Judge issues $1.26 billion judgment against PepsiCo in bottled water lawsuit

Did you hear about the harried PepsiCo secretary who failed to pass along important legal documents relating to a bottled water lawsuit to her boss?

Her oversight may cost the company $1.26 billion -- and we're betting the secretary's job -- after a judge issued a default judgment in that amount to two men who filed suit alleging that PepsiCo stole their idea for bottling water. The judge issued the summary judgment last month when PepsiCo failed to appear in court. PepsiCo is appealing the ruling.

Here, in a nutshell is what happened:

Charles Joyce, of Juneau, Wis., and James Voigt, of Cleveland, Wis., sued PepsiCo in April, asking for a jury trial and damages of more than $75,000. Their lawyer, David Van Dyke, told The Associated Press the two had worked together and came up with the idea to bottle purified water in individual servings.

Joyce's and Voigt's lawsuit accuses PepsiCo of misusing trade secrets. It also names Wis-Pak Inc. and Carolina Canners Inc., companies that make and distribute PepsiCo products, and Thomas M. Hiles, then the executive vice-president of Carolina Canners.

The pair claim they entered written confidentiality agreements about a new beverage they were calling "U.P." with executives of Wis-Pak and Carolina Canners in 1981. The executives violated the agreements and gave the information to PepsiCo, which eventually rolled out a bottled water brand - Aquafina - about a dozen years later, Joyce and Voigt claim.

PepsiCo said part of the problem was it was served the lawsuit in North Carolina, where it is incorporated, instead of Purchase, N.Y., where it is based. Later, a secretary who received letters relating to the case failed to act on them.

Spokesman Joe Jacuzzi said PepsiCo wants to fight the claims but acknowledges it failed to respond because of "an internal process issue."

PepsiCo says it never knew anything about the case. Here's what it told the court on Oct. 13 when it asked the court to abandon the judgment.

-June 11: Stith&Stith, PepsiCo's law firm in North Carolina, is "allegedly" served with the complaint but the company gets no word.

-Sept. 15: Stith&Stith forwards a letter about the case to Tom Tamoney in PepsiCo's legal department, but his secretary, Kathy Henry, "was so busy preparing for a board meeting she did not deliver it to anyone" or tell anyone about it or enter it into a log that tracks such things, according to PepsiCo's court filing.

Despite the default judgment, it's likely that PepsiCo will get its day in court to defend against the $1.26 billion lawsuit, according to a law professor interviewed by The Associated Press.

"I'd be surprised if they didn't set it aside," said Myron Moskovitz, a law professor at Golden Gate University in San Francisco. "But there's going to be some red faces in court."