JOHN D.R. LEONARD, Plaintiff, -against-
PEPSICO, INC. Defendant.
96 Civ. 5320(KMW), 96 Civ. 9069(KMW)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF
NEW YORK
1999 U.S. Dist. LEXIS 11987
August 4, 1999, Decided
August 5, 1999, Filed
DISPOSITION: [*1] Defendant's motion for summary judgment
granted. Any pending motions moot.
COUNSEL: For PEPSICO, INC., plaintiff (96-CV-5320): David N.
Wynn, Arent Fox Kintner Plotkin & Kahn, New York, NY.
For JOHN D.R. LEONARD, plaintiff (96-CV-9069): David E. Nachman,
Solomon, Zauderer, Ellenhorn, Frischer & Sharp, New York, NY.
For PEPSICO, INC., defendant (96-CV-9069): David N. Wynn, Arent
Fox Kintner Plotkin & Kahn, New York, NY.
For PEPSICO, INC., defendant (96-CV-9069): Charles D. Ossola,
Arnold & Porter, Washington, DC.
JUDGES: Kimba M. Wood, United States District Judge.
OPINIONBY: Kimba M. Wood
OPINION: OPINION & ORDER
WOOD, U.S.D.J.:
Plaintiff brought this action seeking, among other things,
specific performance of an alleged offer of a Harrier Jet,
featured in a television advertisement for defendant's "Pepsi
Stuff" promotion. Defendant has moved for summary judgment
pursuant to Federal Rule of Civil Procedure 56. For the reasons
stated below, defendant's motion is granted.
I. Background
This case arises out of a promotional campaign conducted by
defendant, the producer and distributor of the soft drinks Pepsi
and Diet Pepsi. (See PepsiCo Inc.'s Rule 56.1 Statement ("Def.
Stat. [*2] ") P 2.) n1 The promotion, entitled "Pepsi Stuff,"
encouraged consumers to collect "Pepsi Points" from specially
marked packages of Pepsi or Diet Pepsi and redeem these points
for merchandise featuring the Pepsi logo. (See id. PP 4, 8.)
Before introducing the promotion nationally, defendant conducted
a test of the promotion in the Pacific Northwest from October
1995 to March 1996. (See id. PP 5-6.) A Pepsi Stuff catalog was
distributed to consumers in the test market, including Washington
State. (See id. P 7.) Plaintiff is a resident of Seattle,
Washington. (See id. P 3.) While living in Seattle, plaintiff saw
the Pepsi Stuff commercial (see id. P 22) that he contends
constituted an offer of a Harrier Jet.
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n1 The Court's recitation of the facts of this case is drawn
from the statements of uncontested facts submitted by the parties
pursuant to Local Civil Rule 56.1. The majority of citations are
to defendant's statement of facts because plaintiff does not
contest many of defendant's factual assertions. (See Plaintiff
Leonard's Response to PepsiCo's Rule 56.1 Statement ("Pl.
Stat.").) Plaintiff's disagreement with certain of defendant's
statements is noted in the text.
In an Order dated November 24, 1997, in a related case (96
Civ. 5320), the Court set forth an initial account of the facts
of this case. Because the parties have had additional discovery
since that Order and have crafted Local Civil Rule 56.1
Statements and Counterstatements, the recitation of facts herein
should be considered definitive.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
[*3]
A. The Alleged Offer
Because whether the television commercial constituted an offer
is the central question in this case, the Court will describe the
commercial in detail. The commercial opens upon an idyllic,
suburban morning, where the chirping of birds in sun-dappled
trees welcomes a paperboy on his morning route. As the newspaper
hits the stoop of a conventional two-story house, the tattoo of a
military drum introduces the subtitle, "MONDAY 7:58 AM." The
stirring strains of a martial air mark the appearance of a well-
coiffed teenager preparing to leave for school, dressed in a
shirt emblazoned with the Pepsi logo, a red-white-and-blue ball.
While the teenager confidently preens, the military drumroll
again sounds as the subtitle "T-SHIRT 75 PEPSI POINTS" scrolls
across the screen. Bursting from his room, the teenager strides
down the hallway wearing a leather jacket. The drumroll sounds
again, as the subtitle "LEATHER JACKET 1450 PEPSI POINTS"
appears. The teenager opens the door of his house and, unfazed by
the glare of the early morning sunshine, puts on a pair of
sunglasses. The drumroll then accompanies the subtitle "SHADES
175 PEPSI POINTS." A voiceover then intones, [*4] "Introducing
the new Pepsi Stuff catalog," as the camera focuses on the cover
of the catalog. (See Defendant's Local Rule 56.1 Stat., Exh. A
(the "Catalog").) n2
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n2 At this point, the following message appears at the bottom
of the screen: "Offer not available in all areas. See details on
specially marked packages."
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The scene then shifts to three young boys sitting in front of
a high school building. The boy in the middle is intent on his
Pepsi Stuff Catalog, while the boys on either side are each
drinking Pepsi. The three boys gaze in awe at an object rushing
overhead, as the military march builds to a crescendo. The
Harrier Jet is not yet visible, but the observer senses the
presence of a mighty plane as the extreme winds generated by its
flight create a paper maelstrom in a classroom devoted to an
otherwise dull physics lesson. Finally, the Harrier Jet swings
into view and lands by the side of the school building, next to a
bicycle rack. Several students run for cover, and the velocity of
the wind strips [*5] one hapless faculty member down to his
underwear. While the faculty member is being deprived of his
dignity, the voiceover announces: "Now the more Pepsi you drink,
the more great stuff you're gonna get."
The teenager opens the cockpit of the fighter and can be seen,
helmetless, holding a Pepsi. "Looking very pleased with himself,"
(Pl. Mem. at 3,) the teenager exclaims, "Sure beats the bus," and
chortles. The military drumroll sounds a final time, as the
following words appear: "HARRIER FIGHTER 7,000,000 PEPSI POINTS."
A few seconds later, the following appears in more stylized
script: "Drink Pepsi -- Get Stuff." With that message, the music
and the commercial end with a triumphant flourish.
Inspired by this commercial, plaintiff set out to obtain a
Harrier Jet. Plaintiff explains that he is "typical of the 'Pepsi
Generation' . . . he is young, has an adventurous spirit, and the
notion of obtaining a Harrier Jet appealed to him enormously."
(Pl. Mem. at 3.) Plaintiff consulted the Pepsi Stuff Catalog. The
Catalog features youths dressed in Pepsi Stuff regalia or
enjoying Pepsi Stuff accessories, such as "Blue Shades" ("As if
you need another reason to look forward to sunny days. [*6]
"), "Pepsi Tees" ("Live in 'em. Laugh in 'em. Get in 'em."), "Bag
of Balls" ("Three balls. One bag. No rules."), and "Pepsi Phone
Card" ("Call your mom!"). The Catalog specifies the number of
Pepsi Points required to obtain promotional merchandise. (See
Catalog, at rear foldout pages.) The Catalog includes an Order
Form which lists, on one side, fifty-three items of Pepsi Stuff
merchandise redeemable for Pepsi Points (see id. (the "Order
Form")). Conspicuously absent from the Order Form is any entry or
description of a Harrier Jet. (See id.) The amount of Pepsi
Points required to obtain the listed merchandise ranges from 15
(for a "Jacket Tattoo" ("Sew 'em on your jacket, not your arm."))
to 3300 (for a "Fila Mountain Bike" ("Rugged. All-terrain.
