Carat, IMS Face Off in Court Over Studio Pitch

Opening arguments were heard last week in Inde pendent Media Services’ lawsuit against Aegis Group’s Carat USA alleging breach of contract, misuse of trade secrets, unfair competition and illegal interference with bus iness relations. IMS is seeking $30 million in damages.

IMS filed suit in April 2001 after Carat won New Line Cin ema’s $125 million media buying and planning business, following a review.

The suit alleges that Carat based its winning compensation proposal on information that was revealed during 1999 merger talks with IMS.

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 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.

IMS contends that a contract signed by executives of both parties, including Aegis, on Oct. 13, 1999, stipulated that the shops would “not solicit or engage” the other’s respective clients for a period of 12 months.

“When Carat was approached by New Line within that period, they … told the studio that the contract with IMS was changed before it was signed, deleting the ‘or engage’ portion,” said Bruce Fader, a partner with Proskauer Rose, a New York law firm representing IMS.

In last year’s review, Carat asked for a fee of 3 percent, according to Fader.

Carat insists that New Line volunteered what it was paying on commissions, that it wanted to pay no more than 3 percent, and that it was looking for an agency with greater buying clout, said Skoff.

Calls to New Line were not returned. Carat executives declined comment. The trial is expected to conclude sometime this week.

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