The new Netflix documentary, “Pepsi, Where’s My Jet”, is the story of a guy called John Leonard who sued Pepsi for false advertising. While the move backfired on John, the court case shaped advertising laws forever.
In 1995, Leonard was a 20-year-old student in the United States, where he was coaching little league football and dreaming of having a successful business. But, a commercial from Pepsi changed the course of his life.
The 90s were all about the cola wars and in a bid to steer Gen Xers to choose Pepsi over Coca-Cola, Pepsi introduced Pepsi Points, which could be redeemed for Pepsi merchandise.
What could Pepsi Points buy?
In order to understand the difficulty of buying merchandise with points, basic maths needs to be applied. The amount of points a customer would receive was:
- A fountain drink = one point
- Two-litre bottle = two points
- 12 pack = five points
After months of saving for points customers would be able to buy the following:
- Baseball caps = 60 points
- T-shirts = 80 points
- Mountain bikes = thousands
- And the prize that took Leonard to court…. a military grade Harrier jet = a whopping 7 million points
Now, neither the radio or TV commercials contained any fine print, disclaimer or legal notice telling viewers it was a joke. There was no Harrier jet. But unaware of this, Leonard was on a mission to get the jet, and found five investors to help him achieve his goal.
It was too expensive to buy all that Pepsi to get the 7 million points. So, Leonard found a loophole in the fine print. Pepsi Points could be purchased for ten cents a-piece. With the help of his investors, he sent off a $700,008.50 cheque – and sat back waiting for his Harrier jet to arrive.
Weeks later, Pepsi responded saying the inclusion of the Harrier jet in the commercial was nothing more than a joke. But Leonard didn’t want to take no as an answer. After filing of legal suits and counter suits, Pepsi offered Leonard a settlement of $750,000, but he rejected it as he was still on a mission to claim the jet. The Pentagon even got involved. In September 1997, the Pentagon announced that Harrier jets were not for sale and would need to be “demilitarized” before being offered to the public, which included disabling their ability to conduct vertical take-offs and landings.
Unfortunately, in 1999, the judge ruled in favour of Pepsi, saying no reasonable person would think a Harrier jet was attainable by claiming Pepsi reward points.
Leonard might not have received his Harrier jet, but he made history as he changed the way advertising was presented, with disclaimers now an integral part of many commercials.
Outside of April Fool’s pranks, duping your listeners with false statements or promises that might seem hilarious to you is a dangerous road to go down. Make sure EVERYONE is in on the joke. Remember the Hooters waitress who thought she’d won a Toyota but instead the restaurant chain gave her a Toy Yoda. She won enough money in the court case to buy any Toyota she wanted…. and then some!
Both cases in the article are about false advertising in contractual offers.
The "Hooters" case, the company misled the winner into thinking the prize was a Toyota car. Instead the magnitude of the prize giving ceremony resulted in the anticlimax of the winner receiving a "Toy Yoda", a fluffy toy instead of a Toyota car. The gravity of the promotion warranted the winning of a car rather than a fluffy toy.
There is merit in the case for the prize winner believing the prize was a car because "Toy Yoda" could be read as the founder of the Toyota car manufacturing company Mr Iichiro Toyoda was the owner of the Toyoda Manufacturing Company.
Hence the winner could be misled into thinking that the prize was a Toyoda not a Toy Yoda.
It would have saved the restaurant trouble and money if the offer was for a Yoda Toy.
https://apnews.com/article/6f88d96871f3292f506e2679cf012597
In contrast, in Leonard v Pepsico legitimized mere puffery in advertising meaning the offer was not genuine by the extraordinary value of the advertised price of the aeroplane of US $700 million price for US $750k in cash and Pepsi coupons.
In this case the plaintiff lost.
https://en.wikipedia.org/wiki/Leonard_v._Pepsico
We can go earlier to the case of Carlill v Carbolic Smoke Ball. The company's offer was that if their product, a smoke ball of carbolic acid did not cure the consumer of the flu, a £100 prize would be issued.
The defendant lost because the prize offer was not genuine. It was puffery.
The court ruled that the £100 prize was a term of the contract.
The lesson is don't offer an extraordinarily significant prize if you cannot and/or would not be able to furnish the supply of the prize on offer. It causes problems for either party.
One doesn't know what the outcome in court will be because the outcome may be in favour of the plaintiff or the defendant. Carlill was in the plaintiff's case while Leonard was in the defendant's favour.
Don't assume that the Restaurant Code as in the Leonard v Pepsi case or some other industry code will protect the defendant such as Pepsi from liability in honouring the contract.
Other lesson. Who can forget the issue in Sydney in the 1980s where a newspaper printed too many winning "bingo" cards?
Thank you
Anthony, the law is indeed grey and be safe not to make extraorinary offers as prizes, Belfield, in the land of the Wangal and Darug Peoples of the Eora Nation