Exclusively for Pepsi.")). It should be noted that plaintiff
objects to the implication that because an item was not shown in
the Catalog, it was unavailable. (See Pl. Stat. PP 23-26, 29.)
The rear foldout pages of the Catalog contain directions for
redeeming Pepsi Points for merchandise. (See Catalog, at rear
foldout pages.) These directions note that merchandise may be
ordered "only" with the original Order Form. ( [*7] See id.)
The Catalog notes that in the event that a consumer lacks enough
Pepsi Points to obtain a desired item, additional Pepsi Points
may be purchased for ten cents each; however, at least fifteen
original Pepsi Points must accompany each order. (See id.)
Although plaintiff initially set out to collect 7,000,000
Pepsi Points by consuming Pepsi products, it soon became clear to
him that he "would not be able to buy (let alone drink) enough
Pepsi to collect the necessary Pepsi Points fast enough."
(Affidavit of John D.R. Leonard, Mar. 30, 1999 ("Leonard Aff."),
P 5.) Reevaluating his strategy, plaintiff "focused for the first
time on the packaging materials in the Pepsi Stuff promotion,"
(id.,) and realized that buying Pepsi Points would be a more
promising option. (See id.) Through acquaintances, plaintiff
ultimately raised about $700,000. (See id. P 6.)
B. Plaintiff's Efforts to Redeem the Alleged Offer
On or about March 27, 1996, plaintiff submitted an Order Form,
fifteen original Pepsi Points, and a check for $700,008.50. (See
Def. Stat. P 36.) Plaintiff appears to have been represented by
counsel at the time he mailed his check; the check is [*8]
drawn on an account of plaintiff's first set of attorneys. (See
Defendant's Notice of Motion, Exh. B (first).) At the bottom of
the Order Form, plaintiff wrote in "1 Harrier Jet" in the "Item"
column and "7,000,000" in the "Total Points" column. (See id.) In
a letter accompanying his submission, plaintiff stated that the
check was to purchase additional Pepsi Points "expressly for
obtaining a new Harrier jet as advertised in your Pepsi Stuff
commercial." (See Declaration of David Wynn, Mar. 18, 1999 ("Wynn
Dec."), Exh. A.)
On or about May 7, 1996, defendant's fulfillment house
rejected plaintiff's submission and returned the check,
explaining that:
The item that you have requested is not part of the Pepsi
Stuff collection. It is not included in the catalogue or on the
order form, and only catalogue merchandise can be redeemed under
this program.
The Harrier jet in the Pepsi commercial is fanciful and is
simply included to create a humorous and entertaining ad. We
apologize for any misunderstanding or confusion that you may have
experienced and are enclosing some free product coupons for your
use.
(Wynn Aff. Exh. B (second).) Plaintiff's previous counsel
responded [*9] on or about May 14, 1996, as follows:
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 . . . .
(Wynn Aff., Exh. C.) This letter was apparently sent onward to
the advertising company responsible for the actual commercial,
BBDO New York ("BBDO"). In a letter dated May 30, 1996, BBDO Vice
President Raymond E. McGovern, Jr., explained to plaintiff that:
I find it hard to believe that you are of the opinion that the
Pepsi Stuff commercial ("Commercial") really offers a new Harrier
Jet. The use of the Jet was clearly a joke that was meant to make
the Commercial more humorous and entertaining. In my opinion, no
reasonable person would agree with your analysis of the
Commercial. [*10]
(Wynn Aff. Exh. A.) On or about June 17, 1996, plaintiff mailed a
similar demand letter to defendant. (See Wynn Aff., Exh. D.)
Litigation of this case initially involved two lawsuits, the
first a declaratory judgment action brought by PepsiCo in this
district (the "declaratory judgment action"), and the second an
action brought by Leonard in Florida state court (the "Florida
action"). n3 PepsiCo brought suit in this Court on July 18, 1996,
seeking a declaratory judgment stating that it had no obligation
to furnish plaintiff with a Harrier Jet. That case was filed
under docket number 96 Civ. 5320. In response to PepsiCo's suit
in New York, Leonard brought suit in Florida state court on
August 6, 1996, although this case had nothing to do with
Florida. n4 That suit was removed to the Southern District of
Florida in September 1996. In an Order dated November 6, 1996,
United States District Judge James Lawrence King found that,
"Obviously this case has been filed in a forum that has no
meaningful relationship to the controversy and warrants a
transfer pursuant to 28 U.S.C. @ 1404(a)." Leonard v. PepsiCo,
96-2555 Civ.-King, at 1 (S.D. Fla. Nov. 6, 1996). [*11] The
Florida suit was transferred to this Court on December 2, 1996,
and assigned the docket number 96 Civ. 9069.
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n3 Because Leonard and PepsiCo were each plaintiff in one
action and defendant in the other, the Court will refer to the
parties as "Leonard" and "PepsiCo," rather than plaintiff and
defendant, for its discussion of the procedural history of this
litigation.
n4 The Florida suit alleged that the commercial had been shown
in Florida. Not only was this assertion irrelevant, in that
plaintiff had not actually seen the commercial in Florida, but it
later proved to be false. See Leonard v. PepsiCo, 96-2555 Civ.-
King, at 1 (S.D. Fla. Nov. 6, 1996) ("The only connection this
case has to this forum is that Plaintiff's lawyer is in the
Southern District of Florida.").
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Once the Florida action had been transferred, Leonard moved to
dismiss the declaratory judgment action for lack of personal
jurisdiction. In an Order dated November 24, 1997, the Court
granted the motion to dismiss for lack of personal [*12]
jurisdiction in case 96 Civ. 5320, from which PepsiCo appealed.
Leonard also moved to voluntarily dismiss the Florida action.
While the Court indicated that the motion was proper, it noted
that PepsiCo was entitled to some compensation for the costs of
litigating this case in Florida, a forum that had no meaningful
relationship to the case. (See Transcript of Proceedings Before
Hon. Kimba M. Wood, Dec. 9, 1997, at 3.) In an Order dated
December 15, 1997, the Court granted Leonard's motion to
voluntarily dismiss this case without prejudice, but did so on
condition that Leonard pay certain attorneys' fees.
In an Order dated October 1, 1998, the Court ordered Leonard
to pay $88,162 in attorneys' fees within thirty days. Leonard
failed to do so, yet sought nonetheless to appeal from his
voluntary dismissal and the imposition of fees. In an Order dated
January 5, 1999, the Court noted that Leonard's strategy was
"'clearly an end-run around the final judgment rule.'" (Order at
2 (quoting Palmieri v. DeFaria, 88 F.3d 136 (2d Cir. 1996)).)
Accordingly, the Court ordered Leonard either to pay the amount
due or withdraw his voluntary dismissal, as well as his appeals
therefrom, [*13] and continue litigation before this Court.
(See Order at 3.) Rather than pay the attorneys' fees, Leonard
elected to proceed with litigation, and shortly thereafter
retained present counsel.
On February 22, 1999, the Second Circuit endorsed the parties'
stipulations to the dismissal of any appeals taken thus far in
this case. Those stipulations noted that Leonard had consented to
the jurisdiction of this Court and that PepsiCo agreed not to
seek enforcement of the attorneys' fees award. With these issues
having been waived, PepsiCo moved for summary judgment pursuant
to Federal Rule of Civil Procedure 56. The present motion thus
follows three years of jurisdictional and procedural wrangling.
