Mars Contract Suit Against Y&R Continues
A New York judge has denied a request by WPP’s Y&R to toss out a breach of contract suit filed against it earlier this year by shopper marketing specialist Mars
Advertising. But Judge Colleen McMahon of the U.S. District Court in Manhattan did sharply narrow the scope of the complaint, tossing five of the six counts alleged by Mars.
Y&R had argued for dismissal in its entirety -- arguing that the UK was the proper venue, given that the suit revolved around a joint venture created by the parties that is based there. “While the UK is a perfectly acceptable alternative forum, New York is a better one,” Judge McMahon wrote in her decision, ruling that the WPP shop had not adequately demonstrated why New York was not a legally proper locale.
McMahon termed “ridiculous” an argument by Y&R that many of the witnesses in the case were based in the UK and that it would be difficult to transport them to New York. The shop has “both the means and ability to bring them to New York,” she ruled.
Mars -- based in Southfield, MI -- and Y&R agreed to form a London-based joint venture in May 2011 to provide shopper marketing services to European clients. Mars alleges that Y&R failed to deliver numerous resources and services that it agreed to under the contract.
Those services included providing office facilities, IT support and various other back-office functions. Mars also alleged that Y&R failed to deliver agreed upon “institutional capital,” including introductions to potential clients and “coordination services” with respect to shared clients, such as creative strategies, marketing plans, research and other materials.
In May 2012, Y&R launched Red Fuse, which also provides shopper marketing services. The agency shifted client work to it that the Mars-Y&R venture had previously handled, in violation of the joint venture terms, Mars alleged.
Y&R has filed counterclaims, charging Mars with breach of contract for failure to pay agreed-upon fees for shared clients under the joint venture and for rent for office space. Y&R said Mars owes it about $885,000 in payments due under the venture’s terms.