Misplaced letter could cost $1.26bn in bottled water case

By Guy Montague-Jones

- Last updated on GMT

Related tags: Pepsico

PepsiCo has lost a $1.26bn case after a misplaced letter meant the drinks giant failed to turn up in court.

Charles Joyce and James Voigt filed a lawsuit back in April against PepsiCo for trade secret misappropriation and then won a default judgment last month because no defense was made.

PepsiCo has since woken up to the blockage in its legal pipework and has filed a motion to vacate the judgment. This would scrap the verdict and give PepsiCo a chance to defend itself.

Purification process

Joyce and Voigt accuse PepsiCo of using a purification process that they had presented in 1981 to PepsiCo bottlers Carolina Canners and Wis-Pak. The two men then allege that the bottlers broke a confidentiality agreement and passed on details of the process to PepsiCo, who used it to develop the bottled water Aquafina.

Joshua Glazov, a partner at DLA Piper, told BeverageDaily.com that the accusations sound reasonable but that it is too early to tell what the eventual outcome of the case will be.

As for the motion to vacate the default judgment, Glazov said his money is on PepsiCo winning that one because US courts are reluctant to enforce a judgment when the case has not been decided on its merits. So long as defendants have a reasonable excuse for failing to present themselves then the courts will normally let their side of the story be told.

Misplaced letter

Glazov said that in the PepsiCo case the company has a “decent but embarrassing”​ excuse. According to a PepsiCo court filing, a company lawyer forgot about the complaint and failed to pass it on to colleagues.

The lawyer’s memory was then jogged on receipt of a notice five days after Honorable Jacqueline Erwin made her judgment at a Circuit Court in Jefferson County, WI.

Legal wheels at PepsiCo were then put in motion and on October 16 the company filed a motion to vacate the judgment. The hearing is due on 6 November.

Glazov said the PepsiCo experience shows the importance of having a procedure for dealing with complaints that is as carefully followed a pilot’s checklist for take-off.

Reports that the lawyer was “so busy preparing for a board meeting”​ that she misplaced the complaint also rings alarm bells. Glazov said legal departments are being stripped bare and people are juggling a lot of eggs and eventually one will drop, and crack.

Related topics: Markets, Soft Drinks & Water

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