Ad executive Gary Heathcott’s $1.3 million breach-of-contract suit against one of Little Rock’s biggest marketing agencies, CJRW, offers a rare glimpse inside a lucrative consulting contract, and the need for clarity and close scrutiny in legal agreements.
The suit, filed last week in Pulaski County Circuit Court, sprang from a nasty breakup: CJRW tossed Heathcott out of its offices on Main Street and stopped paying him after allegations of bad behavior toward colleagues and clients became a topic in Little Rock ad and government circles last fall.
Heathcott, the colorful and politically connected former chief of Heathcott Associates who now lives in San Antonio, had worked as a consultant for CJRW since selling his client list to the agency in 2015 and bringing several employees to the CJRW staff.
His top lieutenant, Jill Joslin, was named president of CJRW two years ago, and Heathcott’s rainmaking for the firm was cited in his suit, which offers as exhibits a consulting agreement and several superseding revisions. The contracts were drawn up and revised in the wake of the CJRW/Heathcott Associates alliance, which made front-page news in the Arkansas Democrat-Gazette on Jan. 18, 2015.
Terms of that deal were not disclosed.
The suit says Heathcott’s consulting role included “transitioning the accounts from Heathcott Associates” and acquiring “significant new business” worth “millions of dollars in additional revenue to Defendant.” It cites government-related business like the Arkansas Health Care Marketplace, the Arkansas Economic Development Commission and the Arkansas Lottery Commission as examples.
In exchange, Heathcott — who ran Gov. Asa Hutchinson’s advertising for his first gubernatorial campaign — received a top salary of $234,000 a year, a $17,000-a-year discretionary expense account for travel to and from Texas, and 10 percent of the gross income his work generated for the firm.
All that blew up in September 2017.
CJRW says it dismissed Heathcott after persistent complaints of sexist remarks and boorish behavior, including foul language in an exchange with an Arkansas Lottery official that led to Heathcott’s subsequent dismissal from the account. Email confirming that action came to light through a state Freedom of Information Act request from Arkansas Business. CJRW also contended that Heathcott had “violated CJRW’s acceptable methods and procedures,” according to the lawsuit.
Heathcott’s main complaint is that he brought big business to CJRW, which is now refusing to pay what he says he’s owed. “In a short 30 months, I generated millions of dollars in new income for CJRW,” Heathcott said in a statement to Arkansas Business. “Once those ongoing contracts were in-place, CEO Darin Gray determined to kick me to the curb. His effort to void my contract was unlawful and I’m confident that once a jury sees the facts, I’ll be paid what is owed to me by a company that continues to reap the financial fruits of my labor.”
The five-year consulting contract, according to Heathcott’s suit, contains some language that Gray, the CJRW CEO, no doubt regrets not examining better before signing: “Heathcott shall retain exclusive and sole right to terminate the Agreement at any time during the period September 26, 2016 and until September 30, 2021…” But a nearby passage gives CJRW “the right to enforce any violation by Heathcott of other elements within this agreement as well as violations of the published employee handbook,” the suit says, adding that Heathcott “was unaware of any published CJRW employee handbook.”
Two longtime ad and publishing executives, speaking frankly on the understanding their names would be kept anonymous, questioned why Gray would sign a document giving Heathcott exclusive rights to break the deal, and why Heathcott would sign a deal requiring him to abide by a handbook he didn’t know existed.
One element to the dispute is whether Heathcott was strictly a consultant or had the trappings of an employee. “The contract says that CJRW was paying Heathcott’s health insurance and his wife’s, which sort of suggests employee,” one of the executives said. “They were also paying his life insurance premiums,” up to a maximum of $8,105 a year, according to the contract.
“On the other hand,” said the other executive, “the contract’s header is CONSULTING AGREEMENT. Still, I wonder how many independent contractors are getting their insurance paid and are exclusive to a firm the way Heathcott is in that contract with CJRW.”
Several lawyers and legal scholars contacted to assess the legal merits had either already started their holiday vacations or said they couldn’t comment because of past links to the parties in the case.
The suit says that though Heathcott was an independent contractor, he had an offices at CJRW’s 300 Main St. building and kept equipment and files there. It alleges that CJRW accessed a computer, disabled it and left him “without the use of his personal desktop computer for more than 12 months.” The complaint also says the computer was loaded with spyware, and that paper and digital files were taken from safes and not returned.
CJRW has said it will not comment on the lawsuit, which is before Judge Tim Fox.
The lawsuit has drawn no legal response yet from CJRW, which is listed in the action as Cranford Johnson Robinson Woods Inc. The action seeks $1.3 million in actual damages and unspecified punitive damages.
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