II. Discussion
A. The Legal Framework
1. Standard for Summary Judgment
On a motion for summary judgment, a court "cannot try issues
of fact; it can only determine whether there are issues to be
tried." Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d
54, 58 (2d Cir. 1987) (citations and internal quotation marks
omitted). To prevail on a motion for summary judgment, the moving
party therefore must show that there are no such genuine issues
of material [*14] fact to be tried, and that he or she is
entitled to judgment as a matter of law. See Fed. R. Civ. P.
56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d
265, 106 S. Ct. 2548 (1986); Citizens Bank v. Hunt, 927 F.2d 707,
710 (2d Cir. 1991). The party seeking summary judgment "bears the
initial responsibility of informing the district court of the
basis for its motion," which includes identifying the materials
in the record that "it believes demonstrate the absence of a
genuine issue of material fact." Celotex Corp., 477 U.S. at 323.
Once a motion for summary judgment is made and supported, the
non-moving party must set forth specific facts that show that
there is a genuine issue to be tried. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 251-52, 91 L. Ed. 2d 202, 106 S. Ct.
2505 (1986). Although a court considering a motion for summary
judgment must view all evidence in the light most favorable to
the non-moving party, and must draw all reasonable inferences in
that party's favor, see Consarc Corp. v. Marine Midland Bank,
N.A., 996 F.2d 568, 572 (2d Cir. 1993), the nonmoving party
[*15] "must do more than simply show that there is some
metaphysical doubt as to the material facts." Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d
538, 106 S. Ct. 1348 (1986). If, based on the submissions to the
court, no rational fact-finder could find in the non-movant's
favor, there is no genuine issue of material fact, and summary
judgment is appropriate. See Anderson, 477 U.S. at 250.
The question of whether or not a contract was formed is
appropriate for resolution on summary judgment. As the Second
Circuit has recently noted, "Summary judgment is proper when the
'words and actions that allegedly formed a contract [are] so
clear themselves that reasonable people could not differ over
their meaning.'" Krumme v. Westpoint Stevens, Inc., 143 F.3d 71,
83 (2d Cir. 1998) (quoting Bourque v. FDIC, 42 F.3d 704, 708 (1st
Cir. 1994)) (further citations omitted); see also Wards Co. v.
Stamford Ridgeway Assocs., 761 F.2d 117, 120 (2d Cir. 1985)
(summary judgment is appropriate in contract case where
interpretation urged by non-moving party is not "fairly
reasonable"). Summary [*16] judgment is appropriate in such
cases because there is "sometimes no genuine issue as to whether
the parties' conduct implied a 'contractual
understanding.'. . . . In such cases, 'the judge must decide the
issue himself, just as he decides any factual issue in respect to
which reasonable people cannot differ.'" Bourque, 42 F.3d at 708
(quoting Boston Five Cents Sav. Bank v. Secretary of Dep't of
Housing & Urban Dev., 768 F.2d 5, 8 (1st Cir. 1985)).
2. Choice of Law
The parties disagree concerning whether the Court should apply
the law of the state of New York or of some other state in
evaluating whether defendant's promotional campaign constituted
an offer. Because this action was transferred from Florida, the
choice of law rules of Florida, the transferor state, apply. See
Ferens v. John Deere Co., 494 U.S. 516, 523-33, 108 L. Ed. 2d
443, 110 S. Ct. 1274 (1990). Under Florida law, the choice of law
in a contract case is determined by the place "where the last act
necessary to complete the contract is done." Jemco, Inc. v.
United Parcel Serv., Inc., 400 So. 2d 499, 500-01 (Fla. Dist. Ct.
App. 1981); see also [*17] Shapiro v. Associated Int'l Ins.
Co., 899 F.2d 1116, 1119 (11th Cir. 1990).
The parties disagree as to whether the contract could have
been completed by plaintiff's filling out the Order Form to
request a Harrier Jet, or by defendant's acceptance of the Order
Form. If the commercial constituted an offer, then the last act
necessary to complete the contract would be plaintiff's
acceptance, in the state of Washington. If the commercial
constituted a solicitation to receive offers, then the last act
necessary to complete the contract would be defendant's
acceptance of plaintiff's Order Form, in the state of New York.
The choice of law question cannot, therefore, be resolved until
after the Court determines whether the commercial was an offer or
not. The Court agrees with both parties that resolution of this
issue requires consideration of principles of contract law that
are not limited to the law of any one state. Most of the cases
cited by the parties are not from New York courts. As plaintiff
suggests, the questions presented by this case implicate
questions of contract law "deeply ingrained in the common law of
England and the States of the Union." (Pl. Mem. at 8.)
B. [*18] Defendant's Advertisement Was Not An Offer
1. Advertisements as Offers
The general rule is that an advertisement does not constitute
an offer. The Restatement (Second) of Contracts explains that:
Advertisements of goods by display, sign, handbill, newspaper,
radio or television are not ordinarily intended or understood as
offers to sell. The same is true of catalogues, price lists and
circulars, even though the terms of suggested bargains may be
stated in some detail. It is of course possible to make an offer
by an advertisement directed to the general public (see @ 29),
but there must ordinarily be some language of commitment or some
invitation to take action without further communication.
Restatement (Second) of Contracts @ 26 cmt. b (1979). Similarly,
a leading treatise notes that:
It is quite possible to make a definite and operative offer to
buy or sell goods by advertisement, in a newspaper, by a
handbill, a catalog or circular or on a placard in a store
window. It is not customary to do this, however; and the
presumption is the other way. . . . Such advertisements are
understood to be mere requests to consider and examine and
negotiate; [*19] and no one can reasonably regard them as
otherwise unless the circumstances are exceptional and the words
used are very plain and clear.
1 Arthur Linton Corbin & Joseph M. Perillo, Corbin on Contracts @
2.4, at 116-17 (rev. ed. 1993) (emphasis added); see also 1 E.
Allan Farnsworth, Farnsworth on Contracts @ 3.10, at 239 (2d ed.
1998); 1 Samuel Williston & Richard A. Lord, A Treatise on the
Law of Contracts @ 4:7, at 286-87 (4th ed. 1990). New York courts
adhere to this general principle. See Lovett v. Frederick Loeser
& Co., 124 Misc. 81, 207 N.Y.S. 753, 755 (Mun. Ct. N.Y. City
1924) (noting that an "advertisement is nothing but an invitation
to enter into negotiations, and is not an offer which may be
turned into a contract by a person who signifies his intention to
purchase some of the articles mentioned in the advertisement");
see also Geismar v. Abraham & Straus, 109 Misc. 2d 495, 439
N.Y.S.2d 1005, 1006 (Dist. Ct. Suffolk Cty. 1981) (reiterating
Lovett rule); People v. Gimbel Bros. Inc., 202 Misc. 229, 115
N.Y.S.2d 857, 858 (Ct. Spec. Sess. 1952) (because an
"advertisement does not constitute an [*20] offer of sale but
is solely an invitation to customers to make an offer to
purchase," defendant not guilty of selling property on Sunday).
An advertisement is not transformed into an enforceable offer
merely by a potential offeree's expression of willingness to
accept the offer through, among other means, completion of an
order form. In Mesaros v. United States, 845 F.2d 1576 (Fed. Cir.
