Pepsi Ramps Up FCB Battle

The transition of PepsiCo business out of Foote, Cone & Belding and Coca-Cola work in couldn’t be going better.

For the lawyers.

Pepsi’s September decision to dump FCB for Omnicom, and Coke’s subsequent move of several brands to the agency, has now prompted three law suits from Pepsi that raise numerous questions about conflicts, contracts and confidentiality.

FCB, faced with two lawsuits aimed at limiting its abil ity to work for Coke, claimed partial victory late last week despite a judge’s ruling in Pepsi’s favor. Cook County Circuit Judge Richard A. Siebel granted Pepsi’s request for a temporary restraining order barring the four FCB employees who were on Pepsi’s Aquafina account from working on Coke’s Dasani, which was shifted to FCB Chicago several weeks ago.

The rest of FCB’s staff is unaffected, leading to the agency’s spin. “The key thing today is that FCB can start to work immediately for Dasa ni,” said FCB CEO Brendan Ryan.

Pepsi argued that the four em ployees knew too much about Aquafina to work for Coke without breaking confidentiality agreements. FCB Chicago CEO Dana Anderson said the shop could handle Dasani without the Aquafina veterans.

“I have a lot of talented people who have worked on beverages and a lot of talented people who have not worked on beverages,” Anderson said. “We can move ahead with all speed.”

Yet, illustrating the trickiness of the Pepsi-Coke transition, about 50 FCB Chicago employees have been moved out of the shop’s main office in an effort to provide some separation. The staffers have resigned to follow Pepsi’s Quaker business to a new unit of DDB but will remain at FCB until the Quaker contract ends in December.

Pepsi still seeks a permanent injunction to force “insulating walls” between the FCB group that worked on Aquafina and the group that works on the Coke business. It also seeks to keep the Aquafina group away from Dasani work for two years. A full hearing on that request will be heard later this month or in early December.

The addition of Coke’s Powerade to FCB’s roster has led to a separate lawsuit in federal court, filed by Pepsi-owned Quaker. That action makes a similar argument about the ability of FCB executives to keep secrets learned while working on Quaker’s Gatorade brand.

Quaker states in the lawsuit that it has sought assurances from FCB that em ployees who worked on Gator ade will not work on Powerade. But the lawsuit says that IPG has refused even to confirm that FCB would handle Powerade, stating, “Our internal staffing of assignments remains our prerogative and concern.”

The lawsuit asks that FCB be barred from working on or assisting on the Powerade account and that “insulating walls” be built between the agency and any group or individual that has Coke as a client. It also seeks to prevent FCB from spilling any Quaker-related secrets and asks for unspecified monetary damages in excess of $75,000.

“The American consumer will be advantaged by strong and fair competition in the sports-drink category and should not be deprived of that competition,” the lawsuit declares.

In its response to Pepsi’s Circuit Court lawsuit, FCB argues that since the agency was fired by Pepsi, it can’t be prevented from working for a rival. “People understand that if you fire an ad agency, the agency typically ends up working for a competitor,” FCB attorney Lewis Clayton said in court.

In its lawsuits, Pepsi attempts to use FCB’s own words against the agency. It cites an affidavit by FCB’s Anderson from an earlier lawsuit filed by the agency against former Chicago CEO Brian Will iams, which was later dropped; that affidavit em pha sizes the intimacy of the agency’s relationships with clients.

Pepsi is also offering up a letter from Ryan to Pepsi president Steve Reinemund in which Ryan made a promise that no agency employee would be transferred to a Coke account for at least two years after leaving the Pepsi business.

In an affidavit responding to Pepsi’s lawsuit, Ryan said that the offer was off the second that the agency was fired by Pepsi. “Had PepsiCo asked us to restrict personnel assignments for a period exceeding a few months after it terminated our relationship, I would have rejected that proposal,” Ryan said.