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In-House Counsel

PepsiCo: Busy Secty, Mislaid Docs to Blame for Missed Hearings & $1.26B Judgment

Posted Oct 28, 2009 9:38 AM CDT
By Debra Cassens Weiss

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Things go better with a smooth document tracking system, PepsiCo has learned.

PepsiCo says it didn’t defend a lawsuit claiming it stole the idea for purified, bottled water because of mislaid documents and poor communications that kept the legal department in the dark until more than three months after the complaint was filed.

A Wisconsin state court entered a $1.26 billion default judgment on Sept. 30, before PepsiCo’s legal department was even aware of the suit, according to a motion to vacate the award. The National Law Journal has the story.

PepsiCo says the Wisconsin suit was improperly served on its registered agent in North Carolina in June, and the corporate legal department in New York didn’t get notice of the suit until Sept. 15 when it received a co-defendant’s letter, the story says. Even then, a busy legal secretary put the letter aside and didn’t forward it to a lawyer until she received a copy of a default motion on Oct. 5, according to the motion to vacate.

Lawyers for two PepsiCo distributors made appearances in the case in June and July, but PepsiCo was unable to explain why it didn’t learn of the case from them. PepsiCo spokesman Joe Jacuzzi told the NLJ, “It's just another unfortunate thing that didn't come together.”

"The bottom line is there was a defect in the process for us, but also for" the plaintiffs, Jacuzzi said.

The Associated Press quotes Golden Gate University law professor Myron Moskovitz as saying that he predicts the judgment will be thrown out. "I'd be surprised if they didn't set it aside," he said. "But there's going to be some red faces in court."

The next hearing is set for Nov. 6.

Last updated Oct. 29 to add more detail from AP and the hearing date.

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