1988), for example, the plaintiffs sued the United States Mint
for failure to deliver a number of Statue of Liberty
commemorative coins that they had ordered. When demand for the
coins proved unexpectedly robust, a number of individuals who had
sent in their orders in a timely fashion were left empty-handed.
See id. at 1578-80. The court began by noting the "well-
established" rule that advertisements and order forms are "mere
notices and solicitations for offers which create no power of
acceptance in the recipient." Id. at 1580; see also Foremost Pro
Color, Inc. v. Eastman Kodak Co., 703 F.2d 534, 538-39 (9th Cir.
1983) ("The weight of authority is that purchase orders such as
those at issue here are not enforceable contracts until [*21]
they are accepted by the seller."); n5 Restatement (Second) of
Contracts @ 26 ("A manifestation of willingness to enter a
bargain is not an offer if the person to whom it is addressed
knows or has reason to know that the person making it does not
intend to conclude a bargain until he has made a further
manifestation of assent."). The spurned coin collectors could not
maintain a breach of contract action because no contract would be
formed until the advertiser accepted the order form and processed
payment. See 845 F.2d at 1581; see also Alligood v. Procter &
Gamble, 72 Ohio App. 3d 309, 594 N.E.2d 668 (Ohio Ct. App. 1991)
(finding that no offer was made in promotional campaign for baby
diapers, in which consumers were to redeem teddy bear proof-of-
purchase symbols for catalog merchandise); Chang v. First
Colonial Savings Bank, 242 Va. 388, 410 S.E.2d 928 (Va. 1991)
(newspaper advertisement for bank settled the terms of the offer
once bank accepted plaintiffs' deposit, notwithstanding bank's
subsequent effort to amend the terms of the offer). Under these
principles, plaintiff's letter of March 27, 1996, with the Order
Form and the appropriate number [*22] of Pepsi Points,
constituted the offer. There would be no enforceable contract
until defendant accepted the Order Form and cashed the check.
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n5 Foremost Pro was overruled on other grounds by Hasbrouck v.
Texaco, Inc., 842 F.2d 1034, 1041 (9th Cir. 1987), aff'd, 496
U.S. 543, 110 L. Ed. 2d 492, 110 S. Ct. 2535 (1990). See Chroma
Lighting v. GTE Products Corp., 111 F.3d 653, 657 (9th Cir.
1997), cert. denied sub nom., Osram Sylvania Products, Inc. v.
Von Der Ahe, 522 U.S. 943, 118 S. Ct. 357, 139 L. Ed. 2d 278
(1997).
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The exception to the rule that advertisements do not create
any power of acceptance in potential offerees is where the
advertisement is "clear, definite, and explicit, and leaves
nothing open for negotiation," in that circumstance, "it
constitutes an offer, acceptance of which will complete the
contract." Lefkowitz v. Great Minneapolis Surplus Store, 251
Minn. 188, 86 N.W.2d 689, 691 (Minn. 1957). In Lefkowitz, [*23]
defendant had published a newspaper announcement stating:
"Saturday 9 AM Sharp, 3 Brand New Fur Coats, Worth to $100.00,
First Come First Served $1 Each." 86 N.W.2d at 690. Mr. Morris
Lefkowitz arrived at the store, dollar in hand, but was informed
that under defendant's "house rules," the offer was open to
ladies, but not gentlemen. See id. The court ruled that because
plaintiff had fulfilled all of the terms of the advertisement and
the advertisement was specific and left nothing open for
negotiation, a contract had been formed. See id.; see also
Johnson v. Capital City Ford Co., 85 So. 2d 75, 79 (La. Ct. App.
1955) (finding that newspaper advertisement was sufficiently
certain and definite to constitute an offer).
The present case is distinguishable from Lefkowitz. First, the
commercial cannot be regarded in itself as sufficiently definite,
because it specifically reserved the details of the offer to a
separate writing, the Catalog. n6 The commercial itself made no
mention of the steps a potential offeree would be required to
take to accept the alleged offer of a Harrier Jet. The
advertisement in Lefkowitz, in contrast, "identified the person
who could [*24] accept." Corbin, supra, @ 2.4, at 119. See
generally United States v. Braunstein, 75 F. Supp. 137, 139
(S.D.N.Y. 1947) ("Greater precision of expression may be
required, and less help from the court given, when the parties
are merely at the threshold of a contract."); Farnsworth, supra,
at 239 ("The fact that a proposal is very detailed suggests that
it is an offer, while omission of many terms suggests that it is
not."). n7 Second, even if the Catalog had included a Harrier Jet
among the items that could be obtained by redemption of Pepsi
Points, the advertisement of a Harrier Jet by both television
commercial and catalog would still not constitute an offer. As
the Mesaros court explained, the absence of any words of
limitation such as "first come, first served," renders the
alleged offer sufficiently indefinite that no contract could be
formed. See Mesaros, 845 F.2d at 1581. "A customer would not
usually have reason to believe that the shopkeeper intended
exposure to the risk of a multitude of acceptances resulting in a
number of contracts exceeding the shopkeeper's inventory."
Farnsworth, supra, at 242. There was no such danger [*25] in
Lefkowitz, owing to the limitation "first come, first served."
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n6 It also communicated additional words of reservation:
"Offer not available in all areas. See details on specially
marked packages."
n7 The reservation of the details of the offer in this case
distinguishes it from Payne v. Lautz Bros. & Co., 166 N.Y.S.2d
844 (City Ct. Buffalo 1916). In Payne, a stamp and coupon broker
purchased massive quantities of coupons produced by defendant, a
soap company, and tried to redeem them for 4,000 round-trip
tickets to a local beach. The court ruled for plaintiff, noting
that the advertisements were "absolutely unrestricted. It
contained no reference whatever to any of its previous
advertising of any form." Id. at 848. In the present case, by
contrast, the commercial explicitly reserved the details of the
offer to the Catalog.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
The Court finds, in sum, that the Harrier Jet commercial was
merely an advertisement. The Court now turns to the line of cases
upon which [*26] plaintiff rests much of his argument.
2. Rewards as Offers
In opposing the present motion, plaintiff largely relies on a
different species of unilateral offer, involving public offers of
a reward for performance of a specified act. Because these cases
generally involve public declarations regarding the efficacy or
trustworthiness of specific products, one court has aptly
characterized these authorities as "prove me wrong" cases. See
Rosenthal v. Al Packer Ford, 36 Md. App. 349, 374 A.2d 377, 380
(Md. Ct. Spec. App. 1977). The most venerable of these precedents
is the case of Carlill v. Carbolic Smoke Ball Co., 1 Q.B. 256
(Court of Appeal, 1892), a quote from which heads plaintiff's
memorandum of law: "If a person chooses to make extravagant
promises . . . he probably does so because it pays him to make
them, and, if he has made them, the extravagance of the promises
is no reason in law why he should not be bound by them." Carbolic
Smoke Ball, 1 Q.B. at 268 (Bowen, L.J.).
