Pay Attention, Already!

I am sometimes amazed at the attitude taken by people who have no familiarity with business toward legal proceedings. It resembles nothing so much, in my opinion, as the way a barbarian hero from a swords-and-sorcery epic regards magic: as a malevolent, incomprehensible force that can’t be fought against, can’t be reasoned with, can only be avoided or perhaps occasionally bribed to leave you alone. For reasons that escape me, people who would never consider telling a plumber how to install pipes or a carpenter how to drive a nail will feel no compunctions whatsoever in calling for the most preposterous changes in our legal system – and people who will bravely face down accountants, evangelists, or even dentists will take to their heels at the suggestion of a possible lawsuit…

Even worse, I suppose, would be those people who for some reason believe that if you ignore spurious lawsuits they’ll just go away. There’s a reason why most large corporations keep a few lawyers around, and there’s a story out of Wisconsin this week that demonstrates the principle better than most. A story reported by Milwaukee Journal Sentinel online tells of a $1.26 billion award granted to two men who sued PepsiCo, claiming that the soft-drink giant stole their idea for a revolutionary new product: bottled water. According to the online article, the plaintiffs claim to have a signed agreement from thirty or so years ago regarding their ideas for selling a purified water product, which they claim PepsiCo violated by producing the “Aquafina” product for sale. Without examining the facts of the case more closely we can’t really say if this claim was supported or not, but the award was a default judgment, given because PepsiCo failed to show up in court…

Now, according to the company there were “internal process issues” involved; specifically, a secretary in the company’s legal department failed to log correspondence on the case or tell anyone that a key letter had been received. It’s difficult to imagine that this was the only correspondence PepsiCo received about the case, however, or that they routinely allow billion-dollar cases to be “misplaced” by a single clerical employee. What seems more likely is that the company mistook this action for a simple “nuisance” lawsuit (of which any large corporation receives hundreds every year) and failed to pay proper attention to the case, even after it had cleared preliminary hearings and had been assigned a court date. Unfortunately, one of the ways you can tell that a legal action is for real (and not just a nuisance) is when it isn’t immediately laughed out of court and is given a spot on the calendar…

PepsiCo is trying to get the award rescinded, claiming that they haven’t had due process and that the confidentiality agreements on which the plaintiffs have based their case have nothing to do with Aquafina in the first place, but this will not be easy for them, both because they failed to show up for the trial and also because of the claims of internal process issues, which sound remarkably like “the dog ate my homework.” Even if everything PepsiCo is presenting is absolutely true, their initial actions (or lack of actions) were at best bungling (which undermines their credibility) and at worst highly disrespectful of the court (which is not a good way to plead your case). A court case in which the plaintiffs claim to have signed documents which prove that you are in material breach of an agreement made years ago does not fall into the same category as lawsuits in which someone is claiming that your bottling plant is secretly being used to send military secrets to space aliens in Belgium, and should not be treated with the same disdain…

Of course, if PepsiCo were playing attention to their official legal correspondence, they would already know that…