In 1995, Pepsi launched the Pepsi Points promotion. The public was encouraged to drink as much Pepsi as possible with the promise of earning points with every purchase. These points could then be cashed in to purchase various merchandise.
The promotion was announced with a commercial showing a teenage boy, getting ready for school. He is dressed in a shirt with the Pepsi logo. The subtitle rolling across the screen says, “T-SHIRT 75 PEPSI POINTS.” As he emerges from his room, he is wearing a leather jacket. The subtitle reads, “LEATHER JACKET 1450 PEPSI POINTS.” The young man opens the front door of his house, puts on sunglasses, and the words proclaim, “SHADES 175 PEPSI POINTS.” As the commercial draws to a close, the scene shifts to the front of a high school, where three boys watch in wonder as a Harrier Jet descends and lands next to a bike rack. The cockpit opens, and we see the boy from the beginning of the commercial, holding a Pepsi, and exclaiming, “Sure beats the bus.” The subtitle reads, “HARRIER FIGHTER 7,000,000 PEPSI POINTS.”
While the Pepsi Points promotion was real with actual merchandise available, everyone clearly understood that the commercial was meant to be tongue-in-cheek, right? After all, who could even comprehend getting as much as 7 million Pepsi Points in the first place, let alone being able to buy a military jet?
Well… Maybe not everyone was in on the joke.
John Leonard was a 21-year-old business student. He saw the advertisement and was curious about what it would take to get 7 million Pepsi Points. Every 2-liter bottle of Pepsi awarded at least one point, and many bottles and cans offered more. Even at the low end of the scale, it would take about $7 million in soda purchases to acquire the needed points.
Granted, $7 million is a lot of money — especially for a 21-year-old college student. Given that the cost of a Harrier Jet was $33 million, however, it would be a really good return on the investment.
Leonard did some more research, however, and discovered something even more intriguing. According to the fine print in the Pepsi Points rules, anyone who already had at least 15 Pepsi Points could purchase additional points for 10 cents apiece. This brought the cost of 7 million points down to a paltry $700,000. That reduced the cost of a Harrier to a reachable level.
Of course, even $700,000 is no chump change, so Leonard reached out to five investors who agreed to fund his Harrier acquisition plan. On March 27, 1996, Leonard sent in 15 Pepsi Points, an order form with the words, “1 Harrier Jet” written in the item description, and a check for $700,008.50, representing $699,998.50 for the remaining 6,999,985 points and $10 for shipping and handling.
One can only imagine the look on the face of the person at Pepsi who opened the mail that day. In any event, the company returned Leonard’s check and explained that the Harrier Jet was “not part of the offer” and was not included in the catalog of available Pepsi products. The letter explained that the jet was included in the advertisement as a “fanciful” addition to make the ad entertaining. Included with the letter were coupons to help compensate for “any misunderstanding or confusion.”
Leonard, however, was dead set on getting his new set of wings. He had his lawyer respond to Pepsi on May 14, 1996, with a letter:
“Your letter of May 7, 1996 is totally unacceptable. We have reviewed the video tape of the Pepsi Stuff commercial… and it clearly offers the new Harrier jet for 7,000,000 Pepsi points. Our client followed your rules explicitly… This is a formal demand that you honor your commitment and make immediate arrangements to transfer the new Harrier jet to our client. If we do not receive transfer instructions within ten (10) business days of the date of this letter you will leave us no choice but to file an appropriate action against Pepsi.”
This letter was forwarded to the advertising company that produced the commercial. It responded to Leonard’s attorney, confirming that the ad “was clearly a joke” and expressed astonishment that anyone could have taken it seriously. The company did, however, immediately change the advertisement, changing the price of the jet from 7 million Pepsi Points to 700 million.
Leonard and his attorney failed to see the humor in the advertisement and brought a lawsuit in the U.S. Federal District Court for the Southern District of New York. The case, Leonard v. Pepsico, Inc., 88 F. Supp. 2d 116 (S.D.N.Y. 1999), alleged fraud, breach of contract, and deceptive advertising.
For three years, the case made its way through the legal process. Ultimately, the judge sided with Pepsi, concluding that the “callow youth featured in the commercial is a highly improbable pilot, one who could barely be trusted with the keys to his parents’ car, much less the prize aircraft of the United States Marine Corps.” The court’s opinion stated that no reasonable person would believe that the advertisement was anything other than a fanciful promotion. Additionally, the judge pointed to the long-standing principle of common law that advertisements are not, by themselves, ordinarily understood to be offers to enter into a contract; there must be some language of commitment or invitation to take action without further communication to trigger the kind of offer, the acceptance of which would constitute a contract.
Leonard attempted to appeal the court’s decision in 2000. The U.S. Court of Appeals rejected his claim, upholding the original decision.