Energy Drink Maker Sues PepsiCo Over Distribution Agreement

Vital Pharmaceuticals, Inc., doing business as VPX Sports (VPX) has filed a suit against defendant PepsiCo, Inc. seeking injunctive relief in aid of arbitration. Last week’s Southern District of Florida complaint alleges that VPX contracted with the food and beverage giant to ensure that its distribution network was “best in class,” after launching a hugely popular energy drink. However, the filing contends, PepsiCo did not live up to its end of the bargain, leading to the instant dispute.

According to the complaint, “VPX is one of the leading manufacturers of fitness-focused nutritional supplements and energy drinks in the world.” The Florida company allegedly produces one of the most popular and fastest growing energy drinks on the market called “BANG®,” which is the subject of the present controversy.

In March, the parties contracted, the filing states. While many of the details are redacted, the complaint explains that PepsiCo agreed to distribute select BANG products in certain distribution channels throughout the country. According to the filing, however, notwithstanding VPX’s “efforts and good faith approach to the relationship,” the defendant repeatedly failed to live up to its obligations.

Specifically, the complaint states, “[a]fter months of under-performance and unaddressed or inadequately addressed concerns, it became apparent to VPX that PepsiCo either did not have capabilities that it represented, or that it was less interested in advancing the BANG® brand, and more interested in using the popularity of the BANG® brand to tie in and push other failed PepsiCo energy products, such as Rockstar®.” Thus, on Oct. 23, VPX claimed it was “forced” to terminate the agreement and reportedly worked proactively to offer PepsiCo buyout options.

Yet, “rather than acknowledge the clear effect of termination, PepsiCo escalated its efforts to obstruct VPX’s ability to transition distribution rights to successor entities,” the complaint purports. The defendant allegedly did so by threatening legal action against VPX’s future channel and distributor partners, in one instance demanding that the distributor cease interfering with PepsiCo’s pre-existing arrangement. PepsiCo also recently filed a demand for arbitration  with the American Arbitration Association against VPX.  

VPX stated that though it cannot presently calculate its damages, it seeks an order from the court preventing the defendant from communicating with its customers and relevant business partners to “restore and preserve the status quo pending resolution of the parties’ disputes in the pending arbitration.” The causes of action are breach of the parties’ distribution agreement and tortious interference with business relationships.

The plaintiff is represented by Quarles & Brady LLP and in-house counsel at Vital Pharmaceuticals, Inc.