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Secretarial Mistake Costs Pepsi $1.26 Billion

Posted by samzenpus on from the cost-of-a-new-generation dept.

9gezegen writes "Pepsi learned that if it wants to continue to 'Refresh Everything,' it needs an extra $1.26 billion. It looks like one of the secretaries forget to inform company lawyers about a trade secrets case in a Wisconsin state court. When nobody arrived to court, the judge gave $1.26 billion default judgement. According to Pepsi lawyers, they were not properly served because the secretary was 'so busy preparing for a board meeting.' One might imagine she was working on the refreshments. Perhaps Pepsi should learn more about the Spamhaus case."

11 comments

  1. Right. It was the *secretary's* fault by word+munger · · Score: 2, Informative

    It couldn't possibly be *management's* fault for creating a system in which a clerical error can result in a $billion-plus loss.

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    ScienceSeeker.org
    1. Re:Right. It was the *secretary's* fault by lul_wat · · Score: 0

      I've been staring at PHP for too long .. my mind went 'but I never dedclared what $billion is??'

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      Divide a cake by zero. Is it still a cake?
  2. Ehh by nomadic · · Score: 1

    Default judgments are easy to get vacated.

  3. Bad service? by Valdrax · · Score: 2, Interesting

    Someone who is a lawyer correct me if I'm wrong, but this is a terrible argument. I mean, if the secretary is an agent of the company who is authorized to receive communications on the company's behalf, then wouldn't service to a secretary be good enough?

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    1. Re:Bad service? by mpoulton · · Score: 1

      There is an overwhelming tendency for courts to set aside defaults in favor of deciding a case on its merits. Unless the defendant has actually decided not to present a defense, issuing a default judgment subverts the purpose of the justice system, and is an undesirable result. Default judgments are intended to allow worthy plaintiffs to recover when a defendant refuses to participate in the legal process. So, even if this service is likely technically proper, the court will use any possible excuse to overturn the default and actually litigate the case. With that said, there may actually be serious questions about the validity of service in this case. In most states, service on a corporation must be made to the registered agent, an individual designated to receive all official communications. If this was simply sent to the corporate headquarters and received by a secretary, that is not likely to be legally proper service.

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    2. Re:Bad service? by Anonymous Coward · · Score: 0

      Default judgments are intended to allow worthy plaintiffs to recover when a defendant refuses to participate in the legal process.

      so if they don't participate, how are you supposed to get the money from them?

    3. Re:Bad service? by Maximum+Prophet · · Score: 2, Informative

      Default judgments are intended to allow worthy plaintiffs to recover when a defendant refuses to participate in the legal process.

      so if they don't participate, how are you supposed to get the money from them?

      This happens all the time. A Sheriff goes down the the company headquarters (or main branch in that state/city) and starts auctioning off items owned by the company.

      In one case, when I was living in Austin TX, the sheriff came into a restaurant and took all the money out of the register. Then he waited as people paid their bills, and took that money too. When he had collected enough money to pay the debt, he chased everyone out, and sealed the doors.

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  4. I don't believe this by G3ckoG33k · · Score: 1

    I don't believe this. Secretaries aren't the only source of information. The simply "shot the pianist" in order to cover up their incompetence. She should sue them for libel. Perhaps a $100 million lawsuit?

    1. Re:I don't believe this by Anonymous Coward · · Score: 0

      Exactly! And then conveniently forget to pass on the message about the suit.

  5. Lawyers? by phorm · · Score: 1

    I've never tested the theory, but if a company actually has a proper legal dept, I'm fairly sure I can't just plop down a court summons on the secretary's desk in a nondescript envelope.

    The story is light on details though.

    Overall, is the idea of "let's sell bottled water" worth several billion. It hardly seems unique...

  6. Trade secrets of bottling water? by Anonymous Coward · · Score: 0

    With the caveat that there's a whole lot I don't know about the case: "The suit itself stems from two men claiming that they presented PepsiCo with the idea to sell purified water. These two men are Charles Joyce and James Voigt, who had met with the company to discuss the idea. The allegation was that PepsiCo then turned around and used those ideas to develop and sell Aquafina bottled water, which has made billions as an additional brand name under PepsiCo."

    This is like the f-ing bonanza, that you present a business case to Pepsi about them selling bottled water, which they later do, and getting $1.26bn. Or even several hundred million. I'm surprised that Pepsi agreed to listen to the presentation of the case in the first place, given the obvious potential for a situation like this.