PepsiCo hit with $1.26 billion judgment

This is what can happen if you don't read your mail.

A Wisconsin judge has ordered PepsiCo (PEP) to pay $1.26 billion to two men who said the company stole their idea to sell purified water after a secretary mislaid a document alerting the world's No. 2 soft-drink maker the lawsuit existed.

The case was reported first today by The National Law Journal. The judgment amount is equal to more than 20% of PepsiCo's reported annual profits in recent years, regulatory filings show.

According to filings with the Jefferson County Circuit Court near Madison, Charles Joyce and James Voigt won the Sept. 30 judgment five months after first suing PepsiCo and two distributors.

PepsiCo stock was little changed at $60.99 today.

The Wisconsin men said they talked with the distributors in 1981 about their idea to bottle and sell purified water and that PepsiCo later stole the idea by creating Aquafina.

The complaint was filed on April 28, but PepsiCo said the legal department at its Purchase, N.Y., headquarters was not alerted to the case until around Sept. 18, when secretary Kathy Henry received a letter for her supervisor, Tom Tamoney.

Henry, however, put the letter aside and did not tell anyone about it or enter it into her log "because she was so busy preparing for a board meeting," according to PepsiCo's Oct. 13 motion asking the court not to enforce the judgment.

When Henry received a copy of the plaintiff's motion for the default judgment on Oct. 5, she recalled the earlier letter and forwarded it. That prompted the legal department to finally act. It called Henry's earlier failure to forward the letter "excusable neglect."

Henry has worked at PepsiCo for 20 years, another court filing shows.

Joe Jacuzzi, a PepsiCo spokesman, said the lawsuit was without merit. He said it is "completely dubious" to argue the plaintiffs gave other companies trade secrets in 1981 and that PepsiCo used them 15 years later to develop Aquafina.

"While we acknowledge there was an internal process issue, we have been denied due process as we do not believe the plaintiffs complied with the legal requirements to properly serve PepsiCo with their motion for default judgment," he added.

A lawyer for the plaintiffs did not return a call seeking comment.