and fail to show any connection between the alleged trade secret and PepsiCo's sale of Aquafina," Roth argued in court documents.

Voigt referred a reporter's questions to his Chicago attorney, David C. Van Dyke, who could not be reached. A phone call to the Chuck A. Joyce residence was not answered Wednesday.

 

 

3 Comments – Post Your Own

#1) On October 29, 2009 at 1:08 PM, jstegma (29.44) wrote:

"We hire so @#$%^ many lawyers and staff that we sometimes lose track of perfectly legitimate complaints that were served validly against us, so therefore we should get extra special privileges and not have to pay up like little average Joe's that can't so much as afford legal representation do when they fail to show up in court."

Good luck with that.

Mr. Juneau and Mr. Voigt, welcome to the Forbes list.

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#2) On October 29, 2009 at 1:13 PM, EvilPhD (39.93) wrote:

Only now do they bring up a lawsuit? Water was being sold by the gallon years before Aquafina is being sold. 30 years ago. Frivoulous lawsuit. Sell soda without the carbonation and syrup, make mad money...

I never buy bottled water unles it's 5 for a buck at the dollar store!

Reminds me of all the frivoulous spontaneous lawsuits that arose out of the dot com bust of 2000.

Pepsi should win this over in the appeals court.

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#3) On October 29, 2009 at 3:29 PM, jstegma (29.44) wrote:

It's not frivolous because Pepsi waived their right to claim that it was frivolous.  As a matter of fact, they waived their right to defend against the suit in any way, shape, or form.  They totally pooped in their pants on this one.

In order to win on appeal, they'll have to prove that the service of process was defective in some way.  It wasn't.  They were served, and the simply chose to ignore the suit.  "I forgot about it" won't fly, and nor should it.

Here's another approach.  "We hire some really stupid employees and have lax oversight, so therefore we shouldn't have to follow the same laws that everyone else does."  No, you'd better go back to the drawing board.

If I was the judge I'd probably look for abuse of process by the plaintiff's if Pepsi went down that road.  For example if these guys filed hundreds of nuissance suits and they were without merit, I might call it some type of abuse of process and rule against them in order to prevent the junk lawsuit lotto where you file massive numbers of suits with no merit whatsoever and hope that someone eventually fails to respond.  But I don't think that's the case at all here.  It was a typical suit with some possible sliver of merit and it deserved to be treated with reasonable respect in the courts.

You have to keep in mind that cases set precedents.  What rule would you make up that would excuse a large corporate defendent from showing up in court to meet a presumably valid claim?  The default judgment is one of the fundamentals of the civil court system.  If someone serves you, either you show up and defend yourself or you're screwed.  It isn't like criminal court where they bring you in the door in leg irons and an orange jumpsuit.

I think it's gonna be hard to get around this default judgment thing. There was just a huge case of gross incompetence in the service of process office.  It's simply poor internal controls on the part of Pepsi.

Defending this one may be a public relations disaster.  You have a David vs. Goliath where Goliath is claiming that he deserves a rematch because he just messed up and David couldn't win again in a million years.

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