It's the ad industry's version of the "People's Court." On one side, Interpublic Group of Cos. claims it was betrayed by a former agency chief who tried to shanghai its $125 million Mercedes-Benz of North America account. On the other, Marvin Sloves--the spurned former Lowe & Partners/SMS chairman--contends he is an innocent bystander in a contentious agency/client parting.
And the whole ad world is tuning in.
$24 MIL IN DAMAGES SOUGHT
In early February, Lowe lost the Mercedes account. Just days later, Lowe parent Interpublic filed with the American Arbitration Association, seeking $24 million in damages from Mr. Sloves. The allegation: that Mr. Sloves steered Mercedes from Lowe to rival shops.
Interpublic also filed for an injunction in New York state Supreme Court to block Mr. Sloves from pilfering Lowe clients and employees.
The injunction was denied in mid-February. But the arbitration filing is pending--even though Mercedes has since hired Lowe's replacement, Omnicom Group's Merkley Newman Harty.
The unraveling of the six-year relationship between DaimlerChrysler's Mercedes and Lowe first surfaced publicly in early January. The agency forced Mr. Sloves into retirement, binding him to a consulting contract that allowed the executive to continue to work on the Mercedes business but barred him from taking any of Lowe's clients or employees to competitor shops.
Interpublic, however, still claims in its arbitration and supreme court filings that Mr. Sloves helped persuade Mercedes to hire a rival agency. In the legal documents, Interpublic said it believes Mr. Sloves met with several competing agency heads. Both Mr. Sloves and Omnicom executives deny that.
"I have never spoken to Omnicom about Mercedes," Mr. Sloves told Advertising Age last week. "I am under contract [at Lowe] and by law I cannot work on Mercedes at another agency" for two or more years.
It is well known that Mr. Sloves has a close relationship with Mercedes North America President-CEO Mike Jackson. For example, Mr. Sloves accompanied Mr. Jackson to an auto conference in Detroit the second week of January. Mr. Sloves explained: "I'm close to Mike Jackson," adding that he had been invited long before he left Lowe. "He made it clear to me he didn't wish to discuss advertising or the ongoing business."
DEPOSITIONS BEING TAKEN
The conflicting accounts of what happened are expected to continue for several months as lawyers for both sides take depositions for the arbitration suit. Executives close to IPG said last week that--for now--they have no plans to head back to state Supreme Court. Mr. Sloves' attorney, Moses Silverman, declined comment on whether Mr. Sloves plans to countersue.
The whole ad world is still tuned in.
Contributing: Beth Snyder, Jean Halliday.
Copyright March 1999, Crain Communications Inc.