Long a staple of law school curricula, Carbolic Smoke Ball
owes its fame not merely to "the comic and slightly mysterious
object involved," A.W. Brian Simpson, [*27] Quackery and
Contract Law: Carlill v. Carbolic Smoke Ball Company (1893), in
Leading Cases in the Common Law 259, 281 (1995), but also to its
role in developing the law of unilateral offers. The case arose
during the London influenza epidemic of the 1890s. Among other
advertisements of the time, for Clarke's World Famous Blood
Mixture, Towle's Pennyroyal and Steel Pills for Females, Sequah's
Prairie Flower, and Epp's Glycerine Jube-Jubes, see Simpson,
supra, at 267, appeared solicitations for the Carbolic Smoke
Ball. The specific advertisement that Mrs. Carlill saw, and
relied upon, read as follows:
100 L reward will be paid by the Carbolic Smoke Ball Company to
any person who contracts the increasing epidemic influenza,
colds, or any diseases caused by taking cold, after having used
the ball three times daily for two weeks according to the printed
directions supplied with each ball. 1000 L is deposited with the
Alliance Bank, Regent Street, shewing our sincerity in the
matter.
During the last epidemic of influenza many thousand carbolic
smoke balls were sold as preventives against this disease, and in
no ascertained case was the disease contracted by those [*28]
using the carbolic smoke ball.
Carbolic Smoke Ball, 1 Q.B. at 256-57. "On the faith of this
advertisement," id. at 257, Mrs. Carlill purchased the smoke ball
and used it as directed, but contracted influenza nevertheless.
n8 The lower court held that she was entitled to recover the
promised reward.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - -
n8 Although the Court of Appeals's opinion is silent as to
exactly what a carbolic smoke ball was, the historical record
reveals it to have been a compressible hollow ball, about the
size of an apple or orange, with a small opening covered by some
porous material such as silk or gauze. The ball was partially
filled with carbolic acid in powder form. When the ball was
squeezed, the powder would be forced through the opening as a
small cloud of smoke. See Simpson, supra, at 262-63. At the time,
carbolic acid was considered fatal if consumed in more than small
amounts. See id. at 264.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
Affirming the lower court's decision, Lord Justice Lindley
began by [*29] noting that the advertisement was an express
promise to pay L 100 in the event that a consumer of the Carbolic
Smoke Ball was stricken with influenza. See id. at 261. The
advertisement was construed as offering a reward because it
sought to induce performance, unlike an invitation to negotiate,
which seeks a reciprocal promise. As Lord Justice Lindley
explained, "advertisements offering rewards . . . are offers to
anybody who performs the conditions named in the advertisement,
and anybody who does perform the condition accepts the offer."
Id. at 262; see also id. at 268 (Bowen, L.J.). n9 Because Mrs.
Carlill had complied with the terms of the offer, yet contracted
influenza, she was entitled to L 100.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - -
n9 Carbolic Smoke Ball includes a classic formulation of this
principle: "If I advertise to the world that my dog is lost, and
that anybody who brings the dog to a particular place will be
paid some money, are all the police or other persons whose
business it is to find lost dogs to be expected to sit down and
write a note saying that they have accepted my proposal?"
Carbolic Smoke Ball, 1 Q.B. at 270 (Bowen, L.J.).
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
[*30]
Like Carbolic Smoke Ball, the decisions relied upon by
plaintiff involve offers of reward. In Barnes v. Treece, 15 Wash.
App. 437, 549 P.2d 1152 (Wash. Ct. App. 1976), for example, the
vice-president of a punchboard distributor, in the course of
hearings before the Washington State Gambling Commission,
asserted that, "'I'll put a hundred thousand dollars to anyone to
find a crooked board. If they find it, I'll pay it.'" 549 P.2d at
1154. Plaintiff, a former bartender, heard of the offer and
located two crooked punchboards. Defendant, after reiterating
that the offer was serious, providing plaintiff with a receipt
for the punchboard on company stationery, and assuring plaintiff
that the reward was being held in escrow, nevertheless repudiated
the offer. See id. at 1154. The court ruled that the offer was
valid and that plaintiff was entitled to his reward. See id. at
1155. The plaintiff in this case also cites cases involving
prizes for skill (or luck) in the game of golf. See Las Vegas
Hacienda v. Gibson, 77 Nev. 25, 359 P.2d 85 (Nev. 1961) (awarding
$5,000 to plaintiff, who successfully shot a hole-in-one); see
also Grove v. Charbonneau Buick-Pontiac, Inc., 240 N.W.2d 853
(N.D. 1976) [*31] (awarding automobile to plaintiff, who
successfully shot a hole-in-one).
Other "reward" cases underscore the distinction between
typical advertisements, in which the alleged offer is merely an
invitation to negotiate for purchase of commercial goods, and
promises of reward, in which the alleged offer is intended to
induce a potential offeree to perform a specific action, often
for noncommercial reasons. In Newman v. Schiff, 778 F.2d 460 (5th
Cir. 1985), for example, the Fifth Circuit held that a tax
protestor's assertion that, "If anybody calls this show . . . and
cites any section of the code that says an individual is required
to file a tax return, I'll pay them $100,000," would have been an
enforceable offer had the plaintiff called the television show to
claim the reward while the tax protestor was appearing. See id.
at 466-67. The court noted that, like Carbolic Smoke Ball, the
case "concerns a special type of offer: an offer for a reward."
Id. at 465. James v. Turilli, 473 S.W.2d 757 (Mo. Ct. App. 1971),
arose from a boast by defendant that the "notorious Missouri
desperado" Jesse James had not been killed [*32] in 1882, as
portrayed in song and legend, but had lived under the alias "J.
Frank Dalton" at the "Jesse James Museum" operated by none other
than defendant. Defendant offered $10,000 "to anyone who could
prove me wrong." See id. at 758-59. The widow of the outlaw's son
demonstrated, at trial, that the outlaw had in fact been killed
in 1882. On appeal, the court held that defendant should be
liable to pay the amount offered. See id. at 762; see also Mears
v. Nationwide Mutual Ins. Co., 91 F.3d 1118, 1122-23 (8th Cir.
1996) (plaintiff entitled to cost of two Mercedes as reward for
coining slogan for insurance company).
In the present case, the Harrier Jet commercial did not direct
that anyone who appeared at Pepsi headquarters with 7,000,000
Pepsi Points on the Fourth of July would receive a Harrier Jet.
Instead, the commercial urged consumers to accumulate Pepsi
Points and to refer to the Catalog to determine how they could
redeem their Pepsi Points. The commercial sought a reciprocal
promise, expressed through acceptance of, and compliance with,
the terms of the Order Form. As noted previously, the Catalog
contains no mention of [*33] the Harrier Jet. Plaintiff states
that he "noted that the Harrier Jet was not among the items
described in the catalog, but this did not affect [his]
understanding of the offer." (Pl. Mem. at 4.) It should have. n10
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - -
n10 In his affidavit, plaintiff places great emphasis on a
press release written by defendant, which characterizes the
Harrier Jet as "the ultimate Pepsi Stuff award." (See Leonard
Aff. P 13.) Plaintiff simply ignores the remainder of the
release, which makes no mention of the Harrier Jet even as it
sets forth in detail the number of points needed to redeem other
merchandise.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
Carbolic Smoke Ball itself draws a distinction between the
offer of reward in that case, and typical advertisements, which
are merely offers to negotiate. As Lord Justice Bowen explains:
It is an offer to become liable to any one who, before it is
retracted, performs the condition . . . . It is not like cases in
which you offer to negotiate, or you issue advertisements that
you have got a stock of books to sell, [*34] or houses to
let, in which case there is no offer to be bound by any contract.
Such advertisements are offers to negotiate - offers to receive
offers - offers to chaffer, as, I think, some learned judge in
one of the cases has said.
