J. Walter Thompson USA and Dell Computer Corp. are suing each other over their aborted relationship.
The lawsuits underscore the growing strain on agency-marketer relationships, and mark the second time this year a client and its former shop have headed to divorce court to settle a dispute.
AGENCY WANTS $6.4 MIL
JWT, fired in September just three months after its first Dell campaign debuted, is seeking $6.4 million, saying its former client reneged on the contract. Dell's countersuit asserts it was fully within its rights to summarily ax its ex.
"Our position is their complaint is totally without merit," said a spokesman for the direct PC giant. In its harshly worded countersuit, Dell blasts JWT's creative and account service, citing numerous "deficiencies" and its "willful and malicious misconduct."
As agencies and marketers are under more pressure to perform, both seem more willing to go public with private arguments. In the past, agencies rarely went to court in such cases for fear of being viewed by current and potential clients as difficult. But with more marketers making quick changes, agencies are fighting for their own best interests.
MIRRORS GATEWAY SUIT
The Dell litigation mirrors a $9 million breach of contract suit filed in June by D'Arcy Masius Benton & Bowles against former client Gateway, a Dell rival. The case is pending.
Dell hired JWT's New York and Chicago offices in December 1997 as the first agency on its estimated $100 million global brand account. It fired JWT nine months later, following months of tension between JWT and Scott Helbing, who inherited the agency when he joined Dell as VP-corporate branding strategy.
"Although Dell attempted to negotiate in good faith to avoid such a result," Mr. Helbing wrote in his termination letter, "JWT has left it no choice but to exercise its rights" to cut the agency.
Mr. Helbing handed the Dell account to BBDO Worldwide, New York, with which he worked in his former post at Pizza Hut.
JWT says Dell agreed to a fee-based, one-year contract, consisting of $6 million in fixed fees; a minimum $525,000 bonus; a "discretionary service bonus" if JWT met specified performance criteria; out-of-pocket expenses; and reimbursement for media expenses.
JWT asserts it is owed $4.7 million in fees, expenses and bonuses due before it was fired; that includes a discretionary bonus of $764,000. The agency also is seeking $1.6 million due after it was fired under a 90-day cancellation clause.
JWT filed its case in the Supreme Court in the County of New York. Dell responded with its suit in Williamson County District Court in Texas.
JWT declined to comment on the litigation. "We don't discuss as a matter of policy any of our client business, prior or current," a spokeswoman said.
DELL SEEKS DAMAGES, TOO
Dell, which seeks unspecified damages, accuses JWT of withholding money due to media and reimbursement claims for Intel Corp. co-op funds; failing to deliver on Web work; and making slanderous comments. Dell's spokesman declined to discuss the litigation, and efforts to reach Mr. Helbing late last week were not successful.
Contributing: Laura Petrecca.
Copyright December 1998, Crain Communications Inc.