Jury Awards IMS $7 million In Lawsuit Against Carat | Adweek
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Jury Awards IMS $7 million In Lawsuit Against Carat

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NEW YORK -- With less than two hours of deliberation, a jury in New York State Supreme Court found in favor of Independent Media Services, awarding the company $7 million in its lawsuit against Aegis Group's Carat USA alleging breach of contract, misuse of trade secrets, unfair competition and illegal interference with business relations.

The 11-member jury of seven women and four men were unanimous in their verdict, according to a representative for State Supreme Court Justice, Ira Gammerman, who presided over the trial. Closing arguments were heard before noon today.

IMS, a New York-based mid-level media agency with roughly $100 million billings, filed suit in April 2001 seeking $30 million in damages after Carat won New Line Cinema's $125 million media buying and planning business, following a review. New Line was one of IMS' largest clients for 15 years, said Richard Blumenthal, IMS' co-CEO.

The suit contended that Carat based its winning compensation proposal on information that was revealed during 1999 merger talks with IMS. Furthermore, IMS accused Carat of violating a non-compete agreement, specifically a section of the contract that prohibited either party from soliciting or engaging in business talks with each other's respective clients.

"This is a major vindication for our company," Blumenthal said. "By the very fact that the jury was quick and unanimous in its decision, we feel that its plain, despite the reduction of the amount we were seeking, that Carat clearly violated the terms and the spirit of our agreement."

The discussions about a possible merger began because Carat wanted to pursue movie-studio business and was looking for a partner with entertainment credentials, said Abe Skoff, partner at New York law firm Moses & Singer, which is representing Aegis and Carat in the suit.

During those talks, the suit alleges, IMS revealed that it was charging New Line a commission of 3.95 percent on media buying. In last year's review, Carat asked for a fee of 3 percent, said Bruce Fader, a lawyer for IMS.

In June 2000, New Line launched a "blind" media review as a "national consumer entertainment company" through Creative Communications Resources, a Torrance, CA-based consultant. Several agencies were contacted including Carat, which was told New Line was involved when it made it made the final cut along with two other agencies -- neither of which was IMS -- in the review.

Carat insisted that New Line volunteered what it was paying on commissions and that it wanted to pay no more than 3 percent. Furthermore, Carat contended that since Joe Nimziki had recently been named director of marketing at New Line after working at other major studios, there was a need to look for an agency with greater buying clout, Skoff said.

Calls to New Line and Carat were not returned.