Carbolic Smoke Ball, 1 Q.B. at 268; see also Lovett, 207 N.Y.S.
at 756 (distinguishing advertisements, as invitation to offer,
from offers of reward made in advertisements, such as Carbolic
Smoke Ball). Because the alleged offer in this case was, at most,
an advertisement to receive offers rather than an offer of
reward, plaintiff cannot show that there was an offer made in the
circumstances of this case.
C. An Objective, Reasonable Person Would Not Have Considered the
Commercial an Offer
Plaintiff's understanding of the commercial as an offer must
also be rejected because the Court finds that no objective person
could reasonably have concluded that the commercial actually
offered consumers a Harrier Jet.
1. Objective Reasonable Person Standard
In evaluating the commercial, the Court must not consider
defendant's subjective intent in making the commercial, or
plaintiff's subjective view of what [*35] the commercial
offered, but what an objective, reasonable person would have
understood the commercial to convey. See Kay-R Elec. Corp. v.
Stone & Weber Constr. Co., 23 F.3d 55, 57 (2d Cir. 1994) ("We are
not concerned with what was going through the heads of the
parties at the time [of the alleged contract]. Rather, we are
talking about the objective principles of contract law.");
Mesaros, 845 F.2d at 1581 ("A basic rule of contracts holds that
whether an offer has been made depends on the objective
reasonableness of the alleged offeree's belief that the
advertisement or solicitation was intended as an offer.");
Farnsworth, supra, @ 3.10, at 237; Williston, supra, @ 4:7 at
296-97.
If it is clear that an offer was not serious, then no offer
has been made:
What kind of act creates a power of acceptance and is therefore
an offer? It must be an expression of will or intention. It must
be an act that leads the offeree reasonably to conclude that a
power to create a contract is conferred. This applies to the
content of the power as well as to the fact of its existence. It
is on this ground that we must exclude invitations to deal [*36]
or acts of mere preliminary negotiation, and acts evidently done
in jest or without intent to create legal relations.
Corbin on Contracts, @ 1.11 at 30 (emphasis added). An obvious
joke, of course, would not give rise to a contract. See, e.g.,
Graves v. Northern N.Y. Pub. Co., 260 A.D. 900, 22 N.Y.S.2d 537
(App. Div. 4th Dept. 1940) (dismissing claim to offer of $1000,
which appeared in the "joke column" of the newspaper, to any
person who could provide a commonly available phone number). On
the other hand, if there is no indication that the offer is
"evidently in jest," and that an objective, reasonable person
would find that the offer was serious, then there may be a valid
offer. See Barnes, 549 P.2d at 1155 ("If the jest is not apparent
and a reasonable hearer would believe that an offer was being
made, then the speaker risks the formation of a contract which
was not intended."); see also Lucy v. Zehmer, 196 Va. 493, 84
S.E.2d 516, 518, 520 (Va. 1954) (ordering specific performance of
a contract to purchase a farm despite defendant's protestation
that the transaction was done in jest as "'just a bunch of two
doggoned [*37] drunks bluffing'").
2. Necessity of a Jury Determination
Plaintiff also contends that summary judgment is improper
because the question of whether the commercial conveyed a sincere
offer can be answered only by a jury. Relying on dictum from
Gallagher v. Delaney, 139 F.3d 338 (2d Cir. 1998), plaintiff
argues that a federal judge comes from a "narrow segment of the
enormously broad American socio-economic spectrum," id. at 342,
and, thus, that the question whether the commercial constituted a
serious offer must be decided by a jury composed of, inter alia,
members of the "Pepsi Generation," who are, as plaintiff puts it,
"young, open to adventure, willing to do the unconventional."
(See Leonard Aff. P 2.) Plaintiff essentially argues that a
federal judge would view his claim differently than fellow
members of the "Pepsi Generation."
Plaintiff's argument that his claim must be put to a jury is
without merit. Gallagher involved a claim of sexual harassment in
which the defendant allegedly invited plaintiff to sit on his
lap, gave her inappropriate Valentine's Day gifts, told her that
"she brought out feelings that he had not had since [*38] he
was sixteen," and "invited her to help him feed the ducks in the
pond, since he was 'a bachelor for the evening.'" Gallagher, 139
F.3d at 344. The court concluded that a jury determination was
particularly appropriate because a federal judge lacked "the
current real-life experience required in interpreting subtle
sexual dynamics of the workplace based on nuances, subtle
perceptions, and implicit communications." Id. at 342. This case,
in contrast, presents a question of whether there was an offer to
enter into a contract, requiring the Court to determine how a
reasonable, objective person would have understood defendant's
commercial. Such an inquiry is commonly performed by courts on a
motion for summary judgment. See Krumme, 143 F.3d at 83; Bourque,
42 F.3d at 708; Wards Co., 761 F.2d at 120.
3. Whether the Commercial Was "Evidently Done In Jest"
Plaintiff's insistence that the commercial appears to be a
serious offer requires the Court to explain why the commercial is
funny. Explaining why a joke is funny is a daunting task; as the
essayist E.B. White has remarked, "Humor can be dissected,
[*39] as a frog can, but the thing dies in the process . . . ."
n11 The commercial is the embodiment of what defendant
appropriately characterizes as "zany humor." (Def. Mem. at 18.)
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - -
n11 Quoted in Gerald R. Ford, Humor and the Presidency 23
(1987).
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
First, the commercial suggests, as commercials often do, that
use of the advertised product will transform what, for most
youth, can be a fairly routine and ordinary experience. The
military tattoo and stirring martial music, as well as the use of
subtitles in a Courier font that scroll terse messages across the
screen, such as "MONDAY 7:58 AM," evoke military and espionage
thrillers. The implication of the commercial is that Pepsi Stuff
merchandise will inject drama and moment into hitherto
unexceptional lives. The commercial in this case thus makes the
exaggerated claims similar to those of many television
advertisements: that by consuming the featured clothing, car,
beer, or potato chips, one will become attractive, stylish,
desirable, and admired by all. A reasonable [*40] viewer would
understand such advertisements as mere puffery, not as statements
of fact, see, e.g., Hubbard v. General Motors Corp., 1996 U.S.
Dist. LEXIS 6974, 95 Civ. 4362 (AGS), 1996 WL 274018, at *6
(S.D.N.Y. May 22, 1996) (advertisement describing automobile as
"Like a Rock," was mere puffery, not a warranty of quality);
Lovett, 207 N.Y.S. at 756; and refrain from interpreting the
promises of the commercial as being literally true.
Second, 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. Rather than checking the fuel gauges
on his aircraft, the teenager spends his precious preflight
minutes preening. The youth's concern for his coiffure appears to
extend to his flying without a helmet. Finally, the teenager's
comment that flying a Harrier Jet to school "sure beats the bus"
evinces an improbably insouciant attitude toward the relative
difficulty and danger of piloting a fighter plane in a
residential area, as opposed to taking public transportation. n12
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - -
n12 In this respect, the teenager of the advertisement
contrasts with the distinguished figures who testified to the
effectiveness of the Carbolic Smoke Ball, including the Duchess
of Sutherland; the Earls of Wharncliffe, Westmoreland, Cadogan,
and Leitrim; the Countesses Dudley, Pembroke, and Aberdeen; the
Marchionesses of Bath and Conyngham; Sir Henry Acland, the
physician to the Prince of Wales; and Sir James Paget, sergeant
surgeon to Queen Victoria. See Simpson, supra, at 265.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
[*41]
Third, the notion of traveling to school in a Harrier Jet is
an exaggerated adolescent fantasy. In this commercial, the
fantasy is underscored by how the teenager's schoolmates gape in
admiration, ignoring their physics lesson. The force of the wind
generated by the Harrier Jet blows off one teacher's clothes,
literally defrocking an authority figure. As if to emphasize the
fantastic quality of having a Harrier Jet arrive at school, the
Jet lands next to a plebeian bike rack. This fantasy is, of
course, extremely unrealistic. No school would provide landing
space for a student's fighter jet, or condone the disruption the
jet's use would cause.
