Secretary's mistake turns into $1.26 billion judgment against PepsiCo

A busy secretary at PepsiCo who neglected to turn over legal documents to her boss has caused a $1.26 billion default judgment to be levied against the company.

The Honorable Jacqueline R. Erwin, a judge in the Circuit Court of the Third Judicial Circuit, Jefferson County, Wisconsin, awarded the billion dollar default judgment to Charles A. Joyce and James R. Voigt. The suit, which was filed in late April and sought a jury trial, alleged breach of contract against bottlers Carolina Canners, Inc. and Wis-Pak, Inc. It also alleged trade secret misappropriation against PepsiCo and the bottlers.

According to court documents, entrepreneurs Joyce and Voigt developed the idea to purify water and sell it to the public for personal consumption. The concept, including specifics of the purification process and eventual marketing of the product, was presented to bottlers Carolina Canners and Wis-Pak. A confidentiality agreement was executed between the parties in 1981. The bottlers later declined the opportunity to proceed with the project. PepsiCo later introduced bottled water named Aquafina to its product line. Carolina Canners and Wis-Pak manufacture and distribute Pepsi products.

The plaintiffs allege that the PepsiCo product was being produced using the same purification process protected under the executed confidentiality agreement. "The law suit was brought within the appropriate statute of limitations allowed by Wisconsin law," says David C. Van Dyke an attorney and partner at Cassiday Schade LLP, who is representing the plaintiffs.

"This judgment is important on many levels," adds Van Dyke. "We believe that in the end, Wisconsin courts will uphold the judgment and award our clients the damages that they deserve."

According to the motion to vacate filed by PepsiCo, the company claims the Wisconsin suit was improperly served on its registered agent in North Carolina in June. The corporate legal department at PepsiCo's headquarters in New York claims it didn't receive notice of the suit until Sept. 15 when a co-defendant's letter arrived. According to court documents, a legal secretary who was busy preparing for a corporate board meeting set the letter aside. PepsiCo claims the letter from the co-defendant wasn't brought to the attention of its general counsel until early October when a copy of the default motion was received.

"This case is completely without merit," says Joe Jacuzzi, vice president for beverage communications at PepsiCo. "The plaintiff's claim that in 1981, they gave someone other than PepsiCo an idea for a soft drink. Somehow 15 years later, PepsiCo used that alleged information to develop the Aquafina water products. The suit is completely dubious and without merit."

PepsiCo acknowledges there was an internal process issue, but the merits of the case were not examined before the whopping default judgment was made.

PepsiCo has filed two motions with the Circuit Court of the Third Judicial Circuit, Jefferson County, Wisconsin; one a to vacate the default judgment and another to dismiss the claim. A hearing is scheduled for November 6th.

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