Dublin Dr Pepper Responds to Texas Lawsuit Filed by Corporate Partner

Local bottler facing legal fight against North America's #3 soft drink manufacturer

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Aug 10, 2011, 09:00 ET

SHERMAN, Texas, Aug. 10, 2011 /PRNewswire/ -- Dr Pepper Bottling Company of Dublin, Texas, the world's oldest Dr Pepper bottler, has issued a response to a federal lawsuit filed against the family-owned company by the corporate entity controlled by Plano, Texas-based Dr Pepper Snapple Group Inc. (NYSE: DPS).

In the lawsuit filed June 30, Dr Pepper Snapple has asked a federal court to terminate its licensing agreement with Dublin Dr Pepper, and to prevent the small bottling company from using the iconic Dublin Dr Pepper name. The lawsuit also seeks to prevent sales of the one-of-a-kind soft drink on Dublin Dr Pepper's website and toll-free number, in addition to asking for attorneys' fees. The federal court claim came as a surprise to the independent bottler following decades of support, endorsement and encouragement from its corporate partner.

The original Dr Pepper recipe has been produced in the small west Texas town of Dublin (pop. 3,887) since the late 1800s. As the city's largest private employer, Dublin Dr Pepper helps generate significant city and county tax revenue by hiring local employees and drawing more than 80,000 visitors to the community every year.

"Dublin Dr Pepper has been a loyal and committed supporter of the Dr Pepper brand longer than any other bottler," said attorney Steven Wolens of Dallas, a principal in McKool Smith and counsel for the Texas-based company. "Despite benefiting from the relationship with Dublin Dr Pepper for more than 120 years, Dr Pepper Snapple has turned its back on Dublin and the goodwill among the thousands of people who love this true Texas treasure that comes in an 8-ounce bottle."

Dublin Dr Pepper purists and connoisseurs regularly make "Pepper Pilgrimages" to the bottling plant where the soft drink is made using Imperial Pure Cane Sugar rather than high fructose corn syrup, which became the standard for many manufacturers in the 1970s based on cheaper production costs.

Bill Kloster, President and CEO of Dublin Dr Pepper, directs the bottling plant's operations. His father, William P. Kloster, led the company for decades and was known as "Mister Dr Pepper."

"Dublin Dr Pepper has had many good years in a cooperative and supportive relationship with our corporate partner to create and build an incredible consumer passion for the Dr Pepper brand," Mr. Kloster says. "All we want to do is bottle the original Dr Pepper recipe and conduct business honestly and fairly like we've always done, just like I taught my kids and my father taught me."

The Aug. 9 response from Dublin Dr Pepper cites internal and external corporate documents from before the lawsuit was filed that show various inconsistent positions taken by Dr Pepper Snapple, including its support of the Dublin brand for decades and promoting online and phone sales of Dublin Dr Pepper despite complaining of the same thing in its lawsuit.

The response includes archival examples of the Dr Pepper Snapple corporate website from earlier this year with links that directed customers to the Dublin Dr Pepper website and toll-free number. Those links no longer are posted. Also noted are bottlers in North Carolina and Missouri that, like Dublin Dr Pepper, currently use the Dr Pepper name in conjunction with their brands and sell their products online. Those companies have not been sued like the Texas-based bottler.

The lawsuit answer includes references to a 2009 interview with current Dr Pepper Snapple President and Chief Executive Officer Larry Young. At the close of the interview (available here http://video.pbs.org/video/1346204769?starttime=1200000), Mr. Young tells viewers that he is asked about Dublin Dr Pepper wherever he goes.

"It's the original Dr Pepper formula with the Imperial Sugar in it and their following is unbelievable," Mr. Young says in the interview before adding ". . . nothing tastes better than a Dublin Dr Pepper when it's ice cold."

Dr Pepper Snapple is the third largest soft drink company in North America, with more than 19,000 employees and 2009 sales exceeding $5.6 billion. The company's lawsuit claims Dr Pepper Snapple has suffered "irreparable harm." With 37 employees, Dublin Dr Pepper is the smallest Dr Pepper bottler and accounts for less than one-tenth of one percent of total Dr Pepper sales.

The public response to the lawsuit has included the establishment of a Facebook page titled "I Support Dublin Dr Pepper." The page has accumulated more than 4,000 "likes" since the lawsuit was filed, and includes comments from customers. A July 30 rally in support of Dublin Dr Pepper attracted hundreds of fans who now are featured in a music video with a song written by local filmmaker Mike Simpson. "A Big Fan of Small" has been gaining viewers since being posted on YouTube.

The case is Dr Pepper/Seven Up Inc. v. Dr Pepper Bottling Company of Dublin, Texas, No. 4:11-cv-00398, in the U.S. District Court for the Eastern District of Texas in Sherman, Texas.

For more information on Dublin Dr Pepper's response to the lawsuit, please contact Bruce Vincent at 800-559-4534 or [email protected].

SOURCE McKool Smith