Fourth, the primary mission of a Harrier Jet, according to the
United States Marine Corps, is to "attack and destroy surface
targets under day and night visual conditions." United States
Marine Corps, Factfile: AV-8B Harrier II (last modified Dec. 5,
1995) . Manufactured by
McDonnell Douglas, the Harrier Jet played a significant role in
the air offensive of Operation Desert Storm in 1991. See id. The
jet is designed to carry a considerable armament load, including
Sidewinder and Maverick missiles. [*42] See id. As one news
report has noted, "Fully loaded, the Harrier can float like a
butterfly and sting like a bee -- albeit a roaring 14-ton
butterfly and a bee with 9,200 pounds of bombs and missiles."
Jerry Allegood, Marines Rely on Harrier Jet, Despite Critics,
News & Observer (Raleigh), Nov. 4, 1990, at C1. In light of the
Harrier Jet's well-documented function in attacking and
destroying surface and air targets, armed reconnaissance and air
interdiction, and offensive and defensive anti-aircraft warfare,
depiction of such a jet as a way to get to school in the morning
is clearly not serious even if, as plaintiff contends, the jet is
capable of being acquired "in a form that eliminates [its]
potential for military use." (See Leonard Aff. P 20.)
Fifth, the number of Pepsi Points the commercial mentions as
required to "purchase" the jet is 7,000,000. To amass that number
of points, one would have to drink 7,000,000 Pepsis (or roughly
190 Pepsis a day for the next hundred years -- an unlikely
possibility), or one would have to purchase approximately
$700,000 worth of Pepsi Points. The cost of a Harrier Jet is
roughly $23 million dollars, a fact of which plaintiff was [*43]
aware when he set out to gather the amount he believed necessary
to accept the alleged offer. (See Affidavit of Michael E. McCabe,
96 Civ. 5320, Aug. 14, 1997, Exh. 6 (Leonard Business Plan).)
Even if an objective, reasonable person were not aware of this
fact, he would conclude that purchasing a fighter plane for
$700,000 is a deal too good to be true. n13
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n13 In contrast, the advertisers of the Carbolic Smoke Ball
emphasized their earnestness, stating in the advertisement that
"L 1,000 is deposited with the Alliance Bank, shewing our
sincerity in the matter." Carbolic Smoke Ball, 1 Q.B. at 257.
Similarly, in Barnes, the defendant's "subsequent statements,
conduct, and the circumstances show an intent to lead any hearer
to believe the statements were made seriously." Barnes, 549 P.2d
at 1155. The offer in Barnes, moreover, was made in the serious
forum of hearings before a state commission; not, as defendant
states, at a "gambling convention." Compare Barnes, 549 P.2d at
1154, with Def. Reply Mem. at 6.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
[*44]
Plaintiff argues that a reasonable, objective person would
have understood the commercial to make a serious offer of a
Harrier Jet because there was "absolutely no distinction in the
manner" (Pl. Mem. at 13,) in which the items in the commercial
were presented. Plaintiff also relies upon a press release
highlighting the promotional campaign, issued by defendant, in
which "no mention is made by [defendant] of humor, or anything of
the sort." (Id. at 5.) These arguments suggest merely that the
humor of the promotional campaign was tongue in cheek. Humor is
not limited to what Justice Cardozo called "the rough and
boisterous joke . . . [that] evokes its own guffaws." Murphy v.
Steeplechase Amusement Co., 250 N.Y. 479, 483, 166 N.E. 173, 174
(1929). In light of the obvious absurdity of the commercial, the
Court rejects plaintiff's argument that the commercial was not
clearly in jest.
4. Plaintiff's Demands for Additional Discovery
In his Memorandum of Law, and in letters to the Court,
plaintiff argues that additional discovery is necessary on the
issues of whether and how defendant reacted to plaintiff's
"acceptance" of their "offer"; how defendant and its [*45]
employees understood the commercial would be viewed, based on
test-marketing the commercial or on their own opinions; and how
other individuals actually responded to the commercial when it
was aired. (See Pl. Mem. at 1-2; Letter of David E. Nachman to
the Hon. Kimba M. Wood, Apr. 5, 1999.)
Plaintiff argues that additional discovery is necessary as to
how defendant reacted to his "acceptance," suggesting that it is
significant that defendant twice changed the commercial, the
first time to increase the number of Pepsi Points required to
purchase a Harrier Jet to 700,000,000, and then again to amend
the commercial to state the 700,000,000 amount and add "(Just
Kidding)." (See Pl. Stat. Exh C (700 Million), and Exh. D (700
Million -- Just Kidding).) Plaintiff concludes that, "Obviously,
if PepsiCo truly believed that no one could take seriously the
offer contained in the original ad that I saw, this change would
have been totally unnecessary and superfluous." (Leonard Aff. P
14.) The record does not suggest that the change in the amount of
points is probative of the seriousness of the offer. The increase
in the number of points needed to acquire a Harrier Jet may have
been prompted [*46] less by the fear that reasonable people
would demand Harrier Jets and more by the concern that
unreasonable people would threaten frivolous litigation. Further
discovery is unnecessary on the question of when and how the
commercials changed because the question before the Court is
whether the commercial that plaintiff saw and relied upon was an
offer, not that any other commercial constituted an offer.
Plaintiff's demands for discovery relating to how defendant
itself understood the offer are also unavailing. Such discovery
would serve only to cast light on defendant's subjective intent
in making the alleged offer, which is irrelevant to the question
of whether an objective, reasonable person would have understood
the commercial to be an offer. See Kay-R Elec. Corp., 23 F.3d at
57 ("We are not concerned with what was going through the heads
of the parties at the time [of the alleged contract]."); Mesaros,
845 F.2d at 1581; Corbin on Contracts, @ 1.11 at 30. Indeed,
plaintiff repeatedly argues that defendant's subjective intent is
irrelevant. (See Pl. Mem. at 5, 8, 13.)
Finally, plaintiff's assertion that he should be afforded an
opportunity [*47] to determine whether other individuals also
tried to accumulate enough Pepsi Points to "purchase" a Harrier
Jet is unavailing. The possibility that there were other people
who interpreted the commercial as an "offer" of a Harrier Jet
does not render that belief any more or less reasonable. The
alleged offer must be evaluated on its own terms. Having made the
evaluation, the Court concludes that summary judgment is
appropriate on the ground that no reasonable, objective person
would have understood the commercial to be an offer. n14
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - -
n14 Even if plaintiff were allowed discovery on all of these
issues, such discovery would be relevant only to the second basis
for the Court's opinion, that no reasonable person would have
understood the commercial to be an offer. That discovery would
not change the basic principle that an advertisement is not an
offer, as set forth in Section II.B of this Order and Opinion,
supra; nor would it affect the conclusion that the alleged offer
failed to comply with the Statute of Frauds, as set forth in
Section II.D, infra.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
[*48]
D. The Alleged Contract Does Not Satisfy the Statute of Frauds
The absence of any writing setting forth the alleged contract
in this case provides an entirely separate reason for granting
summary judgment. Under the New York n15 Statute of Frauds,
a contract for the sale of goods for the price of $500 or more is
not enforceable by way of action or defense unless there is some
writing sufficient to indicate that a contract for sale has been
made between the parties and signed by the party against whom
enforcement is sought or by his authorized agent or broker.
N.Y.U.C.C. @ 2-201(1); see also, e.g., AFP Imaging Corp. v.
Philips Medizin Systeme, 1994 U.S. Dist. LEXIS 16504, 92 Civ.
6211 (LMM), 1994 WL 652510, at *4 (S.D.N.Y. Nov. 17, 1994)).
Without such a writing, plaintiff's claim must fail as a matter
of law. See Hilord Chem. Corp. v. Ricoh Elecs., Inc., 875 F.2d
32, 36-37 (2d Cir. 1989) ("The adequacy of a writing for Statute
of Frauds purposes 'must be determined from the documents
themselves, as a matter of law.'") (quoting Bazak Int'l. Corp. v.
Mast Indus., Inc., 73 N.Y.2d 113, 118, 538 N.Y.S.2d 503, 535
N.E.2d 633 (1989)).
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - -
n15 Having determined that defendant's advertisement was not
an offer, the last act necessary to complete the contract would
be defendant's acceptance in New York of plaintiff's Order Form.
Thus the Court must apply New York law on the statute of frauds
issue. See supra Section II.A.2.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - -
[*49]
There is simply no writing between the parties that evidences
any transaction. Plaintiff argues that the commercial,
plaintiff's completed Order Form, and perhaps other agreements
signed by defendant which plaintiff has not yet seen, should
suffice for Statute of Frauds purposes, either singly or taken
together. (See Pl. Mem. at 18-19.) For the latter claim,
plaintiff relies on Crabtree v. Elizabeth Arden Sales Corp., 305
N.Y. 48, 110 N.E.2d 551 (N.Y. 1953). Crabtree held that a
combination of signed and unsigned writings would satisfy the
Statute of Frauds, "provided that they clearly refer to the same
subject matter or transaction." Id. at 55. Yet the Second Circuit
emphasized in Horn & Hardart Co. v. Pillsbury Co., 888 F.2d 8 (2d
Cir. 1989), that this rule "contains two strict threshold
requirements." Id. at 11. First, the signed writing relied upon
must by itself establish "'a contractual relationship between the
parties.'" Id. (quoting Crabtree, 305 N.Y. at 56); see also
O'Keeffe v. Bry, 456 F. Supp. 822, 829 (S.D.N.Y. 1978) ("To the
extent that Crabtree permits [*50] the use of a 'confluence of
memoranda,' the minimum condition for such use is the existence
of one [signed] document establishing the basic, underlying
contractual commitment."). The second threshold requirement is
that the unsigned writing must "'on its face refer to the same
transaction as that set forth in the one that was signed.'" Horn
& Hardart, 888 F.2d at 11 (quoting Crabtree, 305 N.Y. at 56); see
also Bruce Realty Co. of Florida v. Berger, 327 F. Supp. 507, 510
(S.D.N.Y. 1971).
None of the material relied upon by plaintiff meets either
threshold requirement. The commercial is not a writing;
plaintiff's completed order form does not bear the signature of
defendant, or an agent thereof; and to the extent that plaintiff
seeks discovery of any contracts between defendant and its
advertisers, such discovery would be unavailing: plaintiff is not
a party to, or a beneficiary of, any such contracts. Because the
alleged contract does not meet the requirements of the Statute of
Frauds, plaintiff has no claim for breach of contract or specific
performance.
E. Plaintiff's Fraud Claim
In addition to moving for summary judgment [*51] on
plaintiff's claim for breach of contract, defendant has also
moved for summary judgment on plaintiff's fraud claim. The
elements of a cause of action for fraud are "'representation of a
material existing fact, falsity, scienter, deception and
injury.'" New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308,
639 N.Y.S.2d 283, 662 N.E.2d 763 (1995) (quoting Channel Master
Corp. v. Aluminium Ltd. Sales, Inc., 4 N.Y.2d 403, 407, 176
N.Y.S.2d 259, 262, 151 N.E.2d 833 (1958)).
To properly state a claim for fraud, "plaintiff must allege a
misrepresentation or material omission by defendant, on which it
relied, that induced plaintiff" to perform an act. See NYU, 639
N.Y.S.2d at 289. "General allegations that defendant entered into
a contract while lacking the intent to perform it are
insufficient to support the claim." See id. (citing Rocanova v.
Equitable Life Assur. Soc'y, 83 N.Y.2d 603, 612 N.Y.S.2d 339, 634
N.E.2d 940 (1994)); see also Grappo v. Alitalia Linee Aeree
Italiane, S.P.A., 56 F.3d 427, 434 (2d Cir. 1995) ("A cause of
action does not generally lie where the plaintiff alleges only
that the [*52] defendant entered into a contract with no
intention of performing it"). Instead, the plaintiff must show
the misrepresentation was collateral, or served as an inducement,
to a separate agreement between the parties. See
Bridgestone/Firestone v. Recovery Credit, 98 F.3d 13, 20 (2d Cir.
1996) (allowing a fraud claim where plaintiff "'demonstrate[s] a
fraudulent misrepresentation collateral or extraneous to the
contract'") (quoting Deerfield Communications Corp. v.
Chesebrough-Ponds, Inc., 68 N.Y.2d 954, 510 N.Y.S.2d 88, 89, 502
N.E.2d 1003 (1986)).
For example, in Stewart v. Jackson & Nash, 976 F.2d 86 (2d
Cir. 1992), the Second Circuit ruled that plaintiff had properly
stated a claim for fraud. In the course of plaintiff's
negotiations for employment with defendant, a law firm, defendant
represented to plaintiff not only that plaintiff would be hired
(which she was), but also that the firm had secured a large
environmental law client, that it was in the process of
establishing an environmental law department, and that plaintiff
would head the environmental law department. See id. at 89-90.
The Second Circuit concluded [*53] that these
misrepresentations gave rise to a fraud claim, because they
consisted of misrepresentations of present fact, rather than
future promises.
Plaintiff in this case does not allege that he was induced to
enter into a contract by some collateral misrepresentation, but
rather that defendant never had any intention of making good on
its "offer" of a Harrier Jet. (See Pl. Mem. at 23.) Because this
claim "alleges only that the defendant entered into a contract
with no intention of performing it," Grappo, 56 F.3d at 434,
judgment on this claim should enter for defendant.
III. Conclusion
In sum, there are three reasons why plaintiff's demand cannot
prevail as a matter of law. First, the commercial was merely an
advertisement, not a unilateral offer. Second, the tongue-in-
cheek attitude of the commercial would not cause a reasonable
person to conclude that a soft drink company would be giving away
fighter planes as part of a promotion. Third, there is no writing
between the parties sufficient to satisfy the Statute of Frauds.
For the reasons stated above, the Court grants defendant's
motion for summary judgment. The Clerk of Court is instructed to
close [*54] these cases. Any pending motions are moot.
SO ORDERED.
Dated: New York, New York
August 4, 1999
Kimba M. Wood
United States District Judge